nep-ino New Economics Papers
on Innovation
Issue of 2007‒08‒08
35 papers chosen by
Koen Frenken
Utrecht University

  1. Innovation Networks of High Tech SMES: Creation of Knowledge but no Creation of Value By Rob Winters; Erik Stam
  2. Patent Activity and Technical Change By Robert L. Basmann; Michael McAleer; Daniel Slottje
  3. Reverse Technology Transfer: A Patent Citation Analysis of the European Chemical and Pharmaceutical Sectors By Paola Criscuolo
  4. The Engine of Growth By Federico Etro
  5. Spillovers, disclosure lags, and incentives to innovate. Do oligopolies over-invest in R&D? By Gianluca Femminis; Gianmaria Martini
  6. Complementary research strategies, first-mover advantage and the inefficiency of patents By Luigi Bonatti
  7. On the cyclicality of R&D: disaggregated evidence By Min Ouyang
  8. Firm Size and Openness: the Driving Forces of University-Industry Collaboration By Roberto Fontana; Aldo Geuna; Mireille Matt
  9. Openness and Technological Innovations in Developing Countries: Evidence from Firm-Level Surveys By Rita Almeida; Ana Margarida Fernandes
  10. University-industry relations in Norway By Magnus Gulbrandsen; Lars Nerdrum
  11. The impact of market size and users' sophistication on innovation: the patterns of demand and the technology life cycle By Marco Guerzoni
  12. Cournot competition among multiproduct firms:specialization through licensing By Luigi Filippini
  13. Governing the "New Economy": a 3-Phase Historical Model of Cumulative Gales of Creative Destruction of the United Kingdom Internet Service Providers' Market By Michèle Javary
  14. Going, Going, Gone. Innovation and Exit in Manufacturing Firms By Cefis, E.; Marsili, O.
  15. A Concordance between Industries and Technologies Matching the technological fields of the Patentatlas to the German Industry Classification By Tom Broekel
  16. Why Are Some Entrepreneurs More Innovative Than Others? By Koellinger, P.
  17. Environmental Policy, Innovation and Performance : New Insights on the Porter Hypothesis By Paul Lanoie; Jérémy Laurent-Lucchetti; Nick Johnstone; Stefan Ambec
  18. Knowledge flows across European regions By Raffaele Paci; Stefano Usai
  19. Establishing National Innovation Foundation: How Does a Tail Wag the Dog? By Gupta Anil K.
  20. The Impact of Cost-Reducing R&D Spillovers on the Ergodic Distribution of Market Structures By Christopher A. Laincz; Ana Rodrigues
  21. A Schumpeterian Renaissance? By Chris Freeman
  22. The influence of innovation and imitation on economic performance By Sylvie Geisendorf
  23. International research and development spillovers through foreign direct investment and productivity growth. By Philip Bodman; Thanh Le
  24. Ethical Issues in Accessing People's Knowledge and Innovations: Need for Revisiting Research Protocols with Specific Reference to Low Cost Health Technologies By Gupta Anil K.
  25. Authority in the Age of Modularity By Stefano Brusoni
  26. Business services and the changing structure of European economic growth By Henk Kox; Luis Rubalcaba
  27. "Increasing Complexity of Artifacts and the Role of Product Architecture"(in Japanese) By Masahiro Okuno-Fujiwara; Hirokazu Takizawa; Yasunori Watanabe
  28. Crop, Conservation, Creativity and Collaboration By Gupta Anil K.
  29. Research Evaluation as a Policy Design Tool: Mapping Approaches across a Set of Case Studies By Valeria Papponetti; Massimiano Bucchi
  30. Special Interest Politics and Intellectual Property Rights: An Economic Analysis of Strengthening Patent Protection in the Pharmaceutical Industry By Chu, Angus C.
  31. Dual licensing in open source software markets By Stefano Comino; Fabio M. Manenti
  32. Agricultural Education for Entrepreneurship, Excellence and Environmental Sustainability: Agenda for Innovation and Change By Gupta Anil K.
  33. Des billets verts pour des entreprises agricoles vertes ? By Lanoie, P.; Llerena, D.
  34. Indigenous Knowledge and Innovations for Managing Resources, Institutions and Technologies Sustainably: A Case of Agriculture, Medicinal Plants and Biotechnology By Gupta Anil K.
  35. On the Role of Technical Cooperation in International Technology Transfers By SAWADA Yasuyuki; MATSUDA Ayako; KIMURA Hidemi

  1. By: Rob Winters (Netherlands Ministry of the Interior and Kingdom Relations); Erik Stam (University of Cambridge, Utrecht University; Max Planck Institute of Economics)
    Abstract: This paper analyses the effects of innovation networks on product and process innovation and sales growth of high technology SMEs. Innovation net- works are positively related to both product and process innovation, i.e. knowledge creation. One exception is the negative effect of innovation networks with suppliers on product innovation. Older SMEs are more product innovative than young SMEs. The positive relation between firm size and (process) innovation, disappears when networks are introduced into the analyses. The general conclusion is that vertical innovation networks remove the effect of firm size on process innovation. In other words, high-tech SMEs can ‘borrow’ size if they co-operate with customers, but especially with suppliers for process innovation. So smallness is not necessarily a disadvantage for innovation, as long as firms cooperate with other organisations. Innovation and networks do not seem to effect value creation, measured as sales growth.
