nep-ino New Economics Papers
on Innovation
Issue of 2005‒11‒12
seventeen papers chosen by
Koen Frenken
Universiteit Utrecht

  1. Learning, Product Innovation and Firm Heterogeneity in Tanzania By Goedhuys, Micheline
  2. Fostering Innovation in Chile By José-Miguel Benavente; Luiz de Mello; Nanno Mulder
  3. Innovation races: An experimental study on strategic research activities By Uwe Cantner; Andreas Nicklisch; Torsten Weiland
  4. "Collective Knowledge, Prolific Inventors and the Value of Inventions: An Empirical Study of French, German and British Owned U.S. Patents, 1975-1998." By William R. Latham; C. Gay and C. Le Bas; Christian Le Bas
  5. Public provision of a private good: What is the point of the BSD license? By Alex Gaudeul
  6. " Persistence of Firm Innovative Behavior: Towards an Evolutionary Theory." By William R. Latham; Christian Le Bas
  7. Cash and the Counter: Capabilities and Preferences in the Demand for Banking Technologies By Davide Consoli
  8. New Technologies and Indian SMEs By Lal, Kaushalesh
  9. Learning Paths to Offshore Outsourcing - From Cost Reduction to Knowledge Seeking By Peter Maskell; Torben Pedersen; Bent Petersen; Jens Dick-Nielsen
  10. The International Allocation of R&D Activity by US Multinationals: The East Asian Experience in Comparative Perspective By Prema-chandra Athukorala; Archanun Kohpaiboon
  11. Technological change, wages and firm size By Brink,R. van den; Ruys,P.H.M.
  12. Market power, innovative activity and exchange rate pass-through in the euro area By Sophocles N. Brissimis; Theodora S. Kosma
  13. Identifying Age, Cohort and Period Effects in Scientific Research Productivity: Discussion and Illustration Using Simulated and Actual Data on French Physicists By Bronwyn H. Hall; Jacques Mairesse; Laure Turner
  14. Entrepreneurship and Liquidity Constraints: Evidence from Sweden By Nykvist, Jenny
  15. Determinants of Total Factor Productivity in the Italian Regions By Guido Ascari; Valeria Di Cosmo
  16. Marktstructuur en innovatie By Boone,J.; Damme,E. van
  17. The Information Technology Revolution and the Puzzling Trends in Tobin’s average q By Adrian Peralta-Alva

  1. By: Goedhuys, Micheline (United Nations University, Institute for New Technologies)
    Abstract: Using a unique firm level data set on learning and product innovation in Tanzanian manufacturing and commercial farming, this paper sheds light on the various sources of firm learning, investment and collaboration and their relative importance for product innovation. The results indicate that larger and foreign owned firms invest significantly more in human and physical capital than do local micro, small and medium sized firms, and they are better connected to the internet. Their ways of upgrading technology also reveals a better financial endowment. Small and medium sized firms on the other hand report to collaborate more intensively with other local firms on product development, marketing and on the input market and upgrade technology through in-house activities, imitation and cooperation with suppliers and universities. By doing so, they are able to offset the scale disadvantages they face in competing for the market information and inputs – new machinery and specialised labour - necessary for product innovation in imperfect markets.
