nep-ino New Economics Papers
on Innovation
Issue of 2007‒07‒13
seventeen papers chosen by
Koen Frenken
Utrecht University

  1. The Impact of Uncertain Intellectual Property Rights on the Market For Ideas: Evidence From Patent Grant Delays By Joshua S. Gans; David H. Hsu; Scott Stern
  2. What When Space Matters Little For Firm Productivity? A multilevel analysis of localised knowledge externalities By Otto Raspe; Frank van Oort
  3. Optimal Patent Breadth: Quantifying the Effects of Increasing Patent Breadth By Chu, Angus C.
  4. Welfare and growth impacts of innovation policies in a small, open economy. An applied general equilibrium analysis By Brita Bye, Taran Fæhn and Tom-Reiel Heggedal
  5. Building a Better Rat Trap: Technological Innovation, Human Capital and the Irula By Siri Terjesen
  6. Creativity and Industrial Cities: A Case Study of Baltimore By Zoltan J. Acs; Monika I. Megyesi
  7. Complementarity or substitutability between private and public investment in R&D: An empirical study By SADRAOUI, Tarek; BEN ZINA, Naceur
  8. How does the design of international environmental agreements affect investment in environmentally friendly technologies ? By Basak Bayramoglu
  9. Specific resources as bases for the differentiation and innovation of tourist destinations By Vaz, Margarida
  10. Adapt or withdraw? Evidence on technological changes and early retirement using matched worker-firm data By Torbjørn Hægeland, Dag Rønningen and Kjell G. Salvanes
  11. The Localization of Entrepreneurship Capital - Evidence from Germany By David B. Audretsch; Max Keilbach
  12. Consumer' sovereignty and policy issues in the development of product ecolabels By Alain Nadai
  13. Innovations spread more like wildfires than like infections By Amavilah, Voxi Heinrich
  14. Conditions of Development of a Product Ecolabel By Alain Nadai
  15. The Instrumental Genesis of Collective Activity. The Case of an ERP Implementation in a Large Electricity Producer By Lorino, Philippe
  16. Process Based Management and the Central Role of Dialogical Collective Activity in Organizational Learning. The Case of Work Safety in the Building Industry By Lorino, Philippe
  17. Green vs. Green: Measuring the Compensation Required to Site Electrical Generation Windmills in a Viewshed By Peter A. Groothuis; Jana D. Groothuis; John C. Whitehead

  1. By: Joshua S. Gans; David H. Hsu; Scott Stern
    Abstract: This paper considers the impact of the intellectual property (IP) system on the timing of cooperation/licensing by start-up technology entrepreneurs. If the market for technology licenses is efficient, the timing of licensing is independent of whether IP has already been granted. In contrast, the need to disclosure complementary (yet unprotected) knowledge, asymmetric information, or search costs may retard efficient technology transfer. In these cases, reductions in uncertainty surrounding the scope and extent of IP rights may facilitate trade in the market for ideas. We employ a dataset combining information about cooperative licensing and the timing of patent allowances (the administrative event when patent rights are clarified). While pre-allowance licensing does occur, the hazard rate for achieving a cooperative licensing agreement significantly increases after patent allowance. Moreover, the impact of the patent system depends on the strategic and institutional environment in which firms operate. Patent allowance seems to play a particularly important role for technologies with longer technology lifecycles or that lack alternative mechanisms such as copyright, reputation, or brokers. The findings suggest that imperfections in the market for ideas may be important, and that formal IP rights may facilitate gains from technological trade.
    JEL: L24 L26 O32 O34
    Date: 2007–07
  2. By: Otto Raspe; Frank van Oort
    Abstract: This paper contributes to the debate on localized knowledge externalities as potential source for firm productivity gains. We apply multilevel analysis to link firm productivity (and growth) to knowledge intensive spatial contexts in the Netherlands. If localized knowledge externalities are important, then firms are hypothesised to co-locate in order to capitalize on each other's knowledge stocks. We conceptualise the regional knowledge base by three dimensions: local 'research and development' intensity, local 'innovativeness', and the characterization of locations by a ‘knowledge workers’ dimension (based on ICT use, educational level, communicative and creative skills). Controlling for firm's heterogeneity, we find a relatively small spatial effect: regional characteristics contribute for only a few percents to firm productivity. The regional intensity of 'innovation' most significantly contributes to this effect. We do not find a contextual spatial effect for productivity growth. These results suggest that the territorial dimension of knowledge externalities should not be exaggerated.
