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on Innovation |
| By: | Bech, Mickael (Institute of Public Health, University of Southern Denmark); Christiansen, Terkel (Institute of Public Health, University of Southern Denmark); Dunham, Kelly (Center for Health Policy, Stanford University); Lauridsen, Jørgen (Department of Business and Economics, University of Southern Denmark); Lyttkens, Carl Hampus (Department of Economics, Lund University); McDonald, Kathryn (Center for Health Policy, Stanford University); McGuire, Alistair (LSE Health & Social Care, London School of Economics); TECH investigators, the (various) |
| Abstract: | The TECH research network collected patient-level data on three procedures for treatment of heart attack patients, (catheterization, coronary artery by-pass grafts and percutaneous transluminal coronary angioplasty), for seventeen countries over an eighteen year period to examine the impact of economic and institutional factors on technology adoption. Specific institutional factors are shown to be important to the up-take of these technologies. Health care systems characterized as public contract systems and reimbursement systems have higher adoption rates than public integrated health care systems. Central funding of investments was negatively associated with adoption rates. GDP per capita also has a strong role in initial adoption. The impact of income and institutional characteristics on the utilization rates of these procedures diminishes over time. |
| Keywords: | Diffusion of technologies; technological change; economic incentives; regulation |
| JEL: | I18 O33 |
| Date: | 2006–02–14 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lunewp:2006_015&r=ino |
| By: | Evangelos Katsamakas (Graduate School of Business, Fordham University); Mingdi Xin (Stern School of Business, New York University) |
| Abstract: | The emergence of open source and Linux has burdened IT managers with the challenge of whether, when, and in what applications to adopt open source software in their firms. We characterize the conditions under which enterprises adopt open source software. We show that adoption depends crucially on network effects, the fit of software with the range of applications used by each firm, and the IT capabilities of a firm. Our model predicts that most firms will adopt a heterogeneous IT architecture that consists of open source and proprietary software. The equilibrium adoption is often socially inefficient. This is the first paper in the open source literature to model the enterprise adoption of open source. |
| Keywords: | Open source software, Linux, IT management, IT architecture, IT capabilities, technology adoption. |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:0529&r=ino |
| By: | Marc Rysman (Boston University, Department of Economics); Tim Simcoe (J.L. Rotman School of Management, University of Toronto) |
| Abstract: | This paper measures the technological significance of voluntary standard setting organizations (SSOs) by examining citations to patents disclosed in the standard setting process. We find that SSO patents are cited far more frequently than a set of control patents, and that SSO patents receive citations for a much longer period of time. Furthermore, we find a significant correlation between citation and the disclosure of a patent to an SSO, which may imply a marginal impact of disclosure. These results provide the first empirical look at patents disclosed to SSOs, and show that these organizations not only select important technologies, but may also play a role in establishing their significance. |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:0522&r=ino |
| By: | Alex Coad; Rekha Rao |
| Abstract: | We relate innovation to sales growth for incumbent firms in four high-tech sectors. A firm, on average, experiences only modest growth and may grow for a number of reasons that may or may not be related to ‘innovativeness’. However, given that firms are heterogeneous and that growth rates distributions are heavy-tailed, it may be misleading to use regression techniques that focus on the ‘average firm’. Using a quantile regression approach, we observe that innovativeness is of crucial importance for a handful of ‘superstar’ fast-growth firms. We also discuss policy implications of our results. |
| Keywords: | Innovation, Firm Growth, Quantile Regression, Innovation Policy |
| Date: | 2006–08–23 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2006/18&r=ino |
| By: | Nicholas Economides (Stern School of Business, NYU); Evangelos Katsamakas (Fordham University) |
| Abstract: | The paper analyzes and compares the investment incentives of platform and application developers for Linux and Windows. We find that the level of investment in applications is larger when the operating system is open source rather than proprietary. The comparison of the levels of investment in the operating systems depends, among others, on reputation effects and the number of developers. The paper also develops a short case study comparing Windows and Linux and identifies new directions for open source software research. |