    Keywords: innovation, innovation networks, high tech SMEs, firm growth
    JEL: D21 D83 D85 L25 O31 O32
    Date: 2007–07–31
  2. By: Robert L. Basmann (Binghampton University); Michael McAleer (School of Economics and Commerce); Daniel Slottje (Southern Methodist University and FTI Consulting)
    Abstract: As creations of the mind, intellectual property includes industrial property and copyrights. This paper presents an aggregate production function of the generalized Fechner-Thurstone (GFT) form to analyze the impact of an important component of intellectual industrial property, namely patent activity, on technical change in the USA for the period 1947-1981. Patents should alter isoquant maps, and measuring their elasticities is both intuitively and empirically appealing. We define a technology-changer as a variable that has an impact on the elasticity of the marginal rate of technical substitution (MRTS) between inputs of the GFT production function over time. Various types of US patent grant activity, specifically total, domestic, foreign, successful and unsuccessful patent applications, are used as instruments for the technology-changer. Using the GFT specification, the impacts of various technology-changers on the elasticity of the mrts between inputs are estimated directly. It is found that granted (or successful) patents, patents granted to foreign companies and individuals, total patent applications, and even unsuccessful patent applications, have significant impacts on the rates at which inputs are substituted for each other over time in production.
    Keywords: GFT production function, patent activity, innovation, technical change, technology-changers, elasticity of the marginal rate of technical substitution.
    JEL: D24 L23 K1
    Date: 2007
  3. By: Paola Criscuolo (SPRU, University of Sussex)
    Abstract: One consequence of the internationalisation of R&D, particularly in high-tech sectors such as chemicals and pharmaceuticals, may be the transfer of foreign technology from the multinational to other firms in its home country. This phenomenon, which may be termed inter-firm reverse technology transfer, has not yet been directly analysed by either the international management literature or the literature on foreign direct investment. But its implications for policy – particularly in Europe – may be significant. Drawing on the evolutionary theory of the multinational, and on the concept of embeddedness, this paper is a first attempt at addressing this issue. We test the hypothesis of inter-firm reverse technology transfer by performing a patent citation analysis on a database of USPTO patents applied for by 24 chemical and pharmaceutical companies over the period 1980-99. Our findings suggest that multinationals act as a channel for the transmission of knowledge developed abroad to other home country firms. These results point to an alternative understanding of foreign direct R&D investment and its implications for both the home country’s technological activity, and its competitive performance in general
    Keywords: Multinational firms; patent citation; embeddedness; international technology transfer
    JEL: F23 L65 O30
    Date: 2007–06–01
  4. By: Federico Etro (Department of Economics, University of Milan-Bicocca)
    Abstract: I develop a Schumpeterian model where the engine of growth is in the microeconomic structure of the patent races and derive new results on the determinants of growth. Under decreasing marginal productivity in the R&D sector, the equilibrium is characterized by small firms investing too little and the growth process is dynamically ine?cient; the optimal policy for innovation always implies R&D subsidies. When the incumbent monopolists are leaders in the patent races, they engage in large R&D investment and their persistent leadership enhances growth. Other sources of growth may reduce investment inducing a paradoxical negative correlation between growth and R&D spending even if innovations are the main engine of growth. In the open economy, growth is driven by the largest country and increases with its relative size and openness. In a monetary economy, price stickiness induces an inverted U relation between inflation and long run growth.
    Keywords: Growth, Innovation
    JEL: O3 O4 F4
    Date: 2006–10
  5. By: Gianluca Femminis (DISCE, Università Cattolica); Gianmaria Martini (Università di Bergamo)
    Abstract: We develop a dynamic duopoly, where firms have to take into account a technological externality, that reduces over time their innovation costs, and an inter-firm spillover, that lowers only the second comer's R&D cost. This spillover exerts its effect after a disclosure lag. We identify three possible equilibria, which are classified, according to the timing of R&D investments, as early, intermediate, and late. The intermediate equilibrium is subgame perfect for a wide parameters range. When the innovation size is large, it implies that the duopolistic market equilibrium involves underinvestment. Hence, even in presence of a moderate degree of inter-firms spillover, the competitive equilibrium calls for public policies aimed at increasing the research activity. When we focus on minor innovations -- the case in which, according to the earlier literature, the market equilibrium underinvests -- our results imply that the policies aimed at stimulating R&D have to be less sizeable than suggested before, despite the presence of an inter-firm spillover.
    Keywords: knowledge spillover, dynamic oligopoly
    JEL: L13 L41 O33
    Date: 2007–06
  6. By: Luigi Bonatti
    Abstract: In a realistic framework where the potential innovators’ research lines are imperfectly correlated and imitation takes some time, this paper studies an industry regulated by an authority which can tax (subsidize) the firms’ pure profits (R&D expenditures). By comparing the market equilibrium emerging when there is patent protection with the market equilibrium emerging without patents, the paper finds that social welfare is higher in the absence of patents. This result is driven by the fact that—without patents--more than one successful inventor may implement its discovery and enter the market, thus reducing the deadweight loss due to imperfect competition.
