nep-ino New Economics Papers
on Innovation
Issue of 2007‒03‒24
sixteen papers chosen by
Koen Frenken
Utrecht University

  1. Patent Pools and the Dynamic Incentives to R&D By Bruno Versaevel; Vianney Dequiedt
  2. Overseas R&D Activities and Home Productivity Growth: Evidence from Japanese Firm-Level Data By TODO Yasuyuki; SHIMIZUTANI Satoshi
  3. Horizontal R&D Cooperation and Spillovers: Evidence from France By Bruno Versaevel; Désiré Vencatachellum
  4. What Determines Overseas R&D Activities? The Case of Japanese Multinational Firms By SHIMIZUTANI Satoshi; TODO Yasuyuki
  5. R&D Delegation in a Duopoly with Spillovers By Bruno Versaevel; Désiré Vencatachellum
  6. Persistence of profits and the systematic search for knowledge - R&D links to firm above-norm profits By Eklund, Johan; Wiberg, Daniel
  7. Network Effects in R&D Partnership Evidence from the European Collaborations in Micro and Nanotechnologies By Corinne Autant-Bernard; Pascal Billand; Christophe Bravard; Nadine Massard
  8. Decomposing differences in total factor productivity across firm size. By Laia Castany; Enrique Lopez-Bazo; Rosina Moreno
  9. Business School-Industry Cooperation: Lessons from Case Studies By Jean-Jacques Chanarron; David Birchall
  10. Towards a Re-Definition of Technology Management By Jean-Jacques Chanarron; Thierry Grange
  11. Innovation and Employment: A Survey By Marco Vivarelli
  12. Innovation and Risk Management By Manuel, Eduardo
  13. Why do some firms contract out production? By Angela Triguero,; Carmen Díaz Mora
  14. Die Beziehung zwischen dem Wettbewerbsrecht und dem Recht geistigen Eigentums - Konflikt, Harmonie oder Arbeitsteilung? - The Relationship between Antitrust Law and Intellectual Property Law - Conflict, Accommodation or Division of Labour? By Dieter Schmidtchen
  15. Information Technology and Economic Growth: Comparison between Japan and Korea By KANAMORI Takahito; MOTOHASHI Kazuyuki
  16. Specialization Patterns and the Factor Bias of Technology By Alejandro Cuñat and Marco Maffezzoli

  1. By: Bruno Versaevel (EM Lyon, GATE CNRS); Vianney Dequiedt (INRA GAEL)
    Abstract: Patent pools are cooperative agreements between several patent owners to bundle the sale of their respective licenses. In this paper we analyze their consequences on the speed of the innovation process. We adopt an ex ante perspective and study the impact of possible pool formation on the incentives to innovate. Because participation in the creation of a pool acts as a bonus reward on R&D activity, we show that a firm’s investment pattern is upward sloping over time before pool formation. The smaller the set of initial contributors, the higher this effect. A pool formation mechanism based on a proposal by the industry and acceptance/refusal by the competition authority may induce overinvestment in early innovations. It also leads a forward looking regulator to delay the clearance date of the pool. This may result in a pool size that is suboptimal from an ex ante viewpoint.
    Keywords: competition policy, licensing, R&D races, research and development
    JEL: L51 O32
    Date: 2007–01
  2. By: TODO Yasuyuki; SHIMIZUTANI Satoshi
    Abstract: This paper investigates the impact of overseas subsidiaries' R&D activities on the productivity growth of parent firms using firm-level panel data for Japanese multinational enterprises. We distinguish between overseas R&D for the utilization and acquisition of foreign advanced knowledge, or innovative R&D, and overseas R&D for the adaptation of technologies and products to local conditions, or adaptive R&D. Our major finding is that overseas innovative R&D helps to raise the productivity growth of the parent firm, while overseas adaptive R&D has no such effect. In addition, we examine whether overseas innovative R&D has an indirect effect on home productivity growth by improving the rate of return on home R&D. However, we find no evidence of such an indirect effect, suggesting that overseas innovative R&D does not engender any knowledge transfers from overseas to home R&D units.
