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on Innovation |
| By: | Giovanni Cerulli; Bianca Potì (CERIS-CNR, Institute for Economic Research on Firms and Growth) |
| Abstract: | The paper explores the impact of a specific R&D policy tool, the Italian “Fondo per le Agevolazioni della Ricerca” (FAR), on industrial R&D and technological output at firm level. Our objective is threefold: first, identifying econometrically the presence/absence of private R&D investment additionality/crowding-out within a pooled sample, in a series of firms’ subsets (by regional, dimensional, technological and other characterizations), and by taking into account the effect of single as well as a mix of policy instruments; second, exploring the output (innovation) additionality by comparing the differential impact of “privately funded” (firm own resources) and “public funded” industrial R&D expenditures on firm patent applications; third, comparing the structural characteristics of the group of firm performing additionality with that doing crowding-out, in order to appreciate which are the firm characteristics driving to the success of the policy at stake. Our results suggest that FAR has been effective in the pooled sample, although no effect emerges in some subsets of firms. In particular, while large firms seem to have been decisive for the success of this policy, small firms present a more marked crowding-out effect. Furthermore, firm growth’s strategy and capacity of effectively transform R&D input into innovation output (patents) seem to lead toward a better effect in term of additionality. |
| Keywords: | business R&D; public incentives; econometric evaluation |
| JEL: | O32 C52 O38 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:dsc:wpaper:10&r=ino |
| By: | Cassiman, Bruno; Veugelers, Reinhilde; Zuniga, Pluvia |
| Abstract: | This paper examines the diversity of the types of links of firms to science and their effect on innovation performance for a sample of Belgian firms. While at the industry level links to science are highly related to the R&D intensity of the sector, we show that there exists considerable heterogeneity in the type of links to science at the firm level. Overall, firms with a science link enjoy superior innovation performance, in particular with respect to innovations that are new to the market. At the invention level, our findings confirm that patents from firms engaged in science are more frequently cited and have a broader technological and geographical impact, but we show that it is crucial to distinguish between direct science links at the invention level and indirect science links at the firm level to encounter these distinct positive effects of science links. |
| Keywords: | Innovation; Cooperation; Patents; forward citation; science; industrial innovation; |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:ner:leuven:urn:hdl:123456789/255978&r=ino |
| By: | Thomas Giebe (Humboldt University at Berlin) |
| Abstract: | We consider procurement of an innovation fromheterogeneous sellers. Innovations are random but depend on unobservable effort and private information. We compare two procurement mechanisms where potential sellers first bid in an auction for admission to an innovation contest. After the contest, an innovation is procured employing either a fixed prize or a first–price auction. We characterize Bayesian Nash equilibria such that both mechanisms are payoff–equivalent and induce the same efforts and innovations. In these equilibria, signaling in the entry auction does not occur since contestants play a simple strategy that does not depend on rivals’ private information. |
| Keywords: | Contest, Auction, Innovation, Research, R&D, Procurement, Signaling |
| JEL: | D21 D44 D82 H57 O31 O32 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:trf:wpaper:307&r=ino |
| By: | Been-Lon Chen (Institute of Economics, Academia Sinica, Taipei, Taiwan); Angus C. Chu (Institute of Economics, Academia Sinica, Taipei, Taiwan) |
| Abstract: | Empirical studies often find significant and positive R&D spillovers across firms. In this note, we incorporate this spillover effect into a scale-invariant quality-ladder model. We find that the modified model features multiple steady states (i) a high-R&D steady state, (ii) a low-R&D steady state and (iii) a zero-R&D steady state. As for dynamics, when R&D spillovers are small, only the zero-R&D steady state is stable, and it emerges as a no-growth trap. In this case, the economy is subject sunspot fluctuations around this trap (i.e., local indeterminacy). When R&D spillovers are large, both the zero-R&D and high-R&D steady states are stable and locally indeterminate. In this case, increasing patent breadth may cause the high-R&D steady state to become unstable and the economy to converge to the no-growth trap. Therefore, strengthening patent protection may stifle innovation through the occurrence of a bifurcation. |
| Keywords: | endogenous-growth model, R&D spillovers, indeterminacy, multiple equilibria, bifurcation |
| JEL: | O31 O41 E32 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:sin:wpaper:10-a002&r=ino |
| By: | Bouguezzi, Fehmi |
| Abstract: | This paper compares patent licensing regimes in a Hotelling model where firms are located symmetrically and not necessary at the end points of the city. I suppose that one of the firms owns a process innovation reducing the marginal unit cost. This patent holding firm will decide to sell a license or not to the non innovative firm and will choose, when licensing, between a fixed fee or a royalty. The key difference between this paper and other papers is that here I suppose that firms are not static and can move along the linear city symmetrically. I find that when there is no licensing, Nash equilibrium exists only when innovation is non drastic. I also find that royalties licensing is better than fixed fee licensing when innovation is small. When the innovation is intermediate I find that fixed fee is better than a royalty. The paper shows that a fixed fee is not better than a non licensing regime independently of the innovation size and the optimal licensing regime is royalties when innovation is small. Finally, I show that a patent holding firm should not license its innovation when it is intermediate or drastic |
