nep-ino New Economics Papers
on Innovation
Issue of 2007‒08‒14
fourteen papers chosen by
Koen Frenken
Utrecht University

  1. The Role(s) of Intellectual Property Rights for Innovation : A Review of the Empirical Evidence and Implications for Developing Countries By Andréanne Léger
  2. The Adoption and Diffusion of Organizational Innovation: Evidence for the U.S. Economy By Lisa Lynch
  3. IPR for Public and Private Innovations, and Growth By Luca, SPINESI
  4. Why Don't Inventors Patent? By Petra Moser
  5. International Energy R&D Spillovers and the Economics of Greenhouse Gas Atmospheric Stabilization By Valentina Bosetti; Carlo Carraro; Emanuele Massetti
  6. The Adoption of ICT: Firm-Level Evidence from Irish Manufacturing Industries By Stefanie Haller; Iula Traistaru-Siedschlag
  7. Localized appropriability : pecuniary externalities in knowledge exploitation By Antonelli Cristiano
  9. India ' s journey toward an effective patent By Abramson, Bruce
  10. Employment, Innovation, and Productivity: Evidence from Italian Microdata By Bronwyn H. Hall; Francesca Lotti; Jacques Mairesse
  11. Identifying the Age Profile of Patent Citations By Aditi Mehta; Marc Rysman; Tim Simcoe
  12. Innovation shortfalls By Maloney, William; Rodriguez-Clare, Andres
  13. Innovation over the Industry Life Cycle By Mark Sanders; Jaap Bos; Claire Economidou
  14. Complexity and innovation: social interactions and firm level total factor productivity By Antonelli Cristiano; Scellato Giuseppe

  1. By: Andréanne Léger
    Abstract: The role patents play for innovation is not clear, but patenting activity has increased in the last decades. This article reviews the empirical evidence on traditional and novel roles of patents to assess their impacts on innovation in developing countries. It shows that patents are not likely to support innovation in developing countries, even though their non-traditional functions fulfill important roles. This questions the relevance of domestic patent systems, and indicates the need to reassess the costs and benefits of the patent system, the use of patents as innovation indicators, and the need for more research on developing countries.
    Keywords: Intellectual property rights, developing countries, innovation
    Date: 2007
  2. By: Lisa Lynch
    Abstract: Using a unique longitudinal representative survey of both manufacturing and nonmanufacturing businesses in the United States during the 1990's, I examine the incidence and intensity of organizational innovation and the factors associated with investments in organizational innovation. Past profits tend to be positively associated with organizational innovation. Employers with a more external focus and broader networks to learn about best practices (as proxied by exports, benchmarking, and being part of a multi-establishment firm) are more likely to invest in organizational innovation. Investments in human capital, information technology, R&D, and physical capital appear to be complementary with investments in organizational innovation. In addition, nonunionized manufacturing plants are more likely to have invested more broadly and intensely in organizational innovation.
    Keywords: organizational innovation, productivity, human capital, technological change
    JEL: D2 J24 M5 O3
    Date: 2007–06
  3. By: Luca, SPINESI
    Abstract: The empirical analyses show that public and private R&D are strongly intertwined. On the one hand, the existence of large direct spillovers from public R&D to private industry has extensively proven. Yet, both a substitutability and complementarity relationship between private and public R&D investment has been found. From an institutional point of view, to stimulate the technology transfer from public R&D to private industry to U.S. adopted an uniform patent policy for public funded research, such as that guaranteed by the Bayh-Dole Act. This paper contributes to explain this empirical evidence. Within a neo-Schumpeterian endogenous growth model, it is shown that the intellectual appropriation share of new commercial valuable idea by private firms and the subsidy of private R&D costs are two equivalent ways to stimulate private R&D effort, and they affect in the same way the endogenous per capita output growth rate. The existence of a trade off between the per capita output growth rate and level has found. The main policy implication of these results consists into guarantee two different regimes of IPR for industrial and public innovations. Furthermore, it is shown that the large direct spillovers from public R&D to private industry allows to have better growth performance even if public R&D investment crowds out private innovative effort. A gain a trade off between the per capita output growth rate and level has found.
