nep-ino New Economics Papers
on Innovation
Issue of 2006‒07‒09
nineteen papers chosen by
Koen Frenken
Universiteit Utrecht

  1. Foreign Direct Investment and Science and Technology Infrastructure in Small Countries: Evidence from Finland and the Netherlands By Elina Berghäll; Cees vanBeers; Tom Poot
  2. Technical Efficiency in an R&D Intensive Industry: Finnish ICT Manufacturing By Elina Berghäll
  3. Global Overview of Innovative Activities from the Patent Indicators Perspective By Mosahid Khan; Hélène Dernis
  4. Competition and Innovation - Microeconometric Evidence using Finnish Data By Juha Kilponen; Torsten Santavirta
  5. Technical Change, Efficiency, Firm Size and Age in an R&D Intensive Sector By Elina Berghäll
  6. A Proposal for Treating Research and Development As Capital Expenditures in the Canadian SNA By Salem, Mehrzad; Siddiqi, Yusuf
  7. R&D and Productivity Growth in Finnish ICT Manufacturing By Elina Berghäll
  8. Innovativity: A Comparison Across Seven European Countries By Pierre Mohnen; Jacques Mairesse; Marcel Dagenais
  9. Innovation and productivity in European industries By Mario Pianta; Andrea Vaona
  10. One Knowledge Base or Many Knowledge Pools? By Bengt-Åke Lundvall
  11. China's Innovation System and the Move Toward Harmonious Growth and Endogenous Innovation By Shulin Gu; Bengt-Åke Lundvall
  12. Patents vs Trade Secrets: Knowledge Licensing and Spillover By Sudipto Bhattacharya; Sergei Guriev
  13. Knowlage accessibility and New Firm Formation By Karlsson, Charlie; Nyström, Kristina
  14. Empirical Studies of Innovation in the Knowledge Driven Economy By Bronwyn H. Hall; Jacques Mairesse
  15. Organizational Design and Resource Evaluation By Bengt-Åke Lundvall
  16. Tax Treatment of Business Investments in Intellectual Assets: An International Comparison By Jacek Warda
  17. Labor supply and personal computer adoption. By Mark Doms; Ethan Lewis
  18. Le débat public en ligne : éléments sur l’équipement d’une démocratie dialogique By Nicolas Benvegnu
  19. Research Use of Patented Knowledge: A Review By Chris Dent; Paul Jensen; Sophie Waller; Beth Webster

  1. By: Elina Berghäll; Cees vanBeers; Tom Poot
    Abstract: This study investigates the links between foreign firms and the public Science and Technology (S&T) institutions in Finland and the Netherlands. By estimating models on data from Community Innovation Surveys, we find for the Netherlands that foreign firms reveal a significantly lower probability to cooperate with domestic S&T institutions than domestic firms, which can be expected a priori. In Finland this negative bias is not present due to Finnish innovation policies in which R&D collaboration is an explicit requirement. If innovating foreign firms in the Netherlands produce innovations based on ideas originating in the firm, they do not co-operate with domestic S&T institutions while in Finland these co-operation schemes do exist. Finnish S&T institutions fit in the R&D strategies of MNEs while S&T institutions in the Netherlands do not.
    Keywords: Multinational Enterprises, Innovation, R&D collaboration, Science and Technology Institutions
    JEL: O32
    Date: 2004–12–31
  2. By: Elina Berghäll
    Abstract: Technical efficiency levels in Finnish ICT manufacturing are established by applying a stochastic frontier model and retrieving Method of Moments and Battese-Coelli efficiency measures to identify both permanent and time-varying efficiency levels, as well as determinants of inefficiency such as R&D investments. The sample is representative of almost half of corporate R&D in Finland in 1990-2003. Results show wide and surprisingly persistent disparities in technical efficiency, with the average firm enjoying only about half of the frontier firm?s technical efficiency level. The rhetoric of Finland featuring on the global technology frontier is based on few firms. Most Finnish firms are constrained to catch-up with the frontier rather than advance it by means of innovation, implying inappropriateness of an innovation focus in policy. The persistence of efficiencies suggests that high risks involved in innovative activity account for only a share of productivity differences. There appear to be considerable permanent gaps between firms related e.g. to managerial and organisational efficiency.
