nep-ino New Economics Papers
on Innovation
Issue of 2006‒12‒16
twenty-two papers chosen by
Koen Frenken
Universiteit Utrecht

  1. The market value of patents and R&D: Evidence from European firms By Bronwyn H. Hall; Grid Thoma; Salvatore Torrisi
  2. As luck would have it : innovation and market value in "complex technology" sectors By Alex Coad; Rekha Rao
  3. Innovation and Productivity across Four European Countries By Rachel Griffith; Elena Huergo; Jacques Mairesse; Bettina Peters
  4. Organizing Innovation: Complementarities Between Cross-Functional Teams By James H. Love; Stephen Roper; Giovanni Mangiarotti
  5. International Knowledge Flows: Evidence from an Inventor-Firm Matched Data Set By Jinyoung Kim; Sangjoon John Lee; Gerald Marschke
  6. On the Marshall - Jacobs Controversy: It Takes Two to Tango By Gerben van der Panne; Cees van Beers
  7. Knowledge and the diversity of innovation systems: a comparative analysis of European regions By Christophe CARRINCAZEAUX (E3I-IFReDE-GRES); Frédéric GASCHET (IERSO-IFReDE-GRES)
  8. Innovation and firm growth in "complex technology" sectors : a quantile regression approach By Alex Coad; Rekha Rao
  9. Knowledge sourcing and firm performance in an industrializing economy: the case of Taiwan in the 1990s. By Chia-Lin CHANG; Stéphane ROBIN
  10. The Jukebox Mode of Innovation - a Model of Commercial Open Source Development By Joachim Henkel
  11. Science-Technology-Industry Links and the ”European Paradox”: Some Notes on the Dynamics of Scientific and Technological Research in Europe. By Giovanni Dosi; Patrick Llerena; Mauro Sylos Labin
  12. Le territoire français en tant que Système Régional d’Innovation. By Rachel Levy; Raymond Woessner
  13. Inventive Activities, Patents and Early Industrialization. A Synthesis of Research Issues By Christine MacLeod; Alessandro Nuvolari
  14. Convergence and Divergence among Technology Clubs By Fulvio Castellacci
  15. Do academic laboratories correspond to scientific communities? Evidence from a large European university. By Rachel Levy; Paul Muller
  16. How Does Knowledge Transfer from Foreign Subsidiaries Affect Parent Companies' Innovative Capacity By Lucia Piscitello; Larissa Pabbiosi
  17. Manifesto for Comprehensive Neo-Schumpeterian Economics By Horst Hanusch; Andreas Pyka
  18. Justifying the Origin of Real Options and their Difficult Evaluation in Strategic Management. By Thierry Burger-Helmchen
  19. New technology, Human Capital and Growth for Developing Countries By Cuong Le Van; Manh-Hung Nguyen; Thai Bao Luong
  20. Understanding the processes of firm growth - a closer look at serial growth rate correlation By Alex Coad
  21. Demand and Technology Determinants of Structural Change and Tertiarisation: An Input-Output Structural Decomposition Analysis for four OECD Countries. By Maria Savona; André Lorentz
  22. Ressources, compétences et stratégie de la firme : Une discussion de l’opposition entre la vision Porterienne et la vision fondée sur les compétences. By Fernand AMESSE; Arman AVADIKYAN; Patrick COHENDET

  1. By: Bronwyn H. Hall (University of California at Berkeley, University of Maastricht, NBER, and IFS London.); Grid Thoma (University of Camerino and CESPRI Bocconi University, Milano, Italy.); Salvatore Torrisi (Bologna University and CESPRI Bocconi University, Milan, Italy.)
