nep-ino New Economics Papers
on Innovation
Issue of 2009‒08‒30
twelve papers chosen by
Steffen Lippert
Massey University Department of Commerce

  1. Effects of Patent Length on R&D: A Quantitative DGE Analysis By Chu, Angus C.
  2. Intracompany Governance and Innovation By Sharon Belenzon; Tomer Berkovitz; Patrick Bolton
  3. Sequential Innovation and the Duration of Technology Licensing By Gordanier, John; Chun-Hui, Miao
  4. Entrepreneurial Innovations, Entrepreneurship Policy and Globalization By Douhan, Robin; Norbäck, Pehr-Johan; Persson, Lars
  5. Economic growth across Chinese provinces: in search of innovation-driven gains By Funke, Michael; Yu, Hao
  6. Equity Financing and Innovation: is Europe different from the United States? By Martinsson, Gustav
  7. Innovation Governance for Value Capture -The Problem and a Proposed Simple Model-based Solution By Pitelis, Christos; Panagopoulosi, Andreas
  8. How do Organisational and Cognitive Distances Shape Firms’ Interactions with Universities and Public Research Institutes? By Broström, Anders; McKelvey, Maureen
  9. Human Resource Practices and Value Capture from Investment in Knowledge/Innovation: Evidence from a Quasi-Experiment By Georgiadis, Andreas; Pitelis, Christos
  10. The geography of research and development activity in the U.S. By Kristy Buzard; Gerald Carlino
  11. Determinants of MNE Subsidiaries Decisions to Set Up Own R&D Laboratories - Theory and Evidence By Kottaridi, Constantina; Papanastassiou, Marina; Pitelis, Christos
  12. ICT as an Enabler for Innovation Adoption By Verkerk, M.; Pijl, G. van der; Asperen, E. van

  1. By: Chu, Angus C.
    Abstract: This paper develops an R&D-growth model and calibrates the model to aggregate data of the US economy to quantify a structural relationship between patent length, R&D and consumption. Under parameter values that match the empirical flow-profit depreciation rate of patents and other key features of the US economy, extending the patent length beyond 20 years leads to a negligible increase in R&D despite equilibrium R&D underinvestment. In contrast, shortening the patent length leads to a significant reduction in R&D and consumption. Finally, this paper also analytically derives and quantifies a dynamic distortionary effect of patent length on capital investment.
    Keywords: innovation-driven growth; intellectual property rights; patent length; R&D
    JEL: O34 O31
    Date: 2009–08
  2. By: Sharon Belenzon; Tomer Berkovitz; Patrick Bolton
    Abstract: This paper examines the relation between ownership, corporate form, and innovation for a cross-section of private and publicly traded innovating firms in the US and 15 European countries. A striking novel observation emerges from our analysis: while most innovating firms in the US are publicly traded conglomerates, a substantial fraction of innovation is concentrated in private firms and in business groups in continental European countries. We find virtually no variation across US industries in the corporate form of innovating firms, but a substantial variation across industries in continental European countries, where business groups tend to be concentrated in industries with a slower and more fundamental innovation cycle and where intellectual protection of innovators seems to be of paramount importance. Our findings suggest that innovative companies choose the corporate form most conducive to R&D, as predicted by the Coasian view of how firms form. This is especially true in Europe, where there are fewer regulatory hurdles to the formation of business groups and hybrid corporate forms. It is less the case in the US, where conglomerates are generally favored.
    JEL: O16 O31 O32
    Date: 2009–08
  3. By: Gordanier, John; Chun-Hui, Miao
    Abstract: We model an innovator's choice of payment scheme and duration as a joint decision in a multi-period licensing game with potential sequential innovations and some irreversibility of technology transfer. We find that it may be optimal to license the innovation for less than the full length of the patent and that royalty contracts can be used to overcome a time-consistency problem faced by the innovator. Our results suggest that licensing contracts based on royalty have a longer duration than fixed-fee licenses and are more likely to be used in industries where sequential innovations are frequent.
