nep-ino New Economics Papers
on Innovation
Issue of 2007‒04‒28
twenty papers chosen by
Koen Frenken
Utrecht University

  1. Motives for Innovation Co-operation – Evidence from the Canadian Survey of Innovation By Schmidt, Tobias
  2. What determines the efficiency of regional innovation systems? By Michael Fritsch; Viktor Slavtchev
  3. The Influence of Strategic Patenting on Companies’ Patent Portfolios By Blind, Knut; Cremers, Katrin; Mueller, Elisabeth
  4. Horizontal R&D Cooperation and Spillovers: Evidence from France By Désiré Vencatachellum; Bruno Versaevel
  5. Collective management of intellectual property rights By Dequiedt, V.; Menière, Y.; Trommetter, M.
  6. Entrepreneurial decision-making in cooperative organizations - a case study research By Brunner, Daniel; Voigt, Tim
  7. Conditional R&D Subsidies By Atallah, Gamal
  8. R&D Delegation in a Duopoly with Spillovers By Désiré Vencatachellum; Bruno Versaevel
  9. Global Sourcing, Technology, and Factor Intensity: Firm-level Relationships By TOMIURA Eiichi
  10. Vertical Integration and Dis-integration of Computer Firms: A History Friendly Model of the Co-evolution of the Computer and Semiconductor Industries. By Franco Malerba; Richard Nelson; Luigi Orsenigo; Sidney Winter
  11. Knowledge creation as a square dance on the Hilbert cube By Berliant, Marcus; Fujita, Masahisa
  12. R&D and Export Intensities in Automotive Parts Firms in China, Malaysia, Philippines and Taiwan: Does Ownership Matter? By Rajah RASIAH
  13. Ethical issues relating to the use of the Internet and the implications for managers and business practice By Mihai Orzan
  14. Artistic Creation and Intellectual Property By Francisco Alcalá; Miguel González-Maestre
  15. How do social capital and government support affect innovation and growth? Evidence from the EU regional support programmes By Akcomak, Semih; Ter Weel, Bas
  16. Intra- and Inter-Sectoral Knowledge Spillovers and TFP Growth Rates By Quella, Núria
  17. Entrepreneurship, State Economic Development Policy, and the Entrepreneurial University By Audretsch, David B; Phillips, Ronnie
  18. Underlying dimensions of knowledge assessment : factor analysis of the knowledge assessment methodology data By Gawande, Kishore; Chen, Derek H. C.
  19. Information Technology Use and Productivity at the Individual Level By Gandal, Neil; King III, Charles; Van Alstyne, Marshall W.
  20. Trade, Knowledge, and the Industrial Revolution By Kevin H. O'Rourke; Ahmed S. Rahman; Alan M. Taylor

  1. By: Schmidt, Tobias
    Abstract: In this paper we analyse the decision of firms in the Canadian manufacturing sector to co-operate on innovation projects. Our focus is on the motives behind this decision and the firm characteristics, both general and with respect to innovation activities, which influence the motives for innovation co-operation. Using data from the Canadian Survey of Innovation 2005 we find that the factors influencing the decision to co-operate in order to access external knowledge are very similar to those influencing cost-sharing motives. We also show that public funding leads firms to cooperate in order to access external knowledge and R&D.
    Keywords: Innovation Co-operation, Motives for Co-operation, Canadian Survey of Innovation
    JEL: L22 O31 O32
    Date: 2007
  2. By: Michael Fritsch (University of Jena, School of Busniess and Economics, Max Planck Institute of Economics Jena, and Institute for Economic Research (DIW Berlin)); Viktor Slavtchev (University of Jena, School of Busniess and Economics)
    Abstract: We assess the efficiency of regional innovation systems (RIS) in Germany by means of a knowledge production function. This function relates private sector research and development (R&D) activity in a region to the number of inventions that have been registered by residents of that region. Different measures and estimation approaches lead to rather similar assessments. We find that both spillovers within the private sector as well as from universities and other public research institutions have a positive effect on the efficiency of private sector R&D in the respective region. It is not the mere presence and size of public research institutions, but rather the intensity of interactions between private and public sector R&D that leads to high RIS efficiency. We find that relationship between the diversity of a regions’ industry structure and the efficiency of its innovation system is inversely u-shaped. Regions dominated by large establishments tend to be less efficient than regions with a lower average establishment size.
