nep-ino New Economics Papers
on Innovation
Issue of 2005‒04‒03
fifteen papers chosen by
Koen Frenken
Universiteit Utrecht

  1. Programme de recherche sur le rôle des gouvernements dans le financement des entreprises<BR>Initiatives gouvernementales en capital de risque : les leçons des expériences européennes By Cécile Carpentier; Jean-Marc Suret
  2. Time to complete and research joint ventures : a differential game approach By Navas,Jorge; Kort,Peter M.
  3. The Environmental Porter Hypothesis as a Technology Adoption Problem? By Kriechel,Ben; Ziesemer,Thomas
  4. Education and Training in a Model of Endogenous Growth with Creative Destruction By Zon,Adriaan ,van; Antonietti,Roberto
  5. General Purpose Technologies and Energy Policy By Zon,Adriaan,van; Kronenberg,Tobias
  6. Dynamic modeling of web purchase behavior and e-mailing impact by Petri net By BALAGUE, Christine; LEE, Janghyuk
  7. Innovation, new market and governance choices of entry : the internet brokerage market case By QUELIN, Bertrand V.; CLAUDE-GAUDILLAT, Valérie
  8. Higher Education, Localization and Innovation: Evidence from a Natural Experiment By Andersson, Roland; John M. Quigley, John M.; Wilhelmsson, Mats
  9. Innovation Behaviour and Productivity Performance in the Nordic Region Does Foreign Ownership Matter? By Ebersberger, Bernd; Lööf, Hans
  10. Are Intellectual Property Rights Detrimental to Innovation? By Crampes, Claude; Langinier, Corinne
  11. Scioeconomic Differences in the Adoption of New Medical Technologies By Dana Goldman; James P. Smith
  12. Pharmaceutical Stock Reactions to Price Constraint Threats and Firm-Level R&D Spending By Joseph Golec; Shantaram Hegde; John Vernon
  13. Patent Licensing from High-Cost Firm to Low-Cost Firm By Sougata Poddar; Uday Bhanu Sinha
  14. "Foreign Technology Acquisition Policy and Firm Performance in Japan, 1957-1970: Micro-aspects of Industrial Policy" By Kozo Kiyota; Tetsuji Okazaki
  15. Limits to Modularity: A Review of the Literature and Evidence from Chip Design By Dieter Ernst

  1. By: Cécile Carpentier; Jean-Marc Suret
    Abstract: Most countries have set up structures and programs for new business creation and financing. We analyze strategies implemented in France, Germany and United Kingdom, where the proportion of government funds in venture capital financing is significantly smaller than in the Quebec, yet the rate of creation and growth of tech start-ups is comparable. In these countries, intervention is based on R&D, transfer, incubation and start-up, in high technology industries exclusively. Except in France, universities are pivotal to new business creation. Internal or subordinated divisions of ministries are created to manage and evaluate governmental programs, define priorities and avoid financing non-crucial industries. Often of limited duration, government programs must abide by rigorous performance and accreditation criteria. Tax incentives are generally not associated with these initiatives. <P>La plupart des pays ont instauré des institutions et des mécanismes dédiés à la création de nouvelles entreprises et au financement de leur croissance. Nous analysons les stratégies mises en place par la France, l’Allemagne et le Royaume-Uni. Dans ces pays, la part de l’État dans le financement par capital de risque est significativement inférieure à celle du Québec sans que la performance en termes de création et de croissance d’entreprises technologiques ne semble inférieure. Ces pays ont privilégié une action ciblée, axée sur les stades de R&D, transfert, incubation et démarrage, clairement restreinte aux technologies. Les universités sont, à l’exception de la France, au centre de l’effort de création de nouveaux projets d’entreprises. Des structures internes ou directement subordonnées aux ministères sont mises en place pour gérer et évaluer les programmes, établir les priorités et éviter les dérapages vers des secteurs en demande de fonds mais non prioritaires. Les programmes, dont la durée de vie est souvent limitée, sont très largement soumis à des critères de performance et d’accréditation rigoureux. Les modes d’intervention autres que les déductions fiscales sont privilégiés.
