nep-ino New Economics Papers
on Innovation
Issue of 2007‒04‒21
twenty-one papers chosen by
Koen Frenken
Utrecht University

  1. Efficiency in Public Research Centers: Evaluating the Spanish Food Technology Program By Jiménez-Sáez, Fernando; Zabala-Iturriagagoitia, Jon Mikel; Zofío, José Luis
  3. From Container Knowledge to Entrepreneurial Learning: The Role of Universities By Gerald Braun
  4. The Innovative Performance of Foreign-owned Enterprises in Small Open Economies By Dachs, Bernhard; Ebersberger, Bernd; Lööf, Hans
  5. Retail Price Regulation and Innovation: Reference Pricing in the Pharmaceutical Industry By BARDEY, David; BOMMIER, Antoine; JULLIEN, Bruno
  6. Economic Recognition of Innovation By Rao, Balkrishna
  7. Intellectual Property Rights, Imitation, and Foreign Direct Investment: Theory and Evidence By Lee Branstetter; Raymond Fisman; C. Fritz Foley; Kamal Saggi
  8. Evolution of regional clusters in nanotechnology. Empirical findings from Germany. By Henn, Sebastian
  9. Financial Incentives in Academia: Research versus Development By Albert Banal-Estañol; Inés Macho-Stadler
  10. Entrepreneurship Education at University Level ? Contextual Challenges By Per Blenker; Poul Dreisler; John Kjeldsen
  11. "Item Pricing Laws, Supplier Behavior, and the Diffusion of Time-Saving Technology Innovations" By James G. Mulligan; Nilotpal Das
  12. The Geography and the Effect of Creative People in Germany By Michael Fritsch
  13. Social rewards in science and economic growth By Carillo, Maria Rosaria; Papagni, Erasmo
  14. Technology and the Demand for Skill:An Analysis of Within and Between Firm Differences By John M. Abowd; John Haltiwanger; Julia Lane; Kevin L. McKinney; Kristin Sandusky
  15. Understanding the Rationale to Patent in Pharmaceuticals By Machado, H. B.
  16. Scholarship in Action: Applied Research and Community Change By HUD - PD&R
  17. Concerning Technology Adoption and Inequality By Radhika Lahiri; Shyama Ratnasiri
  18. Baltic Entrepreneurship Partners (BEPART)From Interregional and International Cooperation to Regional Impact of Entrepreneurship Promotion By Christoph Diensberg
  19. Research Cycles By BRAMOULLÉ, Yann; SAINT-PAUL, Gilles
  20. Intrinsic Motivation versus Signaling in Open Source Software Development By Bitzer, Jürgen; Schrettl, Wolfram; Schröder, Philipp J.H.
  21. Product Creation and Destruction: Evidence and Price Implications By Christian Broda; David E. Weinstein

  1. By: Jiménez-Sáez, Fernando (INGENIO (CSIC-UPV)-Universidad Politécnica de Valencia, Valencia, Spain); Zabala-Iturriagagoitia, Jon Mikel (INGENIO (CSIC-UPV)-Universidad Politécnica de Valencia, Valencia, Spain); Zofío, José Luis (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.)
    Abstract: We rely on efficiency analysis to evaluate the Spanish R&D public policy based on financial incentives, and investigate to what extent this instrument has been able to promote a multidimensional research output mix, contributing to the articulation of a successful Spanish Food Innovation System. Introducing the use of the generalized distance function within DEA techniques, we assess whether this policy has encouraged the creation, strengthening and promotion of efficient public research units, whose activities present a balanced and comprehensive production of complementary research outputs −personnel training, science and technology results, and socio-economic collaboration with the private sector. Characterizing the alternative ways in which the different research units have been participating in the Spanish Food Technology Program, and hence their role within the innovation system, we conclude that R&D policy efforts have not succeeded in orienting research units toward a balanced output research mix due to wrong incentives and the lack of a sustained budget that would enable the consolidation of emerging research units. Furthermore, we observe that the majority of research units channel their efforts toward achieving science-technology results related to publications and submitted patents, instead of increasing socio-economic results that would strengthen the articulation and efficiency of the innovation system.