    Abstract: This paper provides novel empirical evidence on the private value of patents and R&D. We analyze an unbalanced sample of firms from five EU countries - France, Germany, Switzerland, Sweden and the UK in the period 1985-2005. We explore the relationship between firm’s stock market value and patents, accounting for the ‘quality’ of EPO patents. We find that Tobin’s q is positively and significantly associated with R&D and patent stocks. In contrast to results for the U.S., forward citations do not add information beyond that in patents. However, the composite quality indicator based on backward citations, forward citations and the number of technical fields covered by the patent is informative for value. Software patents account for a rising share of total patents in the EPO. Moreover, some scholars of innovation and intellectual property rights argue that software and business methods patents on average are of poor quality and that these patents are applied for merely to build portfolios rather than for protection of real inventions. We therefore tested for the impact of software patents on the market value of the firm and did not find any significant effect, in contrast to results for the United States. However, in Europe, such patents are highly concentrated, with 90 per cent of the software patents in our sample held by just 15 of the firms.
    Keywords: Market Valuation, Intangible Assets, Patents, Software.
    JEL: D24 O31 O34 L86
    Date: 2006–11
  2. By: Alex Coad (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I], LEM - Laboratory of Economics and Management - [Sant'Anna School of Advanced Studies]); Rekha Rao (LEM - Laboratory of Economics and Management - [Sant'Anna School of Advanced Studies])
    Abstract: How do financial markets respond to firms' efforts at innovation ? To answer this question, we measure innovation by creating a synthetic indicator based on a firm's recent history of R&D expenditure and patent applications. We focus on four 2-digit «complex technology» manufacturing sectors that have been hand-picked according to their high propensities to innovate. Whilst standard regression techniques find a positive relationship between innovation and growth, quantile regression analysis adds a new dimension to the literature. We identify those «superstar» firms with the highest stock market valuations and show that these firms owe a lot of their success to their previous efforts at innovation. However, there are also other firms whose attempts to innovate are virtually ignored by financial markets. Our results emphasize the fundamental uncertainty of R&D.
    Keywords: Innovation, market value, quantile regression, patents, Tobin's q.
    Date: 2006–12–07
  3. By: Rachel Griffith; Elena Huergo; Jacques Mairesse; Bettina Peters
    Abstract: This paper compares the role innovation plays in productivity across the four European countries France, Germany, Spain and the UK using firm-level data from the internationally harmonized Community Innovation Surveys (CIS3). Despite a considerable number of national firm-level studies analysing this relationship, cross-country comparisons using micro data are still rare. We apply a structural model that describes the link between R&D expenditure, innovation output and productivity (CDM model). Our econometric results suggest that overall the systems driving innovation and productivity are remarkably similar across these four countries, although we also find interesting differences, particularly in the variation in productivity that is associated with more or less innovative activities.
    JEL: L1 L60 O31 O33 O47
    Date: 2006–12
  4. By: James H. Love; Stephen Roper; Giovanni Mangiarotti
    Abstract: Cross-functional teams play a potentially important part in the innovation process enabling knowledge sharing, the development of trust and overcoming spatial and organizational barriers. Using a supermodularity approach, we focus on potential complementarities which may arise when cross-functional teams are used in different elements of the innovation process in UK and German manufacturing plants. Using optimal combinations of cross-functional teams in the innovation process increases innovation success in the UK by 29.5 per cent compared to 9.5 per cent in Germany. Patterns of complementarity are complex, however, but are more uniform in the UK than in Germany. The most uniform complementarities are between product design and development and production engineering, with little synergy evident between the more technical phases of the innovation process and the development of marketing strategy. In strategic terms, our results suggest the value of using cross-functional teams for the more technical elements of the innovation process but that the development of marketing strategy should remain the domain of specialists.