    Keywords: productivity, multilevel analysis, localized knowledge externalities, Netherlands
    Date: 2007–06
  3. By: Chu, Angus C.
    Abstract: In a generalized quality-ladder growth model, this paper firstly derives the optimal patent breadth and the socially optimal profit-sharing arrangement between patentholders. In this general-equilibrium setting, it identifies and derives a dynamic distortion of markup pricing on capital accumulation that has been neglected by previous studies on patent policy. Then, it quantitatively evaluates the effects of eliminating blocking patent and increasing patent breadth, and this exercise suggests a number of findings. Firstly, the market economy underinvests in R&D so long as a non-negligible fraction of long-run TFP growth is driven by R&D. Secondly, increasing patent breadth may be an effective solution to R&D underinvestment. The resulting effect on long-run consumption can be substantial because the harmful distortionary effects are relatively insignificant. However, the damaging effect of blocking patent arising from suboptimal profit-sharing arrangements between patentholders can be quantitatively significant. Finally, it considers the effect on consumption during the transition dynamics.
    Keywords: endogenous growth; intellectual property rights; patent breadth; R&D
    JEL: O34 O31
    Date: 2007–07
  4. By: Brita Bye, Taran Fæhn and Tom-Reiel Heggedal (Statistics Norway)
    Abstract: We explore how innovation incentives in a small, open economy should be designed in order to achieve the highest welfare and growth, by means of a computable general equilibrium model with R&D-driven endogenous technological change embodied in varieties of capital. We study policy alternatives targeted towards R&D, capital varieties formation, and domestic investments in capital varieties. Subsidising domestic investments, thereby excluding stimuli to world market deliveries, generates less R&D, capital formation, economic growth, and welfare, than do the other alternatives, reflecting that the domestic market for capital varieties is limited. Directing support to R&D rather than to capital formation generates stronger economic growth, a higher number of patents and capital varieties, and a higher share of R&D in total production. However, it costs in terms of lower production within each firm, where presence of sunk patent costs and mark-ups result in efficiency losses. The welfare result is, thus, slightly lower.
    Keywords: Applied general equilibrium; Endogenous growth; Research and Development
    JEL: C68 E62 H32 O38 O41
    Date: 2007–07
  5. By: Siri Terjesen (Brisbane Graduate School of Business, Australia; Max Planck Institute of Economics, Germany)
    Abstract: This case follows Sethu Sethunarayanan, Director of the non-profit Center for the Development of Disadvantaged People (CDDP), which is dedicated to the improvement of the Irula tribe in rural villages of southeast India. The Irulas specialize in catching rats, an activity which provides the bulk of their income and food. Following a routine visit to a local village, Sethu recognized an opportunity for a "better rat trap" to aid the Irula rat catchers. With feedback from rat catchers, Sethu developed an innovative new trap. His innovation won the prestigious Global Development Marketplace award from the World Bank which provided the funding necessary to commercialize the new technology. The venture’s implementation involved site visits to identify beneficiaries, health checks and treatment, preparatory workshops, factory establishment, factory training, production, women's micro-credit collectives, distribution and project evaluation. The case focuses on the relationship between human capital and technological entrepreneurship, considering the knowledge and skills required to commercialize technology for the rural poor and the positive impact on this greatly disadvantaged population.
    Keywords: Human Capital, India, Innovation, Irula, Social Entrepreneurship, Technological Entrepreneurship, World Bank
    Date: 2007–07–05
  6. By: Zoltan J. Acs (George Mason University; Max Planck Institute of Economics, Jena, Germany); Monika I. Megyesi (University of Baltimore)
    Abstract: Creativity is changing the way cities approach economic development and formulate policy. Creative metropolises base their economic development strategies, at least partly, on building communities attractive to the creative class worker. While there are countless examples of high-tech regions transforming into creative economies, traditionally industrial cities have received much less attention in this regard. This research draws on Baltimore to assess the potential of transforming a traditionally industrial region into a creative economy. It analyses Baltimore's performance on dimensions of talent, tolerance, technology, and territory both as a stand-alone metropolitan area and in comparison to similar industrial metropolises. Using data from the US Census Bureau and research on creativity measures, this case study concludes that Baltimore has the opportunity to capitalize on the creative economy because of its openness to diversity, established technology base, and appealing territorial amenities. An important consideration in the transformation towards a creative economy is Baltimore's geographic proximity and access to the largest reservoir of creative talent in the US: Washington, DC.