    Keywords: Innovation System Management; Research Efficiency; Data Envelopment Analysis
    JEL: C61 D78
    Date: 2007–03
  2. By: Ramón Faulí-Oller (Universidad de Alicante); Joel Sandonís (Universidad de Alicante)
    Abstract: An independent research laboratory owns a patented process innovation that can be licensed by means of an auction to two Cournot duopolists producing differentiated goods. For large innovations and close enough substitute goods the patentee auctions o¤ only one license, preventing the full diffusion of the innovation. For this range of parameters, however, if the laboratory merged with one of the firms in the industry, full technology diffusion would be implemented as the merged entity would always license the innovation to the rival firm. This explains that, in this context, a vertical merger is both profitable and welfare improving.
    Keywords: Patent licensing, two-part tariff contracts, vertical mergers
    JEL: L13 L23
    Date: 2007–04
  3. By: Gerald Braun (Hanseatic Institute of Entrepreneurship and Regional Development (HIE-RO) at Rostock University, Faculty of Economics and Social Sciences)
    Abstract: The new quality of international competition changes the function of universities dramatically. They have to ? in addition to their traditional role as sources of ideas, knowledge and intellectual capital ? become agents of innovations, i.e. entrepreneurial universities, enhance regional development and international competitiveness. The transformation of university produced knowledge into market-oriented innovations depends on the quality of academic entrepreneurship. The article analyses two competing approaches to promote academic entrepreneurship: The 'knowledge container' and the 'entrepreneurial learning' approach ? and their foundations in neoclassical and evolutionary growth theory. The obstacles to introduce entrepreneurial learning as an educational innovation are being analysed (non-innovative university culture/history/attitudes, bureaucratic over-regulation, defence of vested rights). The article finally discusses some conditions for successful academic entrepreneurship (corporate university entrepreneurs, change agents, inter-university competition, entrepreneurial universities as learning organisations)
    Keywords: Entrepreneurial university, academic entrepreneurship, container knowledge accumulation, entrepreneurial learning, educational innovations
    JEL: E1 E3 F2
    Date: 2006
  4. By: Dachs, Bernhard (Austrian Research Centers, Vienna, Austria); Ebersberger, Bernd (Management Center Innsbruck, Innsbruck, Austria); Lööf, Hans (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper compares the innovative performance of foreign-owned and domestically owned enterprises in five European countries. We look at innovation inputs, outputs, and examine how strong foreign-owned enterprises are embedded in the innovations systems of their host countries. We find that foreign ownership causes no differences in innovation input, but yields a higher innovation output and higher labour productivity. In four of the five countries, affiliates of foreign multinationals show a similar or even a higher propensity to co-operate with domestic partners than domestically owned enterprises
    Keywords: Austria; Denmark; Finland; Norway; Sweden; Innovation; Multinational Enterprises; Foreign-owned Enterprises; CIS
    JEL: F23 O31
    Date: 2007–04–16
  5. By: BARDEY, David; BOMMIER, Antoine; JULLIEN, Bruno
    JEL: I18 L11 L15 L51
    Date: 2006–12
  6. By: Rao, Balkrishna
    Abstract: Globalization has benefited the economies of member countries of the Organization for Economic Cooperation and Development (OECD) by helping their businesses stay profitable through cost-effective outsourcing of mostly garden-variety tasks and some knowledge-based activities. With time, the latter will account for the lion’s share of work outsourced and emerging export houses will also tend to cater more to their own domestic markets because of their expanding infrastructure and growing manpower possessing advanced skills. This will result in a leveled playing field coaxing developed countries to adopt widespread innovations to maintain their high perch in the economic pecking order. Such large-scale creativity can be managed better if it could be gauged with an appropriate measure. This work propounds a new economic measure called the Gross Domestic Innovation (GDI) to quantify innovations in OECD countries. It will supplement universal measures such as the Gross Domestic Product (GDP), productivity and numbers concerning employment. Apart from the methodology for its estimation, the impact of GDI on the various facets of a vibrant economy is discussed and inter alia, the role of GDI in fighting inflation and alleviating the negative influences of globalization is stressed. Also, a tentative analysis on the economies of U.S., Japan, Germany and China is presented to illustrate the concept.