    Keywords: Knowledge, innovation, technical efficiency, spillovers, patents, regional analysis
    JEL: O31 O18 R12
    Date: 2007–04–20
  3. By: Blind, Knut; Cremers, Katrin; Mueller, Elisabeth
    Abstract: This paper analyses whether strategic motives for patenting influence the characteristics of companies’ patent portfolios. We use the number of citations and oppositions to represent these characteristics. The investigation is based on survey and patent data from German companies. We find clear evidence that the companies’ patenting strategies explain the characteristics of their patent portfolios. First, companies using patents to protect their technological knowledge base receive a higher number of citations for their patents. Second, the motive of offensive – but not of defensive – blocking is related to a higher incidence of oppositions, whereas companies using patents as bartering chips in collaborations receive fewer oppositions to their patents.
    Keywords: strategic patenting, patent portfolio characteristics
    JEL: O32 O34
    Date: 2007
  4. By: Désiré Vencatachellum (HEC Montréal - [HEC Montréal]); Bruno Versaevel (GATE - Groupe d'analyse et de théorie économique - [CNRS : UMR5824] - [Université Lumière - Lyon II] - [Ecole Normale Supérieure Lettres et Sciences Humaines])
    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
    Date: 2007–04–19
  5. By: Dequiedt, V.; Menière, Y.; Trommetter, M.
    Abstract: This paper proposes a common analysis for a large set of multilateral agreements that are used to collectively manage intellectual property in industries as different as biotechnologies or information technologies. It discusses how these agreements, based on existing intellectual property institutions, can encourage innovation either by facilitating technology transfers or by improving the organization of collective innovation processes. In the first part we explain how the collective management of intellectual property rights can be used to facilitate arm’s length technology transfers. Its objective is then to facilitate the access to information about variety, to reduce negotiation costs and to optimize the management of prices. In the second part we explain how the collective management of intellectual property rights can be used to improve the innovation production processes by proposing a wide set of organizational structures ranging from centralized organizations that rely heavily on planning, to decentralized organizations that use incentives to motivate participants. As a conclusion, we highlight new challenges for competition policy generated by those tools.
    JEL: D23
    Date: 2007
  6. By: Brunner, Daniel; Voigt, Tim
    Abstract: In the context of innovation activitties, the process of new product development and their implementation in the internal structure of the organization requires knowledge communication and decision-making on different levels of the cooperative network. The functions of entrepreneurship are not any longer limited to a single firm but are divided up into different parts along the cooperative network. In our paper we address the question how the requiered market knowledge can be perceived and incorporated in the complex structure of cooperative organizations. The methodological approach of the paper is related to the idea of theorizing by meands of case study research. Therefore we introduce a modified concept of the innovation process with six idealized phases. The results are integrated in the framework by the illustration of three selected practical examples of innovation activities carried out by a German cooperative in the past.
    Keywords: cooperatice; case study research; innovation process; entrepreneurship; decision-making;
    JEL: M13
    Date: 2007–04–23
  7. By: Atallah, Gamal
    Abstract: This paper introduces a new type of R&D subsidy, which is conditional on the success of the R&D project. In a three-stage model, the government chooses a subsidy(ies) in the first stage; in the second stage, a monopolist chooses R&D effort which determines the size or the probability of success of the R&D project; in the last stage, the firm chooses its output. It is found that conditional subsidies can yield the same level of innovation and welfare as unconditional subsidies. However, when the probability of success is sufficiently low (be it endogenous or exogenous), conditional subsidies yield suboptimal levels of innovation and welfare. When the firm chooses the probability of success, conditional subsidies can have the advantage of a lower expected cost of the subsidy to the government. I consider the simultaneous use of conditional and unconditional subsidies, and show that different combinations of the two can lead to the same levels of innovation and welfare as unconditional subsidies alone. Finally, reverse conditional subsidies, which the firm gets only if the project fails, are considered. It is found that they yield the same level of innovation as unconditional subsidies, except when the probability of success is sufficiently high. Comparing conditional subsidies with reverse conditional subsidies, conditional subsidies yield higher (lower) welfare when the probability of success is high (low).
