nep-ino New Economics Papers
on Innovation
Issue of 2009‒09‒26
twenty-one papers chosen by
Steffen Lippert
Massey University Department of Commerce

  1. Macroeconomic Effects of Intellectual Property Rights: A Survey By Chu, Angus C.
  2. Policy approaches regarding technology transfer: Portugal and Switzerland compared By Maria das Dores B. Moura Oliveira; Aurora A.C. Teixeira
  3. Is Corporate R&D Investment in High-Tech Sectors More Effective? By Raquel Ortega-Argilés; Mariacristina Piva; Lesley Potters; Marco Vivarelli
  4. Attracting and embedding R&D by multinational firms: policy recommendations for EU new member states By Narula, Rajneesh
  5. Count Data Stochastic Frontier Models, with an application to the patents-R&D Relationship By Eduardo Fé-Rodríguez; Richard Hofler
  6. Reverse knowledge transfer and its implications for European policy By Narula, Rajneesh; Michel, Julie
  7. Inventors and Impostors: An Economic Analysis of Patent Examination By Florian Schuett
  8. Complementarity between private and public investment in R&D: A Dynamic Panel Data analysis By Sadraoui Tarek; Naceur Ben Zina
  9. How do public programmes shape strategic R&D collaborations? Project-level evidence from the 5th and 6th EU Framework Programmes. By Mireille Matt; Stéphane Robin; Sandrine Wolff
  10. What Turns Knowledge into Innovative Products? The Role of Entrepreneurship and Knowledge Spillovers By Block, J.H.; Thurik, A.R.; Zhou, H.
  11. Horizontal mergers, firm heterogeneity, and R&D investments By Noriaki Matsushima; Yasuhiro Sato; Kazuhiro Yamamoto
  12. Contracting and Ideas Disclosure in the Innovation Process By MARTIMORT, David; POUDOU, Jean-Christophe; SAND-ZANTMAN, Wilfried
  14. Technology shape, distance to frontier, or frontier shift? Modeling the determinants of TFP growth By Camilla Mastromarco; Angelo Zago
  15. Product and Process Innovation in a Growth Model of Firm Selection By Cristiana Benedetti Fasil
  16. Breakthrough Inventions and Migrating Clusters of Innovation By William R. Kerr
  17. Integrated Scenario-based Design Methodology for Collaborative Technology Innovation By Fabrice Forest; Olivier Lavoisy; Valérie Chanal
  18. Financial Innovation and Endogenous Growth By Stelios Michalopoulos; Luc Laeven; Ross Levine
  19. The Effect of Collaboration Network on Inventors' Job Match, Productivity and Tenure By Ryo Nakajima; Ryuichi Tamura; Nobuyuki Hanaki
  20. The anti-materialist project of "The Bourgeois Era" By McCloskey, Deirdre Nansen
  21. The Effect of Adversity on Process Innovations and Managerial Incentives By Benoit Dostie; Rajshri Jayaraman

  1. By: Chu, Angus C.
    Abstract: This paper provides a survey on studies that analyze the macroeconomic effects of intellectual property rights (IPR). The first part of this paper introduces different patent-policy instruments and reviews their effects on R&D and economic growth. This part also discusses the distortionary effects and distributional consequences of IPR protection as well as empirical evidence on the effects of patent rights. Then, the second part considers the international aspects of IPR protection. In summary, this survey draws the following conclusions from the literature. Firstly, different patent-policy instruments have different effects on R&D and growth. Secondly, there is empirical evidence supporting a positive relationship between IPR protection and innovation, but the evidence is stronger for developed countries than for developing countries. Thirdly, the optimal level of IPR protection should tradeoff the social benefits of enhanced innovation against the social costs of multiple distortions and income inequality. Finally, in an open economy, achieving the globally optimal level of protection requires an international coordination (rather than the harmonization) of IPR protection.
