nep-ino New Economics Papers
on Innovation
Issue of 2009‒02‒22
twelve papers chosen by
Steffen Lippert
Massey University Department of Commerce

  1. Evaluating the Effect of Public Subsidies on firm R&D activity: an Application to Italy Using the Community Innovation Survey By Cerulli Giovanni; Poti' Bianca
  2. On the consequences of university patenting: What can we learn by asking directly to academic inventors? By Julien Pénin
  4. The Role of the Intellectual Property Rights Regime for Foreign Investors in Post-Socialist Economies By Benedikt Schnellbächer; Johannes Stephan
  5. Financial Patenting in Europe By Bronwyn H. Hall; Grid Thoma; Salvatore Torrisi
  6. Guarantee-backed loans and R&D investments. Do mutual guarantee consortiums value R&D? By Elisa Ughetto; Andrea Vezzulli
  7. R&D Cooperation in Real Option Game Analysis. By Giovanni Villani
  8. Measuring China's Innovation System: National Specificities and International Comparisons By Martin Schaaper
  9. Strategic Choice between Process and Product Innovation under Different Competitive Regimes By Luigi Filippini; Gianmaria Martini
  10. Democratization is the determinant of technological change By Coccia Mario
  11. How should be the levels of public and private R&D investments to trigger modern productivity growth? Empirical evidence and lessons learned for Italian economy By Coccia Mario
  12. Managing innovations resulting from university-industry collaborations By Annamaria Conti

  1. By: Cerulli Giovanni (Ceris - Institute for Economic Research on Firms and Growth, Rome, Italy); Poti' Bianca (Ceris - Institute for Economic Research on Firms and Growth, Rome, Italy)
    Abstract: The aim of the paper is twofold: to verify a full policy failure of public support on private R&D effort, when in presence of a potential plurality of public incentives; to compare the most recent econometric methods used for the analysis of the input additionality. Compared to previous studies our work wants to trace out an advance in two directions: adding more robustness by comparing results from various econometric techniques and providing an analysis of the R&D policy effect behind the average results. A by-product of the paper is a taxonomy of the econometric methods used in the literature, according to the structure of the models, the type of dataset and the available policy information. We exploit the third wave of the Community Innovation Survey for Italy (1998-2000) with a sample size of 1,221 supported and 1,319 non-supported firms. Given the used type of data, the article presents two main limits: first, we do not know the level of the subsidy, so that we can control only for the presence of a total crowding-out; second, we can check only the short-run effect of the supporting policy, while an increase in the private R&D effort could be more likely in the medium term. Our results suggest that: 1. the main factors influencing the probability to participate to the incentive policy are R&D experience, human skills, liquidity constraints, but also foreign capital ownership; 2. on average, the total substitution of private funding by the public one is excluded for Italy as a whole, although some cases of total crowding-out are found: low knowledge intensive services, very small firms (10-19 employees) and the auto-vehicle industry. We get, on average, 885 additional thousand Euros of R&D expenditure per firm with a ratio equal to 4.62: it means that if a generic control unit does 1 thousand Euros of R&D expenditure a matched treated does 4.62 thousand Euros. The additionality for the R&D intensity is about 0.014 with a ratio of about 2.67.
    Keywords: Business R&D; Public Incentives; Econometric Evaluation
    JEL: O32 C52 O38
    Date: 2008–12
  2. By: Julien Pénin
    Abstract: This paper examines the consequences of university patenting by using an original source of information: The point of view of French academic inventors, i.e. French university professors who are also inventors of European patents. Via a survey we collected information about 280 French academic inventors. This enables us to put forward new insights with respect to the effect of university patenting on the diffusion of scientific research, incentives to do basic research, commercialization of university inventions and access to upstream knowledge. In particular, the study suggests a tradeoff between enabling the transfer of university inventions to industry in some sectors and delaying the dissemination of scientific research. On the one hand, most academic inventors acknowledge a lag in their publication process directly attributable to the patent application but, on the other hand, in life science disciplines a large majority of respondents who have had one of their inventions commercialized, believe that this would not have been the case had a patent not been there.
    Keywords: University patenting, open science, intellectual property rights, technology transfer, university-industry relationships, Bayh-Dole Act.
    JEL: O3
    Date: 2009
  3. By: Elsa Martin (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales - CNRS : UMR6579); Hubert Stahn (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales - CNRS : UMR6579)
    Abstract: : In knowledge economies, patent agencies are often viewed as a relevant instrument of an efficient innovation policy. This paper brings a new support to that idea. We claim that these agencies should play an increasing role in the regulation of the relation between heterogeneous private R&D labs and public fundamental research units, especially concerning the question of the appropriation of free basic research results. Since these two institutions work with opposite institutional arrangements (see Dasgupta and David [9]), we essentially argue that there is, on the one hand, an over-appropriation of these results while, on the other hand, there is also an under-provision of free usable results issued from more fundamental research. We show how a public patent office can restore efficiency.