    Keywords: R&D subsidies; Innovation; R&D policy; Innovation policy
    JEL: O38 O31
    Date: 2007
  8. By: Désiré Vencatachellum (HEC Montréal - [HEC Montréal]); Bruno Versaevel (GATE - Groupe d'analyse et de théorie économique - [CNRS : UMR5824] - [Université Lumière - Lyon II] - [Ecole Normale Supérieure Lettres et Sciences Humaines])
    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
    Date: 2007–04–19
  9. By: TOMIURA Eiichi
    Abstract: This paper empirically examines how technology and capital intensity are related with the firm's global sourcing decision. Firm-level data are derived from a survey covering all manufacturing industries in Japan without any firm-size threshold. Firms are disaggregated by their make-or-buy decision (in-house or outsourcing) and by their choice of sourcing location (offshore or domestic). Capital-intensive or R&D-intensive firms tend to source in-house from their FDI affiliates rather than outsourcing to independent suppliers. This paper also confirms that high productivity is related with offshore sourcing. These findings are basically robust even after industry and firm-size are controlled for.
    Date: 2007–04
  10. By: Franco Malerba (Cespri, Bocconi University, Milano, Italy.); Richard Nelson (Columbia University, New York, USA.); Luigi Orsenigo (University of Brescia and CESPRI, Bocconi University, Milan, Italy.); Sidney Winter (Wharton School, University of Pennsylvania, Philadelphia, USA.)
    Abstract: In this paper we present a history-friendly model of the changing vertical scope of computer firms during the evolution of the computer and semiconductor industries. The model is “history friendly”, in that it attempts at replicating some basic, stylized qualitative features of the evolution of vertical integration on the basis of the causal mechanisms and processes which we believe can explain the history. The specific question addressed in the model is set in the context of dynamic and uncertain technological and market environments, characterized by periods of technological revolutions punctuating periods of relative technological stability and smooth technical progress. The model illustrates how the patterns of vertical integration and specialization in the computer industry change as a function of the evolving levels and distribution of firms’ capabilities over time and how they depend on the co-evolution of the upstream and downstream sectors. Specific conditions in each of these markets – the size of the external market, the magnitude of the technological discontinuities, the lock-in effects in demand – exert critical effects and feedbacks on market structure and on the vertical scope of firms as time goes by.
    Keywords: Industrial Dynamics, Vertical Integration, Specialization, Technology.
    JEL: O30 L10 L60
    Date: 2006–12
  11. By: Berliant, Marcus; Fujita, Masahisa
    Abstract: This paper presents a micro-model of knowledge creation through the interactions among a group of people. Our model incorporates two key aspects of the cooperative process of knowledge creation: (i) heterogeneity of people in their state of knowledge is essential for successful cooperation in the joint creation of new ideas, while (ii) the very process of cooperative knowledge creation affects the heterogeneity of people through the accumulation of knowledge in common. The model features myopic agents in a pure externality model of interaction. Surprisingly, in the general case for a large set of initial conditions we find that the equilibrium process of knowledge creation converges to the most productive state, where the population splits into smaller groups of optimal size; close interaction takes place within each group only. This optimal size is larger as the heterogeneity of knowledge is more important in the knowledge production process. Equilibrium paths are found analytically, and they are a discontinuous function of initial heterogeneity.