    Keywords: economic growth; innovation; intellectual property rights
    JEL: O34 O31 O40
    Date: 2009–09
  2. By: Maria das Dores B. Moura Oliveira (UPIN – Universidade do Porto Inovação, Universidade do Porto); Aurora A.C. Teixeira (INESC Porto; CEFUP, Faculdade de Economia, Universidade do Porto)
    Abstract: The environment in which technology transfer takes place plays a key role in defining the best approaches and, ultimately, their success. In the present paper we analyse the extent to which Technology Transfer Offices (TTOs) efficiency is influenced by framework conditions and, in particular, by the innovation policies and programmes. We hypothesise that countries with higher technology transfer efficiency levels would have innovation policies more supportive to technology transfer efforts. Results based on an in depth account and statistical analysis of over 60 innovation policies from Switzerland (widely associated to high levels of technology transference efficiency) and Portugal (a laggard country in this particular) corraborate our initial hypothesis. Switzerland policies overall include more references to knowledge and technology transfer, in the form of licenses, R&D collaboration and spin-offs, than Portuguese policies. One exception is the case of patents (intellectual property rights, in general) with stronger weight in Portuguese policies and, to some extent, the support to spin-off creation and venture capital. The findings highlighted significant differences in variables with impact in technology transfer, namely the priorities addressed, target groups and funding eligibility, aspects of the innovation process targeted and forms of funding. From the exercise it was possible to derive some policy implications. Specifically, we advance that if a country wishes to increase technology transfer efficiency then it should implement a mandate for R&D cooperation between different actors, give priority to fund cutting edge science and research performers, and attribute a higher emphasis on applied industrial research and prototype creation aspects of the innovation process.
    Keywords: Technology transfer, innovation policies, technology transfer efficiency
    Date: 2009–09
  3. By: Raquel Ortega-Argilés (European Commission, Joint Research Center (JRC), Institute for Prospective Technological Studies (IPTS)); Mariacristina Piva (DISCE, Università Cattolica); Lesley Potters (European Commission, Joint Research Center (JRC), Institute for Prospective Technological Studies (IPTS)); Marco Vivarelli (DISCE, Università Cattolica)
    Abstract: This paper discusses the link between R&D and productivity across the European industrial and service sectors. The empirical analysis is based on both the European sectoral OECD data and on a unique micro longitudinal database consisting of 532 top European R&D investors. The main conclusions are as follows. First, the R&D stock has a significant positive impact on labour productivity; this general result is largely consistent with previous literature in terms of the sign, the significance and the magnitude of the estimated coefficients. More interestingly, both at sectoral and firm levels the R&D coefficient increases monotonically (both in significance and magnitude) when we move from the low-tech to the medium and high-tech sectors. This outcome means that corporate R&D investment is more effective in the high-tech sectors and this may need to be taken into account when designing policy instruments (subsidies, fiscal incentives, etc.) in support of private R&D. However, R&D investment is not the sole source of productivity gains; technological change embodied in gross investment is of comparable importance on aggregate and is the main determinant of productivity increase in the low-tech sectors. Hence, an economic policy aiming to increase productivity in the low-tech sectors should support overall capital formation.
    Keywords: R&D, productivity, high-tech sectors, innovation, industrial policy
    JEL: O33
    Date: 2009–07
  4. By: Narula, Rajneesh (John H Dunning Centre for International Business, Henley Business School, University of Reading)
    Abstract: This paper asks: what can governments of new member states do to encourage MNEs to invest in R&D? There are two types of MNE R&D. Innovation can be undertaken in order to adapt its existing products and services to local stimuli. This is 'demand-driven R&D'. Innovation can also be in stand-alone R&D facilities which are considerably more knowledgeintensive, and imply a considerably greater dependence on domestic knowledge sources and infrastructure. This is 'supply-side R&D'. These two types of R&D require somewhat different approaches, and necessarily imply different policy options. In this paper, furthermore, we focus on the MNE and the potential for linkages, and do not limit ourselves to FDI and spillovers. MNEs engage in a variety of other informal and non-equity agreements to engage in knowledge exchange. We also deliberately consider the scope and competence at the MNE subsidiary level. These two novelties are useful in helping highlight the point that the tendency to focus on FDI flows is flawed, since knowledge exchanges and innovation are establishment level phenomena. An MNE policy is required which must link FDI policy and industrial policy in tandem. This paper argues that it is most practical to recommend that new member states focus on attracting and fostering demand-driven R&D activities by MNEs. Furthermore, we recommend that governments reduce the emphasis on costs while increasing the emphasis on specialised locationbound knowledge assets, and setting up programmes that foster demand-oriented upgrading of public R&D and human capital.