    Keywords: Innovation, temporary monopoly, lead time, market regulation, patents.
    JEL: H21 H25 L10 L51 O31
    Date: 2007
  7. By: Min Ouyang
    Abstract: This paper explores the link between short-run cycles and long-run growth by examining the cyclical properties of R&D at the disaggregated industry level. The relationship between R&D and output is estimated using an annual panel of 20 U.S. manufacturing industries from 1958 to 1998. The results indicate that R&D is in fact procyclical; but interestingly, estimates using demand-shift instruments suggest that it responds asymmetrically to demand shocks. We discuss the possibilities that liquidity constraints and technology improvement cause the observed procyclicality of R&D.
    Keywords: Business cycles ; Research and development
    Date: 2007
  8. By: Roberto Fontana (CESPRI, Bocconi University); Aldo Geuna (SPRU, University of Sussex); Mireille Matt (BETA, University of Strasbourg)
    Abstract: A large number of works have studied university-industry relationships either from a qualitative point of view or relying on a case study of a single university. The aim of this paper is to provide some statistical evidence at the cross-country, cross-industry level to verify some of the hypotheses put forward in the qualitative literature. On the basis of the results of the KNOW survey carried out in seven EU countries in 2000, we examine two main issues. First, the contribution made by Public Research Organisations (PROs) to the innovative process of firms is analysed. Second, the existence and the extent of co-operative R&D projects between firms and PROs are examined. A two-equation econometric model evaluates the effect of firm-specific, sector-specific and country-specific factors (such as firm size, appropriation and signalling, searching of knowledge sources, government support) upon the propensity for and the extent of collaborations between PROs and firms. The analysis in this paper provides some preliminary evidence which allows a better understanding of the firm and industry characteristics that affect the contribution of PROs to firms' innovative activities and to their involvement in R&D collaborations with firms. The estimations produce some evidence to highlight how the size of the firm and its openness to the external environment have a significant and important effect on both the extent of and propensity of PRO-firm collaboration.
    Keywords: university-industry relationships, European Public Research Organisations, firm innovation
    JEL: I28 O31
    Date: 2007–06–05
  9. By: Rita Almeida (World Bank and IZA); Ana Margarida Fernandes (World Bank)
    Abstract: This paper examines international technology transfers using firm-level data across 43 developing countries. Our findings show that exporting and importing activities are important channels for the transfer of technology. Majority foreign-owned firms are less likely to engage in technological innovations than minority foreign-owned firms or domestic firms. We interpret this finding as evidence that the technology transferred from multinational parents to majorityowned subsidiaries is more mature than that transferred to minority-owned subsidiaries. Our findings also suggest that foreign-owned subsidiaries rely mostly on the direct transfer of technology from their parents and that firms that import intermediate inputs are more likely to acquire new technology from their machinery suppliers.
    Keywords: innovation, technology adoption, exports, imports, foreign ownership, firm level data
    JEL: F1 F2 O3
    Date: 2007–07
  10. By: Magnus Gulbrandsen (Norwegian Institute for Studies in Research and Education - Centre for Innovation Research); Lars Nerdrum (Norwegian Institute for Studies in Research and Education - Centre for Innovation Research)
    Abstract: This paper analyses the relationship between universities and industry in Norway. Funding figures, publication and patent data, surveys and interviews all indicate that there has been a slow and steady increase in university-industry relations the last 20 years. In the 1980s we notice an increase in the share of industry funding of university R&D, and the 1990s saw a strong growth in PhD students finding work in firms. Many of these trends are seen all over the OECD areas, although there are large variations across disciplines, institutions and industries. Some evidence exists to suggest that Norwegian firms may be particularly collaborative when it comes to R&D and innovation. There are, however, also barriers to how close the cross-sector relations may become. For example, data on graduates’ transition to work indicate how the shorter-term expectations and needs of firms may be difficult to meet by the universities and colleges.
    Date: 2007–07
  11. By: Marco Guerzoni (Jena Graduate Academy, Friedrich Schiller Universitaet.)
    Abstract: The aim of this paper is an investigation on the role of demand in industrial dynamics. Despite the decades-long debate on demand and innovation, theory still lacks a comprehensive analytical formulation. This paper proposes a model where demand is conceived as a peculiar blend of two conditions, market size, and users' sophistication. These conditions drive firms’ incentives to innovate. As main outcome, the paper proposes both a theoretical taxonomy of sectors and an original explanation of technological life cycle.
    Keywords: Innovation, demand, industry life cycle
    JEL: O31 O33 L15
    Date: 2007–07–31
  12. By: Luigi Filippini (DISCE, Università Cattolica)
    Abstract: In a duopoly where each firm produces substitute goods, we show that under process innovation, specialization is the equilibrium attained with cross-licensing. Each firm produces only the good for which it has an advantage. Patent pool extension confirms the results.