| Keywords: | Hotelling model; Technology transfer; Patent licensing |
| JEL: | L0 D45 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:21055&r=ino |
| By: | Gerard Llobet (CEMFI, Centro de Estudios Monetarios y Financieros); Javier Suarez (CEMFI, Centro de Estudios Monetarios y Financieros) |
| Abstract: | We assess the effects of imitation and intellectual property (IP) protection in a model of industry dynamics in which the value of IP is eroded by further innovations and imitations. Innovations result from the development of ideas engendered by entrepreneurs. We find that innovation and welfare are decreasing in the protection of IP against further innovations, while their relationship with the protection against imitations typically has an inverted-U shape (partly because imitation reduces the resistance of incumbents to innovators). We also find that the welfare gains from increasing IP protection increase if entrepreneurs are financially constrained. |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:cmf:wpaper:wp2010_1001&r=ino |
| By: | fiorenza belussi (University of Padua); silvia rita sedita (University of Padua); alessia sammarra (University of Padua) |
| Abstract: | The paper investigates the existence of an Open Regional Innovation System (ORIS model). This model is characterised by the firms’ adoption of an open innovation strategy, which overcomes not only the boundaries of the firms but also the boundaries of the region. Using data collected in a sample of life science firms, our research provides the evidence that the Emilia Romagna RIS has evolved towards an ORIS model, where firms’ innovation search strategy, despite being still embedded in local nets (involving several regional public research organisations - PROs), is open to external-to-the-region research networks and knowledge sources. It also shows that innovation openness influences significantly the firms’ innovative performance. |
| Keywords: | life science sector, learning at the boundaries, Regional Innovation Systems, networks, open innovation model |
| JEL: | L7 O31 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:pad:wpaper:0113&r=ino |
| By: | Czarnitzki, Dirk; Binz-Hottenrott, Hanna Léontine; Thorwarth, Susanne |
| Abstract: | Previous literature provided evidence on financing constraints for investment in R&D activities due to capital market imperfections and special features of R&D investments. Moreover, it has been shown that a shift in capital structure towards more debt, results in a reduction of R&D investments. This article complements this literature by compartmentalizing R&D activities in its components, ‘R’ and ‘D’. In particular, we distinguish research from development as these activities do not only differ in their nature, but also to a large extent take place sequentially. Our results show that ‘R’ investment is more sensitive to the firms’ operating liquidity than ‘D’ indicating that firms have to rely even more on internal funds for financing their research compared to development activities. Moreover, we find that (basic) research subsidy recipients’ investment is less sensitive to internal liquidity. |
| Keywords: | Research and Development; Liquidity Constraints; Innovation Policy; |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:ner:leuven:urn:hdl:123456789/250659&r=ino |
| By: | Czarnitzki, Dirk; Thorwarth, Susanne |
| Abstract: | This paper explores the contribution of design activities on product market performance of Belgian companies. While there is mounting evidence that design can be seen as a strategic tool to successfully spur sales of new product developments at the firm level, the topic of design innovation has not been linked to the open innovation concept yet. In this paper we empirically test whether design activities conducted in-house differ in their contribution to new product sales from externally acquired design. Using a large crosssection of manufacturing and service firms, we investigate the effects on sales of products new to the market and of imitation or significantly improved products of the firm. At first glance, we find the paradox that externally acquired design is not superior to in-house design activities. This effect is robust to several modifications of the model specification. As earlier literature on new technological developments in high-tech sectors, we argue, however, that external design may not affect the sales of market novelties as the “market news” may spill-over quickly to rivals through common customers and suppliers including external designers. |
| Keywords: | Design; R&D; Collaboration; Open Innovation; Product Market Performance; |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:ner:leuven:urn:hdl:123456789/250665&r=ino |
| By: | Flavio Lenz-Cesar; Almas Heshmati (TEMEP, School of Industrial and Management Engineering College of Engineering, Seoul National University) |
| Abstract: | This paper introduces an agent-based simulation model representing the dynamic processes of cooperative R&D in the manufacturing sector of South Korea. Firms¡¯ behaviors were defined according to empirical findings on a dataset from the internationally standardized Korean Innovation Survey in 2005. Simulation algorithms and parameters were defined based on the determinants on firms¡¯ likelihood to participate in cooperation with other firms when conducting innovation activities. The calibration process was conducted to the point where artificially generated scenarios were equivalent to the one observed in the real world. The aim of this simulation game was to create a basic implementation that could be extended to test different policies strategies in order to observe sector responses (including cross-sector spillovers) when promoting cooperative innovation. |