    Keywords: knowledge creation; knowledge externalities; dynamic R and D; endogenous agent heterogeneity
    JEL: D83 O31
    Date: 2007–03–12
  12. By: Rajah RASIAH
    Abstract: This paper seeks to examine the importance of ownership in R&D intensities and export ownership in the automotive parts firms in China, Indonesia, Malaysia, Philippines and Taiwan. Consistent with the portfolio and ownership, location and internationalization theories of foreign direct investment about asset specific advantages, the pooled regressions show higher R&D intensities in local firms than in foreign firms. Export-orientation was only highly correlated with R&D intensities in the local samples. The results also show foreign ownership to be highly correlated with export-orientation in the pooled regressions but not in the individual country regressions.
    Date: 2007–04
  13. By: Mihai Orzan (School of Marketing, Academy of Economic Studies)
    Abstract: The IT&C industry products are ubiquitous in modern society. However, their specificity led, for a long time, to a so-called “marketing blind-spot” in the IT industry, situation especially evident after the Microsoft devastating success from the early nineties. Microsoft was the first IT company to use large scale marketing techniques, among whom was an obscure (at the time) approach to qualitative marketing research known as “usability testing”. This technique was employed to determine if a user interface was appropriate and comfortable for its intended users. Usability testing adoption in the IT industry generated a wealth of information about how users interacted with IT products, information that is paramount in gaining an upper hand in today’s highly competitive Information Society.
    Keywords: Internet, usability, marketing research, website design
    JEL: M39
    Date: 2006–04
  14. By: Francisco Alcalá (Universidad de Murcia. Departamento de Fundamentos del Análisis Económico, Campus de Espinardo); Miguel González-Maestre (Universidad de Murcia. Departamento de Fundamentos del Análisis Económico, Campus de Espinardo)
    Abstract: We analyze artistic markets considering three key distinctive features that have been overlooked by the standard analysis on intellectual property. These features are the dynamic link between the current number of young artists and future high-quality artistic creation, Rosen’s superstars phenomenon, and the role played by promotion costs. Introducing them into an overlapping-generations model brings about a new perspective on the consequences for artistic creation of changes in the copyright term, progress in communication technologies favoring market concentration by stars, and the enlargement of markets. The conventional result that longer copyrights always stimulate artistic creation only holds as a particular case.
    Keywords: superstars, copyrights, innate abilities, allocation of talent.
    JEL: J44 J62 L82 O34
    Date: 2006–12
  15. By: Akcomak, Semih (UNU-MERIT); Ter Weel, Bas (UNU-MERIT)
    Abstract: This research investigates the role of social capital and government intervention in explaining the differences of innovation output and economic growth for regions of the European Union from 1990-2002. Using several measures of social capital and innovation, and the European Union’s Objective 1, 2 and 5b figures for EU regional support, the estimates suggest that EU funding is not significantly contributing to economic outcomes, while social capital is. Investigation of a possible complementary relationship between social capital and government support reveals that regions with higher levels of social capital are more likely to effectively gain from EU regional support programmes. This result implies that aside from the benefits associated with the direct effect of social capital on economic outcomes, social capital appears to be a critical prerequisite for the effective implementation of government programmes. From a policy perspective, it appears to be important to stimulate education to foster human capital formation. When combined, human capital and social capital are likely to yield stronger effects for effective policies which increase economic outcomes.
    Keywords: Social capital, Innovation, Economic growth, European Union, Structural funds
    JEL: O1 O3 O52 Z13
    Date: 2007
  16. By: Quella, Núria
    Abstract: In this paper I estimate unobserved labor-generated knowledge spillovers within and between six large macroeconomic sectors covering the US civilian economy from 1948 to 1991 and relate them to observed productivity changes. I construct a series of sectoral knowledge spillover matrices that show the changes in the magnitude and direction of intraand inter-sectoral spillovers for each sector. I show that the productivity slowdown in the US economy of the early seventies is associated with a decline of intra-sectoral spillovers and the emergence of inter-sectoral spillovers. This change coincides with trade taking over manufacturing as the main source and destination of new knowledge flows. The analysis of technology flows, measured as the production and use of patents, corroborates this finding. Furthermore, I also compute the gap between the market, which ignores knowledge spillovers, and the optimal allocation of labor across sectors, and the wedge between market and optimal wage rates by sector. I show that optimal employment in manufactures is 32% higher than the market allocation, and that optimal wages in the overall economy are 31% above market wages.