    Keywords: Finnish ICT industry, technical efficiency, technology frontier, technology policy and R&D
    JEL: O39 L63 O30
    Date: 2006–05–04
  3. By: Mosahid Khan; Hélène Dernis
    Abstract: This paper provides an overview of innovative activities across a wide range of OECD member and non-member countries, based on international comparable patent indicators. Patent data are frequently used to measure innovative activities, because patent-based indicators reflect the inventive performance of countries, regions, firms, as well as other aspects of the dynamics of the innovation process. <P>Aperçu des activités innovantes au travers d'indicateurs basés sur les brevets <BR>Ce document propose un aperçu des activités en matière d’innovation dans un grand nombre de pays de l’OCDE et quelques non membres, au travers d’indicateurs basés sur les brevets. Les données sur les brevets sont souvent utilisées pour mesurer les activités d’innovation. Elles reflètent en effet la performance de pays, régions, entreprises en matière d’innovation, et d’autres aspects de la dynamique du processus d’innovation.
    Date: 2006–05–02
  4. By: Juha Kilponen; Torsten Santavirta
    Abstract: The relationship between product market competition (PMC) and innovative activity has attracted the attention of many economists lately. In this study we elaborate the theory of Aghion et al. (1997, 2001) of an inverted-U relationship between competition and innovations. We provide a theoretical prediction of a complementary relationship between the incentive effects of PMC and R&D subsidies. We empirically test our complementarity prediction and that of an inverted-U relationship using Finnish firm level data. Our results suggest that the inverted-U relationship is fairly robust to all our innovation measures. We also find that the inverted-U relationship tends to be steeper when also direct R&D subsidies are considered. This result suggests that there exists complementarity between competition and R&D subsidies.
    Keywords: Product market competition, Innovation, R&D subsidies
    JEL: O31 O10 O30 L10
    Date: 2004–11–15
  5. By: Elina Berghäll
    Abstract: The relationship between firm size and age relative to technical change and efficiency is examined in a highly innovative and dynamic sector, the Finnish ICT equipment manufacturing industry. A stochastic frontier model is applied to an unbalanced firm level panel over the period 1990?2003. The sample is representative of almost half of corporate R&D in Finland. The Method of Moments and Battese-Coelli efficiency measures are obtained to compare permanent and time-varying efficiency levels. Results show firm age to be relatively insignificant. New firms do not dominate technical change. In contrast, firm size makes a substantial contribution to productivity growth, technical change and efficiency. High elasticity of factor inputs result in, on average, highly increasing returns to scale. These factors point towards growing concentration and capital-intensity, which can be expected to further widen the productivity gap between small and large firms. To survive, smaller firms may need to combine frontier technology adoption with expanding scale, e.g., by mergers, to improve both technical and scale efficiency.
    Keywords: ICT industry, total factor productivity, technical change, technical efficiency, R&D elasticity, firm size, firm age
    JEL: O39 L63 O30
    Date: 2006–05–04
  6. By: Salem, Mehrzad; Siddiqi, Yusuf
    Abstract: The paper outlines key conceptual and operational issues involved in capitalizing R&D expenditures in the Canadian System of National Accounts (CSNA), shows statistical estimates by industry for reference year 2000, and assesses the impact of capitalization on main CSNA aggregates.
    Keywords: National accounts, Science and technology, Gross domestic product, Research and development
    Date: 2006–06–29
  7. By: Elina Berghäll
    Abstract: A stochastic frontier model is applied to firm level panel data from the Finnish ICT manufacturing sector to explore the role of R&D and technological progress in the outstanding productivity growth Finland demonstrated in the latter half of the 1990?s. The sample is representative of over 90 % of the R&D carried out in the sector, which in turn represents about half of corporate R&D in Finland. Constant returns to scale production functions are clearly inappropriate and labour productivity provides a biased view of TFP. Results show increasing returns to scale and output growth to have been, until recent years, more important than technical change in TFP growth. Like all inputs, physical and R&D capital appear to be substitutes to some extent, reducing concern over low overall investment. The technology policy mix appears to have been R&D investment and R&D employment enhancing, at the expense of non-R&D labour and physical capital. Meanwhile, technical change has been R&D saving and labour using, with large and surprisingly persistent firm-specific differences in R&D productivity.