| Keywords: | Collaborative R&D, Agent-base simulation, Korean innovation survey |
| JEL: | C15 D21 D85 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:snv:dp2009:201052&r=ino |
| By: | Klaus Schmidt (University of Munich) |
| Abstract: | Many high technology goods are based on standards that require several essential patents owned by different IP holders. This gives rise to a complements and a double mark-up problem. We compare the welfare effects of two different business strategies dealing with these problems. Vertical integration of an IP holder and a downstream producer solves the double mark-up problem between these firms. Nevertheless, it may raise royalty rates and reduce output as compared to non-integration. Horizontal integration of IP holders solves the complements problem but not the double mark-up problem. Vertical integration discourages entry and reduces innovation incentives, while horizontal integration always benefits from entry and innovation |
| Keywords: | IP rights, complementary patents, standards, licensing, patent pool, vertical integration |
| JEL: | L1 L4 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:trf:wpaper:274&r=ino |
| By: | Belderbos, Rene; Faems, Dries; Leten, Bart; Van Looy, Bart |
| Abstract: | This article analyzes the financial performance consequences of technology strategies categorized along two dimensions: (1) explorative versus exploitative and (2) solitary versus collaborative. The financial performance implications of firms’ positioning along these two dimensions has important managerial implications, but has received only limited attention in prior studies. Drawing on organizational learning theory and technology alliances literature, a set of hypotheses on the performance implications of firms’ technology strategies are derived. These hypotheses are tested empirically on a panel dataset (1996-2003) of 168 R&D-intensive firms based in Japan, the US and Europe and situated in five different industries (chemicals, pharmaceuticals, ICT, electronics, non-electrical machinery). Patent data are used to construct indicators of explorative versus exploitative technological activities (activities in new or existing technology domains) and collaborative versus solitary technological activities (joint versus single patent ownership). The financial performance of firms is measured via a market value indicator: Tobin’s Q index. The analyses confirm the existence of an inverted U-shape relationship between the share of explorative technological activities and financial performance. In addition, it is observed that most sample firms do not reach the optimal level of explorative technological activities. These findings point to the relevance of creating a balance between exploitation and exploration in the context of technological activities. Moreover, they suggest that, for the majority of R&D intensive firms, reaching such a balance between exploration and exploitation implies investing additional efforts and resources in exploring new knowledge domains. The analyses also show that firms, engaging more intensively in collaboration, perform relatively stronger in explorative activities. At the same time, a negative relationship between the share of collaborative technological activities and a firm’s market value is observed. Contrary to our expectations, it is collaboration in explorative technological activities, rather than collaboration in exploitative technological activities, that leads to a reduction in firm value. These findings question the relevance of open business models for technological activities. In particular, they suggest that the potential advantages of collaboration for (explorative) technological activities (i.e. access to complementary knowledge from other partners, sharing of technological costs and risks) might not compensate for the potential disadvantages, such as the incurred increase in coordination costs and the need to share innovation rewards across innovation partners. |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:ner:leuven:urn:hdl:123456789/252485&r=ino |
| By: | Czarnitzki, Dirk; Hussinger, Katrin; Schneider, Cédric |
| Abstract: | Against the background of the so-called “European paradox”, i.e. the conjecture that EU countries lack the capability to transfer science into commercial innovations, knowledge transfer from academia to industry has been a central issue in policy debates recently. Based on a sample of German scientists we investigate which academic inventions are patented by a scientific assignee and which are owned by corporate entities. Our findings suggest that faculty patents assigned to corporations exhibit a higher short-term value in terms of forward citations and a higher potential to block property rights of competitors. Faculty patents assigned to academic inventors or to public research institutions, in contrast, are more complex, more basic and have stronger links to science. These results may suggest that European firms lack the absorptive capacity to identify and exploit academic inventions that are further away from market applications. |
| Keywords: | academic inventors; university-industry technology transfer; intellectual property rights; |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:ner:leuven:urn:hdl:123456789/254004&r=ino |
| By: | Jan Boone; Jacob K. Goeree |
