nep-ino New Economics Papers
on Innovation
Issue of 2006‒08‒19
twelve papers chosen by
Koen Frenken
Universiteit Utrecht

  1. Knowledge Flow and Sequential Innovation: Implications for Technology Diffusion, R&D and Market Value By Sharon Belenzon
  2. Modeling economic growth fuelled by science and technology By Américo Tristão Bernardes; Ricardo Machado Ruiz; Leonardo Costa Ribeiro; Eduardo da Motta e Albuquerque
  3. Openness and technological innovations in developing countries : evidence from firm-level surveys By Almeida, Rita; Fernandes, Ana Margarida
  4. Basic Research and Sequential Innovation By Sharon Belenzon
  5. Simulating Knowledge-Generation and -Distribution Processes in Innovation Collaborations and Networks By Andreas Pyka; Nigel Gilbert; Petra Ahrweiler
  6. University-local industry linkages : the case of Tohoku University in the Sendai area of Japan By Jiang, Juan; Harayama, Yuko; Abe, Shiro
  7. Technology, Informationand the Decentralization of the Firm By Daron Acemoglu; Philippe Aghion; Claire Lelarge; John Van Reenen; Fabrizio Zilibotti
  8. Innovation and export portfolios By Klinger, Bailey; Lederman, Daniel
  9. The Impact of Royalty Sharing Incentives on Technology Licensing in Universities By Saul Lach; Mark Schankerman
  10. The Emerging Knowledge Governance Approach: Challenges and Characteristics By Nicolai J. Foss
  11. Productivity, Exporting and the Learning-by-Exporting Hypothesis: Direct Evidence from UK Firms By Gustavo Crespi; Chiara Criscuolo; Jonathan Haskel
  12. Firm Productivity in Bangladesh Manufacturing Industries By Fernandes, Ana M.

  1. By: Sharon Belenzon
    Abstract: It is shown that spillovers can enhance private returns to innovation if they feed back into the dynamic researchof the original inventor (Internalized spillovers), but will always reduce private returns, if theoriginal inventor does not benefit from the advancements other inventors build into the"spilled" knowledge (Externalized spillovers). I empirically identify unique patterns ofknowledge flows (based on patent citations), which provide information about whether"spilled" knowledge is reabsorbed by its inventor. A simple model of sequential innovationwith dynamic spillovers is developed, which predicts that market value and R&Dexpenditures should rise with Internalized spillovers and fall with Externalized spillovers.These predications are confirmed using panel data on U.S. firms between 1981 and 2001. Tothe extent that firms internalize some of the spillovers they create, the classicalunderinvestment problem in R&D will be mitigated and the central role of spillovers inpromoting economic growth will be enhanced.
    Keywords: market value, patents, R&D and spillovers
    JEL: O31 O32 O33
    Date: 2006–05
  2. By: Américo Tristão Bernardes (UFOP); Ricardo Machado Ruiz (Cedeplar-UFMG); Leonardo Costa Ribeiro (UFMG); Eduardo da Motta e Albuquerque (Cedeplar-UFMG)
    Abstract: This paper suggests a simulation model to investigate how science and technology fuel economic growth. This model is built upon a synthesis of technological capabilities represented by national innovation systems. This paper gathers data of papers and patents for 183 countries between 1999 and 2003, GDP and population for 2003. These data show a strong correlation between science, technology and income. Three simulation exercises are performed. Feeding our algorithm with data for population, patents and scientific papers, we obtain the world income distribution (R=0.99). These results support our conjecture on the role of science and technology as a source of the wealth of nations.
    Keywords: simulation models; systems of innovation; economic growth
    JEL: O10
    Date: 2006–08
  3. By: Almeida, Rita; Fernandes, Ana Margarida
    Abstract: The authors analyze the role of international technological diffusion for firm-level technological innovations in several developing countries. Their findings show that, after controlling for firm, industry, and country characteristics, exporting and importing activities are important channels for the diffusion of technology. They also find evidence that the majority of foreign-owned firms are significantly less likely to engage in technological innovations than minority foreign-owned firms or domestic-owned firms. The authors interpret this finding as evidence that the technology transferred from multinational parents to majority-owned subsidiaries is more mature than that transferred to minority-owned subsidiaries. This finding supports the idea that equity joint ventures maximize technology transfers to local firms.
