nep-ino New Economics Papers
on Innovation
Issue of 2010‒03‒20
twelve papers chosen by
Steffen Lippert
Massey University Department of Commerce

  1. Mergers and sequential innovation: evidence from patent citations By Jessica C. Stahl
  2. Effects of user's cooperation and location on innovation activity of firms: an input-output approach. By Sánchez González, Gloria; Herrera, Liliana
  3. Innovation, Adoption, Ownership, and Productivity: Evidence from Ukraine By J. David Brown; John S. Earle; Hanna Vakhitova; Vitaliy Zheka
  4. Open, distributed and user-centered: Towards a paradigm shift in innovation policy By Jeroen de Jong; Eric von Hippel
  5. Subsidy and networking: The effects of direct and indirect support programs in the cluster policy By Nishimura, Junichi; Okamuro, Hiroyuki
  8. Share to Scare: Technology Sharing in the Absence of Intellectual Property Rights By Jos Jansen
  9. The impact of technological regimes on patterns of sustained and sporadic innovation activities in UK industries By Marion Frenz; Martha Prevezer
  10. Financial Constraints and Innovation: Why Poor Countries Don't Catch Up By Gorodnichenko, Yuriy; Schnitzer, Monika
  11. Geographic clustering and network evolution of innovative activities: Evidence from China’s patents By Martha Prevezer; Pietro Panzarasa; Tore Opsahl
  12. Evidence of induced innovation in US sectoral Capital’s shares By Andrew T. Young; Hernando Zuleta; Andrés F. García-Suaza

  1. By: Jessica C. Stahl
    Abstract: An extensive literature has investigated the effect of market structure on innovation. A persistent concern is that market structure may be endogenous to innovation. Firms may choose to merge so as to capture information spillovers or they may choose to merge so as to dampen competition in innovation. These two scenarios have very different welfare implications. This paper attempts to distinguish between the two scenarios empirically, looking at recent mergers among public companies in the United States. Using patent citation data, I find evidence that firms increase their rate of sequential innovation in the years preceding a merger, and reduce their rate of sequential innovation in the years following a merger. This suggests that mergers are motivated more by the desire to dampen competition than by the desire to capture information spillovers. I use citation-based measures of patent value to shed light on the welfare implications. The question is relevant for policy, as the FTC and DOJ frequently cite innovation as a reason for concern about a merger.
    Date: 2010
  2. By: Sánchez González, Gloria (Departamento de Dirección y Economía de la Empresa, Facultad de Ciencias Económicas y Empresariales, Universidad de León); Herrera, Liliana (Departamento de Dirección y Economía de la Empresa, Facultad de Ciencias Económicas y Empresariales, Universidad de León)
    Abstract: The present study analyses the profile of firms cooperating with users and estimates the effect of this cooperation on firms’ innovation activities. This issue is particular novel and important as users provide information that will be very useful for generating new products and making the innovation process more efficient. The findings confirm that cooperation with users is a tool for progress and development as it has a positive influence on both input and output of firms’ innovation process. This paper makes three important contributions to the literature. First, we analyse the effect of cooperation with users on how firms distribute their R&D expenditures (basic research, applied research and technological development) in order to make clear how this tool can affect the different strategies for generating knowledge. Second, we also study the impact of this kind of cooperation on the degree of novelty of new products, with the aim of explaining how it affects the productivity of R&D activities. Third, to estimate these effects, the study analyses these relationships and explore the role of proximity in the cooperation with users taking into account the location of this agent (domestic versus international users). Results confirm that cooperation with users increases investments in activities that generate knowledge with a specific practical objective and which are near to firms’ technological domain (applied research and technological development). Independently of user’s location, firms increase their investment in technological development to act quickly in the market and to obtain profits. The study also concludes that cooperation with users has positive effects on innovation outputs and its degree of novelty (radical versus incremental innovations). Nonetheless, these effects are different according to user’s location. Cooperation with domestic users stimulates the sales of radical innovations and cooperation with international users increase sales of incremental innovations.