    Keywords: Innovation; cross-functional terms; complementarities; UK; Germany
    JEL: O15 O31 O32
    Date: 2006
  5. By: Jinyoung Kim; Sangjoon John Lee; Gerald Marschke
    Abstract: We describe the construction of a panel data set from the U.S. patent data that contains measures of inventors' life-cycle R&D productivity--patents and patent citations. We match the data set to information on the U.S. pharmaceutical and semiconductor firms for whom they work. In this paper we use these data to examine the role of research personnel as a pathway for the diffusion of ideas from foreign countries to U.S. innovators. In particular, we find in recent years an increase in the extent that U.S. innovating firms collaborate with or employ researchers with foreign experience. This increase appears to work primarily through an increase in U.S. firms' employment of foreign-residing researchers; the fraction of research-active U.S. residents with foreign research experience appears to be falling, suggesting that U.S. pharmaceutical and semiconductor firms are increasingly locating operations in foreign countries to employ such researchers, as opposed to such researchers immigrating to the U.S. to work. In addition, we investigate which U.S. firms conducting R&D build upon innovations originating abroad. We find that employing or collaborating with researchers who have research experience abroad seems to facilitate the use of output of non-U.S. R&D. We also find that in the semiconductor industry smaller and older firms, and in the pharmaceutical industry, younger firms are more likely to access foreign R&D output.
    JEL: J62 O31 O33
    Date: 2006–11
  6. By: Gerben van der Panne; Cees van Beers
    Abstract: The literature is inconclusive as to whether Marshallian specialization or Jacobian diversification externalities favour regional innovativeness. The specialization argument poses that regional specialization towards a particular industry improves innovativeness in that industry. Regional specialization allows for knowledge to spill over among similar firms. By contrast, the diversification thesis asserts that knowledge spills over between firms in different industries, causing diversified production structures to be more innovative. Building on an original database, we address this controversy for the Netherlands. We thereby advance on the literature by providing a two-level approach, at the region’s and the firm’s level. At the regional level, we compare specialized with diversified regions on numbers of accommodated innovators. At the firm level, we establish causalities between externalities and degree of innovativeness. The results suggest Marshallian externalities: specialized regions accommodate increased numbers of innovating firms and, consistently, incumbent firms’ innovativeness increase with regional specialization. Once the product has been launched, innovators in diversified Jacobian regions prove more successful in commercial terms than innovators in specialized Marshallian regions.
    Keywords: Industrial clusters; innovation; knowledge externalities
    JEL: O18 O31 R10
    Date: 2006
    Abstract: The main goal of this paper is to shed some light on European regional diversity in terms of knowledge accumulation and socio-economic performances. Dynamic links between knowledge, innovation and performance are complex to address because they take place in different contexts, involving heterogeneous agents interacting through different institutions. Studies on national systems of innovation (Edquist, 1997) stressed the role of the institutional context in these dynamics and identify various configurations associated with these national systems. This conceptual framework, used at the regional level, leads to the identification of regional systems of innovation (Cooke, 2001) and thus underlines the limits of a regional scoreboard only based on high-tech indicators as it is usually proposed. This paper constitutes a first attempt to propose a more exhaustive effort in characterizing the diversity of \"regional knowledge an innovation systems \" within Europe. The study is performed through data analysis using the conceptual framework of \"social systems of innovation and production\" (SSIP) proposed by Amable, Barré and Boyer (1997). A Social System of Innovation and Production can be defined as a coherent combination of different components referring to Science-technology-industry (STI) configurations articulated with financial system, labour relations, education and training and economic performances. This framework can be adapted at the regional level by identifying specific arrangements of each part of the system even if the concept of system is questionable at this level. The analysis is performed combining data from three sources (Eurostat, the Cambridge Econometrics database and OST (Observatoire des Sciences et des Techniques)) over a sample of NUTS-II european regions and using multivariate data analysis (principal component analysis, hierarchical anova). Putting together the SSIP and local economic performances allows defining different regional configurations in order to identify regional trajectories and patterns of articulation between knowledge dynamics and performance. Our hypothesis is that regional growth in not a problem of best practice but of coherent knowledge combination: institutional differences may lead similar (or different) STI structures to different (respectively same) performances.
