nep-ino New Economics Papers
on Innovation
Issue of 2008‒11‒18
eight papers chosen by
Steffen Lippert
Massey University Department of Commerce

  1. The Impact of M&A on Technology Sourcing Strategies By Elena Cefis
  2. The effects of R&D tax credits on patenting and innovations By Ådne Cappelen, Arvid Raknerud and Marina Rybalka
  3. Bridging Science to Economy: The Role of Science and Technologic Parks in Innovation Strategies in “Follower” Regions By Alexandre Almeida; Cristina Santos; Mário Rui Silva
  4. Domestic R&D Employment Effects of Offshoring R&D Tasks: Some Empirical Evidence from Finland By Jyrki Ali-Yrkkö; Matthias Deschryvere
  5. Innovation, Integration and Product Proliferation - Empirical Evidence for the Agri-Food Industry By Karantininis, Kostas; Sauer, Johannes; Furtan, William Hartley
  6. From Concept to Policy: Building Regional Innovation Systems in Follower Regions By Alexandre Almeida; António Figueiredo; Mário Rui Silva
  7. A Historical Perspective on Patents and Industry Growth in Finland - Connections and Lags By Tuomo Nikulainen
  8. Globalization and innovation in emerging markets By Yuriy Gorodnichenko; Jan Svejnar; Katherine Terrell

