2021 Prize Winner

This year’s inaugural prize was awarded to a team based at the Robert H. Smith School of Business at the University of Maryland, led by Professor Rachelle C. Sampson.

Looking at US patents between 1980 and 2017, their project aims to demonstrate that long-term-oriented firms – supported by government-funded R&D, stronger scientific orientation, a more centralised organisation and greater investment– are more likely to produce breakthrough innovations such as Dupont’s nylon or AT&T Bell Labs’ transistor.

“I’m delighted to win the inaugural Panmure House Prize.

“This prize will support research that will help shed light on the critical importance of long-term investment horizons for the breakthrough innovation necessary to solve some of our most pressing challenges.

“It’s truly an honour to be connected with Panmure House, home of Adam Smith and a gathering place of many luminaries of the Scottish Enlightenment.  I’m grateful to the esteemed panel of judges and Panmure House for the opportunity to accelerate this research and bring it into the public eye.”

Research title: The Implications of Long-termism for the Nature of Firm Innovation

We examine the relationship between firm time horizons and the nature of firm innovation, 1980-2017. Breakthrough inventions, or those that significantly influence later innovation, typically require a longer-term investment horizon. We combine multiple measures of invention influence and novelty with a measure of firm time horizons to determine whether and to what extent time horizons drive breakthrough inventions, with implications for firm and economy-wide growth. We further examine how investor behavior influences firm innovation via its impact on firm time horizons. Our preliminary findings show that more long-term oriented firms patent more and have more influential and novel patents. Several factors appear to alter the magnitude of this relationship. Firms using more complex technologies, with more government funded R&D, with a stronger scientific orientation, with more centralized organization, and facing greater product market competition show a stronger link between long-term orientation and breakthrough innovation. To evaluate a causal link between time horizons and firm innovation, we examine behavior of a firm’s institutional investors. Specifically, we propose that blockholder investors shifting their investment practices from long to short-term holdings create external pressures on firms for short-term returns. Preliminary findings suggest that, when investors change their holding behavior in ways consistent with greater impatience for returns, firms produce fewer influential innovations. Given documentation on rising short-termism in firms, our project has significant implications for the changing nature of firm R&D, firm competitiveness and economic growth.

Rachelle C. Sampson is Associate Professor of Logistics, Business and Public Policy at the Smith School of Business, University of Maryland. She is also a Visiting Scholar at the ESG Analytics Lab at the Wharton School, University of Pennsylvania, and a Senior Policy Scholar at Georgetown University's Center for Business and Public Policy. Rachelle’s research focuses on how organisation structure and ownership forms influence firm investment time horizons and R&D productivity. Her recent work exposes rising short-termism in US firms and capital markets, outlining implications for firm productivity and growth, the changing nature of R&D within firms, as well as environmental impact. Rachelle has a particular interest in the impact of sustainability practices and ESG performance on employee engagement and productivity, as well as how this translates into long-term financial performance. Her research has been published in several academic outlets, including Management Science, Strategic Management Journal, Academy of Management Journal and Case Western Law Review, and has received press coverage, including Bloomberg and Vox.com. She serves as associate editor at Management Science and on the editorial boards of Strategic Management Journal and Organization Science.

Rachelle regularly presents her research work to practitioner forums, particularly within the ESG investment community. She sits on corporate advisory boards supporting firms seeking to integrate ESG into firm strategy and valuation models. Formerly a professor at NYU-Stern and Georgetown University, Rachelle started her professional career as a consultant for Ernst & Young and as a corporate attorney in Australia. She received her PhD from the University of Michigan and her law degree from Queensland University of Technology, Australia.

Since returning to the U.S., Rachelle has received several awards for her research and teaching, including the Ross School of Business (University of Michigan) Distinguished PhD Alumni Award, the Ameritech Foundation Research Fellowship, the Krowe Award for Teaching Excellence, and recognition from Poets and Quants as a favorite business school professor. She teaches MBA and PhD courses in corporate strategy, managerial economics as well as firm ESG and environmental strategy. Rachelle is an active participant in several activities related to expanding the sustainability curriculum across disciplines at the University of Maryland, including serving as a faculty mentor and facilitator for the Sustainability Teaching Fellows for over a decade. Rachelle is also founder of Blue Prism, a leadership coaching practice focused on supporting individuals, leaders and organizations in aligning with values and purpose. She has received certification for her coaching experience, skills and training from the International Coaching Federation.