    Keywords: Science and technology; patent agency; innovation policy
    Date: 2009–02–12
  4. By: Benedikt Schnellbächer; Johannes Stephan
    Abstract: We integrate international business theory on foreign direct investment (FDI) with institutional theory on intellectual property rights (IPR) to explain characteristics and behaviour of foreign investment subsidiaries in Central East Europe, a region with an IPR regime-gap vis-à-vis West European countries. We start from the premise that FDI may play a crucial role for technological catch-up development in Central East Europe via technology and knowledge transfer. By use of a unique dataset generated at the IWH in collaboration with a European consortium in the framework of an EU-project, we assess the role played by the IPR regimes in a selection of CEE countries as a factor for corporate governance and control of foreign invested subsidiaries, for their own technological activity, their trade relationships, and networking partners for technological activity. As a specific novelty to the literature, we assess the in influence of the strength of IPR regimes on corporate control of subsidiaries and conclude that IPR-sensitive foreign investments tend to have lower functional autonomy, tend to cooperate more intensively within their transnational network and yet are still technologically more active than less IPR-sensitive subsidiaries. In terms of economic policy, this leads to the conclusion that the FDI will have a larger developmental impact if the IPR regime in the host economy is sufficiently strict.
    Keywords: Foreign Direct Investment, Intellectual Property Rights, Technology Transfer, Corporate Governance and Control, R&D and Innovation
    JEL: F21 F23 O31 O34
    Date: 2009–02
  5. By: Bronwyn H. Hall; Grid Thoma; Salvatore Torrisi
    Abstract: We take a first look at financial patents at the European Patent Office (EPO). As is the case at the US Patent and Trademark Office (USPTO), the number of financial patents in Europe has increased significantly in parallel with significant changes in payment and financial systems. Scholars have argued that financial patents, like other business methods patents, have low value and are owned for strategic reasons rather than for protecting real inventions. We find that established firms in non-financial sectors with diversified patent portfolios own a large share of financial patents at the EPO. However, new specialized technology providers in the financial area also hold a number of such patents. Decisions on the financial patent applications take longer and they are more likely to be refused by the patent office, suggesting greater uncertainty over validity than for other patents. They are also more likely to be opposed, which is consistent with the fact that their other economic value indicators are higher.
    JEL: G20 L86 O31 O34
    Date: 2009–02
  6. By: Elisa Ughetto (Politecnico di Torino, Torino - Italy); Andrea Vezzulli (KITeS, Bocconi University, Milan - Italy)
    Abstract: [It is widely acknowledged that firms performing R&D investments are very likely to undergo financial constraints (FC) due to their specific characteristics, which make external debt an imperfect substitute for internal finance,especially for small sized enterprises. This situation calls into question the role that mutual guarantee consortiums(MGCs) might have in mitigating the effect of FC on the innovative activities performed by small and medium enterprises. In this paper, we explore how effectively this role is played by exploiting a large dataset of guaranteebacked loans provided by Eurofidi (an Italian mutual guarantee consortium) including both financial and non financial informations on the applicant firms. Taking into account the different purposes of each loan application (including whether it was asked for sustaining investments in R&D and innovation), we estimate the probability of default (PD)through a bivariate probit which takes into account the problem of sample selection bias that usually affects credit scoring models calibrated only on accepted applicants. We find a crucial set of variables that increase (decrease) the probability of positive granting decision without reducing (raising) the likelihood of a default, thus evidencing the absence of a minimizing default risk behavior of the lending institution with respect to these observed characteristics of the applicants. In particular, when the destination of loans is considered, results show that loans demanded to sustain R&D and innovation activities have a lower probability of turning into bad loans but they also have a lower probability of being accepted. It emerges that innovative firms are subject to relevant credit constraints also when considering the possibility to apply to a mutual guarantee body, which should theoretically facilitate their access to debt finance.]
    Keywords: default prediction, R&D, SMEs, guarantee-backed loans, MGCs.
    JEL: O30 D61 G21 G33
    Date: 2008–12
  7. By: Giovanni Villani
    Abstract: Cooperative investments in R&D are a significant driving force of the modern economy. As it well-known, the R&D investments are uncertain and the strategic alliances create synergies and additional information that increase the success probabilities about R&D projects. The theory of real option games takes into account both the flexibility value of an investment opportunity and the strategic considerations. In particular way, while the non-cooperative options are exercised in the interest of the option holders' payoffs, the cooperative ones are exercised in order to maximize the total partnership value. In our model we develop an interaction between two firms that invest in R&D and we show the effects of cooperative synergies on several equilibriums. Moreover, we consider that the R&D investments are characterized by positive network externalities that induce more benefits in case of reciprocal R&D success.
    Keywords: Real Exchange Options; Cooperation games; Information Revelation; R&D investments.
