nep-ino New Economics Papers
on Innovation
Issue of 2008‒04‒12
nine papers chosen by
Steffen Lippert
Massey University Department of Commerce

  1. R&D and Productivity: Estimating Production Functions when Productivity is Endogenous By Doraszelski, Ulrich; Jaumandreu, Jordi
  2. A Note on The Drivers of R&D Intensity By Mathieu, Azèle; van Pottelsberghe de la Potterie, Bruno
  3. A Policy Insight into the R&D-Patent Relationship By de Rassenfosse, Gaétan; van Pottelsberghe de la Potterie, Bruno
  4. Outsourcing and Technological Innovations: A Firm-Level Analysis By Bartel, Ann P; Lach, Saul; Sicherman, Nachum
  5. Together but Apart: ICT and Productivity Growth in Israel By Lach, Saul; Shiff, Gil; Trajtenberg, Manuel
  6. Science, Technology and Development: Emerging concepts and visions By Soete, Luc
  7. The Innovativeness of Foreign Firms in China By Urem, Branka; Alcorta, Ludovico; An, Tongliang
  8. What Drives the Productive Efficiency of a Firm? : The Importance of Industry, Location, R&D, and Size By Oleg Badunenko; Michael Fritsch; Andreas Stephan
  9. Preemptive Search and R&D Clustering Revisited By Patrick Van Cayseele

