nep-ino New Economics Papers
on Innovation
Issue of 2008‒09‒29
sixteen papers chosen by
Steffen Lippert
Massey University Department of Commerce

  1. Innovation on Demand: Can Public Procurement Drive Market Success of Innovations By Aschhoff, Birgit; Sofka, Wolfgang
  2. One size does not fit all… An economic development perspective on the asymmetric impact of Patents on R&D By Alexandre Almeida; Aurora A.C. Teixeira
  3. Applicant and Examiner Citations in US Patents: An Overview and Analysis By Juan Alcacer; Michelle Gittelman; Bhaven Sampat
  4. R&D offshoring and the domestic science base in India and China By Suma Athreye; Martha Prevezer
  6. Innovation Capacity and Economic Development: China and India By Fan, Peilei
  7. Patent Applications and the Grant Lag under Early Disclosure System: Empirical Estimates for Japanese Firms By Nakanishi, Yasuo; Yamada, Setsuo
  8. The Impact of Higher Standards in Patent Protection for Pharmaceutical Industries under the TRIPS Agreement: A Creation-date: 2008 By Li, Xuan
  9. Why and how do scientists commercialize their research? Towards a typology of inventors By Devrim Goktepe-Hultan
  10. The Efficiency and Evolution of R&D Networks By Michael D. König; S. Battiston; M. Napoletano; F. Schweitzer
  11. Pecuniary externalities: the convergence of directed technological change and the emergence of innovation systems By Antonelli Cristiano
  12. Innovativeness of Small and Medium Size Enterprises in Regional Innovation System: Evidences from Turkey By Bahar C. Erbas; Ali Fýkýrkoca; Arcan Tuzcu
  13. Venture capital as a mechanism for knowledge governance : new markets and innovation-led economic growth By Antonelli Cristiano; Teubal Morris
  14. Modelling and measuring the effects of public subsidies on business R&D: theoretical and econometric issues By Cerulli Giovanni
  15. Hybrid licensing of product innovations By Ottoz Elisabetta; Cugno Franco
  16. Out of equilibrium profit and innovation By Antonelli Cristiano; Scellato Giuseppe

  1. By: Aschhoff, Birgit; Sofka, Wolfgang
    Abstract: Public procurement has been at the centre of recent discussions on innovation policy on both European and national levels (e.g., Aho-Report, Barcelona Strategy). It has a large potential to stimulate innovation since it accounts for 16% of combined EU-15 GDP. We embed public procurement for innovation into the broader framework of public policies to stimulate innovation: regulations, R&D subsidies and knowledge infrastructure (i.e. basic research at universities). We synthesize the characteristics of all four instruments based on existing literature and quantitatively compare their effects on innovation success. Our empirical investigation rests upon a survey of more than 1,100 innovative firms in Germany. Our survey puts us in the position to trace all sources of valuable innovation impulses, namely public customers, law and regulations, universities and public funding for R&D. We relate these sources back to innovation success. We find that (non-defense related) public procurement and knowledge spillovers from universities propel innovation success equally. In a second step, we explore whether these effects vary across firms (e.g. size, location, industry). The benefits of university knowledge apply uniformly to all firms. However, public procurement is especially effective for smaller firms in regions under economic stress as well as in distributive and technological services. Based on these findings targeted policy recommendations can be developed.
    Keywords: Innovation policy, public procurement, comparison of instruments, innovation success
    JEL: C34 H32 O38
    Date: 2008
  2. By: Alexandre Almeida (Faculdade de Economia, Universidade do Porto); Aurora A.C. Teixeira (INESC Porto, CEMPRE, Faculdade de Economia, Universidade do Porto)
    Abstract: Innovation is the building block of competitive advantages and thus economic policies are increasingly focused on creating stimulus to increase a country’s innovative performance and growth potential, namely through knowledge accumulation in general and R&D in particular. In this context, current policy trend seems to support the strengthening of Intellectual Property Rights (IPR), in particular, patent protection, with the argument that positive effects will emerge and would be extensive to all countries regardless their level of development. In this paper we question this “one size fits all” policy and assess how patent thicket affects knowledge productive investment taking into account countries’ development levels. Based on a panel of 95 countries over a ten-year period (1997-2006), our results show that patents have asymmetric impacts across countries development stages, evidencing pervious effects on technological leaders and positive ones on some laggards. Such evidence sustains that innovation policies be adjusted to countries development stages.