    Keywords: small business, public policy, business creation, financing, start-ups, petite entreprise, politiques publiques, création d'entreprises, financement, Europe
    Date: 2005–03–01
  2. By: Navas,Jorge; Kort,Peter M. (Tilburg University, Center for Economic Research)
    Abstract: In this paper we analyze cooperation in R&D in the form of RJVs. We show that the optimal size of an RJV does not only depend on the degree of spillovers, as literature suggests, but also on the cost function of R&D activities. Moreover, the explicit consideration of the fact that R&D projects take time to complete shows that benefits from cooperation in R&D not only allow RJVs to carry out larger R&D projects, but also to reduce the time to completion for projects with a given size and, consequently, to accelerate the acquisition of the benefits associated with the innovation.
    JEL: C73 L13 O31
    Date: 2005
  3. By: Kriechel,Ben; Ziesemer,Thomas (MERIT)
    Abstract: The Porter Hypothesis postulates that the costs of compliance with environmental standards may be offset by adoption of innovations they trigger. We model this hypothesis using a game of timing of technology adoption. We show that times of adoption are earlier the higher the non-adoption tax. The environmental tax turns the preemption game with low profits into a game with credible precommitment yielding high profits (pro-Porter). If there is a precommitment game without environmental taxes, the introduction of a tax leads to lower profits (anti-Porter).
    Keywords: economics of technology ;
    Date: 2005
  4. By: Zon,Adriaan ,van; Antonietti,Roberto (MERIT)
    Abstract: By formulating an endogenous growth model that combines elements from Romer (1990), Aghion and Howitt (1992), and van Zon and Yetkiner (2003), the present paper studies the contribution of education and training on economic growth through their impact on the rate of innovation. The article addresses two main issues. The first is the optimum provision of on-the-job training necessary to be able to adopt, and adapt to new technologies. The second is the impact of both formal education and on-the-job training on the innovative capacity of an economic system that is the ultimate cause of output growth. In our set-up, education enhances R&D activities and lowers adjustment costs to new technologies, thus facilitating their adoption, while on the other hand on-the-job training ensures the possibility to implement the new coming technologies and reap all the related future profits. We assume that the adoption of a new technology consists of two periods, i.e. the training phase during which newly hired workers acquire the right amount of know how in order to become familiar with the specific new technology, and the implementation or production phase in which profit flows arise for firms and in which the cost savings that can be realized arise from productivity increases in the previous phase. By extending the training phase, entrepreneurs run a greater risk of shortening the production phase for a given arrival rate of new technologies that progressively erode the profit flows obtained from existing technologies. The paper shows first that it is possible to find a profit-maximizing, endogenously determined, amount of training that depends on the workers’ educational attainment. Thus, a situation in which better educated workers may be disproportionately selected for training issues is possible, especially in times of rapid technological change. However, the paper also shows that a non-linear relationship between education and technological change (and growth) exists, so that an increase in the formal level of education can even result in a reduction in the rate of growth. The reason for this is the increase in creative destruction that raises ‘technology adoption costs’ in terms of output foregone during re-training spells that arrive at a faster rate. The results offer some insights that are interesting from an education policy perspective.
    Keywords: labour economics ;
    Date: 2005
  5. By: Zon,Adriaan,van; Kronenberg,Tobias (MERIT)
    Abstract: We employ a general purpose technology model with endogenous stochastic growth to simulate the effects of different energy policy schemes. An R&D sector produces endogenous growth by developing radical and incremental technologies. These innovations result in blueprints for capital intermediates, which require raw capital and either carbon or non-carbon-based fuels. A carbon tax therefore affects not only the final production sector but also the R&D sector by making the development of non-carbon-based technologies more attractive. Due to path dependencies and possible lock-in situations, policy can have a significant long-term impact on the energy structure of the economy. Allowing for different elasticities of substitution between consumption and environmental quality, we examine the effects of different carbon policies on growth, environmental quality, and welfare. We find that an anti-carbon policy may reduce welfare initially, but in the long run there is a strong potential for a ‘double dividend’ due to faster growth and reduced pollution.