    Keywords: Innovation; GDI; GDP; OECD; Globalization; Patents
    JEL: O38 O32 O34
    Date: 2006–03
  7. By: Lee Branstetter; Raymond Fisman; C. Fritz Foley; Kamal Saggi
    Abstract: This paper theoretically and empirically analyzes the effect of strengthening intellectual property rights in developing countries on the level and composition of industrial development. We develop a North-South product cycle model in which Northern innovation, Southern imitation, and FDI are all endogenous. Our model predicts that IPR reform in the South leads to increased FDI in the North, as Northern firms shift production to Southern affiliates. This FDI accelerates Southern industrial development. The South's share of global manufacturing and the pace at which production of recently invented goods shifts to the South both increase. Additionally, the model also predicts that as production shifts to the South, Northern resources will be reallocated to R&D, driving an increase in the global rate of innovation. We test the model's predictions by analyzing responses of U.S.-based multinationals and domestic industrial production to IPR reforms in the 1980s and 1990s. First, we find that MNCs expand the scale of their activities in reforming countries after IPR reform. MNCs that make extensive use of intellectual property disproportionately increase their use of inputs. There is an overall expansion of industrial activity after IPR reform, and highly disaggregated trade data indicate an increase in the number of initial export episodes in response to reform. These results suggest that the expansion of multinational activity more than offsets any decline in the imitative activity of indigenous firms.
    JEL: F23 O33 O34
    Date: 2007–04
  8. By: Henn, Sebastian
    Abstract: This article aims at establishing a wider understanding of the evolution of spatial clusters. It will be argued that the potential to generate regional growth is dependent on the way a cluster emerges. Two models of cluster formation will be distinguished in detail – start-up clusters and unrelated spatial concentrations. In its sectoral orientation the study is focused on nanotechnology, a key(technology)-industry said to contribute to new growth spurts in the industrialised world. By analysing the evolution of regional clusters in the Saarland and in Berlin-Brandenburg it will be shown that both types of cluster formation can be found in nanotechnology, demanding different modes of policy intervention.
    Keywords: Cluster; Innovation; Emergence; Evolution; Location; Nanotechnology; Cluster Dynamics; Hightech; Regional Development; Spatial Dynamics
    JEL: R58 R30 R11 O30
    Date: 2006
  9. By: Albert Banal-Estañol; Inés Macho-Stadler
    Abstract: This paper investigates the effects of monetary rewards on the pattern of research. We build a simple repeated model of a researcher capable to obtain innovative ideas. We analyse how the legal environment affects the allocation of researcher?s time between research and development. Although technology transfer objectives reduce the time spent in research, they might also induce  researchers to conduct research that is more basic in nature, contrary to what the ?skewing problem? would presage. We also show that our results hold even if development delays publication.
    Keywords: Faculty behaviour, basic vs. applied research
    JEL: I23 L21 L31 M13 O31
    Date: 2007–04–13
  10. By: Per Blenker (School of Economics and Management, University of Aarhus); Poul Dreisler (Department of Management, School of Business, University of Aarhus); John Kjeldsen (Department of Marketing and Statistics, School of Business, University of Aarhus)
    Abstract: Entrepreneurship has been declared the most significant driver in the future development of societal welfare. Businesses, organisations and the individual person should be motivated for – and develop competence in – perceiving new opportunities through reflective action and hence participate in the creation of change and growth in society. This capacity and inclination for change and innovation is thus conceived as an important human trait, which has come to be known as “enterprising behaviour” in international research. In which ways do these demands challenge the universities and its role in regional and societal context? Interaction between universities, business sector and political system through the so-called “triple-helix-model” is said to be the basis for growth and innovation. Does it mean that knowledge creation and exchange should be based on the concept of the entrepreneurial university? Related to that, what are then the internal challenges for the entire education culture and for the role of the teacher / researcher? It is some of the questions the paper tries to answer or at least give some deeper insight to
    Keywords: Entrepreneurial university, triple-helix, enterprising behaviour, entrepreneurial culture, role of teacher / researcher
    JEL: A2 D8 I21
    Date: 2006
  11. By: James G. Mulligan (Department of Economics,University of Delaware); Nilotpal Das
    Abstract: In this paper we provide non-parametric and parametric estimations of the initial diffusion process of point-of-sale optical scanners that illustrate the importance of controlling for supplier behavior and government regulations. In particular, we show that discrete changes in the early development of the technology followed predictably different diffusion paths depending on each vintage’s relative effect on service speed and costs of production. We also provide evidence that item-pricing laws passed in six states as consumer protection initiatives slowed down the initial diffusion of the technology at the same time as consumer acceptance of scanners was growing nation-wide.