    Keywords: NARegional Innovation systems, Knowledge economy, Institutional diversity, European regions, Regional economic performances
    Date: 2006
  8. By: Alex Coad (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I], LEM - Laboratory of Economics and Management - [Sant'Anna School of Advanced Studies]); Rekha Rao (LEM - Laboratory of Economics and Management - [Sant'Anna School of Advanced Studies])
    Abstract: Innovation is commonly seen as the principal engine of economic development. In this paper, we investigate the microfoundations of economic growth by relating innovation to sales growth at the firm-level, for incumbent firms in four «complex technology» sectors. The average firm, which experiences only modest growth, 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 typically 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.
    Keywords: Innovation, firm growth, quantile regression.
    Date: 2006–12–06
  9. By: Chia-Lin CHANG; Stéphane ROBIN
    Abstract: This paper examines the impact of R&D and technology imports on firm performance in Taiwan’s manufacturing industry. Using a panel of 27,754 firms observed from 1992 to 1995, we estimate Translog production functions in twenty 2-digit industries. We implement four estimations procedures: fixed-effect regression, random-effect GLS, Hausman-Taylor estimator, and Stochastic Frontier Estimation. Our most reliable estimates, obtained with fixed effect and Hausman-Taylor models, show that knowledge inputs have a significant impact on firm sales in a small number of industries, and suggest that R&D and technology imports are more likely to be complements rather than substitutes.
    Keywords: Manufacturing Industries; Newly Industrialized Countries; Technology Imports.
    JEL: L25 L60 O33
    Date: 2006
  10. By: Joachim Henkel
    Abstract: In this paper, I describe and analyze the phenomenon of informal development collaboration between firms in the field of embedded Linux, a type of open source software. To explain the observed phenomenon of voluntary revealing, I develop a duopoly model of quality competition. The central assumptions are that firms require two complementary technologies as inputs, and differ with respect to the relative importance they attach to these technologies. The main results are, first, that a regime with compulsory revealing can lead not only to higher profits, but also to higher product qualities than a proprietary regime. Second, when the decision to reveal is endogenized equilibria arise with voluntary revealing by both players.
    Keywords: Innovation; development collaboration; open source software; embedded Linyx
    JEL: L11 L15 L86
    Date: 2006
  11. By: Giovanni Dosi; Patrick Llerena; Mauro Sylos Labin
    Abstract: This paper discusses, first, the properties of scientific and technological knowledge and the institutions supporting its generation and its economic applications. The evidence continues to support the broad interpretation which we call the ”Stanford-Yale-Sussex” synthesis. Second, such patterns bear important implications with respect to the so-called ”European Paradox”, i.e. the conjecture that EU countries play a leading global role in terms of top-level scientific output, but lag behind in the ability of converting this strength into wealth-generating innovations. Some descriptive evidence shows that, contrary to the ”paradox” conjecture, European weaknesses reside both in its system of scientific research and in a relatively weak industry. The final part of the work suggests a few normative implications: much less emphasis should be put on various types of ”networking” and much more on policy measures aimed to both strengthen ”frontier” research and strengthen European corporate actors.
    Keywords: Open Science, European Paradox, Science and Technology Policy.
    JEL: D80 O33 O38
    Date: 2005
  12. By: Rachel Levy; Raymond Woessner
    Abstract: En matière d’innovation, la notion de réseau public-privé joue un rôle essentiel. En ce sens, les thèses CIFRE en entreprises permettent de mesurer une forme de relation entre les entreprises et les laboratoires universitaires. Il en résulte un maillage du territoire français qui apparaît particulièrement déséquilibré. L’agglomération parisienne constitue le centre primordial, alors que les autres villes n’occupent que des positions secondaires. Toutefois, des grappes urbaines semblent émerger, sur la base de relations bi-ou multilatérales, en complément de leur articulation avec Paris.
    Keywords: système régional d’innovation, réseau, aménagement du territoire, CIFRE.
