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on Innovation |
| By: | Kilponen , Juha (Bank of Finland Research); Santavirta, Torsten (Helsinki School of Economics) |
| Abstract: | We show theoretically that a proportional R&D subsidy accelerates innovation activity at all degrees of competition in the modern Schumpeterian growth model, but less so at high degrees of competition. We then use company-level data on patenting activity, product market competition and R&D subsidies of Finnish firms during 1990–2001 to test the theoretical prediction. The empirical findings can be summarized as follows. Firstly, we find relatively strong evidence in favour of the inverted U-shape between competition and innovation. Secondly, we find some evidence that a direct R&D subsidy increases innovative activity at all but very high degrees of competition. This can be interpreted so mean that the R&D subsidy reinforces the Schumpeterian effect due to the negative cross-effect of R&D subsidy and competition. This is evident from the finding that an increase in the R&D subsidy steepens the inverted U relationship when competition is fierce. |
| Keywords: | competition; innovation; R&D subsidies; patents |
| JEL: | D40 H25 L10 O31 |
| Date: | 2007–09–12 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofrdp:2007_010&r=ino |
| By: | Valentina Bosetti (Fondazione Eni Enrico Mattei); Carlo Carraro (Fondazione Eni Enrico Mattei, University of Venice, CEPR, CESifo and CMCC); Emanuele Massetti (Fondazione Eni Enrico Mattei, Catholic University of Milan and CMCC); Massimo Tavoni (Fondazione Eni Enrico Mattei, Catholic University of Milan and CMCC) |
| Abstract: | It is widely recognized that technological change has the potential to reduce GHG emissions without compromising economic growth; hence, any better understanding of the process of technological innovation is likely to increase our knowledge of mitigation possibilities and costs. 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? Do greenhouse gas stabilization costs drop in the presence of international technological spillovers? 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. The strongest cuts in energy R&D investments are recorded among High Income countries, where international knowledge flows crowd out domestic R&D efforts. The overall domestic pool of knowledge, and thus total net GHG stabilization costs, remain largely unaffected. International spillovers, however, are also an important policy channel. We therefore 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. Finally, a sensitivity analysis shows that High Income countries are more responsive than Low Income countries to changes in the parameters and thus suggests to focus additional empirical research efforts on the former. |
| Keywords: | Climate Policy, Energy R&D, International R&D Spillovers, Stabilization |
| JEL: | H0 H2 H3 |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2007.82&r=ino |
| By: | Hulsink, W.; Bouwman, H.; Elfring, T. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University) |
| Abstract: | High-technology starters do not operate in a vacuum and innovation is not a solitary activity. The activities of technology-based firms are embedded in socio-economic networks with other companies, investors, universities, vocational institutions, etc. The geographical proximity of those institutions and infrastructural hubs will partly play a role in determine the location of ICT firms decision. Furthermore, many high-tech companies shape clusters around areas where their major customers are located. The topic of this paper is regional clustering Enright, 1992; Rosenfeld, 1997within the context of Internet and ICT technology. A dynamic model previously developed for the analysis of ICT-entrepreneurship and networking will be applied to make a critical analysis of five ICT-clusters in the Netherlands and Flanders (Northern part of Belgium): the Louvain Technology Corridor, Flanders Language Valley, Amsterdam Alley, Dommel Valley, and Twente. |
| Keywords: | clusters;high-tech entrepreneurship;networks;Netherlands;Flanders;ICT; |
| Date: | 2007–07–24 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:eureri:300011716&r=ino |
| By: | Holger Graf (Friedrich-Schiller University Jena, School of Business and Economics) |
| Abstract: | The internal density of a local network is said to increase the region-specific knowledge-stock and might lead to a comparative advantage. However, it might also lead to a lock-in situation, if local trajectories are directed towards inferior solutions. Accordingly it is argued that successful clusters are characterised by the existence of gatekeepers, i.e. actors that generate novelty by drawing on local and external knowledge. We attempt to answer questions related to the role and characteristics of gatekeepers within regional innovation systems by applying social network analysis based on patent data for four East-German regions. The regional networks appear to be significantly different with respect to the overall degree of interaction and with respect to their relative outward orienta- tion. Concerning the characteristics of gatekeepers, we find that size does not play the major role for being a gatekeeper. It is rather absorptive capacity that matters for gatekeepers. It also shows that public research organisations serve the functions of a gatekeeper to a higher degree than private actors. |
| Keywords: | Innovator networks; Gatekeeper; R+D co-operation; Scientist mobility |
| JEL: | O31 Z13 R11 |