    Keywords: Technology Industry,ICT Policy and Strategies,Education for Development,Innovation,Foreign Direct Investment
    Date: 2006–08–01
  4. By: Sharon Belenzon
    Abstract: The commercial value of basic knowledge depends on the arrival of follow-up developmentsmostly from outside the boundaries of the inventing firm. Private returns would depend onthe extent the inventing firm internalizes these follow-up developments. Such internalizationis less likely to occur as knowledge becomes more general. This motivates the historicalconcern of insufficient private incentive for basic research. The present paper develops anovel empirical methodology of identifying unique patterns of knowledge flows (based onpatent citations), which provide information about whether 'spilled' knowledge is reabsorbedby its inventor. Using comprehensive data on the largest 500 inventing firms in the US theclassical problem of underinvestment in basic research is confirmed: spillovers of moregeneral knowledge (and in this respect, more basic) are less likely to feed back to theinventing firm. This translates to lower private returns, as indicated by the effect of the R&Dstock of the firm on its market value.
    Keywords: basic knowledge, spillovers, patents and citations
    JEL: O31 O32 O33
    Date: 2006–05
  5. By: Andreas Pyka (University of Augsburg, Department of Economics); Nigel Gilbert (School of Human Sciences, University of Surrey, Guildford, Surrey, GU2 7XH, United Kingdom); Petra Ahrweiler (Research Center Media and Politics, Institute for Political Science, University of Hamburg, Germany)
    Abstract: An agent-based simulation model representing a theory of the dynamic processes involved in innovation in modern knowledge-based industries is described. The agent-based approach al-lows the representation of heterogeneous agents that have individual and varying stocks of knowledge. The simulation is able to model uncertainty, historical change, effect of failure on the agent population, and agent learning from experience, from individual research and from partners and collaborators. The aim of the simulation exercises is to show that the artificial innovation networks show certain characteristics they share with innovation networks in knowledge intensive industries and which are difficult to be integrated in traditional models of industrial economics.
    Keywords: innovation networks, agent-based modelling, scale free networks
    JEL: O31 O32 L22
    Date: 2006–08
  6. By: Jiang, Juan; Harayama, Yuko; Abe, Shiro
    Abstract: This paper focuses on Tohoku University in Sendai in the nonmetropolitan area of Japan. Both a long historical and comparative perspective and a spacial perspective are essential to discuss the relevance of university-local industry linkages to local regional economic development. The conjunction of these linkages and economic development has been affected by two evolutionary processes: institutional configurations and territorial dynamics in the national innovation system. In addition, university-local industry linkages have been complicated by top-down regionalization and bottom-up regionalism.
    Keywords: Tertiary Education,ICT Policy and Strategies,Agricultural Knowledge & Information Systems,Technology Industry,Rural Development Knowledge & Information Systems
    Date: 2006–08–01
  7. By: Daron Acemoglu; Philippe Aghion; Claire Lelarge; John Van Reenen; Fabrizio Zilibotti
    Abstract: This paper develops a framework to analyze the relationship between the diffusion of newtechnologies and the decentralization decisions of firms. Centralized control relies on theinformation of the principal, which we equate with publicly available information.Decentralized control, on the other hand, delegates authority to a manager with superiorinformation. However, the manager can use her informational advantage to make choices thatare not in the best interest of the principal. As the available public information about thespecific technology increases, the trade-off shifts in favour of centralization. We show thatfirms closer to the technological frontier, firms in more heterogeneous environments andyounger firms are more likely to choose decentralization. Using three datasets of French andBritish firms in the 1990s, we report robust correlations consistent with these predictions.