    Keywords: R&D, MNEs, EU expansion, human capital, new member states, innovation policies
    JEL: O32 F23 P36
    Date: 2009
  5. By: Eduardo Fé-Rodríguez; Richard Hofler
    Date: 2009
  6. By: Narula, Rajneesh (John H Dunning Centre for International Business, Henley Business School, University of Reading); Michel, Julie (Center for Competitiveness, Faculty of Economics and Social Sciences, University of Fribourg)
    Abstract: There is a growing international dispersion of R&D activities by MNEs for the purposes of maintaining and augmenting their knowledge assets. Firms need to tap into alternative knowledge sources , as home countries are rarely able to meet all their technological needs. However, accessing to foreign knowledge implies integration with the host country innovation system that requires considerable time and resources. Although asset-augmenting activities are seen as primarily benefitting the MNE, we argue that home country innovation systems can also benefit from reverse knowledge transfer. Policy makers need to promote these linkages and flows, rather than seeing R&D internationalisation as a threat to the home economy. New knowledge developed abroad by firms can and should be encouraged to be transferred to the rest of the firm and to the local environment of the home country.
    Keywords: reverse knowledge transfer, R&D, innovation policy, EU
    JEL: F23 O32 L22
    Date: 2009
  7. By: Florian Schuett
    Abstract: The objective of patent examination is to separate the wheat from the chaff. Good applications - those satisfying the patentability criteria, particularly novelty and nonobviousness - should be accepted, while bad applications should be rejected. How should incentives for examiners be designed to further this objective? This paper develops a theoretical model of patent examination to address the question. It argues that examination can be described as a moral-hazard problem followed by an adverse-selection problem: the examiner must be given incentives to exert effort (looking for evidence to reject), but also to truthfully reveal the evidence he finds (or lack thereof). The model can explain the puzzling compensation scheme in use at the U.S. patent office, where examiners are essentially rewarded for granting patents, as well as variation in compensation schemes across patent offices. It also has implications for the retention of examiners and for administrative patent review.
    Keywords: innovation, patent office, soft information, intrinsic motivation, incentives for bureaucrats
    JEL: O31 O38 D73 D82 L50
    Date: 2009
  8. By: Sadraoui Tarek (LORIA); Naceur Ben Zina
    Abstract: This paper investigates the relationship between private and public investment in R&D, while taking into account the effect of several instruments policies such as subsidies and taxes. We design a new look of knowledge spillovers and R&D cooperation to explain the contribution of public and private R&D on growth. We propose a heterogeneous dynamic panel data model to consider the endogenous effect of R&D investment. We also distinguish between the estimated long and short run results. Our results based on a sample of 23 countries over the period 1992-2004 indicate that both public and private investments in R&D are complementary. By establishing an endogenous growth model, the estimates indicate that public and private R&D depends on the host country's human capital investment. Results indicate that foreign direct investment is a more significant spillover channel than imports.
    Date: 2009–05
  9. By: Mireille Matt; Stéphane Robin; Sandrine Wolff
    Abstract: We analyze the micro rationale of EU-sponsored collaborations compared to non-sponsored, spontaneous collaborations. We compare the incentives and coordination mechanisms of each type of collaboration, and derive propositions that we test empirically. Our econometric analysis uses recent data on (sponsored and non-sponsored) projects conducted by participants in the 5th and 6th European R&D Framework Programmes. Our empirical findings support our main propositions. Compared to spontaneous collaborations, EU-sponsored collaborations clearly have different characteristics and follow a different rationale. However, there is no major difference between the different types of EU-sponsored collaborations.