    Keywords: Intellectual Property Rights, Private and Public R&D, Growth
    JEL: O31 O34
    Date: 2007–07–24
  4. By: Petra Moser
    Abstract: This paper argues that the ability to keep innovations secret may be a key determinant of patenting. To test this hypothesis, the paper examines a newly-collected data set of more than 7,000 American and British innovations at four world's fairs between 1851 and 1915. Exhibition data show that the industry where an innovation is made is the single most important determinant of patenting. Urbanization, high innovative quality, and low costs of patenting also encourage patenting, but these influences are small compared with industry effects. If the effectiveness of secrecy is an important factor in inventors' patenting decisions, scientific breakthroughs, which facilitate reverse-engineering, should increase inventors' propensity to patent. The discovery of the periodic table in 1869 offers an opportunity to test this idea. Exhibition data show that patenting rates for chemical innovations increased substantially after the introduction of the periodic table, both over time and relative to other industries.
    JEL: D02 D21 D23 D62 K0 L1 L5 N0 N2 N21 N23 O3 O31 O34 O38
    Date: 2007–08
  5. By: Valentina Bosetti (FEEM); Carlo Carraro (Department of Economics, University Of Venice Ca’ Foscari); Emanuele Massetti (FEEM; FEEM)
    Abstract: This paper explores how international knowledge flows affect the dynamics of the domestic R&D sector and the main economic and environmental variables. The analysis is performed using WITCH, a dynamic regional model of the world economy, in which energy technical change is endogenous. The focus is on disembodied energy R&D international spillovers. The knowledge pool from which regions draw foreign ideas differs between High Income and Low Income countries. Absorption capacity is also endogenous in the model. The basic questions are as follows. Do knowledge spillovers enhance energy technological innovation in different regions of the world? Does the speed of innovation increase? Or do free-riding incentives prevail and international spillovers crowd out domestic R&D efforts? What is the role of domestic absorption capacity and of policies designed to enhance it? The new specification of the WITCH model presented in this paper enables us to answer these questions. Our analysis shows that international knowledge spillovers tend to increase free-riding incentives and decrease the investments in energy R&D. We also analyze the implication of a policy mix in which climate policy is combined with a technology policy designed to enhance absorption capacity in developing countries. Significant positive impacts on the costs of stabilising GHG concentrations are singled out.
    Keywords: Climate Policy, Energy R&D, International R&D Spillovers, Stabilization
    JEL: H0 H2 H3
  6. By: Stefanie Haller (Economic and Social Research Institute (ESRI)); Iula Traistaru-Siedschlag (Economic and Social Research Institute (ESRI))
    Abstract: This paper examines factors driving ICT adoption at firm level. We use a novel data set including information on ICT and e-commerce in Irish manufacturing firms over the period 2001-2004 and estimate a model derived from the new technology adoption literature that relates ICT adoption indicators to two sets of factors: characteristics of firms and characteristics of the environment in which firms operate. Our research results indicate that the adoption of ICT in Irish manufacturing has been uneven across firms, industries and space. On average, other things equal, firms with more skilled workers, operating in ICT producing and ICT using industries, located in the capital city region have been relatively more successful in adopting and using ICT. To a certain extent, patterns of ICT adoption have been different for domestic and foreign-owned firms, in particular with respect to the effects of international competitive pressure and firm size.
    Keywords: ICT adoption, Human capital, Industrial structure, Information spillovers
    JEL: L21 O31 O33
    Date: 2007–07
  7. By: Antonelli Cristiano (University of Turin)
    Abstract: Pecuniary externalities are crucial in shaping the distinctive competences and the economic success of innovative firms. The analysis of conditions for localized appropriation associated to the intensive use of idiosyncratic factors by means of the introduction of biased technological change provides a new understanding about knowledge appropriability and stresses the key role of external factors in the exploitation of technological knowledge.