    Keywords: creativity, creative class, creativity index, creative cities, talent, technology, tolerance, territory, bohemian index, gay index, old industrial cities, Baltimore, economic development, economic growth, entrepreneurship
    JEL: D64 M13 M14
    Date: 2007–07–02
  7. By: SADRAOUI, Tarek; BEN ZINA, Naceur
    Abstract: In this paper, we investigate the relationship between private and public investment in R&D. Various models proposed in the literature to take account for several instruments policies as: (subsidies, taxes…) are estimated to verify if private and public R&D spending are complement or substitute. Our empirical study is based on a dynamic panel model for a sample of (23) countries over the period 1992-2004. This research is dealing with the relationship between private and public investment in R&D. Results based on the GMM method of Arellano and Bond (1991) and the tests of causality and unit root applied to the panel data show a positive and significant relation between private and public R&D.
    Keywords: R&D; Complementarity; Substituability; GMM; Dynamic Panel Data.
    JEL: C33 O32 O33
    Date: 2006–04–22
  8. By: Basak Bayramoglu (PSE - Paris-Jourdan Sciences Economiques - [CNRS : UMR8545] - [Ecole des Hautes Etudes en Sciences Sociales][Ecole Nationale des Ponts et Chaussées][Ecole Normale Supérieure de Paris], CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I])
    Abstract: This paper studies the link between the design of international environmental agreements and the incentives for the private sector to invest in cleaner technologies. More specifically, it compares the performance, in the Paretoo sense, of two types of agreement : an agreement on a uniform standard with transfers and an agreement on differentiated standards without transfers. To achieve this goal, we use a multi-stage game where the private sector anticipates its irreversible investment given the expected level of abatement standards, resulting from future bilateral negotiations. Our findings indicate that whenever countries are able to partially commit, the agreement on a uniform standard may be preferable, as it creates greater incentives for firms to invest in costly abatement technology. This result relies on the low level of the set-up cost of this technology. If this level is sufficiently high, the announcement and implementation of the agreement on a uniform standard with transfers is not optimal, because it takes away the incentive of all firms to invest in a new abatement technology.
    Keywords: agreements, standards, transfers, technology adoption, irreversible investment, bargaining, transboundary pollution.
    Date: 2007–07–03
  9. By: Vaz, Margarida
    Abstract: Given that one type of tourist does not exist and different strategies are drawn to reach the wished "extraordinary" by tourists for holidays, there are windows of opportunities to the tourist destinations, as these give them the chance for differentiated offers and for a flexibility that opposes uniformity and gives place to variety and difference. Assuming that the development of the destinations do not obey to just a standard way, and alternatively is embedded in the historical, cultural, institutional and natural matrices of the regions where destinations are anchored, then the specific resources of a place can assume the basic role of inputs for the differentiation of the tourist destination and for the diversification of its tourist offers. Taking into account the exceptionality of tourist product as an experience, which is associated with an integrated experience offer, one can say that an idiographic perspective of a destination requires that the valuation of its specific resources pass not only for the tourist services providers to assume themselves as agents who facilitate the stay and the mobility of the tourists, but also that they need to become ambassadors of all the kind of services of the destination as well as of the region itself. Such tourist destination generates change. As it generates differentiated strategies at the regional level and as it is based on co-operation and network, these strategies and related facts make the environment propitious to the dissemination of knowledge and innovation. Innovation, in turn, generates difference, that strengthens the identity of the region, and potentially, of the tourist destination. Such strategies of differentiation, in a sustainable development frame, can be the turning point for a more selective tourist industry, and where all can win: the local communities, the tourists, the tourist agents, and the environment.
    Keywords: Specific resources; idiographic approach; innovation; tourist destination; sustainability; regional development
    JEL: L83 R11
    Date: 2007
  10. By: Torbjørn Hægeland, Dag Rønningen and Kjell G. Salvanes (Statistics Norway)
    Abstract: Older workers typically possess older vintages of skills than younger workers, and they may suffer more from technological change. Experienced workers may nevertheless have accumulated human capital making them suitable for adopting new technologies. On the other hand, to adjust to new technologies, workers must invest in training. This may not be worthwhile for the oldest workers, and technological change may thus induce early retirement. If technological change occurs often, workers will continuously invest in training, which may insulate them from the negative effect of technological change. We exploit the approach by Bartel and Sicherman (1993) to identify this effect by estimating the retirement response to technological change. We examine two hypotheses about the effects of technological changes on early retirement for workers from the age of 50 to the mandatory age of retirement at 67. First, we examine whether workers in firms with higher rates of anticipated technological change retire later than workers in firms with lower rates of technological change. Second, we examine if unanticipated technological change is positively correlated with earlier retirement. We use a matched employer-employee data set with a rich set of controls for worker, firm and local labour market characteristics, and firm level measures of anticipated and not-anticipated technological change. We find a negative correlation between early retirement and anticipated technological change only for the oldest male workers (62 to 66). Further, we find a higher probability of transition to retirement for workers above 60 for firms introducing new process technologies.