    Keywords: Finnish ICT industry, total factor productivity, technical change, R&D elasticity, technology policy
    JEL: O39 L63 O30
    Date: 2006–05–04
  8. By: Pierre Mohnen; Jacques Mairesse; Marcel Dagenais
    Abstract: This paper proposes a framework to account for innovation similar to the usual accounting framework in production analysis and a measure of “innovativity” comparable to that of total factor productivity. This innovation accounting framework is illustrated using micro-aggregated firm data from the first Community Innovation Surveys (CIS1) for seven European countries: Belgium, Denmark, Ireland, Germany, the Netherlands, Norway and Italy for the year 1992. Based on the estimation of a generalized Tobit model and measuring innovation as the share of total sales due to improved or new products, it compares the propensity to innovate, and the innovation intensity conditional and unconditional on being innovative, across the seven countries and low- and high-tech manufacturing sectors. Even with relatively few explanatory variables our innovation framework already accounts for sizeable differences in country innovation intensity. It also shows that differences in innovativity across countries can be nonetheless very large. <P>Nous proposons, dans cette étude, un cadre d’analyse, ou « comptabilité de l’innovation », semblable à celui très généralement utilisé pour la « comptabilité de la croissance », ainsi qu’une mesure de la « productivité des facteurs d’innovation » ou « innovativité » comparable à celle de la productivité totale des facteurs. Nous appliquons ce cadre d’analyse à la comparaison de l’innovation pour sept pays européens – l’Allemagne, la Belgique, le Danemark, l’Irlande, l’Italie, la Norvège et les Pays-Bas –, à partir des données d’entreprises « micro agrégées » de la première enquête communautaire sur l’innovation (CIS1) portant sur l’année 1992. Sur la base d’un modèle Tobit généralisé et en mesurant l’innovation par la part du chiffre d’affaires des entreprises en produits innovants (nouveaux ou améliorés sur les trois années 1990-1992), nous estimons la propension à innover et l’intensité de l’innovation (conditionnellement ou non au fait d’innover) pour les industries manufacturières de haute et basse technologie des sept pays. Bien que disposant de variables explicatives peu nombreuses, nous rendons compte ainsi de différences déjà très significatives d’intensité d’innovation entre pays. Les différences d’innovativité entre pays restent néanmoins très fortes.
    Keywords: Europe, innovation, innovativity, R-D, selectivity, Europe, innovation, innovativité, R-D, sélectivité
    JEL: C35 L60
    Date: 2006–06–01
  9. By: Mario Pianta (Corresponding author, Università di Urbino); Andrea Vaona (Dipartimento di Scienze economiche (Università di Verona))
    Abstract: The labour productivity impact of innovation is investigated in this paper combining neo-Schumpeterian insights on the variety of innovation, with the importance of industrial structures and firm size; two models are proposed for explaining productivity and export success in European manufacturing industries and firm size classes. The empirical estimates are based on data from the European innovation survey (CIS 2), covering Austria, France, Italy, the Netherlands and the UK, broken down by 22 sectors and for large, medium and small firms. The econometric results, obtained adopting cross-sectional estimation methodologies able to account for unobserved industrial characteristics, show that productivity in Europe relies on product and process innovation, with the support of the efficiency gains provided by a grouped business structures. Conversely, in Italy the introduction of new machinery linked to innovation appears as the key mechanism supporting domestic productivity. When export success is considered, all countries have to rely on an innovation-based model of competitiveness.
    Keywords: Innovation, productivity, export performance, industries
    Date: 2006–06
  10. By: Bengt-Åke Lundvall
    Abstract: The purpose of this paper is to show why to build ‘learning organisations’ must be a central element of knowledge management. The paper argues that the wide use of information technology has a contradictory impact on knowledge management. On the one hand it extends the potential for codifying knowledge. On the other hand it makes tacit knowledge scarcer and it contributes to the formation of ‘a learning economy’. The argument is supported by an empirical analysis of survey data from Denmark showing that firms that introduce several organisational practices, assumed to characterise the learning organisation, are more innovative than the average firm. The paper contributes to the empirical foundation for the argument that learning organisations stimulate innovation and competence building and it makes an original conceptual contribution of practical relevance by linking knowledge management to HRM and innovation management.