    Date: 2007–07
  8. By: Giancarlo Corò (Department of Economics, University Of Venice Cà Foscari); Stefano Micelli (Department of Business, University Of Venice Cà Foscari)
    Abstract: This essay examines the situation and the lines of development of industrial districts from the point of view of local systems of innovation. First of all, this article points out to the modernity factors of the district model – which are ascribable to the supply chain economy, to entrepreneurial dynamics and to the importance of geography as a competitive resource – through the analysis of recent contributions of economic literature that examined the emerging organizational models in knowledge economy. Secondly, the outcomes of recent research on leading companies of Italian industrial districts will be presented, looking at three particularly topics of ongoing changes: the process of international opening of the value chain, the technological conditions of competitive advantage, the relationship between strategies and economic performance. Finally, some considerations on the issue of policies will be developed. Such considerations underline the need to re-think the traditional models of local governance of development and suggest to look at the new external district economies, based on service economies, on much more considerable investments in training, technological and cultural activities and, finally, on more aware institutional actions with reference to the association of companies in innovation projects.
    Keywords: Industrial districts, Innovation Systems, Entrepreneurship, Global Value Chain
    JEL: L26
    Date: 2007
  9. By: Abramson, Bruce
    Abstract: The decade following India ' s accession to the World Trade Organization ' s Trade-Related Aspects of Intellectual Property ushered in numerous changes to the country ' s patent system, culminating in a series of amendments in 2005. But a functioning patent system is more than a statute. This paper discusses the steps that India must still take to develop an effective, functioning patent system capable of attracting foreign direct investment, motivating domestic innovation and education, and filtering its benefits to all elements of Indian society, including the poor and the possessors of traditional knowledge. The analysis combines data studies of historical and recent patenting activity in India and by Indians, interviews with Indian government officials, intellectual property attorneys, industrialists, and researchers, and lessons gleaned from patent systems abroad. It identifies critical needs and concrete steps to meet them. Improving public awareness of the revenue-generating potential of patents will enhance incentives for the participation of individuals and small and medium enterprises in the patent system. Formalizing guidelines for patents derived through government research funds-coupled with needed changes in institutional governance-will enhance prospects for technology transfer from laboratories to commercial markets. Compensation schemes for traditional knowledge will extend the benefits of intellectual property rights to the poorest members of society. This paper ' s recommendations would help India achieve both a fully functioning patent system and a mechanism for ensuring that poor people living traditional lifestyles receive their share of the social gains that a working innovation system can confer.
    Keywords: E-Business,Technology Industry,Labor Policies,Real & Intellectual Property Law,Knowledge Economy
    Date: 2007–08–01
  10. By: Bronwyn H. Hall; Francesca Lotti; Jacques Mairesse
    Abstract: Italian manufacturing firms have been losing ground with respect to many of their European competitors. This paper presents some empirical evidence on the effects of innovation on employment growth and therefore on firms' productivity with the goal of understanding the roots of such poor performance. We use firm level data from the last three surveys on Italian manufacturing firms conducted by Mediocredito-Capitalia, which cover the period 1995-2003. Using a slightly modified version of the model proposed by Harrison, Jaumandreu, Mairesse and Peters (HJMP 2005), which separates employment growth rates into those associated with old and new products, we find no evidence of significant employment displacement effects stemming from process innovation. The sources of employment growth during the period are split equally between the net contribution of product innovation and the net contribution from sales growth of old products. However, the contribution of product innovation to employment growth is somewhat lower than in the four European countries considered in HJMP 2005, and the contribution of innovation in general to productivity growth is almost nil in Italy during this period.