    Date: 2006
  13. By: Christine MacLeod; Alessandro Nuvolari
    Abstract: The aim of this paper is to provide an overview of recent research on the role of patent systems in the early phases of industrialization. Perhaps surprisingly, no consensus has been reached yet as to whether the emergence of modern patent systems exerted a favourable impact on inventive activities. However, the recent literature has shed light on a number of fundamental factors which affect the links between inventive activities and the patent system. The concluding section of the paper outlines some "history lessons" for the current debate on the role of Intellectual Property Rights in economic development.
    Date: 2006
  14. By: Fulvio Castellacci
    Abstract: The paper investigates cross-country differences in technology in a large sample of developed and developing economies over the 1990s. The empirical analysis indicates the existence of three technology clubs with markedly different levels of technological development: advanced, followers and marginalized countries. The technology clubs also differ with respect to their dynamics over the 1990s. While the club of followers is characterized by a process of gradual convergence towards the technological frontier, the group of marginalized has experienced an increase in its gap in terms of innovative capabilities.
    Keywords: Growth and development; technological change; convergence clubs; polarization
    JEL: O11 O33 O40
    Date: 2006
  15. By: Rachel Levy; Paul Muller
    Abstract: Although acknowledged as central in the economic literature, the issue of intra academic collaboration has been, insofar, relatively overlooked. This paper fills this gap by stressing the importance of communities in academic research. By analysing the publication behavior of researchers from a large European scientific university, we argue that in certain cases, the community level constitutes a relevant level for analysing the collaborative nature of scientific investigation. Indeed, the reality of research collaborations doesn’t always fit the institutional division of academic work provided by laboratories.
    Keywords: Economics of Science, Knowledge Intensive Communities, Academic Collaborations, Social Network Analysis.
    JEL: L31 O31 O32
    Date: 2006
  16. By: Lucia Piscitello; Larissa Pabbiosi
    Abstract: The paper addresses reverse knowledge transfer (RKT) from foreign subsidiary to parent company. Specifically, it aims at investigating to what extent the effectiveness of such a transfer is influenced by: (i) the organizational mechanisms employed for transferring knowledge; (ii) the subsidiary’s role, its autonomy, and its relationships with the local context. The empirical analysis considers 162 transfers of best practices possessed by foreign subsidiaries and transferred back to their Italian parent companies. Results confirm that the impact of RKT on the parent company’s innovativeness is greater when: (i) person-based mechanisms are employed for transferring knowledge; (ii) subsidiaries are competence-creating; and (iii) knowledge developed by subsidiaries benefits from local external linkages.
    Keywords: External linkages; organizational mechanisms; parent company’s innovativeness; reverse knowledge transfer; subsidiary’s characteristics
    JEL: F23 O30
    Date: 2006
  17. By: Horst Hanusch (University of Augsburg, Department of Economics); Andreas Pyka (University of Augsburg, Department of Economics)
    Abstract: Within the last 25 years large progress has been made in Neo-Schumpeterian Economics, this branch of economic science which deals with dynamic processes causing qualitative transformation of economies basically driven by the introduction of novelties. By its very nature, technological innovation is the most exponent and visible form of novelty. However, Neo-Schumpeterian Economics should be concerned with all facets of open and uncertain developments. A Comprehensive Neo-Schumpeterian approach has to consider not only transformation processes going on on the industry level of an economy, but also those on the public and monetary realms. Our manifesto introduces these extensions and complements towards a Comprehensive Neo-Schumpeterian economic theory, and develops some guideposts in the sense of a roadmap for necessary strands of analysis in the future.