| Date: | 2007–09–10 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2007-054&r=ino |
| By: | Nicholas Economides (Stern School of Business, New York University); William N. Hebert (Calvo & Clark LLP); |
| Abstract: | We examine the intersection of patents and antitrust where a patent holder uses the monopoly power it possesses in the market for a patented product to exclude competitors in an adjacent market and attempt to monopolize or monopolize the adjacent market. The present scheme for awarding patents cannot judge when the issuance of a patent will lead to the appropriate balance between innovation and efficiency. Where a patent holder’s invention uses an interface with adjacent products, the patent holder may be tempted to extend its patent monopoly into adjacent markets that depend upon the interface with the patented invention. Economic theory suggests that it is inappropriate to immunize a patent holder from antitrust liability when it attempts to extend its patent monopoly into adjacent markets, because it could decrease consumer surplus. Courts have expressed their reluctance to scrutinize a patent holder’s innovations and design changes, because of the potential benefits of the innovations and their reluctance to second-guess the marketplace. However, applying traditional antitrust principles, courts have found that monopolists could be liable for unlawfully extending their monopoly positions into adjacent markets in the areas of computer peripherals and software applications; aftermarkets for replacement parts, service and maintenance of durable goods; design changes to medical devices; and changes in drug formulas. While the patent laws provide a spur to innovation by granting limited monopoly rights, the antitrust laws curb the excessive reach of these monopoly rights by acting as a check on excessive expansion of the scope of the patent grant. |
| Keywords: | patents, antitrust, adjacent markets, complementarity, innovation, efficiency, aftermarkets |
| JEL: | K21 Q31 Q34 L42 L40 L12 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:0707&r=ino |
| By: | Bo Carlsson (Case Western Reserve University); Zoltan J. Acs (University of Baltimore); David B. Audretsch (Max-Planck Institute of Economics, Jena, Germany); Pontus Braunerhjelm (Royal Institute of Technology) |
| Abstract: | This paper explores the relationship between knowledge creation, entrepreneurship, and economic growth in the United States over the last 150 years. According to the "new growth theory", investments in knowledge and human capital generate economic growth via spillovers of knowledge. But the theory does not explain how or why spillovers occur, or why large investments in R+D do not always result in economic growth. What is missing is "the knowledge filter" - the distinction between general knowledge and economically useful knowledge. Also missing is a mechanism (such as entrepreneurship) converting economically relevant knowledge into economic activity. This paper shows that the unprecedented increase in R+D spending in the United States during and after World War II was converted into economic activity via incumbent firms in the early postwar period and increasingly via new ventures in the last few decades. |
| Keywords: | knowledge, economic growth, entrepreneurship, spillovers, history |
| JEL: | O14 O17 O30 N90 |
| Date: | 2007–09–12 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2007-057&r=ino |
| By: | Echtelt, F.E.A. van; Wynstra, J.Y.F.; Weele, A.J. van (Erasmus Research Institute of Management (ERIM), RSM Erasmus University) |
| Abstract: | This paper examines how firms succeed to leverage supplier involvement in product development. The paper extends earlier work on managing supplier involvement by providing an integrated analysis of results, processes and conditions both at the level of individual development projects and the overall firm. Following a multiple-case study approach with theoretical sampling, the study is carried out by examining eight projects in which four manufacturers from different industries involve multiple suppliers. The findings suggest that successful supplier involvement is dependent on the coordinated design, execution and evaluation of strategic, long-term processes and operational, short-term management processes and the presence of enabling factors such as a cross-functional oriented organization. The required intensity of these processes and enablers depends on contingencies such as firm size and environmental uncertainty. In contrast with previous research, we find no indications that managing supplier involvement requires a different approach in highly innovative projects compared to less innovative projects. |
| Keywords: | new product development;innovation;R&D management;supplier relations;purchasing; |
| Date: | 2007–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:eureri:300011710&r=ino |
| By: | C. Mirjam van Praag (University of Amsterdam; Tinbergen Institute; Max Planck Institute of Economics; IZA Institute for the Study of Labour); Peter H. Versloot (University of Amsterdam; Tinbergen Institute) |