    Keywords: cross-licensing, patent pool, specialization, process innovation
    JEL: D45 O31
    Date: 2006–12
  13. By: Michèle Javary (CENTRIM, University of Brighton)
    Abstract: This article documents the industrial dynamics and the innovation processes inherent in the fast emerging dial-up Internet access segment of the new telecommunication sector in the United Kingdom for the period between 1992 - 2002. It shows that evolving market structures and related products and service innovation in the wholesale and retail branches of the UK Internet Service Providers' market have to be understood in the context of: a) an entrepreneurial thrust that seizes the advantage of a glut of finance accumulated from the privatization of the utilities; b) the evolution of the relationship between the UK voice and data transfer markets after the privatization of British Telecommunications and the strategic development of its 'intelligent network'; c) the related network technologies and services available for deployment at the start of the implementation of the Internet as a mass infrastructure; d) BT's quasi-monopoly in call origination and finally e) the wider evolutionary industrial dynamics, i.e. a cumulative process of conjectures and feedback loops of market power, strategic management and transformation in corporate and institutional governance following the market's expansion and the transition from metered to unmetered dial up Internet access.
    Keywords: innovation and industrial dynamics, dial-up Internet, United Kingdom
    JEL: L96 O31
    Date: 2007–06–01
  14. By: Cefis, E.; Marsili, O. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: This paper examines the effect of innovation on the risk of exit of a firm, distinguishing between different modes of exits. Innovation represents a resource and a capability that helps a firm to build competitive advantage and remain in the market. At the same time, the resources and capabilities of innovative firms make them an attractive target for the acquisition process of other firms, thereby increasing the likelihood of the exiting the market. We explore these effects empirically by linking data on innovation and exits for a large sample of manufacturing firms in the Netherlands. The results show that the effect of innovation on a firm's risk of exit differs according to the mode of exit and, in addition, it is shaped by the nature of the innovation. While a firm can lower its risk of failure by innovating in either products or processes, the introduction of a new product in the absence of innovation in the production process increases the risk of exit as a result of merger and acquisition.
    Keywords: Mergers and acquisitions;Firm exit;Innovation;Competing risks model;
    Date: 2007–03–21
  15. By: Tom Broekel (Max Planck Institute of Economics, Jena, Germany.)
    Abstract: The Patentatlas by Greif and Schmiedl (2002) represents an important source for patent data in Germany. Its use for industry-speciï¬c studies is however problematic because the correct assignment of patent data classiï¬ed by technological ï¬elds to commonly used industry classiï¬cations is unclear. This paper presents an application-oriented approach to this issue. In using industry-speciï¬c R+D employment numbers on a regional level, an approximate concordance is developed between the 31 technological ï¬elds of the Patentatlas and 21 manufacturing industries, as deï¬ned by the German Industry Classiï¬cation.
    Keywords: Patentatlas, Industry Classiï¬cation, IPC, NACE, Concordance
    JEL: O18 O34 R12
    Date: 2007–07–20
  16. By: Koellinger, P. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: The study provides theoretical insights and empirical evidence on the emergence of different types and degrees of entrepreneurial innovativeness. The results suggest that entrepreneurial innovativeness depends both on individual factors and on the environment in which the individual lives. In particular, high educational attainment and a high degree of self-confidence are significantly associated with entrepreneurial innovativeness at the individual level. Furthermore, entrepreneurs in highly developed countries are more likely to engage in innovative rather than purely imitative activities. The results also show that product, process, and variety innovations have at least to some extent different antecedents.
    Keywords: Entrepreneurship;Innovation;Business opportunities;
    Date: 2007–04–11
  17. By: Paul Lanoie (IEA, HEC Montréal); Jérémy Laurent-Lucchetti; Nick Johnstone; Stefan Ambec
    Abstract: Jaffe and Palmer (1997) present three distinct variants of the so- called Porter Hypothesis. The “weak” version of the hypothesis posits that environmental regulation will stimulate certain kinds of environmental innovations. The “narrow” version of the hypothesis asserts that flexible environmental policy regimes give firms greater incentive to innovate than prescriptive regulations, such as technology-based standards. Finally, the “strong” version posits that properly designed regulation may induce cost-saving innovation that more than compensates for the cost of compliance. In this paper, we test the significance of these different variants of the Porter Hypothesis using data on the four main elements of the hypothesised causality chain (environmental policy, research and development, environmental performance and commercial performance). The analysis is based upon a unique database which includes observations from approximately 4200 facilities in seven OECD countries. In general, we find strong support for the “weak” version, qualified support for the “narrow” version, and qualified support for the “strong” version as well.
    Keywords: Porter hypothesis, environmental policy, innovation, environmental performance, business performance.