    Keywords: growth models; R&D; patents; economic development
    JEL: O41 O32
    Date: 2008–09
  3. By: Juan Alcacer (Harvard Business School, Strategy Unit); Michelle Gittelman (Rutgers Business School, Rutgers University); Bhaven Sampat (Malman School of Public Health, Columbia University)
    Abstract: Researchers studying innovation increasingly use indicators based on patent citations. However, it is well known that not all citations originate from applicants--patent examiners contribute to citations listed in issued patents--and that this could complicate interpretation of findings in this literature. In 2001 the US Patent and Trademark Office (USPTO) began reporting examiner and applicant citations separately. In this paper, we analyze the prior art citations of all patents granted by the USPTO in 2001-2003. We show that examiner citations account for 63 per cent of all citations on the average patent, and that 40 per cent of patents have all citations added by examiners. We use multivariate regression and analysis of variance to identify the determinants of examiner shares. Examiner shares are highest for non-US applicants and in electronics, communications, and computer-related fields. However, most of the variation is explained by firm-specific variables, with the largest patent applicants having high examiner shares. Moreover, a large number of firms are granted patents that contain no applicant prior art. Taken together, our findings suggest that heterogeneity in firm-level patenting practices, in particular by high-volume applicants, has a strong influence on the data. This suggests that analysis of firm-level differences in patenting strategies is an important topic for future research.
    Keywords: Technology, patents, patent examiners, prior art, citations
    Date: 2008–07
  4. By: Suma Athreye; Martha Prevezer
    Abstract: This paper uses patent and publication data to assess the nature of technological advantages that are attracting R&D offshoring and outsourcing activities to India and China and the possible consequences of such R&D offshoring in increasing domestic innovative capability and building domestic research infrastructure. We find evidence that domestic patenting is concentrated in sectors that are different from sectors of R&D offshoring. Furthermore, whilst the domestic science base (as measured by publications data) in India and China shows strong complementarities in its specialisation profile to that in the US, our data also suggest that the location of international R&D activity in these economies from 1995 may not have strengthened the science base of these economies. Foreign patenting activities in India and China are also marked by a low attachment to the science base.
    Keywords: R&D offshoring/internationalisation, Science base, Emerging economies, India and China
    Date: 2008–09
  5. By: Anneli Kaasa; Maaja Vadi
    Abstract: Culture is deemed to be a crucial basis for innovation in various respects. The aim of this paper is to explore the relationships between different cultural dimensions introduced by Hofstede (2001) and the capability of initiating innovation measured by the number of patent applications using the sample of European countries at the regional level. As a novel approach, instead of using Hofstede’s original index scores, the measures for the cultural dimensions are based on the European Social Survey (ESS). We have learned that to be successful in patenting, a region should have power distance, uncertainty avoidance, family-related collectivism (as opposed to friend-related and organisation-related collectivism) and lower than average masculinity. In addition, the negative relationships between these cultural dimensions and patenting are stronger when there is a higher patenting intensity. However, culture alone does not serve as a guarantee for a high level of patenting intensity.