    Keywords: Knowledge spillovers; technology; productivity slowdown.
    JEL: O30 J24 D24 O40
    Date: 2007–04
  17. By: Audretsch, David B; Phillips, Ronnie
    Abstract: In this paper, we discuss the nature of the university-industry relationship and recommend specific policies to help achieve the goal of greater economic growth. We argue that state-supported research universities can be used to integrate entrepreneurship into state economic development and incubate entrepreneurial companies. Regional entrepreneurship policy is a new strategy that regards economic development as a process that goes from supporting research and development to creating and growing new businesses. Specifically, we believe that an entrepreneurial higher education system is a key to state-level economic policies. There is an opportunity at research universities to combine the human capital talent available on faculties with the needs and expertise of private industry to accelerate entrepreneurship and economic growth.
    Keywords: economic development; entrepreneurship; universities
    JEL: L26
    Date: 2007–04
  18. By: Gawande, Kishore; Chen, Derek H. C.
    Abstract: The Knowledge Assessment Methodology (KAM) database measures variables that may be used to assess the readiness of countries for the knowledge economy and has many policy uses. Formal analysis using KAM data is faced with the problem of which variables to choose and why. Rather than make these decisions in an ad hoc manner, the authors recommend factor-analytic methods to distill the information contained in the many KAM variables into a smaller set of " factors. " Their main objective is to quantify the factors for each country, and to do so in a way that allows comparisons of the factor scores over time. The authors investigate both principal components as well as true factor analytic methods, and emphasize simple structures that help provide a clear political-economic meaning of the factors, but also allow comparisons over time.
    Keywords: Statistical & Mathematical Sciences,Econometrics,Economic Theory & Research,Education for Development (superceded),Innovation
    Date: 2007–04–01
  19. By: Gandal, Neil; King III, Charles; Van Alstyne, Marshall W.
    Abstract: We employ a unique data set on white-collar workers that combines direct observations of individual use of information technology as well as objective information on individual performance. The main hypothesis we examine is whether heavier users of IT are more productive, and if heavier users of IT are indeed more productive, how does this increase in productivity manifest itself? Our results suggest that, controlling for other factors, the size of an individual’s internal email network is more highly correlated with revenues generated by that individual than age, experience or education. Further, the number of unique electronic contacts is more significant than the number of messages, external network size, and all other measures of email communication including declared time spent on email. Additionally, even after accounting for the individual’s number of unique contacts within the firm, the social network measure of “betweenness” is also highly correlated with revenues. We attribute the strength of these results to the fine grain detail of the data on this form of task-based white collar work.
    Keywords: information technology; productivity; social networks
    JEL: J24 L86 O14
    Date: 2007–04
  20. By: Kevin H. O'Rourke; Ahmed S. Rahman; Alan M. Taylor
    Abstract: Technological change was unskilled-labor-biased during the early Industrial Revolution of the late eighteenth and early nineteenth centuries, but is skill-biased today. This fact is not embedded in extant unified growth models. We develop a model of the transition to sustained economic growth which can endogenously account for both these facts, by allowing the factor bias of technological innovations to reflect the profit-maximising decisions of innovators. Endowments dictated that the initial stages of the Industrial Revolution be unskilled-labor biased. The transition to skill-biased technological change was due to a growth in "Baconian knowledge" and international trade. Simulations show that the model does a good job of tracking reality, at least until the mass education reforms of the late nineteenth century.
    JEL: F15 J13 J24 N10 O31 O33
    Date: 2007–04

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