    Keywords: research and development ;
    Date: 2005
  6. By: BALAGUE, Christine; LEE, Janghyuk
    Abstract: In this article, the authors introduce Petri nets to model the dynamics of web site visits and purchase behaviors in the case of wish list systems. They describe web site activities and their transition with probability distributions and model the sequential impact of influential factors through links that better explain web purchase behavior dynamics. The basic model, which analyzes site connections and purchases to explain visit and purchase behavior, performs better than a classical negative binomial regression model. To demonstrate its flexibility, the authors extend the wish list Petri net model to measure the impact of e-mailing intervals on visit frequency and purchase.
    Keywords: internet; wish list; e-mail; Petri net; dynamic model
    JEL: D12 M31
    Date: 2004–12–01
  7. By: QUELIN, Bertrand V.; CLAUDE-GAUDILLAT, Valérie (CERAM)
    Abstract: This paper investigates the case of market entry strategies following the introduction of a disruptive innovation. Recognizing that market entry strategies have been envisioned in the literature as a discrete phenomenon, we develop an empirical framework that portrays these strategies as a capability building process. These organizational modes are integrated into our model : acquisition, alliance, and market transaction. We compare the first two with the third one and we test our model in the setting of the online brokerage industry by using a sample of 897 moves made by 98 firms over a seven-year period (1994 to 2000). We built this dataset by collecting secondary data.By suggesting that the entry into a new industry is not a discrete phenomenon, our research should lead the path to additional research on this topic.
    Keywords: innovation; market entry; capabilities; firm's boundaries
    JEL: L22 L86 M10
    Date: 2004–12–01
  8. By: Andersson, Roland (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); John M. Quigley, John M. (University of CaliforniaBerkeley, CA, USA); Wilhelmsson, Mats (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: During the past fifteen years, government policy has decentralized post-secondary education in Sweden. We investigate the economic effects of this decentralization policy on the level of innovation and its spatial distribution in the Swedish economy. We rely upon micro data on patent activity over time, which records the home address of each patent awardee during the past eight years. These measures of innovation, together with data documenting the decentralization of university-based researchers and students, permit us to estimate the effects of exogenous changes in educational policy upon the extent and locus of innovative activity. We find important and significant effects of this policy upon the locus of knowledge production, suggesting that the decentralization has affected regional development through local innovation and increased creativity. We also find some evidence that this policy has affected the aggregate output of “knowledge industries.”
    Keywords: Higher Education; Localization; Innovation; Natural Experiment
    JEL: N34 O31 R11
    Date: 2005–03–18
  9. By: Ebersberger, Bernd (Technology Analysis & Innovation Strategies, Fraunhofer Institute for Systems and Innovation); Lööf, Hans (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper addresses the involvement of foreign companies in domestic economies; the relative engagement of foreign-owned companies in R&D-activities; the relative embeddedness in various national innovation systems and the relative output performance from R&D and innovation. A comparison is made between the innovation and productivity of foreign owned enterprises, of different corporate styles, (Nordic, Anglo-Saxon and Continental European) and the different corporate structures of domestically owned firms (multinational and uninational). Using 5 186 firm level observations from Denmark, Finland, Norway and Sweden, and based on the international harmonized Community Innovation Survey and uniform econometric approaches; the study confirms previous findings, presents new results and identifies country, corporate style and corporate governance differences. Some new lights is also shed on a seemingly paradoxical relationship between R&D and innovation, and between R&D and productivity.
    Keywords: Multinational enterprises; Take-Over; Corporate governance; Cross-country comparison; Spillovers; R&D; Innovation; Productivity
    JEL: C31 D21 F23 G34 L22 O31 O33
    Date: 2005–03–18
  10. By: Crampes, Claude; Langinier, Corinne
    Abstract: Intellectual property rights are legal constraints that limit entry in industries where incumbents are innovators. The set of legal constraints is the same for all industries, without considering that the externalities created by entry are not necessarily negative for the incumbent or that the incumbent's R&D expenditures can be detrimental to entrants. We show that one unique set of legal rules can foster innovation and increase total R&D expenditures in some industries and be detrimental in others. The model is illustrated by case studies from the information and communication technologies industry (software, hardware, music and videogame industries).
