nep-ino New Economics Papers
on Innovation
Issue of 2006‒04‒22
twenty-one papers chosen by
Koen Frenken
Universiteit Utrecht

  1. The Diffusion and Adoption of Advanced Technologies in Canada: An Overview of the Issues By Elad Gafni
  2. Innovation and Dominant Design in Mobile Telephone By Heli Koski; Tobias Kretschmer
  3. The Specificities of Finnish Industrial Policy - Challenges and Initiatives at the Turn of the Century By Christopher Palmberg; Pekka Ylä-Anttila
  4. Global Location Patterns of R&D Investments By Johansson, Börje; Lööf, Hans
  5. Understanding co-operative R&D activity: evidence from four European countries By Laura Abramovsky; Elisabeth Kremp; Alberto López; Tobias Schmidt; Helen Simpson
  6. Parallel Research, Multiple Intellectual Property Right Protection Instruments, and the Correlation among R&D Projects By Harun Bulut; GianCarlo Moschini
  7. Indicators of Innovation in Canadian Natural Resource Industries By Andrew Sharpe; Olivier Guibaud
  8. Diversification and hybridisation in firm knowledge bases in nanotechnologies By Avenel, E.; Favier, A.V.; Ma, S.; Mangematin V.; Rieu, C.
  9. Licensing or Not Licensing?: Empirical Analysis on Strategic Use of Patent in Japanese Firms By Kazuyuki Motohashi
  10. The role of regional institutional entrepreneurs in the emergence of clusters in nanotechnologies By Mangematin, V.; Rip, A.; Delemarle, A.; Robinson, D.K.R.
  11. Open Source Software: The New Intellectual Property Paradigm By Stephen M. Maurer; Suzanne Scotchmer
  12. Technology-intensive Foreign Investments and Economic Development Strategy in a Small Country By Marek Tiits
  13. Start-ups, firm growth and the consolidation of the French biotech industry By Avenel, E.; Corolleur, F.; Gauthier, C.; Rieu, C.
  14. Labeling Regulations and Segregation of First- and Second-Generation Genetically Modified Products: Innovation Incentives and Welfare Effects By GianCarlo Moschini; Harvey E. Lapan
  16. Information Technology, Organisational Change and Productivity Growth: Evidence from UK Firms By Gustavo Crespi; Chiara Criscuolo; Jonathan Haskel
  17. The Knowledge Filter and Economic Growth: The Role of Scientist Entrepreneurship By David B. Audretsch; Taylor Aldridge; Alexander Oettl
  18. What Explains the Canada-US ICT Investment Intensity Gap? By Centre for the Study of Living Standards
  19. Economics of Intellectual Property Rights in Plant Materials By Huffman, Wallace
  20. The value of implementation and the value of information: combined and uneven development By Elisabeth Fenwick; Karl Claxton; Mark Sculpher
  21. Complementarities in Automobile Production By Johannes Van Biesebroeck

  1. By: Elad Gafni
    Abstract: The adoption of advanced technologies is a means of fostering productivity improvement. Many theories seek to explain the process of advanced technology diffusion and adoption. Canadian firms generally trail their U.S. counterparts in the adoption of advanced technology. There are many critical gaps in our knowledge and understanding of technological diffusion in Canada. Key gaps include the identification of leading and lagging industries in terms of adoption; key barriers to technological diffusion in Canada including economic-policy-related barriers; appropriate direct policy interventions to overcome specific barriers; the impact of increasing globalization and the economic ascendancy of the large developing countries on diffusion in Canada; and specific challenges small and medium enterprises face in adopting technology. Another issue requiring more research is whether strong R&D performance is a prerequisite for the broad diffusion of technologies. Possible tradeoffs between supporting R&D and supporting diffusion in the presence of limited public funds to promote innovation merit discussion.
    Keywords: Diffusion, Adoption, Technologies, Technological diffusion, Innovation, Research and Development, R&D, Advanced technology, Technological competitiveness
    JEL: O00 O31 O32 O33
    Date: 2005–05
  2. By: Heli Koski; Tobias Kretschmer
    Keywords: Product innovation, mobile phone handsets, dominant design, min-max principle
    JEL: L15 L96 O32
    Date: 2006–04–03
  3. By: Christopher Palmberg; Pekka Ylä-Anttila
    Keywords: Finland, industrial policy, innovation systems, clusters, globalization
    JEL: O31 O38
    Date: 2006–04–03
  4. By: Johansson, Börje (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Lööf, Hans (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper concerns offshore R&D investments, focusing mainly on large multinational companies within the industrialized world. What do we know about offshore R&D activities regarding trends, scope and destinations, driving forces and constraints? What do we know about consequences for the R&D investing company? What is the impact on national systems of innovation, regional R&D externalities as well as on agglomeration and urban economies of home and host countries?