    JEL: L21 M14 Q52 Q55 Q58
    Date: 2007–06
  18. By: Raffaele Paci; Stefano Usai
    Abstract: The recent resurgence of growth studies has clearly established that technological progress and knowledge accumulation are among the most important factors in determining the performance of regional and national economic systems. Nonetheless, few empirical studies have tried to analyse the flows of technology and knowledge across regional economies in Europe due to the lack of adequate indicators. In this paper we propose new evidence on the characteristics of knowledge flows across European regions based on a statistical databank, set up by CRENoS, on regional patenting and citations at the European Patent Office spanning from 1978 to 2004 and classified by ISIC sectors (3 digit). We consider 175 regions of 17 countries in Europe assigning each patent a region according to the place of residence of the inventors; then, we examine in- and out-flows of patent citations as a proxy of knowledge connections, while looking also at their sectoral differences and dynamics through time. The econometric analysis is based on a model where the transmission and exchange of knowledge across regions is mainly affected by geographical distance together with a set of spatial dummy variables. Moreover, we make several controls to check for the robustness of our results with respect to the inclusion of other characteristics of the origin and destination regions (production structure, economic conditions and technological efforts) as well as different estimation methods. The main result is that knowledge flows decrease as the geographical distance between the origin and the destination region increase. Furthermore, knowledge flows tend to be higher among contiguous regions and areas within the same country.
    Date: 2007
  19. By: Gupta Anil K.
    Abstract: A simple search on the web about unaided technological innovations by common people from the unorganized sector will reveal the paucity of information worldwide. It is this gap, which Honey Bee Network started at IIMA about two decades ago tried to fill. In this paper, a very brief history of the steps taken to establish National Innovation Foundation (NIF) has been given. A detailed history remains to be written. Now that NIF will become an autonomous Institute of Department of Science and Technology, its role within India and outside needs to be redefined. How a small academic initiative has spawned multiple institutional innovations is a subject that deserves further study.
    Date: 2007–07–18
  20. By: Christopher A. Laincz (Drexel University); Ana Rodrigues (Autoridade da Concorrência)
    Abstract: We extend the literature on knowledge spillovers between firms by studying a dynamic duopoly model of R&D. Our analysis highlights the previously ignored welfare effects of spillovers through dynamic changes in industry concentration. In addition, we find that the impact of imperfect appropriability of R&D on concentration and welfare depends crucially on the manner in which spillovers are obtained. To date, the analysis of the impact of knowledge spillovers between firms has been largely restricted to static two-stage models (R&D decisions followed by product market decisions). These models generally predict suboptimal R&D expenditures and lower welfare. Such models are silent on the evolution of the market structure, and the resulting welfare implications, because they need to assume initial conditions (symmetry or asymmetry). We find that when spillovers require absorptive capacity investment in own R&D, larger spillovers lead to declines in concentration while rates of innovation increase and welfare rises. In contrast, when spillovers are costlessly obtained increases in the extent of spillovers rates of innovation fall leading to losses in welfare through both reduced consumer surplus and firm values, while the effect on concentration is ambiguous.
    Date: 2007–06
  21. By: Chris Freeman (SPRU, University of Sussex)
    Abstract: In the last few decades of the twentieth century, the attention paid to technical innovation in the economics and management literature and in social science generally has justified some such description as "a Schumpeterian renaissance". This article, in justifying the concept of such a renaissance, distinguishes in particular Schumpeter's work on the clustering of innovations and technological revolutions as a major contribution to contemporary theory. As always during his lifetime, the relevance of these ideas to his work on Business Cycles remains controversial but the debate on this topic has certainly enlivened the renaissance of neo-Schumpeterian economic theory and research.
    Keywords: innovation clusters, technological revolution, Schumpeter, business cycles
    JEL: E11 O30
    Date: 2007–06–05
  22. By: Sylvie Geisendorf (Department of Economics, University of Kassel)
    Abstract: The importance of innovation and imitation for the economy is discussed in different branches of economic theory. Some of them study the macro, others the micro level. Macroeconomic theories, concerned with technological progress usually do not explicitly distinguish between innovation and imitation. Microeconomic case studies, examine the advantage of one strategy over the other for individual firms, but do not study the macroeconomic effect of these individual behaviours. The present paper attempts to close this gap by proposing a model that is capturing the innovative and imitative activity on the individual level and the resulting performance on the macro level. This is done on the basis of a Multi-Agent simulation. The model gives a comprehensive picture of an evolving economy over time, first because it depicts the interplay of innovation and imitation and second because the agents are placed in a changing economic landscape, forcing them to discover new products. Apart from detecting a predominant strategy, the model also shows to what extend the strategies depend on each other, if the economy should develop as a whole. A main result is that the significance of innovation is overemphasized in some parts of the literature. Imitation is the more important strategy, but as it needs a sound innovative base, it actually is the right mixture between the two with a large proportion of imitation that is moving an economy ahead.
    Keywords: Innovation, Learning, Multi-Agent-Systems, Evolutionary Economics, Genetic Algorithms, Modelling
    Date: 2007–05
  23. By: Philip Bodman (MRG - School of Economics, The University of Queensland); Thanh Le (MRG - School of Economics, The University of Queensland)
    Abstract: This study further examines the role of research and development (R&D), both domestic and foreign, in the development of national productivity. A key focus is on the role played by foreign direct investment (FDI) in facilitating technological transfer. The research empirically investigates the significance of FDI as an effective channel of R&D spillovers within a group of 15 OECD countries. It also examines whether the technology transfer through FDI is bi-directional: from an investing country to a host country and vice versa. In addition, the impact of human capital accumulation on a country’s capacity to learn from a foreign technology base is also examined empirically. The paper considers the possible effects of FDI on human capital accumulation process, in particular, whether FDI helps channel more resources towards the promotion of education activities. Empirical results obtained all lend strong supports to these hypotheses.