    JEL: L1
    Date: 2005–03–25
  11. By: Dana Goldman; James P. Smith
    Abstract: New medical technologies hold tremendous promise for improving population health, but they also raise concerns about exacerbating already large differences in health by socioeconomic status (SES). If effective treatments are more rapidly adopted by the better educated, SES health disparities may initially expand even though the health of those in all groups eventually improves. Hypertension provides a useful case study. It is an important risk factor for developing cardiovascular disease, the condition is relatively common, and there are large differences in rates of hypertension by education. This paper examines the short and long-term diffusion of two important classes of anti-hypertensives - ACE inhibitors and calcium channel blockers - over the last twenty-five years. Using three prominent medical surveys, we find no evidence that the diffusion of these drugs into medical practice favored one education group relative to another. The findings suggest that - at least for hypertension - SES differences in the adoption of new medical technologies are not an important reason for the SES health gradient.
    JEL: D6 H0
    Date: 2005–03
  12. By: Joseph Golec; Shantaram Hegde; John Vernon
    Abstract: Political pressure in the United States is again building to constrain pharmaceutical prices either directly or through legalized reimportation of lower-priced pharmaceuticals from foreign countries. This study uses the Clinton Administration's Health Security Act (HSA) of 1993 as a natural experiment to show how threats of price constraints affect firm-level R&D spending. We link events surrounding the HSA to pharmaceutical company stock price changes and then examine the cross-sectional relation between the stock price changes and subsequent unexpected R&D spending changes. Results show that the HSA had significant negative effects on firm stock prices and R&D spending. Conservatively, the HSA reduced R&D spending by $1.6 billion, even though it never became law. If the HSA had passed, and had many small firms not raised capital just prior to the HSA, the R&D effects could have been much larger.
    JEL: G31 O32 L65 I1
    Date: 2005–03
  13. By: Sougata Poddar (National University of Singapore); Uday Bhanu Sinha (Indian Statistical Institute)
    Abstract: In the literature of patent licensing, most of the studies are done where new technology is transferred from a cost-efficient firm (patentee) to a less efficient firm (licensee). However, R&D intensive firms are usually based in high wage countries whereas the cost-efficient firms are based in low wage countries. As a result R&D intensive firms are not necessarily the most cost -efficient firms in the industry, although in most cases they are the patentee firms. Given this backdrop, we study a situation of patent licensing where the technology transfer takes place from an innovative firm, which is relatively inefficient in terms of cost of production to its cost-efficient rival. We look for optimal licensing arrangements in this environment. This framework also provides a platform to bridge the literature on external and internal patentees.
    Keywords: licensing, fixed fee, royalty, two-part tariff, quantity competition, Innovation
    JEL: D43 D45 L13
  14. By: Kozo Kiyota (International Graduate School of Social Sciences, Yokohama National University and RIETI); Tetsuji Okazaki (Faculty of Economics, University of Tokyo)
    Abstract: We examine the determinants and effects of technology acquisition licensing, using firm-level data between 1957 and 1970. Our results indicate that in technology acquisition licensing, the government screened a firm's application based on (i) the industry that the firm belonged to and (ii) its past experience of technology acquisition. As a result, inefficient firms with considerable experience tended to acquire more technologies before deregulation. Despite this screening process, the technology acquisition policy contributes to improve a firm performance: The firms with acquired technology succeeded in capital accumulation, which results in much faster growth of labor productivity.
    Date: 2005–03
  15. By: Dieter Ernst (Economics Study Area, East-West Center)
    Abstract: This working paper has been prepared as part of the East-West Center's research project on Globalization of Knowledge Work: Why is Chip Design Moving to Asia. In this paper, Dieter assesses what we know about the limits to modularity and their impact on firm organization and industry structure. He focuses on evidence form chip design, drawing on interview on 2002 and 2003 with a sample of 60 companies and 15 research institutions that are involved in chip design in the US, Taiwan, Korea, China and Malaysia. It is summarized "stylized" propositions of the modularity literature that are well-established, as well as predictions that are controversial. In addition, important limits to modularity and relevant management responses were reviewed.
    Date: 2004–09

This nep-ino issue is ©2005 by Koen Frenken. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.