    Keywords: Knowledge management; learning economy; interactive learning; organisational change
    JEL: D83 O32
    Date: 2006
  11. By: Shulin Gu; Bengt-Åke Lundvall
    Abstract: Observers around the world are impressed by the rapid growth of China’s economy. While outside observers tend to focus on the success story of unprecedented growth policy documents and recent domestic debates in China have pointed to the need for a shift in the growth trajectory with stronger emphasis on ‘endogenous innovation’ and ‘harmonious development’. This paper attempts to capture the current characteristics of China’s production and innovation system; how they were shaped by history and what major challenges they raise for the future. On the basis of the analysis the authors propose that it is possible to link together the two key concepts ‘endogenous innovation’ and ‘harmonious development’ by focusing innovation and development efforts in China on domestic needs, including social needs, rather than a one-sided focus on export-promotion and commodity production.
    Keywords: China; economic growth; R&D; innovation systems
    JEL: O32 O11
    Date: 2006
  12. By: Sudipto Bhattacharya (London School of Economics and CEPR); Sergei Guriev (New Economic School/CEFIR and CEPR)
    Abstract: We develop a model of two-stage cumulative research and development (R&D), in which one Research Unit (RU) with an innovative idea bargains to license her nonverifiable interim knowledge exclusively to one of two competing Development Units (DUs) via one of two alternative modes: an Open sale after patenting this knowledge, or a Closed sale in which precluding further disclosure to a competing DU requires the RU to hold a stake in the licensed DU’s post-invention revenues. Both modes lead to partial leakage of RU’s knowledge from its description, to the licensed DU alone in a closed sale, and to both DUs in an open sale. The open sale is socially optimal; yet the contracting parties choose the closed sale whenever the interim knowledge is more valuable and leakage is sufficiently high. If the extent of leakage is lower, more RUs choose open sales, generating a non-monotonic relationship between the strength of Intellectual Property Rights (IPR) and aggregate R&D expenditures and the overall likelihood of development by either DU.
    JEL: D23 O32 O34
    Date: 2004–02
  13. By: Karlsson, Charlie (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Nyström, Kristina (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper investigates the role of knowledge for successful entrepreneurship. The paper explicitly discusses the role of accessibility to university and company R&D for new firm formation. Company R&D is assumed to contain a higher share of R&D directed towards generating technological knowledge. Hence, the accessibility to such R&D are expected to have a stronger influence on new firm formation than the accessibility to university R&D. Since knowledge can also be assumed to be spatially bounded and diffuses in geographical space, it is argued that local interaction, measured by intra-municipality accessibility to knowledge, have a stronger influence on new firm formation than interregional interaction. In the empirical analysis data on new firm formation in 288 Swedish municipalities and accessibility to university and company R&D for 1997 and 1999 are used. We find that accessibility to company R&D have a stronger impact on new firm formation than accessibility to university R&D. We also find that close knowledge interactions are more important for new firm formation than long distance knowledge interactions. Accessibility to inter-regional company R&D has even a negative impact on new firm formation.
    Keywords: knowledge; accessibility; regional; entrepreneurship; Sweden
    JEL: L10 R11
    Date: 2006–07–07
  14. By: Bronwyn H. Hall; Jacques Mairesse
    Abstract: This introduction to a special issue of EINT surveys a collection of ten papers that study various aspects of innovation and knowledge management and their impact on performance at the firm level for a number of countries. These studies have been conducted using data drawn from innovation surveys combined with data from a number of other sources. The issue illustrates the value of these surveys in improving our understanding of innovation in firms and raises a number of questions for future work in this area.
    JEL: O3 M2
    Date: 2006–06
  15. By: Bengt-Åke Lundvall
    Abstract: It is increasingly realized that knowledge is the most important resource and that learning is the most important process in the economy. Sometimes this is expressed by coining the current era as characterised by a ‘knowledge based economy’. But this concept might be misleading by indicating that there is one common knowledge base on which economic activities can be built. In this paper we argue that it is more appropriate to see the economy as connecting to different ‘pools of knowledge’. The argument is built upon a conceptual framework where we make distinctions between private/public, local/global, individual/collective and tacit/codified knowledge. The purpose is both ‘academic’ and practical. Our analysis demonstrates the limits of a narrowly economic perspective on knowledge and we show that these distinctions have important implications both for innovation policy and for management of innovation.