    JEL: O3 L8
    Date: 2006
  12. By: Michael Fritsch (University of Jena, School of Busniess and Economics, Max Planck Institute of Economics Jena, and Institute for Economic Research (DIW Berlin))
    Abstract: This paper investigates the geography and the effect of people in creative occupation in Germany. The population share of the Creative Class as well as of bohemians and artists is relatively high in larger cities, but smaller places and rural regions may also have a considerable proportion of people with a creative job. While ethnical and cultural diversity and a high level of public supply in health care and education can explain the distribution of creative people, employment opportunities seem to play only a minor role. There is a positive statistical relationship between the share of people in creative occupations, the level of new business formation and the innovativeness of regions. A high share of creative occupations seems to be conducive to regional growth; however, the exact nature of this relationship is still unclear.
    Keywords: Creativity, innovation, entrepreneurship, regional development
    JEL: O31 O18 R11
    Date: 2007–03–30
  13. By: Carillo, Maria Rosaria; Papagni, Erasmo
    Abstract: In this paper we put forward a model of basic research and long-run economic growth in which the incentives of social reward to scientific work may produce increasing returns and multiple equilibria. The state organizes production of new knowledge - a public good that improves firms' technology - with taxes on the private sector. Scientists compete with one another to attain priority over a discovery and be awarded both a real prize and prestige in the scientific community. Also, scientists\ derive job motivation from dedication to science which provides social status. Analysis of the model shows, on the one hand, a low equilibrium where the economy is endowed with a small science sector, researchers have high relative income but low prestige, and competition for discoveries is weak. On the other hand, there is a high equilibrium where the economy has a large science sector, scientists obtain for new findings high prestige but lower relative salaries and, as the effect of creative destruction is strong, there is fierce competition among researchers. Comparative statics shows that if the scientific infrastructure is poor, policies that increase the marginal benefits from a discovery have perverse effects, while policies aimed at improving the selection mechanism of researchers work well. \ The same policies have opposite effects at the high steady state.
    Keywords: Social reward; basic research; economic growth
    JEL: O40 O30
    Date: 2007–03–28
  14. By: John M. Abowd; John Haltiwanger; Julia Lane; Kevin L. McKinney; Kristin Sandusky
    Abstract: We estimate the effects of technology investments on the demand for skilled workers using longitudinally integrated employer-employee data from the U.S. Census Bureau's Longitudinal Employer-Household Dynamics Program infrastructure files spanning two Economic Censuses (1992 and 1997). We estimate the distribution of human capital and its observable and unobservable components within each business for each year from 1992 to 1997. We measure technology using variables from the Annual Survey of Manufactures and the Business Expenditures Survey (services, wholesale and retail trade), both administered during the 1992 Economic Census. Static and partial adjustment models are fit. There is a strong positive empirical relationship between advanced technology and skill in a cross-sectional analysis of businesses in both sectors. The more comprehensive measures of skill reveal that advanced technology interacts with each component of skill quite differently: firms that use advanced technology are more likely to use high-ability workers, but less likely to use high-experience workers. These results hold even when we control for unobservable heterogeneity by means of a selection correction and by using a partial adjustment specification.
    JEL: J23 J24 O33
    Date: 2007–04
  15. By: Machado, H. B.
    Date: 2007–10
  16. By: HUD - PD&R
    Abstract: Through its Office of University Partnerships, HUD's Office of Policy Development and Research supports the research efforts of college and university students and faculty. The department recognizes that good research and analysis is the foundation to meaningful community outreach. This edited monograph highlights the benefits to be derived from engaged, community-based research. The articles included describe the application of the scholarly principles of analysis, data collection, and interpretation to the real problems of housing and urban development confronting our communities. The unifying theme throughout this collection is how much communities and universities can achieve by working together in research partnerships. Such research has had both immediate and long-term impacts on the state of the nation's housing and community development programs.
