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on Innovation |
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Issue of 2008‒02‒09
twelve papers chosen by Steffen Lippert Massey University Department of Commerce |
| By: | Ulrich Doraszelski; Jordi Jaumandreu |
| Abstract: | We develop a simple estimator for production functions in the presence of endogenous productivity change that allows us to retrieve productivity and its relationship with R&D at the firm level. By endogenizing the productivity process we build on the recent literature on structural estimation of production functions. Our dynamic investment model can be viewed as a generalization of the knowledge capital model (Griliches 1979) that has remained a cornerstone of the productivity literature for more than 25 years. We relax the assumptions on the R&D process and examine the impact of the investment in knowledge on the productivity of firms. We illustrate our approach on an unbalanced panel of more than 1800 Spanish manufacturing firms in nine industries during the 1990s. Our findings indicate that the link between R&D and productivity is subject to a high degree of uncertainty, nonlinearity, and heterogeneity across firms. By accounting for uncertainty and nonlinearity, we extend the knowledge capital model. Moreover, capturing heterogeneity gives us the ability to assess the role of R&D in determining the differences in productivity across firms and the evolution of firmlevel productivity over time. |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:cte:werepe:we078652&r=ino |
| By: | Berrone, Pascual (IESE Business School); Gelabert, Liliana (Universidad Carlos III); Fosfuri, Andrea (Universidad Carlos III); Gomez-Mejia, Luis R. (Arizona State University) |
| Abstract: | We examine institutional pressures as antecedents of environmental innovation. Drawing on institutional theory and a resource-based view of the firm, we argue that regulatory and normative forces influence companies' propensity to innovate in environment-related projects. Furthermore, we suggest that this relationship is contingent on the availability and specificity of the companies' resources. These relationships were tested using environmental patents and citations of 340 publicly-traded companies from polluting industries in the U.S. Results suggest that institutional pressures can be a source of competitive advantage, and regulatory forces are becoming more strongly associated with environmental innovations as the intensity of companies' R&D activities increase. |
| Keywords: | environmental innovation; institutional theory; resource-based view; |
| Date: | 2007–11–21 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0723&r=ino |
| By: | Giammario Impullitti |
| Abstract: | The geographical distribution of R&D investment changes dramatically in the 1970s and 1980s. In the early 1970s U.S. firms are the uncontested world leaders in R&D investment in most manufacturing sectors. Later, led by Japan and Europe, foreign firms start challenging American R&D leadership in many sectors of the economy. In this period of increasing competition we also observe a substantial increase in the U.S. R&D subsidy. In a version of the multi-country quality ladder growth model I study the effects of foreign R&D competition on domestic welfare and on the optimal R&D subsidy. I build a new empirical index of international R&D rivalry that can be used to perform quantitative analysis in this type of frameworks. In a calibrated version of the model I focus on the period 1979-1991 and perform the following quantitative exercises: first, I evaluate the quantitative effects of the observed increase in foreign R&D competition on U.S. welfare. I find that the positive growth effect and the negative business-stealing effect of foreign competition on U.S. welfare substantially balance each other, and the overall welfare effect of competition is negligible - less then 1 percent of per-capita consumption. Moreover, using estimates of the effective U.S. R&D subsidy rate, I compute the distance from optimality of the observed subsidy at each level of competition. I find that international competition increases the optimal subsidy and that, surprisingly, the U.S. subsidy observed in the data is fairly close to the optimal subsidy. |
| Keywords: | international competition, R&D-driven growth theory, strategic R&D policy, international trade and growth |
| JEL: | F12 F13 O41 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:eui:euiwps:eco2008/11&r=ino |
| By: | Gorodnichenko, Yuriy (University of California, Berkeley); Svejnar, Jan (University of Michigan); Terrell, Katherine (University of Michigan) |
| Abstract: | Globalization brings opportunities and pressures for domestic firms in emerging market economies to innovate and improve their competitive position. Using recent data on firms in 27 transition economies, we test for the effects of globalization through the impact of increased competition and foreign direct investment on domestic firms’ efforts to raise their capability (innovate) by upgrading their technology or their product/service (improving quality or developing a new one), taking into account firm heterogeneity. We find support for the prediction that competition has a negative effect on innovation, especially for firms further from the frontier, and that the supply chain of multinational enterprises and international trade are important channels for domestic firm innovation. We do not find support for the inverted U effect of competition on innovation. There is partial support for the hypothesis that firms in a more pro-business environment invest more in innovation and are more likely to display the inverted U relationship between competition and innovation. |
| Keywords: | competition, innovation, emerging markets, spillovers |
| JEL: | F23 O16 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3299&r=ino |
| By: | Siebert, Ralph; von Graevenitz, Georg |
| Abstract: | In a patent thicket licensing provides a mechanism to either avoid or resolve hold up. We study the choice between ex ante licensing to avoid hold up and ex post licensing to resolve it. Firms’ choice of licensing contract is studied in the context of a patent portfolio race. We show that high expected blocking leads to ex ante licensing while ex post licensing arises if expected blocking is low but realized blocking is high. Also, ex ante licensing reduces firms’ R&D incentives. A sample selection model of licensing is derived from the theoretical model. In this framework theoretical predictions on effects of blocking are tested with data from the semiconductor industry. We show that licensing helps firms to resolve blocking. However, licensing is not a cure all: it decreases as fragmentation of property rights increases and arises mainly between large firms with similar market shares. Using a treatment effects model we also confirm the prediction that ex ante licensing reduces the level of R&D investment. |