| JEL: | L10 L86 L31 |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:0507&r=ino |
| By: | Jakob B. Madsen (Department of Economics, Monash University, Australia) |
| Abstract: | Semi-endogenous models and, to some extent, also Schumpeterian models are based on the assumption of diminishing returns to R&D. This paper shows that the null hypothesis of constant returns to R&D cannot be rejected for the OECD countries. |
| Keywords: | returns to R&D; endogenous growth theory |
| JEL: | O3 O4 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:kud:epruwp:06-05&r=ino |
| By: | Nicholas Economides (Stern School of Business, NYU); Evangelos Katsamakas (Fordham University) |
| Abstract: | Technology platforms, such as Microsoft Windows, are the hubs of technology industries. We develop a framework to characterize the optimal two-sided pricing strategy of a platform firm, that is, the pricing strategy towards the direct users of the platform as well as towards firms offering applications that are complementary to the platform. We compare industry structures based on a proprietary platform (such as Windows) with those based on an open-source platform (such as Linux) and analyze the structure of competition and industry implications in terms of pricing, sales, profitability, and social welfare. We find that, when the platform is proprietary, the equilibrium prices for the platform, the applications, and the platform access fee for applications may be below marginal cost, and we characterize demand conditions that lead to this. The proprietary applications sector of an industry based on an open source platform may be more profitable than the total profits of a proprietary platform industry. When users have a strong preference for application variety, the total profits of the proprietary industry are larger than the total profits of an industry based on an open source platform. The variety of applications is larger when the platform is open source. When a system based on an open source platform with an independent proprietary application competes with a proprietary system, the proprietary system is likely to dominate the open source platform industry both in terms of marketshare and profitability. This may explain the dominance of Microsoft in the market for PC operating systems. |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:0506&r=ino |
| By: | Gilbert Desmarais |
| Abstract: | An international PEB seminar on “Information and Communications Technology and Educational Property Management” was held in Montreal, Canada, from 31 October to 3 November 2004. The aim of this seminar was to examine how information and communications technology (ICT) can be incorporated into educational property management by investigating three issues: how ICT can make educational spaces more functional and comfortable in a sustainable development perspective, how it can improve the security and protection of facilities and, lastly, how it can optimise their technical and administrative management. The participants had the opportunity to see the theories presented in each field illustrated concretely by visiting innovative institutions in Montreal and its suburbs. A brief summary of these visits is provided below. |
| Keywords: | Canada, technology, Quebec, management |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:oec:eduaaa:2005/1-en&r=ino |
| By: | Yuki Nakajima (The Japan Society for the Promotion of Science) |
| Abstract: | The telephone system was not sufficiently developed in prewar Japan. This study examines the technological development of automatic telephone switchboard (ATS) to clarify the problems of telephone system in prewar Japan. Ministry of Communication(MOC) introduced automatic telephone system in 1923. From the standpoint of the telephone exchange service, it was a very opportune decision; however, it was technologically premature. Although they had conducted research on the system before WW1, their only choice was the primitive S ~ S system. Further, the dependence on import technology caused different A-type and H-type ATS to coexist. Each local telephone exchange district independently introduced a different type. The MOC had to prepare the specifications and parts for repair for two different systems. These factors hampered the improvement of the telecommunication quality. Standardizing the system by using independent technology became the biggest issue for the MOC in the 1930s. In the 1930s, some joint researches were organized with private enterprises. They tried to develop a gT-typeh or gElectronic Tube-typeh ATS. However, the T-type ATS was merely an improvement over the outdated S ~ S system with respect to the circuit design. On the other hand, Matsumae aimed at a novel technology, an electronic common control system. However, a suitable electronic tube was not invented. As a result, the telecommunication industry was unable to resolve the coexistence problem in the prewar period. However, the engineers of MOC and ATS suppliers recognized their technological backwardness and shared an awareness of the importance of standardization by independent technology. This was the starting point for the research and development system of the telecommunication industry in gPostwar Japan.h |