    Keywords: Technological changes; early retirement
    Date: 2007–07
  11. By: David B. Audretsch (Max Planck Institute of Economics, Jena, Germany; Indiana University, USA); Max Keilbach (Max Planck Institute of Economics, Jena, Germany)
    Abstract: Whereas initially physical capital and later, knowledge capital were viewed as crucial for growth, more recently a very different factor, entrepreneurship capital, has emerged as a driving force of economic growth. In this paper, we define a region's capacity to create new firms start-ups as the region's entrepreneurship capital. We then investigate the local embeddedness of this variable and which variables have an impact on this variable. Using data for Germany, we find that knowledge-based entrepreneurship capital is driven by local levels of knowledge creation and the acceptance of new ideas, indicating that local knowledge flows play an important role. Low-tech entrepreneurship capital is rather increased by regional unemployment and driven by direct incentives such as subsidies. All three measures are locally clustered, indicating that indeed, entrepreneurship capital is a phenomenon that is driven by local culture, and is therefore locally bounded.
    Keywords: Entrepreneurship capital, Local Clusters, Knowledge Spillovers, Spatial Econometrics
    JEL: L60 O30 G30
    Date: 2007–07–02
  12. By: Alain Nadai (CIRED - Centre international de recherche sur l'environnement et le développement - [CIRAD : UMR56][CNRS : UMR8568] - [Ecole des Hautes Etudes en Sciences Sociales][Ecole Nationale des Ponts et Chaussées][Ecole Nationale du Génie Rural des Eaux et des Forêts])
    Abstract: Quality labels are not new, but the last decade saw labeling schemes to be increasingly targeted at expert qualities – i.e. qualities involving a high degree of scientific expertise in order to be assessed. The paper takes a close look at the regulatory and institutional framework underlying the development of one of these labels: the EU ecolabeling program (CEE, 1992). In order to better understand the conditions for the development of product ecolabels, we examine a success story, the case of the paints and varnishes European Ecolabel and contrast it the result with case of industrial opposition (detergent industry). The comparison pints at the importance of the negotiation phase in the development of product ecolabels. It also suggests that the degree of technological heterogeneity of the concerned industry - i.e. the extent to which the environmental performance of the products sold by the different firms are different - may be a variable determining the chances of success in the development of an ecolabel. The conclusion examines the lessons that can be drawn for the development of environmentally effective product ecolabels. It proposes tracks for further research on the subject.
    Keywords: ecolabel ; industry ; competition ; negotiation
    Date: 2007–07–04
  13. By: Amavilah, Voxi Heinrich
    Abstract: Conventional theory says that innovations first diffuse slowly, then at faster paces, and finally at asymptotically declining rates. Economists and others explain such behavior with a variety of logistic models. Early models like the contagion model derive their predictive power from reliance on the history of the variables they are trying to predict. New social learning models improve the dynamics of diffusion across heterogeneous populations, while other studies propose various modifications. However, these extensions of the logistic and related models are still too orderly in structure and outcome. In reality one can expect both order from disorder and disorder from order. The argument of this paper is that innovations spread more like wild fire than like systematic epidemics. This analogy is no mere conjecture; some environments are more susceptible to catching fire than others. Just as the rate of the spread of fire is a function of fuel and other factors, so too is the spread of innovations, only that in the latter case the fuel is human population. Human population in general is a necessary fodder for the spread of innovations. The sufficient condition is the quality of the population which can favor or disfavor the spread of innovations, which explains why there are some random chances of finding islands untouched by fire surrounded by a sea of fire devastation.
    Keywords: Innovation spread; logistic model; derivative Gompertz; diffusion of innovations
    JEL: M3 O31 Z00 D89
    Date: 2007–07–07
  14. By: Alain Nadai (CIRED - Centre international de recherche sur l'environnement et le développement - [CIRAD : UMR56][CNRS : UMR8568] - [Ecole des Hautes Etudes en Sciences Sociales][Ecole Nationale des Ponts et Chaussées][Ecole Nationale du Génie Rural des Eaux et des Forêts])
    Abstract: Since the early 1990s, national ecolabelling programmes have proliferated worldwide. The European Union (EU) implemented such a regional program in 1991. This decision was part of a broader orientation towards Integrated Product Policy approach in the EU. Since 1991, the development of European ecolabels has been slow and difficult. This paper examines industrial strategies vis-à-vis the EU ecolabel in order to understand the problems faced by the regulator in the development of this ecolabel.<br /><br />The first part of the paper defines and uses the concept of credence good in order to argue that the consumer cannot assess the ecolabel. Based on the examination of the development of the European ecolabel, the second part points out three variables that seem to influence the development of product eco-labels : i) the type of industry (i.e. the degree of heterogeneity between the sets of products sold by the different firms); ii) the threat of direct governmental regulation on the environmental quality of the product; and, iii) the magnitude of the final demand for a green variant of the product. The paper concludes with a discussion of on policy implications for policy makers interested in considering or promoting the use of ecolabels.