    Keywords: learning, innovation, technological change, competitiveness, multinational corporations, MNEs, small and medium enterprises, SMEs, investment, Tanzania
    Date: 2005
  2. By: José-Miguel Benavente; Luiz de Mello; Nanno Mulder
    Abstract: A good framework for investment in innovation can contribute to increasing Chile’s growth potential. Spending on R&D is currently low in relation to GDP and heavily reliant on government financing. Innovation activity in the business sector is also limited by insufficient seed and venture capital and human capital constraints. This is despite several favourable framework conditions, including a stable macro-economy, liberal foreign trade and investment regimes, and reasonably pro-competition regulations in product markets. The government intends to increase public spending on R&D, to be financed by revenue from the mining tax introduced in May 2005, and to create a National Innovation Council. The effectiveness of these measures will depend largely on the extent to which they will boost business-financed innovation consistent with Chile’s comparative advantages. This Working Paper relates to the 2005 OECD Economic Survey of Chile ( <P>Encourager l’innovation au Chili Un bon cadre pour l'investissement en innovation peut contribuer à augmenter le potentiel de croissance du Chili. La dépense en R&D par rapport au PIB est actuellement basse et financée principalement par l’État. L'activité d'innovation dans le secteur privé est également limitée par l'insuffisance du capital risque, des capitaux de démarrage et du capital humain. C'est en dépit de plusieurs conditions générales favorables, y compris un environnement macroéconomique stable, un régime commercial et d'investissement libéral et des régulations favorables à la concurrence sur des marchés de biens. Le gouvernement prévoit d'augmenter les dépenses publiques en R&D, financées par le revenu d’une nouvelle taxe minière introduite en mai 2005, et de créer un Conseil national d'innovation. L'efficacité de ces mesures dépendra en grande partie s'ils encouragent l’innovation financée par les entreprises sur la base des avantages comparatifs du Chili. Ce Document de travail se rapporte à l'Étude économique de l'OCDE du Chili, 2005 (
    Keywords: research and development, recherche-développement, innovation policy, politique d'innovation, Chile, Chili
    JEL: I20 O30 O54
    Date: 2005–10–27
  3. By: Uwe Cantner (University of Jena, Faculty of Economics); Andreas Nicklisch (Max-Planck-Institute for Research into Collective Goods); Torsten Weiland (Max-Planck-Institute for Economics, Strategic Interactions Group)
    Abstract: In an experimental setting, firms in a duopoly market engage in a patent tournament and compete for profit-enhancing product advancements. The firms generate income by matching exogenously defined demand preferences with an appropriately composed product portfolio of their own. Demand preferences are initially unknown and first need to be revealed by an investigation of the possible product variations. The better firms approximate demand preferences, the higher their profits. In the ensuing innovation race, firms interact through information spillovers resulting from the imperfect appropriability of research successes. In the random period of the experiment, the continuity of the search process is disturbed by an exogenous shock that affects both the supply and demand side and again spurs research competition. Firms may henceforth explore an enlarged product space in attempting to match the equally modified demand preferences. In our analysis, we explore the behavioural regularities of agents who are engaged in innovation activities. As a key element we test to what extend relative economic performance exercises a stimulating effect on the implementation of innovation and imitation strategies.
    Keywords: Innovation, Imitation, Patent Tournament, Trial and Error Process
    JEL: D81 O31
    Date: 2005–11–07
  4. By: William R. Latham (Department of Economics,University of Delaware); C. Gay and C. Le Bas; Christian Le Bas
    Abstract: The aim of this paper is to test two related propositions: (1) that there is a direct, positive relationship between the involvement of a prolific inventor in the production of knowledge and the magnitudes in the collective dimension of this knowledge production, as measured by the presence of foreign inventors and the size of the inventive team; and (2) that there is a direct, positive relationship between the involvement of a prolific (or foreign) inventor and the value of the new knowledge produced. We use detailed information from nearly 300,000 patents granted by the US Patent Office to French, German and British inventors over the period from 1975 to 1999. From data available from each patent regarding citations of prior patents and the numbers and identities of the inventors listed in the patent application, we are able to construct measures of collective knowledge, the presence of prolific inventors, and the imputed value of patents. In a novel approach in this literature, we estimate negative binomial multiple regression models for determining measures of both collective knowledge and the value of the patents. We find strong support, after controlling for technological field effects, for hypotheses that both prolific and foreign inventors tend to be parts of larger teams of inventors and that both prolific and foreign inventors tend to produce inventions having more value. In the conclusion, we draw some implications of these results for knowledge governance.
    Keywords: Inventors, patents, prolific
    JEL: O31 O32
    Date: 2005
  5. By: Alex Gaudeul (University of East Anglia - Norwich & ESRC Centre for Competition Policy)
    Abstract: Software is a potentially excludable public good. It is possible, at some cost, to exclude non-paying users from its consumption by using copyright law or technological restraints. Licensing the software under proprietary license terms makes of it a private good, licensing it under the BSD does not change the economic nature of the software while licensing it under the GPL artificially makes of it a pure public good. A project leader will prefer one or the other of those license terms depending on her software project’s market potential and on the cost of developing it. The optimal licensing for a sequence of cumulative innovations and the impact of possible competition between rival software development teams are considered.
    Keywords: Open Source Software; Public Goods; Information Goods; Non- Profit; Volunteer Organisation; Intellectual Property; Copyright; Licensing; Innovation
    JEL: D23 D45 D71 H41 H42 K11 L31 L86 O31 O32 O34
    Date: 2005–11–09
  6. By: William R. Latham (Department of Economics,University of Delaware); Christian Le Bas
    Abstract: A growing body empirical literature deals with persistence in innovation. However, there is neither a survey of the development and status of the field nor a clear statement of a theory of persistence which includes a formal model of the dynamics of firm persistence. This paper fills these gaps by first providing a survey of previous studies of persistence, then presenting a theory, based on the evolutionary approach, to explain the choice of firms to innovate persistently, sporadically or not at all, and finally describing a formal model which shows some striking results corroborated by recent empirical evidence.