| Keywords: | Telephone system, Automatic Telephone Switchboard, Ministry of Communication, Research & Development, Joint Research |
| JEL: | N65 N75 O33 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:osk:wpaper:0623&r=ino |
| By: | Tobias Kretschmer (London School of Economics) |
| Abstract: | In this paper, we study the dynamics of the market for Database Management Systems (DBMS), which is commonly assumed to possess network effects and where there is still some viable competition in our study period, 2000 – 2004. Specifically, we make use of a unique and detailed dataset on several thousand UK firms to study individual organizations’ incentives to adopt a particular technology. We find that there are significant internal complement effects – in other words, using an operating system and a DBMS from the same vendor seems to confer some complementarities. We also find evidence for complementarities between enterprise resource planning systems (ERP) and DBMS and find that as ERP are frequently specific and customized, DBMS are unlikely to be changed once they have been customized to an ERP. We also find that organizations have an increasing tendency to use multiple DBMS on one site, which contradicts the notion that different DBMS are near-perfect substitutes. |
| Keywords: | Database software, indirect network effects, technology adoption, microdata |
| JEL: | L86 O33 |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:0517&r=ino |
| By: | Kong Weng Ho; Hian Teck Hoon (School of Economics and Social Sciences, Singapore Management University) |
| Abstract: | In this paper, we take another approach to accounting for the sources of Singapore’s economic growth by being explicit about the channels through which Singapore, as a technological follower, benefits from international R&D spillovers. Taking into account the channels through which technology developed in the G5 countries diffuses to technological followers, we show that 57.5 percent of Singapore’s real GDP per worker growth rate over the 1970-2002 period is due to multifactor productivity growth. In particular, about 52 percent of the growth is accounted for by an increase in the effectiveness of accessing ideas developed by the technology leaders through improvement in our educational quality and increase in machinery imports and foreign direct investment from the G5 countries. We also find that capital accumulation that takes the form of imports of machinery as well as foreign direct investment from the G5 countries enhances the effectiveness of technology transfer thus raising the rate of return to capital. Compared to the rate of return to capital inferred from the traditional Solow growth model with purely exogenous technological progress of 10.8 percent, taking into account the technology transfer channel raises the implied rate of return to 13 percent. |
| Keywords: | technological diffusion, idea production function, multifactor productivity growth |
| JEL: | F43 O33 O47 |
| Date: | 2006–06 |
| URL: | http://d.repec.org/n?u=RePEc:siu:wpaper:15-2006&r=ino |
| By: | Fredrik Andersson; Matthew Freedman; John C. Haltiwanger; Julia Lane; Kathryn L. Shaw |
| Abstract: | Innovation in the U.S. economy is about employing and rewarding highly talented workers to produce new products. Using unique longitudinal matched employer-employee data, this paper makes a key connection between talent and firms in markets with risky product innovations. We show that software firms that operate in product markets with highly skewed returns to innovation, or high variance payoffs, are more likely to attract and pay for star workers. Thus, firms in high variance product markets pay more up-front—in starting salaries—to attract and motivate star employees, because if these star workers produce home-run innovations, the firm’s winnings will be huge. However, we also find these same firms pay highly for loyalty: star workers that stay with a firm have much higher earnings in firms with high variance product market payoffs. The large effects on earnings are robust to the inclusion of a wide range of controls for both workers and firm characteristics. One key control is that we also show that in firms that have actually hit home runs, with high revenues, the rewards for star talent are even greater. We also find that the dispersion of earnings is higher within firms with high variance product payoffs. |
| JEL: | J24 J31 L2 L86 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12435&r=ino |
| By: | James D. Adams; Roger Clemmons |