| Abstract: | This paper examines to what extent recent empirical evidence can collectively and systematically substantiate the claim that entrepreneurship has important economic value. Hence, a systematic review is provided that answers the question: What is the contribution of entrepreneurs to the economy in comparison to non-entrepreneurs? We study the relative contribution of entrepreneurs to the economy based on four measures that have most widely been studied empirically. Hence, we answer the question: What is the contribution of entrepreneurs to (i) employment generation and dynamics, (ii) innovation, and (iii) productivity and growth, relative to the contributions of the entrepreneurs' counterparts, i.e. the 'control group'? A fourth type of contribution studied is the role of entrepreneurship in increasing individuals' utility levels. Based on 57 recent studies of high quality that contain 87 relevant separate analyses, we conclude that entrepreneurs have a very important - but specific - function in the economy. They engender relatively much employment creation, productivity growth and produce and commercialize high quality innovations. They are more satisfied than employees. More importantly, recent studies show that entrepreneurial firms produce important spillovers that affect regional employment growth rates of all companies in the region in the long run. However, the counterparts cannot be missed either as they account for a relatively high value of GDP, a less volatile and more secure labor market, higher paid jobs and a greater number of innovations and they have a more active role in the adoption of innovations. |
| Keywords: | entrepreneur, entrepreneurship, self-employment, productivity, economic development, growth, employment, innovation, patents, R+D, utility, remuneration, income. |
| JEL: | D24 D31 E23 E24 J21 J28 J31 L26 M13 |
| Date: | 2007–09–12 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2007-061&r=ino |
| By: | Roberto Antonietti (University of Bologna); Giulio Cainelli (University of Bari and CERIS-CNR) |
| Abstract: | Aim of this paper is to explore the main drivers of outsourcing of knowledge intensive business services by Italian manufacturing firms. While anecdotal and empirical evidence has emphasized labour cost and scale economies as behind firms’ choices to outsource production or service activities, here we focus on spatial agglomeration and technology as important factors. Using microeconomic data on a repeated cross-section of Italian manufacturing firms for the period 1998-2003, we develop a two-stage model in order to avoid selection bias: first, we estimate the determinants of the firm's decision to outsource business-related services; second, we estimate the main factors underlying the intensity and complexity of KIBS outsourcing, expressed by the number of service activities that are externalized. Our results show that labour cost-savings are not relevant in driving the decision to outsource KIBS, but ICT, R&D and location within a dense and technologically developed industrial district have very positive effects. |
| Keywords: | KIBS, Service Outsourcing, R&D, ICT, Spatial Agglomeration |
| JEL: | L24 L84 R32 R12 |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2007.79&r=ino |
| By: | Zoltan Acs (George Mason University); Lawrence A. Plummer (Clemson University); Ryan Sutter (George Mason University) |
| Abstract: | A new model of economic growth introduces the knowledge filter between new knowledge and economically useful knowledge. It identifies both new ventures and incumbent firms as the mechanisms that penetrate the knowledge filter. Recent empirical work has shown that new firms are more proficient at penetrating the knowledge filter than are incumbent firms; however, the analysis has only examined expanding economies and has relied on purely cross-sectional regression methodologies. This study explores the role of new and incumbent firms in penetrating the knowledge filter utilizing recent developments in spatial panel estimation techniques to provide a more robust set of findings. The results suggest those new firms are more proficient at penetrating the knowledge filter in declining and growing regions alike. |
| Keywords: | Entrepreneurship, Knowledge, Regional Growth, Endogenous Growth |
| JEL: | L26 O1 O18 O3 R1 |
| Date: | 2007–09–12 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2007-058&r=ino |
| By: | Olivier BROSSARD (LEREPS-GRES); Jérôme VICENTE (LEREPS-GRES) |
| Abstract: | This paper deals with the firms’ motives for entering into knowledge partnerships. We start by showing that networking strategies are designed to access external knowledge whilst maintaining at the same time a sufficient level of knowledge appropriation and tradability. The ICT sector (and interplaying ones) is particularly concerned by this accessibility/appropriation trade-off. The questions of modularity, complementarity, compatibility and standardisation are critical in the formation of corporate strategic and technological partnerships. Considering that knowledge in this sector is complex and systemic, we construct a theoretical typology of knowledge partnerships by crossing the levels of cognitive and relational proximity with the knowledge phases of exploration, examination and exploitation. This typology is then tested on empirical data through the use of a classification algorithm. The dataset is based on a sample of strategic alliances in the European ICT sector extracted from SDC Platinum. We show that strategic alliances are clustered in relation to the knowledge phases (exploration, examination, exploitation), and that the alliance categories are characterised by levels of relational and cognitive distance which actually are in keeping with the theoretical predictions. |
| Keywords: | knowledge networks; knowledge phases; proximities; strategic alliances; ICT sector |
| JEL: | L22 L24 L63 O31 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:grs:wpegrs:2007-18&r=ino |