  24. By: Gupta Anil K.
    Abstract: There is a widespread concern all over the world about the emerging tensions in the local, regional and global dialogues on relationship between formal and informal knowledge systems. It is realized that the basic social contract between knowledge producing communities and the knowledge valorizing corporations and professionals needs redefinition. Several professional societies have incorporated discussions on ethical issues in accessing knowledge, innovations and practices of local communities involving use of local biodiversity resources. The situation becomes even more complex when we realize that the healthcare needs of large majority of poor people still are met by their own survival strategies dependent upon use of local knowledge and resources. It is obvious that this knowledge is precious and can generate viable and productive alternatives valued by modern markets. At the same time, it is also true that if this knowledge was sufficiently robust as it stands, the local health conditions would not have been as precarious as these often are in many regions because of nutritional and other economic hardships. The linkage with formal science and technology is therefore vital. The paper deals with four issues: (a) what can we learn from the analysis of a country wide campaign in India on documenting more than 30000 local health traditions maintained by communities and individuals, (b) whether the health priorities and the options for addressing them require new technological and institutional paradigms, (c) how can new partnership between people, professionals, public policy makers and profit-oriented corporations be conceptualized so that not only benefits are shared fairly but also the knowledge systems grow and thrive and (d) what should be the ethical code of conduct guiding the knowledge exchange, value addition and benefit sharing for generating viable health options for knowledge rich, economically poor people. The paper would thus provide an overview of the global debate on this subject and also suggest how an ethnobotanist can become the watchdog of, as well as the advocates for, the interests of healers, herbalists and other traditional knowledge rich communities.
    Date: 2007–07–18
  25. By: Stefano Brusoni (SPRU, University of Sussex, CESPRI & CRORA, Bocconi University)
    Abstract: This paper builds upon on-going research into the organisational implications of 'modularity'. Advocates of modularity argue that the Invisible Hand of markets is reaching activities previously controlled through the Visible Hand of hierarchies. This paper argues that there are cognitive limits to the extent of division of labour: what kinds of problems firms solve, and how they solve them, set limits to the extent of division of labour, irrespective of the extent of the market. This paper analyses the cognitive limits to the division of labour relying on an in-depth case study of engineering design activities. On this basis, this paper explains why co-ordinating increasingly specialised bodies of knowledge, and increasingly distributed learning processes, requires the presence of knowledge integrating firms even in the presence of modular products. Such firms, relying on their wide in-house scientific and technological capabilities, have the 'authority' to identify, propose, and implement solutions to complex problems. In so doing, they co-ordinate networks of suppliers of both components and specialised competencies.
    Keywords: modularity, division of labour limits, knowledge integrating firms
    JEL: L2 O3
    Date: 2007–06–05
  26. By: Henk Kox; Luis Rubalcaba
    Abstract: A pervasive trend that characterised the past two decades of European economic growth is that the share in the economy of commercial services, and particularly business services, grows monotonically, and this mainly to the expensive of the manufacturing sector. The structural shift reflects a changing and increasingly complex social division of labour between economic sectors. The fabric of inter-industry relations is being woven in a new way due to the growing specialisation in knowledge services, the exploitation of scale economies for human capital, lowered costs of outsourcing in-house services, and the growing encapsulation of manufacturing products in a ‘service jacket’. Business services, which inter alia includes the software industry and other knowledge-intensive business services (KIBS), play a key role in many of these processes.<BR> We argue that in recent decades business services contributed heavily to European economic growth, in terms of employment, productivity and innovation. A direct growth contribution stems from the businessservices sector’s own remarkably fast growth, while an indirect growth contribution was caused by the positive knowledge and productivity spill-overs from business services to other industries. The spill-overs come in three forms: from original innovations, from speeding up knowledge diffusion, and from the reduction of human capital indivisibilities at firm level. The external supply of knowledge and skill inputs exploits positive external scale economies and reduces reduces the role of internal (firm-level) scale (dis)economies associated with these inputs. The relatively low productivity growth that characterises some business-services sectors may be a drag on the sector's direct contribution to overall economic growth. The paper argues that there is no reason to expect a "Baumol disease" effect as long as the productivity and growth spill-overs from KIBS to other economic sectors are large enough.<BR> Finally, the paper concludes by pinpointing some policy 'handles' that could be instrumental in boosting the future contibution of business services to overall European economic growth.