| Abstract: | This paper describes flows of basic research through the U.S. economy and explores their implications for scientific output at the industry and field level. The time period is the late 20th century. This paper differs from others in its use of measures of science rather than technology. Together its results provide a more complete picture of the structure of basic research flows than was previously available. Basic research flows are high within petrochemicals and drugs and within a second cluster composed of software and communications. Flows of chemistry, physics, and engineering are common throughout industry; biology and medicine are almost confined to petrochemicals and drugs, and computer science is nearly as limited to software and communications. In general, basic research flows are more concentrated within scientific fields than within industries. The paper also compares effects of different types of basic research on scientific output. The main finding is that the academic spillover effect significantly exceeds that of industrial spillovers or industry basic research. Finally, within field effects exceed between field effects, while the within- and between industry effects are equal. Therefore, scientific fields limit basic research flows more than industries. |
| JEL: | D2 O3 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12459&r=ino |
| By: | James D. Adams (Department of Economics, Rensselaer Polytechnic Institute, Troy, NY 12180-3590, USA); J. Roger Clemmons (Institute for Child Health Policy, College of Medicine of the University of Florida, PO Box 100147, Gainesville, FL 32610-0147) |
| Abstract: | This paper describes flows of basic research through the U.S. economy and explores their implications for scientific output at the industry and field level. The time period is the late 20th century. This paper differs from others in its use of measures of science rather than technology. Together its results provide a more complete picture of the structure of basic research flows than was previously available. Basic research flows are high within petrochemicals and drugs and within a second cluster composed of software and communications. Flows of chemistry, physics, and engineering are common throughout industry; biology and medicine are almost confined to petrochemicals and drugs, and computer science is nearly as limited to software and communications. In general, basic research flows are more concentrated within scientific fields than within industries. The paper also compares effects of different types of basic research on scientific output. The main finding is that the academic spillover effect significantly exceeds that of industrial spillovers or industry basic research. Finally, within field effects exceed between field effects, while the within- and between industry effects are equal. Therefore, scientific fields limit basic research flows more than industries. |
| JEL: | O3 D2 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:rpi:rpiwpe:0614&r=ino |
| By: | Tobias Kretschmer (London School of Economics); Katrin Muehlfeld (London School of Economics) |
| Abstract: | The success of the CD has (partly) been attributed to the ability of Sony, Philips and Matsushita to cooperate in the run-up to the DAD conference in 1981, where the technological standard was set. We model the situation leading up to the conference in a simple game with technological progress and the possibility of prelaunching a technology. We identify players' tradeos between prelaunching (which ends technological progress) and continued development (which involves the risk of being pre-empted). Contrasting outcomes with complete and incomplete information, we nd that there appeared to be considerable uncertainty about rivals' technological progress. |
| Date: | 2004–10 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:0414&r=ino |
| By: | Sudip Bhattacharjee (School of Business, University of Connecticut); Ram D. Gopal (School of Business, University of Connecticut); Kaveepan Lertwachara (School of Business, University of Connecticut); James R. Marsden (School of Business, University of Connecticut); Rahul Telang (H John Heinz III School of Public Policy and Management, Carnegie Mellon University) |
| Abstract: | Recent technological and market forces have profoundly impacted the music industry. Emphasizing threats from peer-to-peer (P2P) technologies, the industry continues to seek sanctions against individuals who offer significant number of songs for others to copy. Yet there is little rigorous empirical analysis of the impacts of online sharing on the success of music products. Combining data on the performance of music albums on the Billboard charts with file sharing data from a popular network, we: 1) assess the impact of recent developments related to the music industry on survival of music albums on the charts, and 2) evaluate the specific impact of P2P sharing on an album’s survival on the charts. In the post P2P era, we find significantly reduced chart survival. The second phase of our study isolates the impact of file sharing on album survival. We find that sharing does not seem to hurt the survival of albums. |
| Keywords: | peer-to-peer, digitized music, online file sharing, survival. |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:0526&r=ino |