    Keywords: innovation, culture, Europe
    Date: 2008
  6. By: Fan, Peilei
    Abstract: Both China and India, the emerging giants in Asia, have achieved significant economic development in recent years. China has enjoyed a high annual GDP growth rate of 10 per cent and India has achieved an annual GDP growth rate of 6 per cent since 1981. Decomposing China and India?s GDP growth from 1981 to 2004 into the three factors? contribution reveals that technology has contributed significantly to both countries? GDP growth, especially in the 1990s. R&D outputs (high-tech exports, service exports, and certified patents from USPTO) and inputs (R&D expenditure and human resources) further indicate that both countries have been very committed to R&D and their output is quite efficient. Both governments have played an essential role in transforming their national innovation systems so that they can be more adaptable to economic development. The main focus of their reforms has been to link the science sector with the business sector and to provide incentives for innovation activities. Balancing import of technology and indigenous R&D effort is another major theme. Innovation capability development has become more and more critical to the success of biofirms in India and China. Institutional factors have great influence on choice of innovation at the firm level, i.e., the decision at firm level in terms of indigenous R&D or import of technology. Nevertheless, limited financial resources and insufficiently qualified human resources remain two major challenges for domestic companies in both countries.
    Keywords: China, India, innovation capability, domestic companies, ICT, biotech
    Date: 2008
  7. By: Nakanishi, Yasuo; Yamada, Setsuo
    Abstract: The purpose of this paper is to investigate the impact of the length of the grant lag under the early disclosure system in Japan. First, we measure the length of the grant lag. Second, we investigate whether reducing the grant lag significantly increases patent applications. We use data from 1985 to 2000 on 101 Japanese companies. The parameter for the grant lag was significantly negative in all equations. Therefore, reducing the grant lag increases patent applications. We also empirically investigated the determination of R\D. The grant lag significantly affects R\D
    Keywords: Patent; Grant Lag; Patent Policy; R\D
    JEL: O33 O32
    Date: 2008–04
  8. By: Li, Xuan
    Abstract: A comparative study is undertaken that explores Chinese and Indian pharmaceutical industries under different patent regimes. It is found that relative to India, which had implemented process patent until 2005, China with a product patent regime since 1993 suffers from both lower drug accessibility and availability (the latter is a missing parameter in the literature). Also, China lags behind in both lower R&D investment and patents filed by Chinese nationals. Based on these findings and associated legal interpretation, we conclude that higher patent protection in China generates negative impacts on the pharmaceutical industries. Thus, governments should utilize TRIPS flexibilities and other regimes like price control to offset the anticompetitive effect in designing patent policies.
    Keywords: product patent, process patent, TRIPS, pharmaceutical industries, China, India
  9. By: Devrim Goktepe-Hultan (Max Planck Institute of Economics)
    Abstract: Incentives and assistance provided by TTOs, university policies, patent legislation and scientific disciplines are certainly part of the explanations for academic entrepreneurship. But they are only one facet of the story. Another facet is related to the scientists' motives, expectations and perceptions about the importance and necessity of such activities. There are no comprehensive studies to date that cover both internal and external factors. This is an important, complex and relatively under-researched theme. Our findings suggest that scientists are rarely engage in patenting activities for economic profit reasons or due to institutional and organizational support. Individual relations and networks with firms and other actors found to be important factors for scientists' entrepreneurial activities. Serial inventors act as role models to other scientists and crucial in the creation of an entrepreneurial milieu at the universities, as others would be affected by these behaviours and tend to follow them. However, the fact that university policies and TTOs have provided little incentives for scientists to get involved in entrepreneurship should not be considered to rule out institutional effects.