| Abstract: | This paper introduces three methodological advances to study the optimal design of static and dynamic markets. First, we apply a mechanism design approach to characterize all incentive-compatible market equilibria. Second, we conduct a normative analysis, i.e. we evaluate alternative competition and innovation policies from a welfare perspective. Third, we introduce a reliable way to measure competition in dynamic markets with non- linear pricing. We illustrate the usefulness of our approach in several ways. We reproduce the empirical finding that innovation levels are higher in markets with lower price-cost margins, yet such markets are not necessarily more competitive. Indeed, we prove the Schumpeterian conjecture that more dynamic markets characterized by higher levels of innovation should be less competitive. Furthermore, we demonstrate how our approach can be used to determine the optimal combination of market regulation and innovation policies such as R&D subsidies or a weakening of the patent system. Finally, we show that optimal markets are characterized by strictly positive price-cost margins. |
| JEL: | D4 L51 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:zur:iewwpx:479&r=ino |
| By: | Lecocq, Catherine; Leten, Bart; Kusters, Jeroen; Van Looy, Bart |
| Abstract: | This paper investigates whether firms active in biotechnology can improve their technological performance by developing R&D activities in technology clusters. Regions that host a concentration of biotechnology activity are identified as technology clusters (level of US states, Japanese prefectures and European NUTS2 regions). A fixed effect panel data analysis on a set of 59 biopharmaceutical firms (period 1995-2002) provides evidence for a positive, albeit diminishing (inverted-U shape) relationship between the number of technology clusters in which a firm is present and its total technological performance. This effect is distinct from a mere multi-location effect. |
| Keywords: | Cluster; Innovation; Biotechnology; |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:ner:leuven:urn:hdl:123456789/249147&r=ino |
| By: | Belderbos, Rene; Leten, Bart; Suzuki, Shinya |
| Abstract: | We examine the role of host countries’ academic research strengths in global R&D location decisions by multinational firms. While we expect that a firm’s propensity to perform R&D in a host country increases with the strength of local academic research, firms are expected to be heterogeneously positioned to benefit from academic research strengths due to differences in the capacity to absorb and utilize scientific knowledge. We find support for these conjectures in an analysis of foreign R&D activities in 40 host countries and 30 technology fields by 176 leading European, US and Japanese firms during the periods 1995-1998 and 1999-2002. Controlling for a wide range of host country factors, the number of relevant ISI publications by scientists based in the host country has a substantial positive impact on the propensity to conduct foreign R&D. The effect of academic research is significantly larger for firms with a stronger science orientation in R&D - as indicated by citations to scientific literature in prior patents. For host countries with a strong relevant science base, this greater responsiveness of science oriented firms more than offsets a generally greater inclination to concentrate R&D at home. The findings appear robust across a variety of specifications. |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:ner:leuven:urn:hdl:123456789/252486&r=ino |
| By: | Pierre-Richard Agénor; Kyriakos C. Neanidis |
| Abstract: | This paper studies interactions between public capital, human capital, and innovation in a three-period OLG model of endogenous growth. Public capital affects growth not only through productivity, but also through the diffusion rate of new technologies, the capacity to innovate, and the ability to produce human capital. Trade-offs involved in the allocation of public spending to R&D subsidies and nonlinearities are discussed. Panel data regressions based on a sample of 38 industrial and developing countries are used to test, using a variety of estimation techniques and variable definitions, the implications of the model over the period 1981-2008. Results show that higher innovation performance promotes growth directly, whereas public capital (both quantity and quality) has both direct and indirect effects on growth by promoting human capital accumulation and raising the capacity to innovate. The latter effect appears to operate in a nonlinear fashion, in line with “critical mass” models of infrastructure. Taking proper account of the government’s budget constraint, our estimates also suggest that public spending on R&D contributes to growth by fostering innovation. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:man:cgbcrp:135&r=ino |
| By: | Czarnitzki, Dirk; Wastyn, Annelies |
| Abstract: | The concept of knowledge has gained in interest since industrialized economics have induced a shift in importance from labor, capital and natural resources towards intellectual resources. This study investigates how the management of knowledge influences the innovation performance of a firm. While former studies mainly focused on knowledge management cycles, we distinguish different types of knowledge management techniques. It turns out that there is a difference between three knowledge management techniques and their influence on product and process innovation. The ability to source external knowledge positively affects the firm’s introduction of new products and products new to the market. For obtaining cost reductions it is effective to stimulate employees to share knowledge. The availability of a codified knowledge management policy also positively affects the cost reduction possibilities of a firm. These results indicate that it is important for a firm to carefully select the tools of knowledge management in function of the kind of technical innovation it wants to proceed. |