    JEL: A00
    Date: 2006–08
  17. By: Radhika Lahiri; Shyama Ratnasiri
    Abstract: Empirical evidence suggests that there has been a divergence over time in income distributions across countries and within countries. Furthermore, developing economies show a great deal of diversity in their growth patterns during the process of economic development. For example, some of these countries converge rapidly on the leaders, while others stagnate, or even experience reversals and declines in their growth processes. In this paper we study a simple dynamic general equilibrium model with household specific costs of technology adoption which is consistent with these stylized facts. In our model, growth is endogenous, and there are two-period lived overlapping generations of agents, assumed to be heterogeneous in their initial holdings of wealth and capital. We find that in a special case of our model, with costs associated with the adoption of more productive technologies fixed across households, inequalities in wealth and income may increase over time, tending to delay the convergence in international income differences. The model is also capable of explaining some of the observed diversity in the growth pattern of transitional economies. According to the model, this diversity may be the result of variability in adoption costs over time, or the relative position of a transitional economy in the world income distribution. In the more general case of the model with household specific adoption costs, negative growth rates during the transitional process are also possible. The model’s prediction that inequality has negative impact on technology adoption is supported by empirical evidence based on a cross country data set.
    Keywords: inequality, technology adoption, international income differences, altruism, negative growth rates
    Date: 2007–04–20
  18. By: Christoph Diensberg (Economics and Business Education, University of Rostock Hanseatic Institute for Entrepreneurship and Regional Development HIE-RO)
    Abstract: This article illustrates the case of the international network project BEPART (Baltic Entrepreneurship Partners) with its activities in entrepreneurship promotion. It starts with some basic thoughts on the understanding of entrepreneurship. The article then turns to European and regional development issues in the Baltic Sea Region by trying to show how the project work responds to related challenges. The next step describes the project goals and structure. Ten propositions on regional entrepreneurship promotion are presented as they represent a set of shared basic assumptions inside the network. They are also intended to be a tool for inducing more far reaching improvements in the field. Knowledge exchange and its effects are another issue that is highlighted. The article touches the topic of evaluation and learning within the project, and finally turns to innovations in entrepreneurship education and its foundations
    Keywords: entrepreneurship promotion, entrepreneurship education, Baltic Sea Region, regional development
    JEL: A2 D8 L2 R5
    Date: 2006
  19. By: BRAMOULLÉ, Yann; SAINT-PAUL, Gilles
    JEL: O39 C61
    Date: 2006–11
  20. By: Bitzer, Jürgen (Free University Berlin); Schrettl, Wolfram (Free University Berlin); Schröder, Philipp J.H. (Department of Economics, Aarhus School of Business)
    Abstract: This papers sheds light on the puzzling fact that even though open <p> source software (OSS) is a public good, it is developed for free by <p> highly qualified, young, motivated individuals, and evolves at a rapid <p> pace. We show that when OSS development is understood as the private <p> provision of a public good, these features emerge quite naturally. <p> We adapt a dynamic private-provision-of-public-goods model to reflect <p> key aspects of the OSS phenomenon. Apart from extrinsic motives <p> (namely signaling), the present model also contains intrinsic motives <p> of OSS programmers, such as play value or homo ludens payoff, userprogrammers’ <p> and gift culture benefits. Such intrinsic motives feature <p> extensively in the wider OSS literature and contribute new insights to <p> the economic analysis
    Keywords: open source software; public goods; homo ludens; war of attrition
    JEL: H41 L31 L86
    Date: 2006–09–01
  21. By: Christian Broda; David E. Weinstein
    Abstract: This paper describes the extent and cyclicality of product creation and destruction in a large sector of the U.S. economy and quantifies its implications for the measurement of consumer prices. We find four times more entry and exit in product markets than is typically found in labor markets because most product turnover happens within the boundaries of the firm. Net product creation is strongly pro-cyclical, but contrary to the behavior of labor flows, it is primarily driven by creation rather than destruction. High rates of innovation are also accompanied by substantial price volatility of products. These facts suggest that the CPI deviates from a true cost-of-living index in three important dimensions. The quality bias that arises as new goods replace outdated ones causes the CPI to overstate inflation by 0.8 percent per year; the cyclicality of the bias implies that business cycles are more volatile than indicated by official statistics; and finally, sampling error is sufficiently large that over the last 10 years policymakers could not statistically distinguish whether quarterly inflation was accelerating or decelerating 65 percent of the time.
    JEL: E21 E31 E32
    Date: 2007–04

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