Abstract: We use a large-sample inductive approach to explore the impact of two social liberalization policies (legalization of same-sex civil unions and medical marijuana) and one anti-liberalization policy (passage of abortion restrictions) on innovation. First, we show that liberalization policies increase state-level patenting while the anti-liberalization policy reduces patenting. Next, we examine three possible mechanisms that could explain the findings. The results suggest that liberalization policies can increase the collaboration diversity of inventors, and hence the rate, novelty, and impact of their innovation output, through promoting more liberal views and more openness to diversity. We also find speculative evidence that social liberalization policies increase entrepreneurial entry through promoting more diverse social interactions. We do not find evidence for liberal policies attracting top inventors from other regions.
Here is a good summary of the paper in HBR: Legal Marijuana and Gay Marriage Have Been Good for U.S. Innovation