    Keywords: foreign direct investment; R&D; innovation; externalities
    JEL: F21 F23 O30
    Date: 2006–04–05
  5. By: Laura Abramovsky (Institute for Fiscal Studies); Elisabeth Kremp; Alberto López; Tobias Schmidt; Helen Simpson (Institute for Fiscal Studies)
    Abstract: This paper investigates co-operative research activity by firms using data from the 3rd Community Innovation Survey for four countries, France, Germany, Spain and the UK. We build on the Cassiman and Veugelers (CV) (2002) study of Belgian manufacturing firms, by incorporating information on the service sector, and considering the role of public support in affecting firms’ decisions to co-operate. Our results support those in CV, in that we find a positive relationship between the likelihood of undertaking co-operative R&D and both incoming knowledge spillovers and the extent to which firms find strategic methods important in appropriating the returns to innovative activity. We find that public support is positively related to the probability of undertaking co-operative agreements particularly with regard to the likelihood of co-operation with the research base. We find some evidence, in particular for Spain, that firms carry out co-operative R&D to overcome excessive perceived risks and financial constraints.
    Keywords: R&D co-operation, spillovers, joint ventures, CIS
    JEL: O31 O32 L24
    Date: 2005–10
  6. By: Harun Bulut; GianCarlo Moschini (Center for Agricultural and Rural Development (CARD))
    Abstract: The choice of a research path in attacking scientific and technological problems is a significant component of firms' R&D strategy. One of the findings of the patent races literature is that, in a competitive market setting, firms' noncooperative choices of research projects display an excessive degree of correlation, as compared to the socially optimal level. The paper revisits this question in a context in which firms have access to trade secrets, in addition to patents, to assert intellectual property rights (IPR) over their discoveries. We find that the availability of multiple IPR protection instruments can move the paths chosen by firms engaged in an R&D race toward the social optimum.
    Keywords: intellectual property rights, parallel R&D, patent races.
    JEL: O3 L0
    Date: 2005–09
  7. By: Andrew Sharpe; Olivier Guibaud
    Abstract: This report develops a set of indicators of innovation in a number of the natural resource industries in Canada. It then uses these indicators to assess trends in innovation over time in these industries. The innovative performance of Canadian natural resource industries is also compared with the average for all industries in Canada and with natural resource industries in other countries. The report finds that on most innovation indicators, Canadian natural resource industries perform either at or above the all-industries average and at a an average level internationally.
    Keywords: Indicators, Indexes, Indices, Innovation, Natural resource, Productivity, Productivity growth, Innovation trends, R&D, Research and Development, Mechinery and equipment, foreign direct investment
    JEL: J21 J24 O13 O31 O32 O40 Q00
    Date: 2005–03
  8. By: Avenel, E.; Favier, A.V.; Ma, S.; Mangematin V.; Rieu, C.
    Abstract: The paper investigates the linkages between characteristics of technologies and a firm’s knowledge base. Nanotechnologies have been defined as converging technologies that operate as nanoscale, and which require integration to fulfil their economic promises. The paper analyses the degree of convergence and the convergence mechanisms within a firm’s knowledge base. If convergence predominates as it has been claimed, nanotechnologies are not competence destroyers and the development is based on the exetension of the knowledge base of existing firms. Based on a worldwide database of nanofirms, the paper examines the influence of the characteristics of the technologies on the structure of the firm knowledge base. It argues that nano S&T patterns of development combine competence destroying activities and a critical role of research facilities and technological platforms. While the competence destroying characteristics of nanotechnologies give a premium to emerging companies, the role of research and production facilities stenghthens large incumbent competitive position and geographically polarises the emergence of small dedicated nanofimrs.
    JEL: O31 O32 L22
    Date: 2006
  9. By: Kazuyuki Motohashi
    Abstract: In this paper, IP strategy at firm level is analyzed in a framework of use of patent as a tool for maximizing firm's revenue, based on a dataset from JPO's Survey of Intellectual Property Activities in 2004. Descriptive regressions of IP strategy indicators suggest a non-linear relationship between firm size and licensing propensity. For a small firm with less complementary assets, such as production facility and marketing channels, tends to license more. At the same time, a licensing propensity of large firm is also high due to the effect of cross licensing.
    Date: 2006–04
  10. By: Mangematin, V.; Rip, A.; Delemarle, A.; Robinson, D.K.R.
    Abstract: In the case of new technologies like nanotechnology, institutional entrepreneurs appear who have to act at different levels (organizational, regional, national) at the same time. We reconstruct, in some detail, the history of two cases, in Grenoble and in Twente/Netherlands. An intriguing finding is that institutional entrepreneurs build their environment before changing their institution. They first mobilize European support to convince local and national levels before actual cluster building occurs. Only later will there be reactions against any de-institutionalisation caused at the base location. The Dutch case shows another notable finding: when mobilizing support the entrepreneur will have to agree to further conditions, and then ends up in a different situation (a broad national consortium) than originally envisaged (the final cluster involved a collaboration of Twente with two other centres). In general, an institutional entrepreneur attempts to create momentum, and when this is achieved, he has to follow rather than lead it.
