nep-ino New Economics Papers
on Innovation
Issue of 2009‒02‒07
five papers chosen by
Steffen Lippert
Massey University Department of Commerce

  1. Should R&D Champions be Protected from Foreign Takeovers? By Katariina Nilsson Hakkala; Bertrand; Norbäck Olivier; Persson Pehr-Johan; Lars
  2. Economic Incongruities in the European Patent System By Malwina Mejer; Bruno van Potteslberghe de la Potterie
  3. The decision to innovate: Antecedents of opportunity exploitation in high tech small firms By Jeroen de Jong
  4. Trade-Related Intellectual Property Rights: Theory and Empirics By Olena Ivus
  5. Effectiveness of R&D Tax Incentives in Small and Large Enterprises in Québec By Rufin Baghana; Pierre Mohnen

  1. By: Katariina Nilsson Hakkala; Bertrand; Norbäck Olivier; Persson Pehr-Johan; Lars
    Abstract: We analyze how the entry mode of Foreign Direct Investments (FDI) affects affiliate R&D activities. Using unique affiliate level data for Swedish multinational firms, we first present empirical evidence that acquired affiliates have a higher level of R&D intensity than Greenfield (start-up) affiliates. This gap persists over time and with the age of the affiliates, as well as for different firm types and industries. To explain this finding, we develop an acquisitioninvestment-oligopoly model where we show that for a foreign acquisition to take place in equilibrium, the acquiring MNE must invest sufficiently in sequential R&D in the affiliate. Otherwise, rivals will expand their business, thus making the acquisition unprofitable. Two additional predictions of the model ? that foreign firms acquire high-quality domestic firms and that the gap in R&D between acquired and greenfield affiliates decreases in acquisition transaction costs ? are consistent with the data. JEL classification: F23, L10, L20, O30
    Keywords: FDI, M&A, R&D, Multinational Firms
    Date: 2008–11–07
  2. By: Malwina Mejer; Bruno van Potteslberghe de la Potterie
    Abstract: This paper argues that the consequences of the ‘fragmentation’ of the European patent system are more dramatic than the mere prohibitive costs of maintaining a patent in force in many jurisdictions. First, detailed analysis of judicial systems in several European countries and four case studies provide evidence suggesting that heterogeneous national litigation costs, practices and outcome induce a high level of uncertainty. Second, a high degree of managerial complexity results from systemic incongruities due to easier ‘parallel imports’, possible ‘time paradoxes’ and the de facto paradox of having EU-level competition policy and granting authority ultimately facing national jurisdictional primacy on patent issues. These high degrees of uncertainty and complexity contribute to reduce the effectiveness of the European patent system and provide additional arguments in favour of the Community patent and a centralized litigation in Europe.
    Keywords: European patent system, patent cost, litigation process, enforcement, uncertainty
    JEL: K41 P14 O34
    Date: 2009
  3. By: Jeroen de Jong
    Abstract: The current paper explores the antecedents of small business owners' decision to exploit identified opportunities for innovation. Drawing on social psychology, entrepreneurship and organizational behavior literature three potential antecedents are proposed: attitude towards the opportunity, subjective norms of close ties, and perceived behavioral control. It is hypothesized that each of these constructs correlates with the decision to innovate. Drawing on multiple-source survey data of 160 high tech small business owners in the Netherlands, it is found that subjective norms and perceived behavioral control are positively related to the decision to innovate. Moreover, a three-way interaction is estimated and confirmed, suggesting that when all antecedents are simultaneously present, opportunity exploitation is significantly more likely. Implications for practice and future research are discussed.
    Date: 2009–02–02
  4. By: Olena Ivus
    Abstract: The WTO inspired strengthening of intellectual property rights (IPRs) in developing countries remains highly controversial even 15 years after the 1994 TRIPs agreement. This paper employs both theory and empirics to assess how a strengthening of IPRs affects international technology diffusion by altering the volume of high-tech exports into developing countries. In the context of a North-South general equilibrium model,stronger IPRs encourage Northern firms to introduce new high-tech products in the South. High-tech exports to the South rise, while low-tech exports may fall. International technology diffusion does not necessarily fall. These theoretical predictions are examined empirically. On average,developing countries that strengthened their IPRs under the TRIPs agreement saw an increase of approximately $50 billion (1994 US dollars) in their high-tech imports. This amount is equivalent to a 13% increase in their annual value of high-tech imports.
    JEL: F10 K33 O34
    Date: 2009–01–29
  5. By: Rufin Baghana; Pierre Mohnen
    Abstract: In this paper we evaluate the effectiveness of R&D tax incentives in Quebec, using manufacturing firm data from 1997 to 2003 originating from R&D surveys, annual surveys of manufactures and administrative data. The estimated price elasticity of R&D is -0.10 in the short run and -0.14 in the long run, with a slightly higher elasticities for small firms than for large firms. We show that there is a deadweight loss associated with level-based R&D tax incentives that is particularly acute for large firms. For small firms it is not sizeable enough to suppress the R&D additionality, at least not during quite a number of years after the initial tax change. Incremental R&D tax credits do not suffer from this deadweight loss and are from that perspective preferable to level-based tax incentives. <P>Nous estimons l’efficacité des incitations fiscales à la R-D au Québec à partir des données des enquêtes annuelles de la R&D et de la manufacture et à partir des données administratives pour la période 1997 à 2003. L’élasticité-prix de court terme est estimée à -0.10 et celle de long terme à -0.14, avec une élasticité légèrement supérieure pour les petites entreprises. Nous trouvons une perte sèche assez nette pour les grandes firmes associée aux crédits d’impôt basés sur les niveaux de R-D. Pour les petites firmes cette perte sèche n’est pas suffisante pour détruire l’additionalité des crédits d’impôt. Les crédits d’impôt basés sur la recherche incrémentale n’accusent pas de perte sèche et sont de ce point de vue préférables aux crédits en proportion du niveau de R-D.
    Keywords: R&D tax incentives, price elasticity of R&D, Quebec, Incitations fiscales à la R-D, élasticité-prix de court terme, Québec.
    Date: 2009–01–01

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