    Keywords: Neo-Schumpeterian economics, industrial dynamics, public finance, financial markets
    JEL: O30 O40 L2 P0 G10 B52
    Date: 2006–12
  18. By: Thierry Burger-Helmchen
    Abstract: This work explores and reviews the introduction of real option in the strategic management literature. The aim is to contribute to a better understanding of the origin of the real option. By distinguishing between shadow and real option, and implementing entrepreneurship in the traditional option valuation framework we obtain a more exhaustive representation of the strategic decision processes in the firm. We explain the creation of a real option as an entrepreneurial process, which transforms inventive ideas into profitable innovation. This constitutes a step toward an option based-theory of the firm by describing the emergence of a firm’s options and the strategic building of new competences for exercising these options. In addition, this approach offers a parallel understanding of why the real option theory is less used in practice than in theory.
    Keywords: Real Option, Theory of the Firm, Entrepreneurship, Dynamic Capabilities.
    JEL: L29 D83 M13 M19
    Date: 2006
  19. By: Cuong Le Van (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I]); Manh-Hung Nguyen (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I]); Thai Bao Luong (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I], CEPN - Centre d'économie de l'Université de Paris Nord - [CNRS : UMR7115] - [Université Paris-Nord - Paris XIII])
    Abstract: We consider a developing country with three sectors in economy: consumption goods, new technology, and education. Productivity of the consumption goods sector depends on new technology and skilled labor used for production of the new technology. We show that there might be three stages of economic growth. In the first stage the country concentrates on production of consumption goods; in the second stage it requires the country to import both physical capital to produce consumption goods and new technology capital to produce new technology; and finally the last stage is one where the country needs to import new technology capital and invest in the training and education of high skilled labor in the same time.
    Keywords: Optimal growth model, New technology capital, Human Capital, Developing country.
    Date: 2006–12–07
  20. By: Alex Coad (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I], LEM - Laboratory of Economics and Management - [Sant'Anna School of Advanced Studies])
    Abstract: Serial correlation in annual growth rates carries a lot of information on growth processes - it allows us to directly observe firm performance as well as to test hypotheses. Using a 7-year balanced panel of 10 000 French manufacturing firms, we observe that small firms typically are subject to negative correlation of growth rates, whereas larger firms display positive correlation. Furthermore, we find that those small firms that experience extreme positive or negative growth in any one year are unlikely to repeat this performance in the following year.
    Keywords: Serial correlation, firm growth, quantile regression.
    Date: 2006–12–06
  21. By: Maria Savona; André Lorentz
    Abstract: The paper provides fresh empirical evidence on the relative role of changes in final and intermediate demand as affecting the changes in the sectoral structure of advanced economies. These latter have led, over the last three decades, to the massive growth of service sectors. The paper draws upon the recently released OECD Input- Output (I-O) tables. The empirical analysis is based on an I-O Structural Decomposition Analysis carried out on 13 manufacturing and service sectors, from the end of 1960s to the end of 1990s. Although heterogeneous sectoral patterns emerge, we find that the structural changes leading to the growth of services, particularly KIBS (Knowledge Intensive Business Services), are mainly (domestic) demand-led, whereas the role of foreign trade remains marginal even in the last decade. We infer that, even in the case of the most technologically advanced service sectors, (domestic) demand constraints affect the degree of exploitation of technological opportunities and the patterns of growth.
    Keywords: Structural change, Growth of Services, Input–Output.
    Date: 2006
  22. By: Fernand AMESSE; Arman AVADIKYAN; Patrick COHENDET
    Abstract: En distinguant information et connaissance nous développons une approche de la firme fondée sur les compétences intégrant les perspectives stratégiques et évolutionnistes. Nous insistons particulièrement sur la dynamique de co-construction des compétences distinctives au niveau de la firme et des compétences communes au niveau de l’industrie. Nous illustrerons ce processus de co-construction à travers les cas de la modularité et de la gestion de plateforme s cognitives dans un contexte inter organisationnel.
    Keywords: information, connaissance, approche fondée sur les compétences, dynamique de coordination inter organisationnelle ; compétences distinctives et communes, modularité.
    JEL: L10 L22 O32 M10
    Date: 2006

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