    JEL: D24 J0 J20 L20 O30
    Date: 2007–08
  11. By: Aditi Mehta (Department of Economics, Boston University); Marc Rysman (Department of Economics, Boston University); Tim Simcoe (J.L. Rotman School of Management, University of Toronto)
    Abstract: Previous work studying the age distribution of citations for patents relies on functional form assumptions to address the co-linearity between the birth year, citation year, and age. This paper proposes a non-parametric identification strategy that uses the lag between application and grant as a source of exogenous variation. We show empirically that the “citation clock” starts only when a patent issues, and we examine the potential bias if our assumption is incorrect. We use our approach to re-examine some prior results on the citation age profile of patents from different technological fields. We discuss potential extensions into other research areas.
    JEL: L1 O3
    Date: 2007–03
  12. By: Maloney, William; Rodriguez-Clare, Andres
    Abstract: There is a common perception that low productivity or low growth is due to what can be called an " innovation shortfall, " usually identified as a low rate of investment in research and development (R & D) when compared with some high innovation countries. The usual reaction to this perceived problem is to call for increases in R & D investment rates, usually specifying a target that can be as high as 3 percent of GDP. The problem with this analysis is that it fails to see that a low R & D investment rate may be appropriate given the economy ' s pattern of specialization, or may be just one manifestation of more general problems that impede accumulation of all kinds of capital. How can we know when a country suffers from an innovation shortfall above and beyond the ones that should be expected given the country ' s specialization and accumulation patterns? This is the question the authors tackle in this paper. First, they show a simple way to estimate the R & D gap that can be explained by a country ' s specialization pattern, illustrating it for the case of Chile. For this country they find that although its specialization in natural-resource-intensive sectors explains part of its R & D gap, a significant shortfall remains. Second, the authors show how a calibrated model can be used to determine the R & D gap that should be expected given a country ' s investment in physical and human capital. If the actual R & D gap is above this expected gap, then one can say that the country suffers from a true innovation shortfall.
    Keywords: Investment and Investment Climate,Economic Theory & Research,Trade and Regional Integration,Research and Development,Economic Growth
    Date: 2007–07–01
  13. By: Mark Sanders; Jaap Bos; Claire Economidou
    Abstract: In this paper, we present a model of the industry life cycle that drives and is driven by R&D. In the model, firms have the option to improve the quality of their output or to invest R&D resources in efficiency gains. Faced with this tradeoff, less mature industries, in which young firms dominate, opt for quality improvements instead of efficiency improvements, whereas more mature industries will do both. This switch is endogenous and depends on the level of quality achieved. We explore these two hypotheses empirically using a panel of manufacturing industries across six European countries over the period 1980-1997. Our empirical results provide support for the model's predictions.
    Keywords: Growth, Life Cycle, Innovation, Stochastic Frontier Analysis, Manufacturing Industries
    JEL: C23 L23 L60 O32 O47
    Date: 2007–06
  14. By: Antonelli Cristiano (University of Turin); Scellato Giuseppe
    Abstract: The analysis of social interactions as drivers of economic dynamics represents a growing field of the economics of complexity. Social interactions are a specific form of interdependence whereby the changes in the behavior of other agents affect the structure of the utility functions for households and of the production functions for producers. In this paper, we apply the general concept of social interactions to the area of the economics of innovation and technological change. In particular, we discuss how both the knowledge spillovers literature and the Schumpeterian notion of creative reaction can be reconciled within a general framework building on the concept of social interactions within complex dynamics. The paper presents an empirical analysis of firm level total factor productivity (TFP) for a sample of 7020 Italian manufacturing companies observed during years 1996-2005. We show that changes in firm level TFP are significantly affected by localised social interactions. Such evidence is robust to the introduction of appropriate regional and sectoral controls, as well as to econometric specifications accounting for potential endogeneity problems. Moreover, we find evidence suggesting that changes in competitive pressure, namely the creative reaction channel, significantly affect firm level TFP with and additive effect with respect to localised social interactions deriving from knowledge spillovers.
    Date: 2007–07

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