    Keywords: Cooperation with users, basic research, applied research, technological development, degree of novelty, location.
    Date: 2009–05
  3. By: J. David Brown; John S. Earle; Hanna Vakhitova; Vitaliy Zheka
    Abstract: How do new and foreign firms achieve superior productivity? Do they conduct more and better R&D? Or do they distinguish themselves through computerization and organizational capital? We investigate the determinants of and returns to several types of investment, using a panel of over 40,000 Ukrainian industrial firms in 2000-2007. Foreign firms engage in more non-technological investment and IT and less in R&D than domestic private firms. Similarly, new firms invest more in non-technological capital and IT and less in R&D than initially state-owned firms. Productivity gains from R&D and non-technology investment are insignificantly different across ownership types, whereas foreign firms achieve much higher returns to IT investment than other firms. These results suggest that foreign firms outperform others via organizational capital that is better able to exploit IT investment. New firm productivity growth is a result of higher investment volume rather than investment efficiency.
    Keywords: R&D, information technology, foreign ownership, transition, Eastern Europe,<br /> Ukraine
    JEL: D21 D24 F23 G34 L33 O32 P31
    Date: 2010
  4. By: Jeroen de Jong; Eric von Hippel
    Abstract: Today's innovation policies ignore that innovation is increasingly open, distributed and user-centered. In this paper we introduce the user-centered model as an alternative paradigm of how innovation 'works'. We discuss how it differs from traditional, linear producer-centered model, argue why it is legitimate to develop policies in support of it, and provide specific directions.  
    Date: 2010–03–03
  5. By: Nishimura, Junichi; Okamuro, Hiroyuki
    Abstract: Subsidy and networking: The effects of direct and indirect support programs in the cluster policy Industrial clusters have attracted considerable attention worldwide for regional innovation. Thus, policymakers in various countries have recently developed their specific cluster policies. However, there are few empirical studies yet on cluster policies. This paper empirically evaluates the “Industrial Cluster Project” (ICP) initiated by the Ministry of Economy, Trade and Industry (METI) in 2001, using original questionnaire data. We address two research questions on the effect of the ICP: if the participants of this project that exploit various support programs are more successful in alliance/network formation within the cluster than the others, and which kind of support program of the ICP contributes to firm performance. Different from similar preceding projects, the ICP aims at the autonomous development of regional industries and comprises both direct R&D support and indirect networking/coordination support. The main idea of public support of local firms clearly shifted toward networking and coordination for those who can help themselves. Thus, our special attention is paid to the differences between the direct R&D support and indirect networking/coordination support, which bring out the conditions necessary for the effective organization of cluster policies for improving firm performance. Our empirical evaluation is based on a sample of 511 firms from a recent original survey. We first employ the propensity score and the difference-in-differences (DID) estimation to analyze the degree of alliance/network formation before and after participating in the ICP. Then we use Heckman’s two-step procedure and the negative binomial model to examine the effects of support programs on firm performance. The estimation results suggest that cluster participants that exploit support programs (especially indirect support measures) expand industry-university-government network after participating in the ICP. Moreover, we find that not every support program contributes to firm performance, thus firms should select the most effective program according to their aims. Indirect support programs have an extensive and strong impact on outputs, especially innovation outcomes, while direct R&D support has a weak effect except for R&D subsidy.
    Keywords: Cluster policy, industrial cluster, R&D support, subsidy, networking
    JEL: O25 O38 R11
    Date: 2009–12
  6. By: Madureira, Livia; Costa, Susete
    Abstract: The main purpose of this paper is to discuss the potential of MFA model to enhance innovation in rural areas build on the analysis of information from a database of best practices on innovation in EU rural areas collected by the RAPIDO project1. The analysis shows innovation to be strongly related to multiple-activity. This suggests the synergies between functions and land-uses to overlap the competition for resources between activities and that MFA shows a promising approach to enhance innovation in rural areas.