    Date: 2007–03
  3. By: Bruno Versaevel (EM Lyon, GATE CNRS); Désiré Vencatachellum (HEC Montréal)
    Abstract: We use the French portion of the 2002 Community Innovation Survey to test how spillovers a®ect the likelihood that ¯rms cooperate in R&D. Unlike most existing empirical studies, our results clearly support well-established theoretical predictions of the industrial organization literature. We find that a firm which benefits from higher spillovers from her rivals is more likely to cooperate horizontally in R&D. Moreover, the impact of incoming spillovers on the likelihood of horizontal R&D cooperation is positive and statistically significant only when they are above a threshold. Both the value, and the precision of the estimates, increase with the information flow which firms report receiving from their competitors.
    Keywords: cooperation, research and development, spillovers
    JEL: C72 L13 L81
    Date: 2006–10
  4. By: SHIMIZUTANI Satoshi; TODO Yasuyuki
    Abstract: This paper explores what factors determine the nature, extent, and location of Japanese multinationals' R&D activities abroad. Taking advantage of a rich micro-level dataset from the survey on Japanese overseas subsidiaries, the study distinguishes between two types of overseas R&D: innovative and adaptive. We find several differences between the determinants of overseas innovative and adaptive R&D. These differences confirm the view that overseas innovative R&D aims at the exploitation of foreign advanced knowledge, whereas overseas adaptive R&D is mostly influenced by the market size of the host country. Our results provide a convincing and comprehensive explanation of the geographical distribution of overseas R&D by Japanese MNEs.
    Date: 2007–03
  5. By: Bruno Versaevel (GATE CNRS); Désiré Vencatachellum (HEC Montréal)
    Abstract: There is evidence that competing firms delegate R&D to the same independent profit-maximizing laboratory. We draw on this stylized fact to construct a model where two firms in the same industry offer transfer payments in exchange of user-specific R&D services from a common laboratory. Inter-firm and within-laboratory externalities affect the intensity of competition among delegating firms on the intermediate market for technology. Whether competition is relatively soft or tight is reflected by each firm's transfer payment offers to the laboratory. This in turn determines the laboratory's capacity to earn profits, R&D outcomes, delegating firms' profits, and social welfare. We compare the delegated R&D game to two other ones where firms (i) cooperatively conduct in-house R&D, and (ii) non-cooperatively choose in-house R&D. The delegated R&D game Pareto dominates the other two games, and the laboratory earns positive profits, only if within-laboratory R&D services are suffciently complementary but inter-firm spillovers are suffciently low. We find no room for policy intervention, because the privately profitable decision to delegate R&D, when the laboratory participates, always benefits consumers.
    Keywords: common agency, externalities, research and development
    JEL: C72 L13 O31
    Date: 2006–10
  6. By: Eklund, Johan (Jönköping International Business School (JIBS) and CESIS); Wiberg, Daniel (Jönköping International Business School (JIBS) and CESIS)
    Abstract: Economic theory tells us that abnormal firm and industry profits will not persist for any significant length of time. Any firm or industry making profits in excess of the normal rate of return will attract entrants and this competitive process will erode profits. However, a substantial amount of research has found evidence of persistent profits above the norm. Barriers to entry and exit, is an often put forward explanation to this anomaly. In the absence of, or with low barriers to entry and exit, this reasoning provides little help in explaining why these above-norm profits arise and persist. In this paper we explore the links between the systematic search for knowledge and the persistence of profits. By investing in research and development firms may succeed in creating products or services that are preferred by the market and/or find a more cost efficient method of production. Corporations that systematically invest in research and development may, by doing this, offset the erosion of profits and thereby have persistently high profits which diverge from the competitive return.We argue that even in the absence of significant barriers to entry and exit profits may persist. This can be accredited to a systematic search for knowledge through research and development.