    JEL: G13 C71 D80 O32
    Date: 2008–10
  8. By: Martin Schaaper
    Abstract: This working paper provides input to the OECD Review of Innovation Policy for China (OECD, 2008), which was released in September 2008. Science and technology (S&T) have been pinpointed by the Chinese State Council as a key driving force for sustainable economic growth and the transformation of China into an innovation-oriented nation on the basis of the development of a national innovation system with strong indigenous innovation capacity. One of the targets set in the National Guidelines for the Medium- and Long-term Plan for Science and Technology Development (2006-20) is to raise the ratio of R&D to GDP to 2% by 2010 and to 2.5% or more by 2020. This is an extremely ambitious target, as it implies the need for R&D expenditure to increase by at least 10-15% annually.<P>Évaluation du système d'innovation de la Chine : Spécificités nationales et comparaisons internationales<BR>Ce document de travail est une contribution à la Revue de l’OCDE sur les politiques d’innovation pour la Chine (OCDE, 2008) qui a été publiée en septembre. La science et la technologie (S-T) ont été identifiées par le Conseil d’État chinois comme étant des ressorts essentiels pour l’instauration d’une croissance économique durable et la transformation de la Chine en un pays orienté vers l’innovation grâce à la mise en oeuvre d’un système national d’innovation doté d’une solide capacité d’innovation propre. Les lignes directrices nationales pour les programmes à moyen et long termes de développement de la science et de la technologie (2006-2020) ont notamment pour objectif de porter la R-D à 2 % du PIB d’ici 2010 et à 2,5 % ou plus d’ici 2020. Il s’agit là d’un objectif extrêmement ambitieux qui suppose que les dépenses de R-D augmentent d’au moins 10 à 15 % par an de manière continue.
    Date: 2009–01–15
  9. By: Luigi Filippini (DISCE, Università Cattolica di Milano); Gianmaria Martini (Università di Bergamo)
    Abstract: This paper investigates the strategic choice between introducing a process or a product innovation in a duopoly model with vertical differentiation, comparing the outcomes in case of Bertrand and Cournot competition. It is shown that under both competitive regimes three equilibria in innovation adoption may arise: two symmetric equilibria, where firms select the same innovation type, and one asymmetric equilibrium. The competitive regime has an impact on the features of the asymmetric equilibrium, since in case of Bertrand competition, the high (low) quality firm chooses a product (process) innovation, while firms make the opposite choices in case of Cournot competition. The presence of a leapfrogging effect (only in the Cournot competitors tend to favor the introduction of a new product in comparison with the Bertrand competitors.
    Keywords: vertical differentiation, innovation adoption, process and product innovation, competitive regime.
    JEL: D43 L15 O33
    Date: 2009–01
  10. By: Coccia Mario (Ceris - Institute for Economic Research on Firms and Growth, Moncalieri (Turin), Italy)
    Abstract: The purpose of this paper is to analyze the relationship between democracy and technological innovation. The primary findings are that most free countries, measured with liberal, participatory, and constitutional democracy index, have higher technological innovation than less free and more autocratic countries, so that the former have a higher interaction among social, economic and innovation systems with fruitful effects on economic growth and the wealth of nations. In fact “democracy richness” in these countries displays a higher rate of technological innovation. In addition, democratization is an antecedent process (cause) to technological innovation (effect), which is a major wellknown determinant of economic growth. These findings lead to the conclusion that policy makers need to be cognizant of positive association between democratization and technological innovation to sustain modern economic growth and future technological progress in view of the accelerating globalization.
    Keywords: Democratization, Technological Innovation, Patents, Royalty Licenses Fee, Economic Grow
    JEL: F00 O33 O34 O57 P00
    Date: 2008–12
  11. By: Coccia Mario (Ceris - Institute for Economic Research on Firms and Growth, Moncalieri (Turin), Italy)
    Abstract: Governments in modern economies devote much policy attention to enhancing productivity and continue to emphasize its drivers such as investment in R&D. This paper analyzes the relationship between productivity growth and levels of public and private R&D expenditures. The economic analysis shows that the magnitude of R&D expenditure by business enterprise equal to 1.58% (% of GDP) and R&D expenditure of government and higher education of 1.06 (% of GDP) maximize the long-run impact on productivity growth. These optimal rates are the key to sustain productivity and technology improvements that are more and more necessary to modern economic growth.
    Keywords: R&D investment, Productivity growth, Optimization
    JEL: E60 H50 O40 O57
    Date: 2008–12
  12. By: Annamaria Conti (Chaire en Economie et Management de l'Innovation, Collège du Management de la Technologie, Ecole Polytechnique Fédérale de Lausanne)
    Abstract: We consider a policy regime allowing academic institutions to grant industry the intellectual property rights (IPRs) over invention resulting from collaborations. If a firm plays an important role in generating an invention, the researcher offers the IPRs to the firm, as an incentive to collaborate. However, he retains certain domains where he can exploit an invention without having to apply for a license. The choice of these domains involves a tradeoff. In fact, the researcher either induces the firm's effort, by assigning a broad field of use, or he ensures that he can use an invention in other applications, by granting a narrow field of use. The reverse occurs if it is the researcher who plays an important role in generating an invention. The main difference, however, is that if effort were contractible, the firm could reward the researcher for supplying the first best level of effort, because, unlike the researcher, it is not cash constrained. An empirical analysis, based on École Polytechnique Fédérale de Lausanne research contracts, supports the role of broad fields in bolstering a firm's effort, when the latter is important for generating an invention.
    Keywords: intellectual property rights, field of use, university-industry relations
    JEL: L26 I23 O31 D81 D86
    Date: 2009–02

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