    Keywords: Innovation, Multifunctionality, Rural areas, Sustainability, Agribusiness, Community/Rural/Urban Development,
    Date: 2009–12
  7. By: Nabradi, Andras
    Keywords: Innovation, knowledge, infrastructure, institutions, Agribusiness, Labor and Human Capital,
    Date: 2009–12
  8. By: Jos Jansen (Max Planck Institute for Research on Collective Goods)
    Abstract: I study the incentives of Cournot duopolists to share their technologies with their competitor in markets where intellectual property rights are absent and imitation is costless. The trade-off between a signaling effect and an expropriation effect determines the technology-sharing incentives. In equilibrium at most one firm shares some of its technologies. For similar technology distributions, there exists an equilibrium in which nobody shares. If the technology distributions are skewed towards efficient technologies, then there may exist equilibria in which one firm shares all technologies, only the best technologies, or only intermediate technologies. No other equilibria can exist.
    Keywords: Innovation, strategic disclosure, trade secret, Cournot duopoly, indivisibility, open source, skewed distribution
    JEL: D82 L13 O32 O34 L17
    Date: 2009–10
  9. By: Marion Frenz; Martha Prevezer
    Abstract: This paper brings together ideas about technological regimes and looks at their influence on patterns of sustained or persistent innovation across UK manufacturing and services industries using two waves of the UK Community Innovation Surveys. It builds a link between technological regimes and Schumpeterian patterns of innovation, and tests these on the CIS databases. It creates a model using the variables within the technological regime to see whether these can explain sustained patterns of innovation. These variables include appropriability, cumulativeness, technological opportunity and closeness to the science base as well as enterprise size. The paper finds that strong appropriability, a high degree of cumulativeness, and closeness to the applied science base are strong predictors of sustained innovation activities. The results on technological opportunity are ambiguous. High tech manufacturing industries, i.e. chemicals and scientific instruments as well as some high tech services i.e. telecoms are more likely to register persistent innovation.
    Date: 2010–03
  10. By: Gorodnichenko, Yuriy (University of California, Berkeley); Schnitzer, Monika (University of Munich)
    Abstract: This paper examines micro-level channels of how financial development can affect macroeconomic outcomes like the level of income and export intensity. We investigate theoretically and empirically how financial constraints affect a firm's innovation and export activities, using unique firm survey data which provides direct measures for innovations and firm-specific financial constraints. We find that financial constraints restrain the ability of domestically owned firms to innovate and export and hence to catch up to the technological frontiers. This negative effect is amplified as financial constraints force export and innovation activities to become substitutes although they are generally natural complements.
    Keywords: innovation, productivity, financial constraint, export, technology frontier, BEEPS
    JEL: O3 O16 F1 G3
    Date: 2010–02
  11. By: Martha Prevezer; Pietro Panzarasa; Tore Opsahl
    Abstract: This study examines the spatial distribution and social structure of processes of learning and knowledge creation within the context of the inventor network connecting Chinese patent teams. Results uncover mixed tendencies toward both geographic co-location and dispersion arising from combined processes of intra-cluster learning and extra-cluster networking. These processes unfold within a social network that becomes less fragmented over time: as a giant component emerges and increases in size, social distances among inventors become longer. The interplay between geographic and network proximity is assessed against China’s institutional environment. Implications of the findings are discussed for regional development and policy-making.
    Keywords: clusters; knowledge transfer; social networks; patenting
    JEL: L11 M13 O53 R12
    Date: 2010–03
  12. By: Andrew T. Young; Hernando Zuleta; Andrés F. García-Suaza
    Abstract: We use annual data on capital’s share and relative factor prices from 35 US industries from 1960 to 2005 to test the induced innovation hypothesis. We derive, from a production function framework, testable implications for the effect of contemporaneous and lagged factor price ratios on capital’s share of production. The predicted effect is positive or negative depending on the elasticity of substitution between labor and capital. From panel regressions, the estimated effect of the contemporaneous factor price ratio implies an elasticity of substitution that is less than unity, consistent with the consensus from the literature. Based on this, our negative estimated effects for lagged price ratios are both statistically significant and consistent with the induced innovation hypothesis.
    Date: 2010–03–06

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