    Keywords: Persistence of Profits; Profit Dynamics; R&D; Innovation Activity; Knowledge
    JEL: C10 C32 O10 O32
    Date: 2007–03–13
  7. By: Corinne Autant-Bernard (CREUSET - Centre de Recherche Economique de l'Université de Saint-Etienne - [CNRS : FRE2938] - [Université Jean Monnet - Saint-Etienne]); Pascal Billand (CREUSET - Centre de Recherche Economique de l'Université de Saint-Etienne - [CNRS : FRE2938] - [Université Jean Monnet - Saint-Etienne]); Christophe Bravard (CREUSET - Centre de Recherche Economique de l'Université de Saint-Etienne - [CNRS : FRE2938] - [Université Jean Monnet - Saint-Etienne]); Nadine Massard (CREUSET - Centre de Recherche Economique de l'Université de Saint-Etienne - [CNRS : FRE2938] - [Université Jean Monnet - Saint-Etienne])
    Abstract: Based on the research projects submitted to the 6th Framework Program of the European Union, this paper studies cooperative networks in micro and nanotechnologies. Our objective is twofold. First, using the statistical tools of the social network analysis, we characterise the structure of the R&D collaborations established between firms. Second, we investigate the determinants of this structure, by analysing the individual choices of cooperation. A binary choice model is used to put forward the existence of network effects alongside other microeconomic determinants of cooperation. Our findings suggest that network effects are present, so that probability of collaboration is influenced by each individual's position within the network. It seems that social distance matters more than geographical distance. We also provide some evidence that similar firms (in terms of research potential) are more likely to collaborate together
    Keywords: Network formation; R&D collaboration; Knowledge externalities; nanotechnologies
    Date: 2007–03–19
  8. By: Laia Castany (Faculty of Economics, University of Barcelona); Enrique Lopez-Bazo (Faculty of Economics, University of Barcelona); Rosina Moreno (Faculty of Economics, University of Barcelona)
    Abstract: This paper investigates the extent to which the gap in total factor productivity between small and large firms is due to differences in the endowment of factors determining productivity and to the returns associated with these factors. We place particular emphasis on the contribution of differences in the propensity to innovate and in the use of skilled labor across firms of different size. Empirical evidence from a representative sample of Spanish manufacturing firms corroborates that both differences in endowments and returns to innovation and skilled labor significantly contribute to the productivity gap between small and large firms. In addition, it is observed that the contribution of innovation to this gap is caused only by differences in quantity, while differences in returns have no effect; in the case of human capital, however, most of the effect can be attributed to increasing differences in returns between small and large firms.
    Keywords: Total Factor Productivity, skilled labor, innovation, firm size, Oaxaca decomposition
    Date: 2007–03
  9. By: Jean-Jacques Chanarron (GATE - Groupe d'analyse et de théorie économique - [CNRS : UMR5824] - [Université Lumière - Lyon II] - [Ecole Normale Supérieure Lettres et Sciences Humaines], EMSI - Ecole de Management des Systèmes d'Information - [Ecole de Management de Grenoble]); David Birchall (Henley Management College - [Henley Management College])
    Abstract: There is evidence to suggest that firms wish to work with universities to gain access to new technologies, to knowledge of future technologies and their possible impact and to thechnical problem-solving capability. There is much less evidence to support the proposition that firms work with business models and new processes. The barriers identified include those concerning management and leadership.<br />Following an overview of relevant literature, the research here reported is the outcome of investigations carried out by a network of academics and practitioners from the automotive industry. Though the examination of a number of case studiesof joint efforts, a model for cooperation is developed. Critical success factors for sustainable networks, relating to the different modes of collaboration, are put forward. Finally, areas for further research are identified.
    Keywords: business-school ; universities ; cooperation ; knowledge transfer ; automotive industry ; case studies ; key success factors
    Date: 2007–03–16
  10. By: Jean-Jacques Chanarron (GATE - Groupe d'analyse et de théorie économique - [CNRS : UMR5824] - [Université Lumière - Lyon II] - [Ecole Normale Supérieure Lettres et Sciences Humaines], EMSI - Ecole de Management des Systèmes d'Information - [Ecole de Management de Grenoble]); Thierry Grange (EMSI - Ecole de Management des Systèmes d'Information - [Ecole de Management de Grenoble])
    Abstract: The paper is proposing an historical approach of the definition and constitution of technology management as a discipline leading to a re-visited approach more in line with contemporary issues and problems facing businesses. It is suggested to expand its scope to the strategic management of technology and innovation.
    Keywords: technology management
    Date: 2007–03–16
  11. By: Marco Vivarelli (Università Cattolica Piacenza, CSGR Warwick, Max Planck Institute of Economics Jena and IZA)
    Abstract: According to the "compensation theory", market forces should assure a complete compensation of the initial labour-saving impact of process innovations. In this paper a critique of this approach is proposed through a detailed survey of the theoretical and empirical literature on the subject. The general conclusion is that - although compensation is always working - the complete counter-balancing of dismissed workers cannot be assumed ex-ante.
