Happiness and Innovation Around the World

This study investigates the impact of happiness on corporate innovation around the world. Using novel data from the World Happiness Report, we document that happiness is positively associated with firm innovation. The effect is more pronounced for R&D intensive firms. Further, we find that happiness promotes innovation through channels of collaboration, productivity, and risk tolerance. Our results are robust to including a range of controls and to using an instrumental variable approach and quasi-natural experiment. Overall, our results suggest that happiness can foster corporate innovation around the world.