    JEL: E32 L2 L8 L16 O3 O4 O52
    Date: 2007–06
  27. By: Masahiro Okuno-Fujiwara (Faculty of Economics, University of Tokyo); Hirokazu Takizawa (School of Global Studies, Tama University); Yasunori Watanabe (MMRC, 21st Century COE, University of Tokyo)
    Abstract: The purpose of the paper is twofold: One is to explain the concept of product architecture in the context of increasing complexity of artifacts; The other is to examine the condition under which the open-standard strategy is likely to be adopted. Dramatic decreases in mechanical information processing cost due to IT development induced hierarchical subdivision of artifacts with a modular structure consisting of numerous parts. This brought to the fore the question of how to solve the complicated coordination/integration problem between development of whole product system and that of individual parts. There are two ways of classifying solutions to this problem: One is the distinction between coordination by humans and coordination by product architecture; The other is the distinction between decentralized coordination through markets and cooperative coordination via organizations or networks. We argue that precommitted standardization and open development strategies are complements. We then set up a model for examining the problem faced by a monopolist with a core technology to decide to choose between open-standard strategy or closed-integral strategy. Some comparative analytic results are provided.
    Date: 2007–07
  28. By: Gupta Anil K.
    Abstract: Participatory plant breeding has attracted lot of attention in the recent past. However, most of the time, farmers’ involvement has been restricted to selections from the material generated by plant breeders as a part of their institutional research. In this paper, I share a few examples of varieties developed by farmers arguing in the process for creating a special window of opportunity at the national and international level for such innovations. A portfolio of monetary and non-monetary incentives aimed at individuals and communities will be necessary for the purpose. The incentives should also reinforce the synergy between technology, institutions and culture. The incentive should be not only for conservation function but also for augmentation; innovation and diffusion function so that a complete value chain of agro biodiversity develops. An argument is also made for modifying the passport data sheets of the gene banks which have practically no information on food processing knowledge about various germplasm generated by the local communities, in particular, women. This neglect is not understandable except as a mark of inertia, when the demand for processed food is increasing so much every day. In the end, I suggest that taxonomy of farmers’ selection criteria be paid special attention. Crop, livestock, craft and tree characteristics are looked at together while understanding the selection criteria. The breeding strategy for dryland be modified so that we do not continue to screen germplasm only or mainly on grain criteria (higher harvest index) to the neglect of fodder quality and quantity. The role of PPVFRA is crucial in bringing about the suggested changes.
    Date: 2007–07–18
  29. By: Valeria Papponetti (Fondazione Eni Enrico Mattei); Massimiano Bucchi (University of Trento)
    Abstract: This paper provides an overview of research evaluation practices across countries. The main aim is to investigate whether research assessment is implemented and to see to what extent its results are used to revise policy strategies, identify new research priorities, allocate financial resources or enhance public understanding of R&D. The paper addresses a set of cases studies, four within Europe (UK, Finland, Italy, and Spain) and two outside (US and Japan). Each case study provides an outline of the strategies devised to improve the domestic science system; offers a map of the main actors of science policy and introduces the main performers of research assessment. A short overview of how evaluation is approached at European level is also given. The study shows that approaches vary significantly from case to case and that it is not always possible to identify a clear research evaluation framework. In some cases, new strategies have been devised to improve the research system and the process of renovation has affected the structure and the role of research assessment. Overall, official documents across countries emphasise that research evaluation is not a means in itself, and call on its use as a policy design tool. However, very few cases of “management by results” can be identified. The success of research evaluation practice is always tied to strong cultural support and it is where research assessment meets with reluctance and mistrust that it yields no fruit. The absence of an “evaluative culture” is the main obstacle to an efficient research evaluation system.
    Keywords: Research Evaluation Systems, Management by Results, Evaluative Culture, Research Policy, Policy Planning
    Date: 2007–07
  30. By: Chu, Angus C.
    Abstract: Since the 80’s, the pharmaceutical industry has benefited substantially from a series of policy changes that have strengthened the patent protection for brand-name drugs as a result of the industry’s political influence. This paper incorporates special interest politics into a quality-ladder model to analyze the policymakers’ tradeoff between the socially optimal patent length and campaign contributions. The welfare analysis suggests that the presence of a pharmaceutical lobby distorting patent protection is socially undesirable in a closed-economy setting but may improve social welfare in a multi-country setting, which features an additional efficiency tradeoff between monopolistic distortion and international free-riding on innovations.
    Keywords: campaign contributions; intellectual property rights; patent length; special interest politics
    JEL: O34 D72 O31
    Date: 2007–08
  31. By: Stefano Comino; Fabio M. Manenti
    Abstract: Dual licensing has proved to be a sustainable business model for various commercial software vendors employing open source strategies. In this paper we study the main characteristics of dual licensing and under which conditions it represents a profitable commercial strategy. We show that dual licensing is a form of versioning, whereby the software vendor uses the open source licensing terms in order to induce commercial customers to select the proprietary version of the software. Furthermore, we show that the software vendor prefers dual licensing to a fully proprietary strategy when the customers are very sensitive to the reciprocal terms of the open source license.
    Keywords: Open source software, dual licensing, copyright, versioning, forking.