    JEL: M13
    Date: 2005
  11. By: Stephen M. Maurer; Suzanne Scotchmer
    Abstract: Open source methods for creating software rely on developers who voluntarily reveal code in the expectation that other developers will reciprocate. Open source incentives are distinct from earlier uses of intellectual property, leading to different types of inefficiencies and different biases in R&D investment. Open source style of software development remedies a defect of intellectual property protection, namely, that it does not generally require or encourage disclosure of source code. We review a considerable body of survey evidence and theory that seeks to explain why developers participate in open source collaborations instead of keeping their code proprietary, and evaluates the extent to which open source may improve welfare compared to proprietary development.
    JEL: K L
    Date: 2006–04
  12. By: Marek Tiits (Institute of Baltic Studies)
    Abstract: The EU Lisbon objective to increase the R&D investments to 3% of the GDP by 2010 cannot be achieved in a small country by simply increasing the public sector appropriations for R&D investments. The experience of Ireland and Singapore as well as various Central European transition countries shows that introduction of a proactive foreign investment strategy, closely coordinated with education, research, employment and other policies, is in a small country one of the most influential and virtually the only possibility for a radical increase of the knowledge intensity of the economy.
    Keywords: Foreign direct investment, public policy, innovation policy, small countries
    JEL: F2 F43 L16 O14 O15 O3 O57
    Date: 2005–10–22
  13. By: Avenel, E.; Corolleur, F.; Gauthier, C.; Rieu, C.
    Abstract: Based on an original dataset, we analyze empirically the determinants of firm growth in the French biotech industry during two periods, 1996-1999 and 1999-2002. We have two main results. First, Gibrat's law is violated. The growth of annual turnover is influenced by teh initial size of the firm. The effect is non-linear, negative for small firms. Second, location has a significant impact on growth. We use different sets of dummies to characterize location and different measures of firm growth. As a whole, our results point at Marseilles (and its region) and Nanterre (but not Paris and Evry) as favorable places for the growth of firms between 1999 and 2002. For the 1996-1999, the favorable places are Strasbourg (and Alsace) and Rh“ne-Alpes (Lyon/Grenoble). Our analysis thus suggests that the changes in the (notably legal) environment of French biotech firms that took place in 1999 had a drastic effect of the comparative advantages of locations for biotech firms.
    JEL: L25 L65 R30
    Date: 2005
  14. By: GianCarlo Moschini (Center for Agricultural and Rural Development (CARD)); Harvey E. Lapan
    Abstract: We review some of the most significant issues and results on the economic effects of genetically modified (GM) product innovation, with emphasis on the question of GM labeling and the need for costly segregation and identity preservation activities. The analysis is organized around an explicit model that can accommodate the features of both first-generation and second-generation GM products. The model accounts for the proprietary nature of GM innovations and for the critical role of consumer preferences vis-à-vis GM products, as well as for the impacts of segregation and identity preservation and the effects of a mandatory GM labeling regulation. We also investigate briefly a novel question in this setting, the choice of "research direction" when both cost-reducing and quality-enhancing GM innovations are feasible.
    Keywords: identity preservation, labeling, market failure, product differentiation, welfare.
    Date: 2005–04
  15. By: Kokko, Ari (European Institute of Japanese Studies); Kravtsova, Victoria (MERIT, Maastricht, Netherlands)
    Abstract: This paper explores the determinants of innovative capability in a sample of multinational company (MNC) subsidiaries in four transition economies: Estonia, Hungary, Poland, and Slovenia. It finds that capability in product and process technology appears to be determined by a different set of variables than capability related to marketing and management knowledge. The most independent affiliates – those that are diversified, oriented towards the local market, established through acquisitions rather than greenfield investments, and where the foreign MNCs’ only hold minority ownership – are also those that acquire the strongest innovative capability in product and process technology. For marketing and management capability, the pattern is nearly the opposite. The highest levels of capability are recorded in subsidiaries that are closely tied to the parent company, with high foreign ownership shares and substantial exports back to the parent company. These differences can be expected to have some impact on the kinds of spillovers different kinds of foreign direct investment (FDI) projects may generate.