    Keywords: Persistence, Innovation, Evolutionary
    JEL: O31 B52
    Date: 2005
  7. By: Davide Consoli (CRIC - Institute of Innovation Research, University of Manchester UK)
    Abstract: The main argument of this paper is that consumption and demand, like production, are discovery processes guided by trial-and-error and learning by consuming. The key question that is addressed is: how do consumers deal with innovation? By bringing together a number of threads within the innovation literature my claim is that consumers, akin to firms, follow routines that shape their consumption bundle, conceived here as an ensemble of activities rather than a bunch of goods. The analysis developed in the paper takes a very specific angle by elaborating on empirical evidence on the patterns of use of retail payment services in the United Kingdom to appreciate how consumption and demand can be shaped by the intertwined evolution of capabilities and preferences.
    Keywords: Retail Banking; Innovation; Demand; Consumer Capabilities
    JEL: L10 L23
    Date: 2005–11–08
  8. By: Lal, Kaushalesh (United Nations University, Institute for New Technologies)
    Abstract: The study identifies and analyses the factors that influenced the adoption of new technologies in SMEs. Information and communication technologies (ICTs) have been used as proxy of new technologies. The findings of the study suggest that industry-specific characteristics such as skill- and export-intensiveness have bearings on the type of ICT adoption. The size of operation measured in terms of sales turnover influenced the adoption of new technologies. The results also suggest that there are marginal differences in the labour productivity and profitability of firms that adopted varying degree of ICTs. In view of the fact that that MFA provisions are no more available to garments sector firms since January 1, 2005, the government needs to embark on providing technological, physical, and communication infrastructure at a globally competitive rate so that SMEs can withstand onslaught posed by large domestic firms and MNCs.
    Keywords: small and medium enterprises, SMEs, technological change, information and communication technologies, ICT, India, competitiveness, technology policy, industrial policy
    Date: 2005
  9. By: Peter Maskell; Torben Pedersen; Bent Petersen; Jens Dick-Nielsen
    Abstract: A corporation’s offshore outsourcing may be seen as the result of a discrete, strategic decision taken in response to an increasing pressure from worldwide competition. However, empirical evidence of a representative cross-sector sample of international Danish firms indicates that offshore sourcing in low-cost countries is best described as a learning-by-doing process in which the offshore outsourcing of a corporation goes through a sequence of stages towards sourcing for innovation. Initially, a corporation’s outsourcing is driven by a desire for cost minimization. Over a period of time the outsourcing experience lessens the cognitive limitations of decision-makers as to the advantages that can be achieved through outsourcing in low-cost countries: the insourcer/ vendor may not only offer cost advantages, but also quality improvement and innovation. The quality improvements that offshore outsourcing may bring about evoke a realization in the corporation that even innovative processes can be outsourced.
    Keywords: Offshore outsourcing; cost reduction; innovation; experiential learning; low-cost countries
    JEL: L22 L23 D83 M55
    Date: 2005
  10. By: Prema-chandra Athukorala; Archanun Kohpaiboon
    Abstract: This paper examines patterns and determinants of overseas R&D expenditure of MNEs, with emphasis on the East Asian experience, using a new panel dataset relating to US-based manufacturing MNEs over the period 1990-2001. It is found that inter-country differences in R&D intensity of operation of US MNE affiliates are fundamentally determined by the domestic market size, overall R&D capability and cost of hiring R&D personnel. The impact of domestic market orientation of affiliates on R&D propensity varies among countries depending on their stage of global economic integration. Intellectual property protection seems to matter largely for mature economies with complementary endowments. There is no evidence to suggest that financial incentives have a significant impact on inter-country differences in R&D intensity when controlled for other relevant variables. Nor is there a statistically significant relationship between the size of the capital stock of MNEs and R&D intensity of their operation across countries. Overall, our findings serve as a caution against paying too much attention by host country governments on turning MNEs affiliates into technology creators as part of their foreign direct investment policy.
    Date: 2005–09
  11. By: Brink,R. van den; Ruys,P.H.M. (TILEC (Tilburg Law and Economics Center))
    Date: 2005
  12. By: Sophocles N. Brissimis (Bank of Greece and University of Piraeus. Address: 21 E.Venizelos Ave., 10250 Athens, Greece.); Theodora S. Kosma (Corresponding author: Athens University of Economics and Business (AUEB), 76 Patission Street, 10434 Athens, Greece.)