    JEL: L11 L17 L86 D45
    Date: 2007
  32. By: Gupta Anil K.
    Abstract: Having been a product of Agricultural University, I understand and empathize with the leaders of the universities about the problems they face. However, let us accept that the standards that were set decades ago can indeed be surpassed if only we would challenge the students to bring out the best in them. My one line summary of the problem is that we are not challenging the future leaders of our discipline strongly enough. Is it because rise in their expectations will create a stress on us or is it that we have learnt to be helpless? Isn’t it ironic that in almost no agricultural university, a graduate or postgraduate is not required to take any course in entrepreneurship? The universities seem to be locked up in the paradigm of seventies.
    Date: 2007–07–18
  33. By: Lanoie, P.; Llerena, D.
    Abstract: Il est de coutume d'associer à la protection de l'environnement l'idée que l'intervention des pouvoirs publics représente uniquement des coûts supplémentaires pour les agriculteurs. Cependant, depuis quelques années, ce paradigme est remis en cause par de nombreuses études. Par exemple, Porter et van der Linde (Porter, 1991; Porter and van der Linde, 1995) considèrent que la pollution est souvent associée à une sous utilisation des ressources (matière première, énergie, etc.) et que l'existence de politiques environnementales plus strictes peut stimuler l'innovation et, par là même, aboutir à une compensation des coûts supportés par les entreprises régulées. En réalité, il existe de multiples canaux par lesquels une amélioration de la performance environnementale des exploitations agricoles peut aboutir à de meilleures performances économiques, ou en tout cas pas nécessairement à un accroissement des coûts d'exploitation. Pour être systématique, il faut examiner les impacts de la performance environnementale non seulement en termes de revenus additionnels, mais également en termes de réduction des coûts. En suivant le cadre d'analyse proposé par Reinhardt (2000), Lankoski (2000, 2006) et Lanoie et Ambec (2007), nous pouvons tout d'abord constater qu'une amélioration des performances environnementales peut induire un accroissement des recettes via trois canaux : i) l'accès à de nouveaux marchés,; ii) la possibilité de différencier les produits et iii) la possibilité de vendre des technologies environnementales. Par ailleurs, une meilleure performance environnementale peut également se traduire par une réduction des coûts dans les catégories suivantes : iv) coûts réglementaires; v) coûts des matières premières, des intrants et de l?énergie; vi) coût du capital et vii) coût du travail. L'objectif de cet article est d'appliquer ce cadre d'analyse au secteur agricole. Plus précisément, à l'aide d'illustration et d'études de cas, nous analysons pour chacun des sept points présentés ci-dessus les relations qui peuvent exister entre la performance environnementale des exploitations agricoles et leur performance économique. Si certains auteurs ont déjà étudié la rentabilité de différentes mesures ou techniques agro-environnementales, il n'existe pas à notre connaissance d'études systématiques. De plus, les exemples concrets d'expériences menées en France et au Québec montrent que la question de l'impact des pratiques environnementales sur la rentabilité des entreprises reste d'actualité, et que les approches proposées peuvent être une source d?inspiration pour les agriculteurs en réflexion quant à leur décision d?investir ou non en matière de protection de l'environnement.
    JEL: L21 M14 Q52 Q55 Q58
    Date: 2007
  34. By: Gupta Anil K.
    Abstract: Communities living close to nature invariably evolve a language to understand and interpret the variations and discontinuities in nature. A flower of new colour, an unusually tall plant, an unseasonal germination or an extraordinary fruiting have attracted human attention in every part of the world. Some of these odd plants got selected either for curiosity or for a purposive characteristic and became a local crop variety. Some got analysed for their therapeutic property and became a medicinal plant. Some were combined with other plants, insects, fungi or other materials such as animal urine, milk, minerals or other compounds to develop various kinds of biotechnological products useful as drugs, dyes or derivatives. It is not surprising therefore that civilizational societies whether in Latin America or Asia or Africa have had a tremendously rich knowledge base drawing upon local resources. In this paper, I first discuss the framework in which indigenous knowledge systems for agriculture, medicinal plants and biotechnology can be analysed. In second part, I suggest ways in which policy makers can try to blend the formal and the informal institutional contexts of technological knowledge. Lastly, I suggest some areas for further research, action and policy interventions through cooperative Indo-Brazilian and S African dialogue.
    Date: 2007–07–18
  35. By: SAWADA Yasuyuki; MATSUDA Ayako; KIMURA Hidemi
    Abstract: We investigate whether and how technical cooperation aid (TC) facilitates technological diffusion from developed to developing countries, comparing it with foreign direct investment (FDI) and external openness. Extending the model of Benhabib and Spiegel (2005), we estimate the degree to which these three channels contribute to countries’ total factor productivity (TFP) growth rates. Our econometric model also allows us to identify whether a country will catch up to or diverge from the technological leader nation over time. Two sets of robust findings emerge. First, TC, FDI and openness all contribute to facilitate international technology transfers. Yet, among these three channels, openness seems to contribute the most, followed by TC. Also, TC seems to compensate for the lack of sufficient human capital in developing countries. Second, around 6 to 17 countries out of 85 in our sample fail to catch up to the technological leader over the 36 years. These results suggest that TC can play an important role in facilitating the technological catch up of developing countries.
    Date: 2007–07

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