    Keywords: FDI; MNC subsidiaries; innovative capability; spillovers
    JEL: F23 O32 O33
    Date: 2006–04–11
  16. By: Gustavo Crespi (University of Sussex, AIM and CeRiBA); Chiara Criscuolo (CEP, LSE, AIM and CeRiBA); Jonathan Haskel (Queen Mary, University of London)
    Abstract: We examine the relationships between productivity growth, IT investment and organisational change (Δ<i>O</i>) using UK firm panel data. Consistent with the small number of other micro studies we find (a) IT appears to have high returns in a growth accounting sense when Δ<i>O</i> is omitted; when Δ<i>O</i> is included the IT returns are greatly reduced, (b) IT and Δ<i>O</i> interact in their effect on productivity growth, (c) non-IT investment and Δ<i>O</i> do not interact in their effect on productivity growth. Some new findings are (a) Δ<i>O</i> is affected by competition and (b) we also find strong effects on the probability of introducing Δ<i>O</i> from ownership. US-owned firms are much more likely to introduce Δ<i>O</i> relative to foreign owned firms who are more likely still relative to UK firms.
    Keywords: Information technology, Productivity growth, Organisational change
    JEL: D24 E22 L22 O31
    Date: 2006–04
  17. By: David B. Audretsch; Taylor Aldridge; Alexander Oettl
    Date: 2006–01
  18. By: Centre for the Study of Living Standards
    Abstract: It is widely recognized that machinery and equipment investment intensity is less in Canada than in the United States. What is less well know is that it is information and communications technology (ICT) investment that largely accounts for this gap. The author documents trends in ICT investment in both Canada and the United States and attempts to explain why ICT investment per worker in the Canadian business sector in 2004 was only 45 per cent of that in the US business sector. While no definitive explanation emerges, among the factors he identifies as playing a role are industrial structure, firm size distribution of employment, the price of labour compared to ICT investment goods, and the underestimation of ICT investment in official statistics.
    Keywords: Machinery and equipment investment, information and communications technology, ICT, Investment gap, Business sector, Industrial structure, Firm size
    JEL: E22 G11 J21 M00 O47 Z10
    Date: 2005–06
  19. By: Huffman, Wallace
    Abstract: This paper presents an economic perspective on intellectual property in plant materials, including its value, and summary information on the U.S. seed industry. It first considers intellectual property rights--types, economic incentives that they bestow, and uses across developed and developing countries. Second, it considers the U.S. seed industry--characteristics for major crops, optimal pricing of a superior variety, and relative size of public and private research expenditures. Some conclusions and implications are presented in the final section.
    Keywords: Intellectual property rights, value of innovations, plants, seed industry.
    Date: 2006–04–06
  20. By: Elisabeth Fenwick (Department of Economics and Related Studies, University of York; Centre for Health Economics, University of York); Karl Claxton (Department of Economics and Related Studies, University of York; Centre for Health Economics, University of York); Mark Sculpher (Centre for Health Economics, University of York)
    Abstract: In a budget constrained healthcare system the decision to invest in strategies to improve the implementation of cost-effective technologies must be made alongside decisions regarding investment in the technologies themselves and investment in further research. This paper presents a single, unified framework that simultaneously addresses the problem of allocating funds between these separate but linked activities. The framework presents a simple 4 state world where both information and implementation can be either at the current level or ‘perfect’. Through this framework it is possible to determine the maximum return to further research and an upper bound on the value of adopting implementation strategies. The framework is illustrated through case studies of health care technologies selected from those previously considered by the UK National Institute for Health and Clinical Excellence (NICE). Through the case studies, several key factors that influence the expected values of perfect information and perfect implementation are identified. These factors include the maximum acceptable cost-effectiveness ratio, the level of uncertainty surrounding the adoption decision, the expected net benefits associated with the technologies, the current level of implementation and the size of the eligible population. Previous methods for valuing implementation strategies have confused the value of research and the value of implementation. This framework demonstrates that the value of information and the value of implementation can be examined separately but simultaneously in a single framework. This can usefully inform policy decisions about investment in healthcare services, further research and adopting implementation strategies which are likely to differ between technologies.
    Keywords: Value of information analysis; value of implementation; healthcare decisionmaking, Bayesian analysis
    Date: 2005–09
  21. By: Johannes Van Biesebroeck
    Abstract: The number of different car and light truck models produced in North America has increased enormously over the last decades. The data suggests that producing this increased variety of vehicles is associated with a productivity penalty. We show that manufacturers can adopt complementary activities to reduce this penalty. Flexible technology, defined as the ability to assemble models derived from different “platforms” on the same assembly line, and bringing previously outsourced activities in-house are two such activities that we identify. Both are costly themselves, in terms of lower productivity, but they reduce the cost of producing greater variety. The results are robust to controlling for the endogeneity of the adoption decisions using activity-specific instruments, as proposed by Athey and Stern (2003).
    JEL: L23 L11 L62 M11
    Date: 2006–04

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