    Keywords: Innovation; Licensing; Patent; Royalty; Technology Leakage; Time Consistency.
    JEL: D86 L13 L24
    Date: 2009–07
  4. By: Douhan, Robin (Research Institute of Industrial Economics (IFN)); Norbäck, Pehr-Johan (Research Institute of Industrial Economics (IFN)); Persson, Lars (Research Institute of Industrial Economics (IFN))
    Abstract: What explains the world-wide trend of pro-entrepreneurial policies in the last few decades? We study entrepreneurial policy in a lobbying model taking into account the con.ict of interest between entrepreneurs and incumbents. It is shown that international market integration leads to more pro-entrepreneurial policies. It becomes more difficult to protect the profits of incumbent firms from entrepreneurial entry and pro-entrepreneurial policies make foreign entrepreneurs less aggressive. Making use of the Doing Business database, we find, consistent with our theory, evidence that international openness reduces barriers to entry for new entrepreneurs and that the effect is stronger in countries with more rent-seeking governments.
    Keywords: Entrepreneurship; Regulation; Innovation; Market Integration; Lobbying
    JEL: D73 F15 L26 L51 O31
    Date: 2009–08–24
  5. By: Funke, Michael (BOFIT); Yu, Hao (BOFIT)
    Abstract: In this paper we analyse the impact of R&D on total factor productivity across Chinese provinces. We introduce innovations explicitly into a production function and evaluate their contribution to economic growth in 1993 - 2006. The empirical results highlight the importance and the interaction between local and external research. The evidence indicates that growth in China is not explained simply by factor input accumulation.
    Keywords: China; R&D; R&D Spillovers; patents; regional economic growth; semiparametric estimators
    JEL: C14 O47 R11 R12
    Date: 2009–08–26
  6. By: Martinsson, Gustav (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: During the mid and late 1990s young, high-tech firms in the U.S. experienced a supply shift in both internal and external equity fueling a finance driven boom in corporate R&D. I estimate dynamic R&D regression models for high-tech firms, separately for the U.K. and Continental Europe, and find significant cash flow effects for newly listed firms in both samples, but only the new, high-tech firms in the U.K. experienced a supply shift in external equity as well. The findings of this paper suggest a channel through which market based financial systems outperform the bank based economies of Continental Europe.
    Keywords: Financing constraints; R&D; Stock Issues; Econometrics; Financial markets; international economics
    JEL: G32 O32
    Date: 2009–08–26
  7. By: Pitelis, Christos; Panagopoulosi, Andreas
    Abstract: We aim to model the "optimal" choice on internal versus external innovation for value capture of different-sized firms, in the context of multi-level bargaining. We find that size differentials are a major determinant for the choice in hand. We derive implications for "closed" versus "open" innovation approaches, and we discuss managerial practice, limitations and possible extensions.
    Keywords: Innovation, Firm Size, Value Capture, Patent Portfolios
    Date: 2009
  8. By: Broström, Anders (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); McKelvey, Maureen (RIDE and Institute of Innovation and Entrepreneurship)
    Abstract: This paper examines how the institutional set-up of public research organisations (PROs) affects how firms are able to utilise direct interaction with publicly employed researchers. We argue that the role that PRO interaction has to play in the firm’s innovation processes depend on the organisational and cognitive distances between the firm and the PRO. In particular, this paper empirically explores how Swedish engineering firms assess the value of R&D partnerships with universities and research institutes. Our theoretical discussion of organizational distance suggests that managers should perceive institute contacts to be more strongly associated with short-term R&D projects than university contacts. This hypothesis cannot be verified. Following from our discussion of cognitive distance, we find that firms with advanced R&D capabilities obtain differential benefits. Their interaction with universities provides impulses for innovation and offers opportunities to learn to a greater extent than contacts with public research institutes. However, firms with less advanced R&D capabilities perceive no significant differences between university and institute interaction. Thus, both organizational and cognitive distance affect firms’ interactions with PROs, and our results have implications for the current push in Europe to reform universities and institutes.