    Keywords: Strategic R&D Collaborations; European Framework Programmes; Research Joint Ventures.
    JEL: L21 L24 O31 O32
    Date: 2009
  10. By: Block, J.H.; Thurik, A.R.; Zhou, H. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: The knowledge spillover theory of entrepreneurship seeks to explain the sources of entrepreneurship and its consequences with regard to economic performance. This paper extends this theory and links it to innovation performance. We propose that a high rate of entrepreneurship facilitates the process of turning knowledge into innovative products while it has no effect on the relation between knowledge and imitative products. We use European country-level data to test our propositions. Our results show that a high rate of entrepreneurship increases the chances that knowledge turns into innovative products. The findings highlight the importance of entrepreneurs in the process of commercialization of knowledge. Implications for innovation policy are discussed.
    Keywords: innovation;entrepreneurship;knowledge;patents;technology policy;knowledge spillovers;commercialization of knowledge;economic growth;O30
    Date: 2009–09–15
  11. By: Noriaki Matsushima; Yasuhiro Sato; Kazuhiro Yamamoto
    Abstract: We investigate the incentive and the welfare implications of a merger when heterogeneous oligopolists compete both in process R&D and on the product market. We examine how a merger affects the output, investment, and profits of firms, whether firms have merger incentives, and, if so, whether such mergers are desirable from the viewpoint of social welfare. We also derive equilibrium configurations and explore their welfare properties.
    Date: 2009–09
  12. By: MARTIMORT, David; POUDOU, Jean-Christophe; SAND-ZANTMAN, Wilfried
    Date: 2009–06
  13. By: Thomas Gillier (ERPI - Equipe de Recherche sur les Processus Innovatifs - Institut National Polytechnique de Lorraine - INPL - Ecole Nationale Supérieure en Génie des Systèmes Industriels, EDF R&D - EDF, MINATEC IDEAs Laboratory - CEA); Gérald Piat (EDF R&D - EDF); Benoît Roussel (ERPI - Equipe de Recherche sur les Processus Innovatifs - Institut National Polytechnique de Lorraine - INPL - Ecole Nationale Supérieure en Génie des Systèmes Industriels); Patrick Truchot (ERPI - Equipe de Recherche sur les Processus Innovatifs - Institut National Polytechnique de Lorraine - INPL - Ecole Nationale Supérieure en Génie des Systèmes Industriels)
    Abstract: Our paper refers to an industrial practice based on an integrated theoretical framework of design, CK design theory (Hatchuel and Weil, 2002, Hatchuel and Weil, 2003, Hatchuel and Weil, 2008), to support people in management of innovation fields. This study is based on an empirical case in a new form of R&D partnerships, the Cross Industry Exploratory Partnerships. MINATEC IDEAs Laboratory® is composed of a broad scope of partners 2 which aims to co-explore opportunities of micronanotechnologies. The paper deals with a strategic design tool, OPERA, which has been experimented since 2007 and involved participation of design team work and powerholders. During two years, creative insights and projects of the two laboratory's major innovation fields have been collected and structured within CK theory. This tool permits power-holders to drive innovation projects by giving an overview of explored concepts (and still not explored), activation and production of competencies and knowledge.
    Keywords: CK theory; innovative design; innovation partnership; OPERA; design theory; management of innovation
    Date: 2009–06–08
  14. By: Camilla Mastromarco; Angelo Zago (Department of Economics (University of Verona))
    Abstract: We investigate the determinants of TFP growth of Italian manufacturing firms. Using stochastic frontier techniques, we consider three approaches to take into account the influence of external factors, i.e., the determinants of growth. First, external factors may affect the shape of the technology. Second, they may influence the distance from the frontier. Third, in a novel approach, the external factors influence the technological progress, that is the shift of the frontier. Using a sample of manufacturing firms in 1998-2003, we find that the exports, technological investments and spillovers, public infrastructures, and banking efficiency all have a positive effect on TFP growth. We also find that the first model best fits the data.