| Keywords: | Knowledge management; innovation performance; |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:ner:leuven:urn:hdl:123456789/250667&r=ino |
| By: | Mikko Myrskylä (Max Planck Institute for Demographic Research, Rostock, Germany); Joshua R. Goldstein (Max Planck Institute for Demographic Research, Rostock, Germany) |
| Abstract: | We study prediction and error propagation in Hernes, Gompertz, and logistic models for innovation diffusion. We develop a unifying framework in which the models are linearized with respect to cohort age and predictions are derived from the underlying linear process. We develop and compare methods for deriving the predictions and show how Monte Carlo simulation can be used to estimate prediction uncertainty for a wide class of underlying linear processes. For an important special case, random walk with, we develop an analytic prediction variance estimator. Both the Monte Carlo method and the analytic variance estimator allow the forecasters to make precise the level of within-model prediction uncertainty in innovation diffusion models. Empirical applications to first births, first marriages and cumulative fertility illustrate the usefulness of these methods. |
| JEL: | J1 Z0 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:dem:wpaper:wp-2010-013&r=ino |
| By: | Pradhan, Jaya Prakash |
| Abstract: | The liberalization of economic policies in the last two decades and intensifying market competition tend to be a cause of policy concern for the survival of SMEs in emerging economies like India as these firms accounts for the largest chunk of industrial units and employment. Given their limited financial and intangible resources, the promotion of R&D among SMEs has become a very important policy parameter. The aim of this paper is to contribute to the literature on Indian R&D by analyzing the trends and patterns of R&D investment by Indian manufacturing SMEs during the period 1991−2008 and exploring various factors that determine their R&D behaviour. The results show that Indian SMEs have lowest incidence of doing in-house R&D and their R&D intensities have fallen in the last decade. A number of factors that play important role in determining SME R&D have been identified based on the three steps Censored Quantile Regression and some useful policy implications are suggested for enhancing R&D activities of small firms. |
| Keywords: | SMEs; R&D; Business Groups; Foreign Firms |
| JEL: | L11 F23 O32 L22 O31 |
| Date: | 2010–02–24 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:20951&r=ino |
| By: | Teles, Vladimir Kuhl; Joiozo, Renato |
| Abstract: | Panel cointegration techniques applied to pooled data for 27 economies forthe period 1960-2000 indicate that: i) government spending in education andinnovation indicators are cointegrated; ii) education hierarchy is relevant whenexplaining innovation; and iii) the relation between education and innovation canbe obtained after an accommodation of a level structural break. |
| Date: | 2010–02–22 |
| URL: | http://d.repec.org/n?u=RePEc:fgv:eesptd:245&r=ino |
| By: | Konstantinos Karachalios (Eurpoean Patent Office); ; |
| Abstract: | This paper analyzes the use of proprietary technology in key ICT standards, an important challenge for standards policy. However, the gaming and the loopholes between standardisation and patent system leave enough space for extreme individualist optimisation strategies, and thus considerable rent seeking. Thus, civil society and governments increasingly doubt that the existing regulatory frameworks may guarantee a smooth functioning of both systems in the future. However, strong-handed governmental interventions may lead to de facto trade protectionism and serious geopolitical frictions, according to the European Patent Office’s (EPO) Scenarios for the Future analysis. To avoid the worst case scenario, patent authorities should depart from their traditionally reluctant stance and assume a more pro-active role in this field. They can improve governance by increasing transparency and promoting respect of the rules at the interface of the patenting and standardisation process. To achieve this, a structured cooperation and exchange of per se public information between patent and competition authorities as well as formal standardisation bodies is necessary. |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:ewc:wpaper:wp110&r=ino |
| By: | Gerard Llobet (CEMFI, Centro de Estudios Monetarios y Financieros); Anne Layne-Farrar (LECG Consulting); A. Jorge Padilla (LECG Consulting) |
| Abstract: | Under the legal doctrine of first sale, or patent exhaustion, a patent holder's ability to license multiple parties along a production chain is restricted. How and when such restrictions should be applied is a controversial issue, as evidenced by the Supreme Court's granting certiorari in the Quanta case. The issue is important, as it has significant implications for how firms can license in verically disaggregated industries. We explore this issue from an economic viewpoint and find that under ideal circumstances how royalty rates are split along the production chain has no real consequence for social welfare. Even when we depart from ideal conditions, however, we still find no economic justification for a strict application of patent exhaustion. To the contrary, we show there are often private and social advantages to charging royalties at multiple stages. Our results advocate for a flexible application of the first sale doctrine, where exhaustion holds as a default rule but can be easily overwritten in patent contracts. |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:cmf:wpaper:wp2010_1002&r=ino |