    Keywords: quality, eco-labeling, voluntary environmental regulation.
    Date: 2007–07–04
  15. By: Lorino, Philippe (ESSEC Business School)
    Abstract: Collective activity should be a focal subject to study organizational dynamics, particularly in relation with the implementation of management systems such as ERPs. Collective activity is analyzed here as an ongoing dialogical construction by actors. It is always mediated by signs and particularly by instruments. To design and adapt collective activity, a reflexive dialogical exchange between actors, a “collective activity about collective activity”, mediated by instruments, is necessary: we call it “the instrumental genesis of collective activity”. We analyze the case of an ERP implementation at EDF, a large electricity company, in the purchase and procurement area of the production division. The design and implementation of the new system was not clearly viewed as the instrumental genesis of collective activity. Difficulties appeared particularly for cross-functional cooperation and for the construction of new professional profiles of competence. In the light of this case, we suggest that key conditions for the intelligibility and the actionability of collective activity are the establishment of communities and the hybridization of professional competences.
    Keywords: Collective Activity; Collective Sensemaking; Community; Dialogical; ERP; Instruments; Instrumental Genesis of Activity; Interpretation; Sign
    JEL: Z00
    Date: 2007–05
  16. By: Lorino, Philippe (ESSEC Business School)
    Abstract: The notion of “process”, which describes the cooperation of heterogeneous practices and competences for a given output, has gained a major position in managerial practices for the last twenty years. This paper presents three ideas about organizational dynamics and processes and tests their applicability in the case of work safety improvement in a building company. The first idea is that the success of the process notion shows the central role of “conjoint” (as opposed to “common”) collective activity in organizational learning. Conjoint collective activity is dialogical (“acts speak”) and mediated by the utilization of semiotic systems (languages and technical and managerial tools). The second idea is that organizational learning is neither based on the actors’ individual subjectivity nor on the technological and objective artefacts engaged in the processes, but rather on the reflexive understanding and ongoing redesign of processes by the process actors themselves, in the frame of a reflexive inquiry, a “collective activity about collective activity” which is triggered and kept in motion by axiological judgments (process evaluation). The third idea is that the possibilities to configure processes in a given organization are multiple. The reflexive inquiry enacts a specific social, spatial and time configuration of the process, its “chronotope” in Bakhtin’s vocabulary, which plays a major role in the way actors can make sense of their collective activity and transform it. A longitudinal case study about work safety on the building yards shows that it is difficult to “control out” risk at work once designs have been established, in the frame of the “project execution” process, but it is easier to “design out” risk, when the actors of the process collectively design and redesign their collective activity, from the very first phases of a building project to the end. Therefore a major way to improve safety consists in extending the chronotope of the collective activity under consideration, overcoming the traditional separation between “design / planning” and “execution”. The conclusion summarizes the main theoretical, epistemological and practical issues involved in this research about conjoint collective activity.
    Keywords: Business Process; Chronotope; Collective Activity; Collective Sense Making; Dialogism; Inquiry; Process-based Management; Safety Management
    JEL: Z00
    Date: 2007–05
  17. By: Peter A. Groothuis; Jana D. Groothuis; John C. Whitehead
    Abstract: A willingness to accept framework is used to measure the compensation required to allow wind generation windmills to be built in the mountains of North Carolina. We address why the NIMBY syndrome may arise when choosing site locations, the perceived property rights of view-sheds, as well as the perceptions of the status quo in the southern Appalachian Mountains. We find that individuals who perceive wind energy as a clean source of power require less compensation. Those who retire to the mountains or individuals who have ancestors from Watauga County require more compensation to accept windmills in their view-shed. We find that annual compensation is about twenty three dollars per household. In the aggregate, citizens need to be compensated by about one-half million dollars a year to allow wind electrical generation turbines in Watauga County. In addition, we find in a bivariate-probit analysis that individuals who are more likely to participate in a green energy program also are more likely to allow electrical generation wind mills in their view-shed suggesting that the green on green environmental debate is overstated.
    Date: 2007

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