| By: | Prasenjit Mitra (Pennsylvania State University); Sandeep Purao (Pennsylvania State University); John W. Bagby (Pennsylvania State University); Karthikeyan Umapathy (Pennsylvania State University); Sharoda Paul (Pennsylvania State University) |
| Abstract: | There is an evolution in the process used by standards-development organizations (SDOs) and this is changing the prevailing standards development activity (SDA) for information and communications technology (ICT). The process is progressing from traditional SDA modes, typically involving the selection from many candidate, existing alternative components, into the crafting of standards that include a substantial design component (SSDC), or “anticipatory” standards. SSDC require increasingly important roles from organizational players as well as SDOs. Few theoretical frameworks exist to understand these emerging processes. This project conducted archival analysis of SDO documents for a selected subset of web-services (WS) standards taken from publicly available sources including minutes of meetings, proposals, drafts and recommendations. This working paper provides a deeper understanding of SDAs, the roles played by different organizational participants and the compliance with SDO due process requirements emerging from public policy constraints, recent legislation and standards accreditation requirements. This research is influenced by a recent theoretical framework that suggests viewing the new standards-setting processes as a complex interplay among three forces: sense-making, design, and negotiation (DSN). The DSN model provides the framework for measuring SDO progress and therefore understanding future generations of standards development processes. The empirically grounded results are useful foundation for other SDO modeling efforts. |
| Keywords: | antitrust, design, intellectual property rights, negotiation, sense-making, standardization, standards development organizations |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:0518&r=ino |
| By: | Gerry O’Sullivan |
| Abstract: | The largest-ever evaluation of an Irish research programme has concluded that the PRTLI is “the beginning of a major and most beneficial transformation of the research landscape of Ireland that will help to install an innovation-driven economy”. The PRTLI, the Programme for Research in Third Level Institutions, is managed by the country’s Higher Education Authority. |
| Keywords: | tertiary, financing, Ireland |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:oec:eduaaa:2005/3-en&r=ino |
| By: | Yooki Park (University of California, Berkeley); Suzanne Scotchmer (University of California, Berkeley) |
| Abstract: | Digital products such as movies, music and computer software are protected both by self-help measures such as encryption and copy controls, and by the legal right to prevent copying. We explore how digital rights management and other technical protections a®ect the pricing of content, and consequently, why content users, content vendors, and antitrust authorities might have di®erent views on what technical capabilities should be deployed. We discuss the potential for \collusion through technology." |
| Keywords: | technical protections, DRM, antitrust, trusted systems |
| JEL: | L13 L14 L15 K21 O33 |
| Date: | 2004–09–30 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:0409&r=ino |
| By: | Matthew T. Clements (University of Texas); Hiroshi Ohashi (University of Tokyo) |
| Abstract: | This paper examines the importance of indirect network effects in the U.S. video game market between 1994 and 2002. The diffusion of game systems is analyzed by the interaction between console adoption decisions and software supply decisions. Estimation results suggest that introductory pricing is an effective practice at the beginning of the product cycle, and expanding software variety becomes more effective later. The paper also finds a degree of inertia in the software market that does not exist in the hardware market. This observation implies that software providers continue to exploit the installed base of hardware users after hardware demand has slowed. |
| Keywords: | indirect network effects; penetration pricing; software variety |
| JEL: | C23 L68 M21 |
| Date: | 2004–10 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:0401&r=ino |
| By: | Hoon Hian Teck (School of Economics and Social Sciences, Singapore Management University); Edmund S. Phelps (Columbia University) |