  1. By: Elena Cefis
    Abstract: The paper investigates the effects of Mergers and Acquisitions (M&A) on corporate research and development (R&D) strategies using Community Innovation Survey (CIS) data on the Dutch manufacturing sector. The focus of the research is whether M&A affect corporate innovation strategies, favouring in-house R&D and innovation expenses versus external technological sourcing. The results show that M&A activities have a positive and significant impact on innovation investments by firms, and particularly on R&D intensity and total expenditure on innovation. M&A affect corporate innovation strategies, favouring in-house R&D versus external technological sourcing. Firm post-merger behaviour favours the consolidation of the knowledge, competences and capabilities that have been acquired by merging with or by buying another firm, confirming that the reasons for a merger or acquisition are most often related to firms' innovative performance. Following involvement in a M&A, firms tend primarily to focus on fully integration of their resource bases in order to enable them to produce and sell innovative products that are new to the market.
    Keywords: Technology sourcing; Innovation; M&A; Heckman two-stage; Bi-Tobit.
    JEL: D21 O31 O32 L22
    Date: 2008–11–11
  2. By: Ådne Cappelen, Arvid Raknerud and Marina Rybalka (Statistics Norway)
    Abstract: Norwegian business spending on R&D is low by OECD standards. To stimulate business R&D, in 2002 the Norwegian government introduced a tax-based incentive, SkatteFUNN. We analyze the effects of SkatteFUNN on the likelihood of innovating and patenting. Using a rich database for Norwegian firms, we find that projects receiving tax credits result in the development of new production processes and to some extent the development of new products for the firm. Firms that collaborate with other firms are more likely to be successful in their innovation activities. However, the scheme does not appear to contribute to innovations in the form of new products for the market or patenting.
    Keywords: Tax credits; R&D; Patenting; Innovation; Self-selection
    JEL: C33 C52 D24 O38
    Date: 2008–11
  3. By: Alexandre Almeida (Faculdade de Economia, Universidade do Porto); Cristina Santos (Faculdade de Economia, Universidade do Porto); Mário Rui Silva (Faculdade de Economia, Universidade do Porto)
    Abstract: The concept of Regional Innovation System (RIS) builds upon an integrated perspective of innovation, acknowledging the contribution of knowledge production subsystem, regulatory context and enterprises to a region’s innovative performance. Science and Technology parks can act as a platform to the production of knowledge and its transfer to the economy in the form of spin-offs or simple knowledge spillovers, enhanced by the co-location of R&D university centers and high technology enterprises on site. Although reflecting mainly a science push perspective, they may constitute central nodes in an infrastructural system of competitiveness that articulates other entrepreneurial location sites and bridges Universities to the economy in a more efficient and effective way, being crucial to increasing technology transfer and interchange speed, promoting the technological upgrading of the regional economy. In this paper we discuss the importance of Science and Technology Parks in the building up of a Regional Innovation System, promoting the technological intensification of the economy, a more effective knowledge transfer and sharing and the construction of competitive advantages, with particular importance in follower regions facing structural deficiencies. We oppose to the predominant closed paradigm, which understands science parks’ role in a narrow and “enclavist”, arguing in favor of an open and “integrative” paradigm where the interconnection to other infrastructures and agents boosts the park’s performance and upgrades the regional economies competitiveness infra-structures and innovation capability. We further stress the importance of science parks in signaling capabilities and hence attracting R&D external initiatives, namely, R&D FDI.
    Keywords: Science Parks, New technology-based firms, Innovation, Regional Policy
    JEL: O31 O33 O38 R58
    Date: 2008–11
  4. By: Jyrki Ali-Yrkkö; Matthias Deschryvere
    Abstract: ABSTRACT : This study empirically explores whether R&D offshoring affects the domestic R&D employment at the firm level. Overall, the Finnish survey data suggest that the impact of R&D internationalization on domestic R&D employment depends on the mode of internationalization (in-house offshoring vs. offshore outsourcing vs. in-house expansion of R&D abroad). Moreover, manufacturing and service firms are found to be different when it comes to R&D internationalization and its domestic employment effects. In the manufacturing sector, especially in-house offshoring of R&D has a significant negative impact on the plan to increase R&D employment. But the relationship between the in-house expansion of R&D abroad and domestic R&D employment turns out to be complementary. In the service sector, it is in the first place offshore outsourcing of R&D that has a significant negative impact on the plan to increase R&D employment. A final result supports the view that R&D does not always follow production but that a strong location link between production and R&D does have a significant negative effect on the domestic R&D employment.
    Keywords: globalization, internationalization, outsourcing, offshoring, job loss, R&D, spillovers, research, relocation, domestic, home-country
    JEL: J6 J3
    Date: 2008–11–06
  5. By: Karantininis, Kostas; Sauer, Johannes; Furtan, William Hartley
    Abstract: While mergers, both horizontal and vertical, have been shaping the landscape of the agri-food industry in Europe, the implications of the changing market structure on the level of innovation has not been studied yet. In this paper we deal with the link between innovation and market structure using the empirical example of the Danish agri-food industry. The purpose of this paper is two-fold. First we test for the importance of vertical integration on innovation. While there exist several studies on this linkage, to our knowledge, this is the first that deals with the agri-food industry. Secondly, we examine both product proliferation and innovation. To our knowledge, there are no other similar studies that examine both aspects using the same data set. We follow the hypothesis put forward by Armour and Teece (1980) that vertical integration enhances technological innovation, mainly because vertical integration may resolve hold-up problems. Our paper is related also to recent work by Weiss and Witkopp (2005) on the German food industry, although their work is mostly related to the role of the retail sector. We are able to examine both innovation (measured as investment on R&D) as well as product proliferation (measured as number of new products). We also examine the effects of network relationships and the importance of countervailing power. We use data from an extensive survey of 444 Danish firms over two years, 2000 and 2005 to estimate two different models: a bootstrapped zero-inflated Poisson regression and a robust Heckman sample selection model. The results verify the hypotheses formulated for both models with various degrees of significance.
    Keywords: Innovation, Vertical Integration, Product Proliferation, Agribusiness, Agribusiness,
    Date: 2008
  6. By: Alexandre Almeida (Faculdade de Economia, Universidade do Porto); António Figueiredo (Faculdade de Economia, Universidade do Porto); Mário Rui Silva (Faculdade de Economia, Universidade do Porto)
    Abstract: In the spirit of “The Lisbon strategy”, public policies are redirecting support from investment-driven policies to knowledge building as the main driver for competitiveness and innovation. This re-orientation poses different challenges to regions and RIS concept may be the central element, simultaneously goal and toolbox, for devising innovation promotion policies. The RIS framework stresses the need to combine a systemic and inclusive view of innovation along with territorially embedded specificities. In this paper we explore how to operationalize the concept of RIS in terms of innovation policy, arguing against a “one size fits all” approach. Concentrating our analysis on follower regions, we bridge the concept of RIS with the structural deficiencies and challenges posing to this kind of regions, for which innovation policy should seek an adequate combination between science push and demand pull perspectives. We also address the importance of taking advantage of the catching-up status, building upon R&D cost-advantages and clustering around external initiatives as well as the correction of important constraints to the construction of a RIS.
    Keywords: Innovation, Regional Innovation Systems, Innovation Policy, Follower Regions
    JEL: O18 O31 O14 O33
    Date: 2008–11
  7. By: Tuomo Nikulainen
    Abstract: ABSTRACT : This paper aims to establish how the innovative activity in Finland has changed over time in the transition from a resource-driven economy to a knowledge-driven economy. The paper first takes a historical perspective on innovation and industrial activity in Finland through a descriptive analysis. The aim is to identify technological trends in both specific technological areas as well as in different industries. Patent data provides a long time-series of innovative activity from 1842 to 2005 covering 164 years overall. This data is complemented with industry data from 1948 to 2007. The industry data allows a comparative descriptive analysis between the main industries and their respective technological development. The descriptive analysis is complemented with a statistical analysis, in which the interaction between growth in industrial volumes and growth in patent stock is empirically examined taking into account the industry specificities and lag-structures. This approach reveals whether patenting activity, used to approximate innovative activities, can be used to predict the growth of industrial activity. This aspect has received surprisingly little attention in prior research. The regression analyses show that there is a positive connection between industry growth and patent growth. In addition, the patent growth lags, both backward and forward in time, are positively connected to the industrial growth. This finding suggests that there might exist a positive cycle where innovation induces industry growth, which in turn induces innovative activities. Furthermore, patent growth seems to have a weak positive impact on industry growth with a lag of 13 years. This indicates that patent growth might provide weak signals of future industry growth
    Keywords: patents, industry growth, lags, technological change
    JEL: L60 O11 O14 O33
    Date: 2008–11–03
  8. By: Yuriy Gorodnichenko; Jan Svejnar; Katherine Terrell
    Abstract: Globalization brings opportunities and pressures for domestic firms in emerging markets to innovate and improve their competitive position. Using 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 innovate (raise their capability) by upgrading their technology, improving the quality of their product or service, or acquiring certification. We find that competition has a negative effect on innovation, especially for firms further from the efficiency frontier, and we do not find support for an inverted U effect of competition on innovation. We show that the supply chain of multinational enterprises and international trade are important channels for domestic firms' innovation. We detect no evidence that firms in a more pro-business environment are more likely to display a positive or inverted U relationship between competition and innovation, or that they are more sensitive to foreign presence.
    JEL: F23 O16 P23
    Date: 2008–11

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