    Keywords: innovation, technological unemployment, compensation
    JEL: J64 O33
    Date: 2007–02
  12. By: Manuel, Eduardo
    Abstract: Always, anytime, we speak about innovation, that it occurs in our live, firms, countries and regions. The innovation is very important for survive of any firm, any entrepreneur, any country and any region in world market due to their speed evolution. This paper has as objective to approach the relationship between Innovation and Risk Management. We concluded that the relationship between innovation and risk management will exist always whereas we are continuing to live in global world that it originated a global market in all economic sectors. And for any firm, any entrepreneur, any country or any region that wants to survive in this world or market it need to do a risk management that consist in to innovate, and so can reduce the uncertainty relatively their contextual environment that affect a determined activity and consequently that is affecting their performance.
    Keywords: Innovation; Risk; Risk Management
    JEL: M29 O31 M19 D81
    Date: 2007–03–15
  13. By: Angela Triguero,; Carmen Díaz Mora
    Abstract: The present paper examines which factors determine outsourcing decision using firm-level panel data for Spanish manufacturing industries. Outsourcing is measured as the manufacture of custom-made finished products or parts and components which have been contracted out to third parties. Moreover, we distinguish whether the main contractor provides the materials to the external supplier or not. Following the theoretical framework of Grossman and Helpman (2002), we take into account the persistence of outsourcing decision as well as other firm, industry and market characteristics that influence the likelihood of contracting out. Using a dynamic panel data probit model, our results show that previous subcontracting decision, wages, market changes, R&D activities, product and process innovation, product differentiation, industry-size and exporter status affect positively the current subcontracting decision.
  14. By: Dieter Schmidtchen (Universität des Saarlandes)
    Abstract: The relationship between the Antitrust Law and the Patent, Copyright and other Intellectual Property (IP) Laws has perplexed antitrust scholars and practitioners for a long time. Intellectual property and antitrust regimes both seek to advance the economic well-being of society. However, whereas the IP laws are designed to create exclusive rights - rights that sometimes rise to the level of monopolies - in order to encourage innovation and creativity, Antitrust Law is designed to foster competition and to prevent the formation of monopolies. Finding the right balance between maintaining competition and creating incentives to innovate is no easy task. This paper emphasises a division of labour: IP law should concern itself with assigning and enforcing intellectual property rights, while Antitrust Law should concern itself with the use of those rights for anti-competitive purposes. I develop the main thesis in three parts: The first part of the paper outlines the economics of IP rights. The second part presents basics of Antitrust Law. The third part deals with some specificity of the IP/Antitrust Law interface: Reasons giving rise for special concerns are found in the areas of mergers, licensing and cross-licensing, patent pools, grant-backs, practices to extend the legal patent monopoly beyond the life of the patent, interfaces and interoperability in networks, umbrella branding, and compulsory trademark licensing. The last part of the paper summarises with a set of principles for competition policy.
    Keywords: competition policy, competition law, antitrust, intellectual property,
    JEL: L4
  15. By: KANAMORI Takahito; MOTOHASHI Kazuyuki
    Abstract: In this paper we compare sources of economic growth in Japan and Korea from 1985 to 2004, focusing on the role of information technology (IT), based on the framework of Jorgenson and Motohashi (2005). In both countries, the information technology industry is an important source of economic and productivity growth from the output side. In addition, active IT investments are supposed to lead to substantial IT capital service contribution to economic growth from the input side.
    Date: 2007–03
  16. By: Alejandro Cuñat and Marco Maffezzoli
    Abstract: Development accounting exercises based on an aggregate production function find technology is biased in favor of a country's abundant production factors. We provide an explanation to this finding based on the Heckscher-Ohlin model. Countries trade and specialize in the industries that use intensively the production factors they are abundantly endowed with. For given factor endowment ratios, this implies smaller international differences in factor price ratios than under autarky. Thus, when measuring the factor bias of technology with the same aggregate production function for all countries, they appear to have an abundant-factor bias in their technologies.

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