| Abstract: | It seems to be taken for granted by many commentators that the sharp decline in prices of computers, telecommunications equipment and software resulting from the technological improvements in the information and communications technology (ICT)-producing sector is good for jobs and is a major driving force behind the non-inflationary employment miracle and booming stock market in the latter half of the nineties in the U.S. and their recurrence since 2004. We show that, in our model, a technical improvement in the ICT-producing sector by itself cannot explain a simultaneous increase in employment and a risein firms’ valuation (or Tobin’s Q ratio). There are two cases. If the elasticity of equipment price (pI ) with respect to ICT-producing sector’s productivity is less than one, labor’s value marginal productivity increases thus pulling up the demand wage and expanding employment. However, the increased output by adding to the capital stock and thus driving down future capital rentals causes a decline in firms’ valuation, q per unit, even though Tobin’s Q (= q=pI ) is up. If the elasticity is greater than one, equipment prices fall so dramatically that labor’s value marginal productivity declines, employment in the ICT-using sector expands proportionately more than the increase in capital stock, thus raising future capital rentals, so both firms’ valuation and Tobin’s Q rise; but then real demand wage falls and employment contracts. The key to generating a booming stock market alongside employment expansion is to hypothesize that when technical improvement in the ICT-producing sector occurs, the market forms an expectation of future productivity gains to be reaped in the ICT-using sector. Then we can explain not only the stock market boom and associated rise in investment spending and employment in the period 1995-2000 but also the subsequent decline in employment, in Tobin’s Q and in investment spending in 2001, with consumption holding up well as productivity gains in the ICT-using sector were realized. An anticipation of a future TFP improvement in the ICT-using sector can once more play the role of raising the stock market. |
| Keywords: | Business asset valuation, Tobin’s Q, investment spending,employment |
| JEL: | E13 E22 E23 E24 O33 |
| Date: | 2006–02 |
| URL: | http://d.repec.org/n?u=RePEc:siu:wpaper:07-2006&r=ino |
| By: | Dhanoos Sutthiphisal |
| Abstract: | This paper investigates the impact of ¡§learning-by-producing¡¨ on inventive activity and shows that, in both emerging (electrical equipment and supplies) and maturing (shoes and textiles) industries, the geographic association between invention and production was rather weak during the Second Industrial Revolution. Regional shifts in production were neither accompanied nor followed by corresponding increases in invention. Instead, this paper finds that the geographic location of inventive activity tended to mirror the geographic distribution of individuals with advanced technical skills appropriate to the particular industry in question. Even in the craft-based shoe industry, much of the invention came from those with the advanced technical skills. The findings suggest that scholars have over-emphasized the importance of learning-by-producing in accounting for the geographic differences in inventive activity, and underestimated the significance of technical skills or human capital amongst the population. |
| JEL: | N0 O3 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12469&r=ino |
| By: | Jean O. Lanjouw |
| Abstract: | We consider how patent rights and price regulation affect whether new drugs are marketed in a country, and how quickly. The analysis covers a large sample of 68 countries at all income levels and includes all drug launches over the period 1982-2002. It uses newly compiled information on legal and regulatory policy, and is the first systematic analysis of the determinants of drug launch in poor countries. Price control tends to discourage rapid product entry, while the results for patents are mixed. There is evidence that local capacity to innovate matters and that international pricing externalities may play a role. |
| Keywords: | patent, drugs, access, market entry, price control |
| JEL: | D62 D4 K2 K10 I11 I18 |
| URL: | http://d.repec.org/n?u=RePEc:cgd:wpaper:61&r=ino |
| By: | Mark McCabe (Georgia Institute of Technology); Christopher Snyder (Dartmouth College) |
| Abstract: | Previous research modeled academic journals as platforms connecting authors with readers in a two-sided market. This research used the same basic framework also used to study telephony, credit cards, video game consoles, etc. In this paper, we focus on a key difference between the market for academic journals and these other markets: journals vary in terms of quality, where a journal's quality determined by the quality of the papers it publishes. We provide a simple model of journal quality. As an illustration of the value of the model, we use it to address issues that have arisen in the recent debate concerning whether, in the Internet age, journals should become \open access" (freely available to readers, financed by author rather than subscriber fees). Among other issues, we examine (a) whether open-access journals would tend to publish more articles than traditional journals, moving further down the quality spectrum in order to boost revenue; (b) whether journal quality affects the profitability of adopting open access; and (c) whether submission fees or acceptance fees are better instruments to extract surplus from authors. |
| Keywords: | Open access, academic journal, two-sided market, quality |
| JEL: | L14 L82 D40 L31 |
| Date: | 2004–11 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:0418&r=ino |