    Keywords: public research organisations; organisation of public research; universities; institutes; R&D interaction
    JEL: M21 O31 O32
    Date: 2009–08–26
  9. By: Georgiadis, Andreas; Pitelis, Christos
    Abstract: We analyse the link between human resource (HR) practices and the ability of firms to capture value from investments in knowledge-innovation and present evidence that supports a positive relationship between the two, employing an empirical design that utilises a unique data set that is based on a quasi-experiment. Our findings suggest that an additional pound invested in R&D, increases the rate of return of businesses that receive support in the form of employees and management/entrepreneur training, as well as improved workforce retention and recruitment, by significantly more than businesses that didn't receive such support. This has important implications for managerial practice and public policy.
    Date: 2009
  10. By: Kristy Buzard; Gerald Carlino
    Abstract: This study details the location patterns of R&D labs in the U.S., but it differs from past studies in a number of ways. First, rather than looking at the geographic concentration of manufacturing firms (e.g., Ellison and Glaeser, 1997; Rosenthal and Strange, 2001; and Duranton and Overman, 2005), the authors consider the spatial concentration of private R&D activity. Second, rather than focusing on the concentration of employment in a given industry, the authors look at the clustering of individual R&D labs by industry. Third, following Duranton and Overman (2005), the authors look for geographic clusters of labs that represent statistically significant departures from spatial randomness using simulation techniques. The authors find that R&D activity for most industries tends to be concentrated in the Northeast corridor, around the Great Lakes, in California's Bay Area, and in southern California. They argue that the high spatial concentration of R&D activity facilitates the exchange of ideas among firms and aids in the creation of new goods and new ways of producing existing goods. They run a regression of an Ellison and Glaeser (1997) style index measuring the spatial concentration of R&D labs on geographic proxies for knowledge spillovers and other characteristics and find evidence that localized knowledge spillovers are important for innovative activity.
    Keywords: Research and development ; Geography
    Date: 2009
  11. By: Kottaridi, Constantina; Papanastassiou, Marina; Pitelis, Christos
    Abstract: We explore the determinants of MNE subsidiaries decisions to set-up own R&D laboratories drawing on evidence from UK regions. In this context, we also test for the interaction between firm's internal and external environments. We also integrate extant IB and strategic management literatures and incorporate recent debates in New Economic Geography (NEG) in specifying the 'external environment'. We find support for the role of firm's 'productive opportunity' and predictions of the NEG on the basis of an analysis of primary data. We discuss implications for managerial practice and government regional policies.
    Keywords: MNE subsidiaries, R&D laboratory, internal and external environment, productive opportunity
    Date: 2009
  12. By: Verkerk, M.; Pijl, G. van der; Asperen, E. van (Erasmus Econometric Institute)
    Abstract: In this paper we investigate how two online services (a portal and a digital library) may influence the adoption of an innovation. It is known from prior surveys that the installation services branch of the Dutch building industry has a relatively slow adoption rate for innovations. We examine if these two online services can influence the attitude towards the adoption of innovations. From the academic literature we have derived a list of factors that influence the attitude towards adoption by individuals. We limited this project to a number of factors that are commonly referred to as technological factors. Using an online digital library and a custom-built portal, we conducted a field experiment with a post-test only control group design for one particular innovative product (a gas-analysis device); the test was performed using a survey. Our main finding is that the portal has a significant and positive effect towards the adoption of the innovation by an individual. We did not find a significant impact for the use of the digital library. On the basis of this experiment, we propose that online services that offer a high degree of interaction amongst their users are more likely to induce an increase in the willingness of an individual to adopt an innovation.
    Keywords: innovation;adoption;portal;digital library;field experiment.
    Date: 2009–07–30

This nep-ino issue is ©2009 by Steffen Lippert. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.