    Keywords: Knowledge; economic development
    JEL: D83 O33
    Date: 2006
  16. By: Jacek Warda
    Abstract: In a knowledge-based economy, business performance and overall levels of economic growth are increasingly dependent on the development and exploitation of intellectual assets. A number of OECD countries offer tax incentives to encourage and reward business expenditures on intellectual assets. This working paper examines the tax treatment of corporate expenditures on selected intellectual assets and develops an indicator of the relative generosity of tax systems in OECD countries to such investments. Five types of intellectual assets are considered: research and development (R&D), patents, workforce training, software and organisational change. The paper shows that although tax incentives have, to date, mainly favoured R&D expenditures, they are gradually embracing other types of intellectual assets, especially in those countries that provide more generous tax treatment of R&D. Nineteen OECD countries had specific R&D tax incentives in place in 2005, up from only 12 in 1996, and 6 offered tax incentives for corporate training. <BR>Dans une économie du savoir, la performance des entreprises et les taux de croissance économique globaux dépendent de plus en plus du développement et de l’exploitation d’actifs intellectuels. Un certain nombre de pays de l’OCDE appliquent des mesures d’incitation fiscale afin d’encourager et de valoriser les dépenses des entreprises portant sur des actifs intellectuels. Ce document de travail examine le régime fiscal des dépenses des entreprises portant sur certains actifs intellectuels et définit un indicateur de la générosité relative des systèmes fiscaux des pays de l’OCDE vis-à-vis de ces investissements. Cinq catégories d’actifs intellectuels sont envisagées : recherche et développement (R-D), brevets, formation de la main-d’oeuvre, logiciels et changement organisationnel. La note montre que, si les incitations fiscales ont surtout à ce jour favorisé les dépenses de R-D, elles s’appliquent aussi de plus en plus à d’autres catégories d’actifs intellectuels, surtout dans les pays qui accordent déjà un régime fiscal plus généreux à la R-D. Dix-huit pays de l’OCDE appliquaient des mesures d’incitation fiscale spécifique à la R-D en 2005, au lieu de 12 seulement en 1996, et 6 d’entre eux appliquaient des mesures d’incitation fiscale aux dépenses de formation des entreprises.
    Date: 2006–05–22
  17. By: Mark Doms; Ethan Lewis
    Abstract: The positive correlations found between computer use and human capital are often interpreted as evidence that the adoption of computers have raised the relative demand for skilled labor, the widely touted skill-biased technological change hypothesis. However, several models argue the skill- intensity of technology is endogenously determined by the relative supply of skilled labor. The authors use instruments for the supply of human capital coupled with a rich dataset on computer usage by businesses to show that the supply of human capital is an important determinant of the adoption of personal computers. Their results suggest that great caution must be exercised in placing economic interpretations on the correlations often found between technology and human capital.
    Keywords: Labor supply ; Computers
    Date: 2006
  18. By: Nicolas Benvegnu (Centre de Sociologie de l'Innovation, Ecole des Mines de Paris)
    Abstract: Provides a case study on the use of the Internet as a deliberative and participatory tool in technical controversies.
    Keywords: Internet, deliberative democracy, public understanding of science, transportation, France
    JEL: Z19 I38 R38 O30 O38
    Date: 2006–03
  19. By: Chris Dent; Paul Jensen; Sophie Waller; Beth Webster
    Abstract: This Working Paper reviews issues related to research access to patented inventions, with a particular focus on the role of research exemptions (or experimental use exemptions) in protecting such access. It outlines factors that may affect the ability of researchers to access patented inventions for legitimate research purposes, it reviews evidence of current and anticipated limitations on access, and explores different options for the formulation of research exemptions that balance research use and patent holder’s rights. <BR>Le présent document du travail passe en revue les questions concernant l’accès des chercheurs aux inventions brevetées, en examinant notamment le rôle que les exemptions de recherche (ou les exemptions pour utilisation expérimentale) jouent dans la protection de cet accès. Le document souligne les facteurs pouvant affecter la capacité des chercheurs s’accéder aux inventions brevetées à des fins de recherche légitimes, examine les indices concernant les limites actuelles ou prévues imposées à l’accès et étudie les différents options permettant de formuler des exemptions de recherche qui maintiennent un juste équilibre entre l’utilisation des inventions à des fins de recherche et les droits des titulaires des brevets.
    Date: 2006–03–17

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