    Abstract: This paper examines exchange rate pass-through in the euro area by accounting for the impact of exchange rate changes on exporting firms’ market power, cost structure and competitiveness. An international oligopoly model where exporting firms simultaneously decide on their pricing and innovation strategies is used as the basis for the econometric analysis. The estimations are carried out on data for manufacturing imports of three large euro area countries (Germany, France, Netherlands) from three major non-euro area import suppliers (US, Japan, UK). The results show that exporting firms’ price and innovation decisions in each source country are jointly determined and that total pass-through to euro area import prices is low. There are also indications that other factors, such as interactions with domestic producers, may be important for the determination of pass-through. Finally, euro area import prices are found to be sticky in local currency in the short run.
    Keywords: Exchange rate pass-through; market power; innovative activity; multivariate cointegration; euro exchange rate.
    JEL: C32 F39 L13 O31
    Date: 2005–10
  13. By: Bronwyn H. Hall; Jacques Mairesse; Laure Turner
    Abstract: The identification of age, cohort (vintage), and period (year) effects in a panel of individuals or other units is an old problem in the social sciences, but one that has not been much studied in the context of measuring researcher productivity. In the context of a semi-parametric model of productivity where these effects are assumed to enter in an additive manner, we present the conditions necessary to identify and test for the presence of the three effects. In particular we show that failure to specify precisely the conditions under which such a model is identified can lead to misleading conclusions about the productivity-age relationship. We illustrate our methods using data on the publications 1986-1997 by 465 French condensed matter physicists who were born between 1936 and 1960.
    JEL: C23 O31 J44
    Date: 2005–11
  14. By: Nykvist, Jenny (Department of Economics)
    Abstract: Do potential entrepreneurs face liquidity constraints? Or to put it differently, does a person have to be wealthy to start a new business? This question has been discussed in a large literature that has documented a positive relationship between initial wealth and entrepreneurship. However, in a recent paper Hurst and Lusardi (2004) use higher order of polynomials in wealth and find that there is no relationship between household initial wealth and the probability of starting an own business throughout most of the wealth distribution in the United States. In this paper we examine this relationship using similar methods on Swedish data. The data set used is LINDA, a register-based longitudinal data set for Sweden. The relationship is estimated using probit models with different specifications of wealth. However, the result that wealth is not important for new entrepreneurs cannot be replicated. Instead, the main finding of the paper is that the relationship between wealth and transition into entrepreneurship is positive but diminishing for the major part of the wealth distribution. Moreover, the relationship between wealth and entrepreneurship gets stronger as the models get less restricted with respect to wealth. Our result leads us to the conclusion that liquidity constraints do play a significant role when determining transition into entrepreneurship in Sweden.
    Keywords: Liquidity constraints; wealth; entrepreneurship; starting capital; business ownership
    JEL: D31 J23 J24 M13
    Date: 2005–09–10
  15. By: Guido Ascari (University of Pavia); Valeria Di Cosmo (University of Pavia)
    Abstract: This paper investigates the determinants of TFP for Italian regions. We find strong evidence in favour of the factors commonly suggested by the theoretical literature. In particular, R&D expenditures and the number of researchers are positively related to regional TFP. Moreover, human capital is an important determinant of TFP. Finally, we find a strong difference between Northern and Southern regions, particularly regarding the effect of research activity and social capital. Our results are robust across different estimation methods.
    Keywords: Total factor productivity, Italian regions, panel data, human capital, social capital
    JEL: O47 C23 R11
    Date: 2005–11–08
  16. By: Boone,J.; Damme,E. van (TILEC (Tilburg Law and Economics Center))
    Date: 2004
  17. By: Adrian Peralta-Alva (University of Miami)
    Abstract: A growing literature argues that the Information Technology rev- olution caused the stock market crash of 1973-1974, its subsequent stagnation and eventual recovery. This paper employs general equi- librium theory to test whether this good news hypothesis is consistent with the behavior of US equity prices and with the trends in corpo- rate output, investment and consumption. I …nd it is not. A model based exclusively on good news can make equity prices fall as much as in the data but it must also imply a strong economic expansion right when the US economy stagnated. However, when the observed productivity slowdown in old production methods is incorporated into the model consistency with major macroeconomic aggregates can be achieved and a 20% drop in equity values can be accounted for. (JEL E44, O33, O41)
    Keywords: Stock Market, Tobin's q Technological Change, Productivity Slowdown 1974, Information Technology Revolution
    JEL: O P
    Date: 2005–11–03

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