    Keywords: university patenting, incentives, individual inventors, inventors’ typology
    JEL: O31 O34 O38 B31
    Date: 2008–09–15
  10. By: Michael D. König (Chair of Systems Design, ETH Zurich, Switzerland); S. Battiston (Chair of Systems Design, ETH Zurich, Switzerland); M. Napoletano (Chair of Systems Design, ETH Zurich and Observatoire Français des Conjonctures Economiques, Department for Research on Innovation and Competition, Valbonne, France); F. Schweitzer (Chair of Systems Design, ETH Zurich, Switzerland)
    Abstract: This work introduces a new model to investigate the efficiency and evolution of networks of firms exchanging knowledge in R&D partnerships. We first examine the efficiency of a given network structure in terms of the maximization of total profits in the industry. We show that the efficient network structure depends on the marginal cost of collaboration. When the marginal cost is low, the complete graph is efficient. However, a high marginal cost implies that the efficient network is sparser and has a core-periphery structure. Next, we examine the evolution of the network struc- ture when the decision on collaborating partners is decentralized. We show the existence of mul- tiple equilibrium structures which are in general inefficient. This is due to (i) the path dependent character of the partner selection process, (ii) the presence of knowledge externalities and (iii) the presence of severance costs involved in link deletion. Finally, we study the properties of the emerg- ing equilibrium networks and we show that they are coherent with the stylized facts of R&D net- works.
    Keywords: R&D networks, technology spillovers, network efficiency, network formation
    JEL: D85 L24 O33
    Date: 2008–09
  11. By: Antonelli Cristiano (University of Turin)
    Abstract: The new understanding of the characteristics of knowledge indivisibility and knowledge appropriability makes it possible to appreciate the key role pecuniary externalities play both in the generation and in the exploitation of technological knowledge. Pecuniary externalities affect access to external knowledge and its localized appropriation, by the intensive use of idiosyncratic factors and the introduction of biased technological change. Their combined effect shapes the convergence of the directed features of the knowledge generated at the firm level and explains the path dependent emergence of local and technological innovation systems and the dynamics of innovation cascades.
    Date: 2008–07
  12. By: Bahar C. Erbas; Ali Fýkýrkoca; Arcan Tuzcu
    Date: 2008–09
  13. By: Antonelli Cristiano (University of Turin); Teubal Morris
    Date: 2008–05
  14. By: Cerulli Giovanni (Ceris - Institute for Economic Research on Firms and Growth, Rome, Italy)
    Abstract: It is the aim of this paper to review the principal econometric models used so far to measure the effect of government’s support to private R&D expenditure; in order to reach this task, we first present a basic theoretical framework to identify the effects of public subsidies on business R&D, going on by extending it to the case of dynamic complementarities and presence of subsidy spillovers. The review of the econometric models, the core of the paper, starts from section 4. We first classify econometric models according to three dimensions: 1. structural (based on a system of equations) and non-structural (based on a reduced-form equation and, possibly, a counterfactual) models; 2. models using the subsidy variable in a continuous or in a binary form; and finally, 3. studies exploiting a cross-section versus a longitudinal (panel data) structure. The final part of the paper is an original contribution providing some guidelines to implement R&D policy evaluation in a dynamic subsidization setting.
    Keywords: business R&D; public incentives; econometric evaluation; dynamic treatment
    JEL: O32 C52 O38
    Date: 2008–06
  15. By: Ottoz Elisabetta (University of Turin); Cugno Franco (University of Turin)
    Abstract: This paper studies the feasibility and the effects of hybrid licensing agreements involving product innovations protected by patents and trade secrets. Since incentive and efficiency considerations suggest that a typical contract should provide for a negative fixed fee and post-patent royalties at the same unit level as before patent’s expiration, we conclude that per se prohibitions of these practices are not justified on economics grounds.
    Date: 2008–10
  16. By: Antonelli Cristiano (University of Turin); Scellato Giuseppe
    Abstract: Innovation is the result of intentional decision-making that takes place in out-of-equilibrium conditions. The farther is profitability from the average and the deeper the out-of-equilibrium conditions. The farther away is the firm from equilibrium and the stronger the likelihood for innovation to take place. The hypothesis of a U-relationship between levels of profitability and innovative activity, as measured by the rates of increase of total factor productivity, is articulated and tested. The evidence of a large sample of 7000 Italian firms in the years 1996-2005 confirms that a strong causal relation holds between the quadratic specification of profitability and the growth rates of total factor productivity. The results are robust to different approaches to evaluate productivity growth rates.
    Date: 2008–04

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