    Keywords: Decentralization, heterogeneity, learning, the theory of the firm
    JEL: O31 O32 O33 F23
    Date: 2006–05
  8. By: Klinger, Bailey; Lederman, Daniel
    Abstract: This paper examines the link between sectoral concentration and overall performance in the search for on-the-frontier innovations, inside-the-frontier innovations, and export booms. It extends the literature by increasing country coverage and the types of search processes considered, and by focusing on the links with overall performance in these search processes. After controlling for the necessary relationships as well as fixed effects at the country/commodity group level, the paper finds a clear negative relationship between the concentration of innovation portfolios and performance: countries that are the most successful in these search processes have their successes spread across a broader range of industries than those with poorer performance. Furthermore, the search for export booms exhibits the least amount of sectoral concentration and path-dependence. These findings suggest that public support for these processes need not be focused in a narrow range of sectors, and modeling of these processes in theoretical work, particularly in the search for export booms, should be of a stochastic flavor.
    Keywords: Education for Development,Economic Theory & Research,Innovation,Pro-Poor Growth and Inequality,Technology Industry
    Date: 2006–08–01
  9. By: Saul Lach; Mark Schankerman
    Abstract: Using data on U.S. universities, we show that universities that give higher royalty shares to facultyscientists generate greater license income, controlling for other factors including university size,quality, research funding, and local demand conditions. We use pre-sample data on universitypatenting to control for the endogeneity of royalty shares. The incentive effects are larger in privateuniversities than in public ones, and we provide survey evidence on performance-based pay,government constraints and objectives of Technology License Offices that helps explain this finding.Royalty incentives work through two channels — raising faculty effort and sorting scientists acrossuniversities. The effect of incentives is mainly to increase the quality rather than the quantity ofinventions.
    Keywords: royalty incentives, invention, technology licensing
    JEL: O31 O34 L2 L3
    Date: 2006–06
  10. By: Nicolai J. Foss
    Abstract: The “knowledge governance approach” is characterized as a distinctive, emerging approach that cuts across the fields of knowledge management, organisation studies, strategy, and human resource management. Knowledge governance is taken up with how the deployment of governance mechanisms influences knowledge processes, such as sharing, retaining and creating knowledge. It insists on clear micro (behavioural) foundations, adopts an economizing perspective, and examines the links between knowledge-based units of analysis with diverse characteristics and governance mechanisms with diverse capabilities of handling these transactions. Research issues that the knowledge governance approach illuminates are sketched.
    Keywords: Governance; knowledge management; organizational economics
    JEL: L1 L2 M1
    Date: 2006
  11. By: Gustavo Crespi; Chiara Criscuolo; Jonathan Haskel
    Abstract: Case study evidence suggests that exporting firms learn from their clients. But econometric evidence,mostly using exporting and TFP growth, is mixed. We use a UK panel data set with firm-levelinformation on exporting and productivity. Our innovation is that we also have direct data on thesources of learning (in this case about new technologies). Controlling for fixed effects we have twomain findings. First, we find firms who exported in the past are more likely to then report that theylearnt from buyers (relative to learning from other sources). Second, firms who had learned frombuyers (more than they learnt from other sources) in the past are more likely to then have productivitygrowth. This suggests some support for the learning-by-exporting hypothesis.
    Keywords: Productivity, Exporting, Learning
    JEL: F12 L1
    Date: 2006–05
  12. By: Fernandes, Ana M.
    Abstract: The author studies the determinants of total factor productivity (TFP) for manufacturing firms in Bangladesh using data from a recent survey. She obtains TFP measures by making use of firm-specific deflators for output and inputs. Controlling for industry, location, and year fixed effects, she finds that: (1) firm size and TFP are negatively correlated; (2) firm age and TFP exhibit an inverse-U shaped relationship; (3) TFP improves with the quality of the firm ' s human capital; (4) global integration improves TFP; (5) firms with research and development activities and quality certifications have higher TFP, while more advanced technologies improve TFP only in the presence of significant absorptive capacity; (6) power supply problems cost firms heavily in terms of TFP losses; and (7) the presence of crime dampens TFP.
    Keywords: Water and Industry,Economic Growth,Microfinance,Small Scale Enterprise,Economic Theory & Research
    Date: 2006–08–01

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