  1. By: Doraszelski, Ulrich; Jaumandreu, Jordi
    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 firm-level productivity over time.
    Keywords: production function estimation; productivity; R&D
    JEL: D2
    Date: 2008–01
  2. By: Mathieu, Azèle; van Pottelsberghe de la Potterie, Bruno
    Abstract: The objective of this paper is to evaluate the extent to which technological specialization influences the observed R&D intensity of countries, and hence would bias the well-known country rankings that consist in comparing aggregate R&D intensity. The econometric analysis performed on a cross-country cross-industry panel dataset (21 industrial sectors, 10 countries, from 1991 to 2002) suggests that accounting for the technological specialization of countries drastically reduces the differences in relative R&D efforts observed at the country level. The only exception is Sweden (and the USA, but to a lower extent), which has an ‘above-than-average’ R&D intensity in most industries. Countries like Finland, Japan or Germany do not have an R&D intensity that is particularly higher than their industrial structure would predict.
    Keywords: high-tech industries; Lisbon agenda; R&D intensity; Science and technology policies
    JEL: E22 O31 O57
    Date: 2008–02
  3. By: de Rassenfosse, Gaétan; van Pottelsberghe de la Potterie, Bruno
    Abstract: This paper investigates whether patent counts can be taken as indicators of macroeconomic innovation performance. The empirical model explicitly accounts for the two components of patenting output: research productivity and patent propensity. The empirical analysis aims at explaining the `correct' number of priority filings in 34 countries. It confirms that the two components play a substantial role as witnessed by the impact of the design of several policies, namely education, intellectual property and science and technology policies. A major policy implication relates to the design of patent systems, which ultimately induces, or allows for, aggressive patenting strategies.
    Keywords: education policy; patent policy; propensity to patent; R&D productivity; S&T policy
    JEL: O30 O38
    Date: 2008–02
  4. By: Bartel, Ann P; Lach, Saul; Sicherman, Nachum
    Abstract: This paper presents a dynamic model that analyzes how firms’ expectations with regards to technological change influence the demand for outsourcing. We show that outsourcing becomes more beneficial to the firm when technology is changing rapidly. As the pace of innovations in production technology increases, the firm has less time to amortize the sunk costs associated with purchasing the new technologies. This makes producing in-house with the latest technologies relatively more expensive than outsourcing. The model therefore provides an explanation for the recent increases in outsourcing that have taken place in an environment of increased expectations for technological change. We test the predictions of the model using a panel dataset on Spanish firms for the period 1990 through 2002. The empirical results support the main prediction of the model, namely, that all other things equal, the demand for outsourcing increases with the probability of technological change.
    Keywords: outsourcing; technological change
    JEL: J21 L11 L24 O33
    Date: 2008–03
  5. By: Lach, Saul; Shiff, Gil; Trajtenberg, Manuel
    Abstract: There is widespread agreement about the important role played by Information and Communication Technologies (ICTs) in the US productivity revival and in the evolving US-EU productivity gap. In Israel, the ICT sector grew very rapidly during the 1990s and became a hotbed of innovation and technological advance by worldwide standards. Yet, Israel's overall productivity growth remained sluggish, with traditional sectors both in manufacturing and services seemingly unable to benefit from the success of the ICT sector. The main goal of this paper is to shed light on these twin developments. We use newly constructed data on industry-level ICT investments between 1990 and 2003 and estimate production functions for manufacturing industries augmented to include ICT capital. We find a significant elasticity of value-added with respect to ICT capital, which increases considerably with the technological sophistication of the industry. We also find that ICT capital deepening is the most important factor contributing to value added growth in manufacturing during 1995-2000, before the burst of the bubble. Because most ICT capital is concentrated in high tech industries, growth in manufacturing has been mostly confined to the high-tech sector. Facilitating the adoption of ICT in traditional industries is therefore crucial to achieving economy-wide growth. The Israeli experience described here - although restricted to the manufacturing sector - provides a useful example of the benefits and limitations associated with a growth strategy centred on a local ICT producing sector, however successful it might be.
    Keywords: GPT; ICT; productivity growth
    JEL: O3 O4
    Date: 2008–03
  6. By: Soete, Luc (UNU-MERIT)
    Abstract: This paper analyzes the impact of globalization on the allocation of public and private resources for research, knowledge creation and diffusion. We argue that while the concentration of research investments remains in a relatively small number of rich countries and regions, the focus of such activities is increasingly global. From this perspective the international business community is becoming increasingly concerned about the sustainability of its long term growth based on relatively low growth at the high end of the market in comparison to rising demand amongst lower income groups, located primarily in developing countries. Building on this analysis, the paper outlines a vision of innovation for development that could lead to a truly new research programme for innovation studies and the development of successful innovation-for-development strategies.
    Keywords: Economic Development, Science and Technology, Research and Development, Diffusion of Technology, Investment, Innovation, Developing Countries
    JEL: O14 O16 O19 O25 O32 O33
    Date: 2008
  7. By: Urem, Branka (UNU-MERIT); Alcorta, Ludovico (Maastricht School of Management); An, Tongliang (School of Business, Nanjing University)
    Abstract: This paper studies the relationship between foreign ownership and innovations of high novelty in context of advanced developing countries. We develop hypotheses about a direct relationship in terms of two dimensions, propensity and intensity of innovations of high novelty, and a contingency hypothesis about the moderating impact of R&D internationalisation on the relationship with propensity. The analysis is based on innovation survey data on manufacturing firms from Jiangsu province of China. Hypotheses are tested using non-parametric methods. We find that foreign firms do not have a higher propensity of innovations of high novelty, not even when they engage in formal R&D. However, the evidence suggests that foreign firms have a higher intensity of innovations of high novelty than domestic firms.
    Keywords: multinational enterprises, foreign firms, innovation, manufacturing, China
    JEL: F23 L60 O31 O32
    Date: 2008
  8. By: Oleg Badunenko; Michael Fritsch; Andreas Stephan
    Abstract: This paper investigates the factors that explain the level and dynamics of manufacturing firm productive efficiency. In our empirical analysis, we use a unique sample of about 39,000 firms in 256 industries from the German Cost Structure Census over the years 1992-2005. We estimate the efficiencies of the firms and relate them to firm-specific and environmental factors. We find that (1) about half the model's explanatory power is due to industry effects, (2) firm size accounts for another 20 percent, and (3) location of headquarters explains approximately 15 percent. Interestingly, most other firm characteristics, such as R&D intensity, outsourcing activities, or the number of owners, have extremely little explanatory power. Surprisingly, our findings suggest that higher R&D intensity is associated with being less efficient, though higher R&D spending increases a firm's efficiency over time.
    Keywords: Frontier analysis, determinants of efficiency, firm performance, industry effects, regional effects, firm size
    JEL: D24 L10 L25
    Date: 2008
  9. By: Patrick Van Cayseele
    Abstract: The results obtained by Cardon and Sasaki (1998) on R&D clustering are derived under the specific assumption that firms only can own one patent. When multiple patents are allowed, R&D clustering will come about more frequently if search costs are substantial.
    Keywords: R&D clustering; persistence of monopoly
    JEL: L12
    Date: 2008–03

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