    Keywords: TFP, growth accounting, stochastic frontiers, R&D spillovers, banking efficiency, infrastructures
    JEL: O47 C23 G21 H54
    Date: 2009–09
  15. By: Cristiana Benedetti Fasil
    Abstract: Recent empirical evidence based on firm level data emphasizes firm heterogeneity in innovation activities and the different effects of process and product innovations on the productivity level and productivity growth. To match this evidence, this paper develops an endogenous growth model with two sources of firm heterogeneity: production efficiency and product quality.Both attributes evolve endogenously through firms’ innovation choices. Growth is driven by innovation and self-selection of firms and sustained by entrants who imitate incumbents. Calibrating the economy to match the Spanish manufacturing sector, the model enables to quantify the different effects of selection, innovation, and imitation as well as product and process innovation on growth. Compared to single attribute models of firm heterogeneity, the model provides a more complete characterization of firms’ innovation choices explaining the partition of firms along different innovation strategies and generating consistent firm size distributions.
    Keywords: endogenous growth theory, firm dynamics, heterogeneous firms, productivity, quality, innovation
    JEL: L11 L16 O14 O31 O40
    Date: 2009
  16. By: William R. Kerr (Harvard Business School, Entrepreneurial Management Unit)
    Abstract: We investigate the speed at which clusters of invention for a technology migrate spatially following breakthrough inventions. We identify breakthrough inventions as the top one percent of US inventions for a technology during 1975-1984 in terms of subsequent citations. Patenting growth is significantly higher in cities and technologies where breakthrough inventions occur after 1984 relative to peer locations that do not experience breakthrough inventions. This growth differential in turn depends on the mobility of the technology's labor force, which we model through the extent that technologies depend upon immigrant scientists and engineers. Spatial adjustments are faster for technologies that depend heavily on immigrant inventors. The results qualitatively con.rm the mechanism of industry migration proposed in models like [Duranton, G., 2007. Urban evolutions: The fast, the slow, and the still. American Economic Review 97, 197.221].
    Keywords: Agglomeration, Clusters, Entrepreneurship, Invention, Mobility, Reallocation, R&D, Patents, Scientists, Engineers, Immigration.
    JEL: F2 J4 J6 O3 O4 R1 R3
    Date: 2009–09
  17. By: Fabrice Forest (PACTE - Politiques publiques, ACtion politique, TErritoires - CNRS : UMR5194 - Université Pierre Mendès-France - Grenoble II - Institut d'Études Politiques de Grenoble - Université Joseph Fourier - Grenoble I); Olivier Lavoisy (PACTE - Politiques publiques, ACtion politique, TErritoires - CNRS : UMR5194 - Université Pierre Mendès-France - Grenoble II - Institut d'Études Politiques de Grenoble - Université Joseph Fourier - Grenoble I); Valérie Chanal (PACTE - Politiques publiques, ACtion politique, TErritoires - CNRS : UMR5194 - Université Pierre Mendès-France - Grenoble II - Institut d'Études Politiques de Grenoble - Université Joseph Fourier - Grenoble I)
    Abstract: The paper presents a scenario-based methodology developed and tested throughout cooperative research and development projects. It is aimed at supporting information technology innovation with an end-to-end Human and Social Sciences assistance. This methodology provides an integrated approach combining a vision of the potential users, business aspects and technological challenges throughout the design process. An original combination of different methods is proposed and experimented: user-centred design, scenario-based design, user and functional requirements analysis, business value analysis, user acceptance studies, and visualization methods. This methodology has been implemented in three European R&D projects, in the domain of the telecommunications and Internet infrastructure. The key contributions of this approach are that it unifies brings together visions of the users, potential business value and technology challenges thanks to scenario construction.