| Keywords: | Hold-Up Problem; Licensing; Innovation; Patent Race; Patent Thicket. |
| JEL: | L13 L49 L63 |
| Date: | 2008–01–11 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:msmdpa:2104&r=ino |
| By: | Jakub Kastl (Stanford University); David Martimort (Toulouse School of Economics); Salvatore Piccolo (Toulouse School of Economics, University of Naples and CSEF) |
| Abstract: | We use data from the Italian manufacturing industry to document the positive relationship between delegation of decisions within organizations and innovation incentives. In order to obtain the causal effect, we build a contract theory model with asymmetric information and moral hazard which predicts that awarding autonomy to the manager spurs innovation incentives relative to arrangements based on vertical control. We use the model to guide our search for suitable instruments. Using several alternative instrumental variables and different specifications we find a strong positive effect of delegation on R&D spending. |
| Keywords: | Asymmetric Information, Delegation, Hold-up, R&D and Vertical Control |
| Date: | 2008–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:sef:csefwp:192&r=ino |
| By: | Paul L. Robertson (University of Tasmania); David Jacobson (Dublin City University); Richard N. Langlois (University of Connecticut) |
| Abstract: | In this survey, we examine the operations of innovation processes within industrial districts by exploring the ways in which differentiation, specialization, and integration affect the generation, diffusion, and use of new knowledge in such districts. We begin with an analysis of the importance of the division of labor and then investigate the effects of social embeddedness on innovation. We also consider the effect of forms of organization within industrial districts at various stages of product and process life, and we examine the negative aspects of embeddedness for innovation. We conclude with a discussion of the possible consequences of new information and communications technologies on innovation in industrial districts. |
| Keywords: | industrial districts, innovation, division of labor, embeddedness, information technology. |
| JEL: | L14 O31 R11 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2008-03&r=ino |
| By: | Daron Acemoglu; Philippe Aghion; Rachel Griffith; Fabrizio Zilibotti |
| Abstract: | This paper investigates the determinants of vertical integration. We first derive a number of predictions regarding the relationship between technology intensity and vertical integration from a simple incomplete contracts model. Then, we investigate these predictions using plant-level data for the UK manufacturing sector. Most importantly, and consistent with theory, we find that the technology intensities of downstream (producer) and upstream (supplier) industries have opposite effects on the likelihood of vertical integration. Also consistent with theory, both these effects are stronger when the supplying industry accounts for a large fraction of the producer’s costs. These results are generally robust and hold with alternative measures of technology intensity, with alternative estimation strategies, and with or without controlling for a number of firm and industry-level characteristics. |
| Keywords: | Hold-up, incomplete contracts, internal organization of the firm, investment, residual rights of control, R&D, technology, UK manufacturing, vertical integration. |
| JEL: | L22 L23 L24 L60 |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:zur:iewwpx:342&r=ino |
| By: | Hans Gersbach (CER-ETH Center of Economic Research at ETH Zurich, Switzerland); Maik T. Schneider (CER-ETH Center of Economic Research at ETH Zurich, Switzerland); Olivier Schneller (CER-ETH Center of Economic Research at ETH Zurich, Switzerland) |
| Abstract: | We augment a Schumpeterian growth model with a public basic-research sector to examine how much a country should invest in basic research. We find that the closer the country is to the world’s technological frontier the more the government should invest in basic research. Basic-research expenditures are increasing with a country’s degree of openness as long as innovation sizes are small. We provide possible explanations for the empirical evidence available on basic-research expenditures across countries. |
| Keywords: | basic research, openness, distance to frontier, economic growth |
| JEL: | O31 O38 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:eth:wpswif:08-79&r=ino |
| 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 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:2007_11&r=ino |
| By: | Erik Stam (University of Cambridge, Netherlands Scientific Council for Government Policy, Utrecht University and Max Planck Institute of Economics, Jena) |
| Abstract: | What is meant by entrepreneurship, innovation and economic growth is often not clear or very idiosyncratic. This paper starts with a discussion of the nature of entrepreneurship and its relation to innovation. The second section provides an overview of theory and empirical research on the relation between entrepreneurship, innovation and economic growth. The paper continues with a study on entrepreneurship and innovation in the Netherlands in an international and historical perspective. After these conceptual, theoretical and empirical investigations, we turn to policy issues. |
| Keywords: | entrepreneurship, innovation policy, innovation systems, the Netherlands |
| JEL: | E61 G38 L26 L53 O12 O31 O33 O38 |
| Date: | 2008–01–30 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2008-006&r=ino |
| By: | Rajshree Agarwal (University of Illinois at Urbana Champaign); David Audretsch (Max Planck Institute of Economics); MB Sarkar (University of Central Florida) |
| Abstract: | Questioning the underlying assumptions of the process of creative destruction, we conceptualize an alternative process of creative construction that may characterize the dynamics between entrants and incumbents. We discuss the underlying mechanism of knowledge spillover strategic entrepreneurship whereby knowledge investments by existing organizations, when coupled with entrepreneurial action by individuals embedded in their context, results in new venture creation, heterogeneity in performance and subsequent growth in industries, regions and economies. The framework has implications for future research in entrepreneurship, strategy and economic growth. |
| Keywords: | growth, spillovers, creative destruction, entrepreneurship |
| JEL: | L16 L21 M13 O11 O40 O57 |
| Date: | 2008–01–30 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2008-008&r=ino |