| By: | Ana Isabel, Moreno Monroy |
| Abstract: | We analyze the vertical, horizontal and transversal networks that a firm can form in the presence of innovation and technological lags. Our empirical case of study uses three industries of the Colombian manufacturing sector. Within this framework we find a rich variety of interorganizational connections. In vertical relationships, a hierarchical relationship only unidirectional material flows happen. Enterprises of the informal and low-segment level of the market cannot establish content-wise vertical relationships, because they have low legitimacy. We find that in highly competitive scenarios with low product differentiation, firms do not engage in any kind of interchange with similar, competing enterprises. We derived that an important determinant of horizontal cooperation is the knowledge of other agents, fueled by standardized practices. As for the relationships of firms with the institutional support system, we find that the access is limited to enterprises operating in the higher segment of the market. The implication is that a subgroup of enterprises does not have access to the support system and indeed have a pessimistic view towards it. The conclusion is that the heterogeneity in the universe of firms is reflected also in their possibilities to engage in networks. |
| Keywords: | networks; technology; clusters |
| JEL: | Z13 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:4843&r=ino |
| By: | Anne ter Wal; Ron A. Boschma |
| Abstract: | The cluster literature suffers from a number of shortcomings: (1) by and large, cluster studies do not take into account that firms in a cluster are heterogeneous in terms of capabilities; (2) cluster studies tend to overemphasize the importance of place and geographical proximity and underestimate the role of networks which are, by definition, a-spatial entities; (3) most, if not all cluster studies have a static nature, and do not address questions like the origins and evolution of clusters. Our aim is to overcome these shortcomings and propose a theoretical framework on the evolution of clusters. Bringing together bodies of literature on clusters, industrial dynamics, the evolutionary theory of the firm and network theory, we describe how clusters co-evolve with: (1) the industry they adhere to; (2) the (dynamic) capabilities of the firms they contain; and (3) the industry-wide knowledge network they are part of. Based on this framework, we believe the analysis of cluster evolution provides a promising research agenda in evolutionary economic geography for the years to come. |
| Keywords: | cluster evolution, network dynamics, industrial dynamics, co-evolution, evolutionary economic geography |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:0707&r=ino |
| By: | Zoltan J. Acs (George Mason University and Max-Planck-Institute of Economics, Jena); David J. Brooksbank (University of Glamorgan); Colm O'Gorman (Dublin City University); David G. Pickernell (University of Glamorgan); Siri Terjesen (Queensland University of Technology and Max-Planck-Institute of Economics, Jena) |
| Abstract: | We explore if the Knowledge Spillover Theory of Entrepreneurship, applied to FDI, provides at least a partial explanation for the greater emergence of recent knowledge-based entrepreneurship in Ireland compared with Wales. In order to examine how FDI and entrepreneurship policy in these two regions might have influenced the levels of knowledge-based entrepreneurship, we outline FDI and entrepreneurship policies for Wales and Ireland and key measures of knowledge creation, and evaluate the extent and nature of FDI activity and its relationship with entrepreneurship in general and knowledge-based entrepreneurship in particular. Implications include possible policy directions for countries that are characterized by weak knowledge-creating institutions yet wish to encourage knowledge-based entrepreneurship. |
| Keywords: | Economic Development, Entrepreneurship, Foreign Direct Investment, Ireland, Knowledge Spillovers, Wales |
| JEL: | J24 L26 M13 |
| Date: | 2007–09–12 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2007-059&r=ino |
| By: | Ziesemer, Thomas (Maastricht University, UNU-MERIT); Kriechel, Ben (Maastricht University, ROA) |
| Abstract: | The Porter Hypothesis postulates that the costs of compliance with environmental standards may be offset by adoption of innovations they trigger. We model this hypothesis using a game of timing of technology adoption. We show that times of adoption are earlier the higher the non-adoption tax. The environmental tax turns the preemption game with low profits into a game with credible precommitment yielding high profits (pro-Porter). If there is a precommitment game without environmental taxes, the introduction of a tax leads to lower profits (anti-Porter). An evaluation of the empirical literature indicates that the Porter hypothesis holds even for profit-maximizing firms under multiple market imperfections such as imperfect competititon, X-inefficiency, and agency costs. These are more likely to be present in sectors with large firms. In many case studies that we evaluate, though, we detect an element of explicit or implicit subsidies for environmentally friendly behaviour, which is in line with Pigovian policies. |
| Keywords: | Environmental Policy, Strategic Trade Theory, Technology Adoption, Porter Hypothesis |
| JEL: | Q2 F1 H7 O3 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:unumer:2007024&r=ino |