    Keywords: Scenario-based design ; user requirements ; business economics ; functional requirements ; visualization
    Date: 2009–12
  18. By: Stelios Michalopoulos; Luc Laeven; Ross Levine
    Abstract: We model technological and financial innovation as reflecting the decisions of profit maximizing agents and explore the implications for economic growth. We start with a Schumpeterian endogenous growth model where entrepreneurs earn monopoly profits by inventing better goods and financiers arise to screen entrepreneurs. A novel feature of the model is that financiers also engage in the costly, risky, and potentially profitable process of innovation: Financiers can invent more effective processes for screening entrepreneurs. Every existing screening process, however, becomes less effective as technology advances. Consequently, technological innovation and, thus, economic growth stop unless financiers continually innovate. Historical observations and empirical evidence are more consistent with this dynamic model of financial innovation and endogenous growth than with existing models of financial development and growth.
    JEL: G0 G3 O1 O31 O4
    Date: 2009–09
  19. By: Ryo Nakajima; Ryuichi Tamura; Nobuyuki Hanaki
    Abstract: It has been argued in the economic literature that job search through informal job networks improves the employer-employee match quality. This paper argues that inventors' research collaboration networks reduce the uncertainty of firms about the match qualities of inventors prior to hiring. We estimate the effect of inventors' collaboration networks on their productivity and mobility using the U.S. patent application database. It is found that network- recruited inventors are more productive and have longer tenure than publicly recruited inventors. The evidence from fixed-effect regressions shows that the higher productivity and longer tenure of network-recruited inventors are not solely attributable to their unobserved ability. These results are consistent with the job match hypothesis between inventors and firms through their collaboration networks.
    Date: 2009
  20. By: McCloskey, Deirdre Nansen
    Abstract: It is a materialist prejudice common in scholarship from 1890 to 1980 that economic results must have economic causes. But ideas caused the modern world. The point can be made by looking through each of the materialist explanations, from the “original accumulation” favored by early Marxist historians to the "new institutionalism” favored by late Samuelsonian economists. The book present does so, and finds them surprisingly weak. The residual is ideas, in particular the Bourgeois Revaluation of the 17th and 18th centuries in northwest Europe. The argument takes six books, constituting a full-scale defense of capitalism. One is already published (The Bourgeois Virtues: Ethics for an Age of Commerce 2006), and this is volume 2. Volume 3 will explore exactly how the Revaluation occurred, first in Holland and then by imitation in England, Scotland, Pennsylvania, and the world. Volume 4 explores the balance of interest (Max U) and language in explaining the Industrial Revolution and its longer-term consequences; volume 5 explains why the clerisy of elite artists and intellectuals turned against innovation after 1848; and volume 6 asks which of the present-day complaints about free-market economies has merit. Since the sestet (“The Bourgeois Era”) is a defense, one can expect not to find arguments that globalization is bad for the poor, or that innovation has destroyed the environment. Both left and right are suspicious of the modern world, often for the same reasons. “The Bourgeois Era” argues that both are mistaken: that innovation has elevated people, in more than goods alone.
    Keywords: bourgeois era; innovation; economics; economic history; economic causes; ideas; modern world; capitalism
    JEL: N10 N13 N0
    Date: 2009–06–09
  21. By: Benoit Dostie; Rajshri Jayaraman
    Abstract: This paper asks whether adversity spurs the introduction of process innovations and increases the use of managerial incentives by firms. Using a large panel data set of workplaces in Canada, our identification strategy relies on exogenous variation in adversity arising from increased border security along the 49th parallel following 9/11. Our longitudinal difference-in-differences estimates indicate that firms responded to adversity by introducing new or improved processes, but did not change their use of managerial incentives. These results suggest that the threat of bankruptcy may provide impetus for improving efficiency.
    Keywords: Process innovation, managerial incentives, efficiency, natural experiment
    JEL: L20 O31 M52 J33
    Date: 2009

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