nep-ino New Economics Papers
on Innovation
Issue of 2010‒06‒11
sixteen papers chosen by
Steffen Lippert
Massey University Department of Commerce

  1. Innovation and Productivity: a Firm Level Study of Ukrainian Manufacturing Sector By Ganna Vakhitova; Tetyana Pavlenko
  2. Licensing a common value innovation when signaling strength may backfire By Cuihong Fan; Byoung Heon Jun; Elmar G. Wolfstetter
  3. Inventor collaboration over distance – a comparison of academic and corporate patents By Anja Dettmann; Sidonia von Proff
  4. Are Patent Brokers a Possible First Best? By Mario Benassi; Daniela Corsaro; Guido Geenen
  5. Inside Innovation Persistence: New Evidence from Italian Micro-data By Antonelli Cristiano; Crespi Francesco; Scellato Giuseppe
  6. Innovation and job creation in a dual labor market: Evidence from Spain By Stucchi, Rodolfo; Giuliodori, David
  7. Strategic inputs into patent pools By Justus Baron; Henry Delcamp
  8. Essential patents in pools: Is value intrinsinc or induced ? By Henry Delcamp
  9. Entrepreneurship and the National System of Innovation: What is Missing in Turkey? By Bascavusoglu-Moreau, Elif
  10. Incumbent Response to Process Innovation: The Case(s) of E-Business Adoption By Kristina Steffenson McElheran
  11. Quality Competition or Quality Cooperation? License-Type and the Strategic Nature of Open Source vs. Closed Source Business Models By Sebastian von Engelhardt
  12. Assessing Indicators of Patent Quality: Complex vs. Discrete Technologies By Justus Baron; Henry Delcamp
  13. Invention and Transfer of Climate Change Mitigation Technologies on a Global Scale: A Study Drawing on Patent Data By Antoine Dechezleprêtre; Matthieu Glachant; Ivan Hascic; Nick Johnstone; Yann Ménière
  14. The complex interaction between Global Production Networks, Digital Information Systems and International Knowledge Transfers By Jarle Hildrum; Dieter Ernst; Jan Fagerberg
  15. Systems thinking, market failure, and the development of innovation policy- The case of Australia. By Mark Dodgson; Alan Hughes; John Foster; J.S. Metcalfe
  16. Loan availability and investment: Can innovative companies better cope with loan denials? By Mueller, Elisabeth; Reize, Frank

  1. By: Ganna Vakhitova (Kyiv School of Economics, Kyiv Economic Institute); Tetyana Pavlenko (Kyiv School of Economics)
    Abstract: TThere is a large literature on innovation contribution to productivity for EU countries including CEE states. At the same time very little is known about CIS countries. We apply the same framework and select the same period (2004-2006) to make our study comparable. The modified CDM model considers not only companies that report formal innovation expenditures but the entire sample of manufacturing firms. This approach accounts for underreporting of innovative firm’s efforts, especially among small firms. Additionally, we allow dynamic two-direction relationship between productivity and innovation input and test “success breeds success” hypothesis. Our major attention is given to the impact of the government support on firm’s R&D expenditures, innovations and productivity. The results show that government financial support has positive effect on the probability and amount of firm’s innovation expenditures but not on the probability of innovation itself, neither for process nor for product innovation. The latter finding emphasizes that only the effective government innovation policy may actual positively contribute to the productivity after all. We found that both parts of the "success breeds success" hypothesis work. Firms which have introduced new or significantly improved product in the past are more likely to invest into R&D and to come up with a product innovator in the future. Our results also suggest that amount of innovation expenditures in the following period is influenced by firm’s productivity in the previous period. Empirical evidence of this is quite rare in the literature. Finally, similar to Estonia during late transition only process innovation has been found to contribute to productivity of Ukrainian firms.
    Keywords: R&D, innovation, productivity, "success breeds success", transition, Ukraine
    JEL: C33 D24 F14 O31 O33 O47 L60
    Date: 2010–06
  2. By: Cuihong Fan (Shanghi University of Finance and Economics School of Economics); Byoung Heon Jun (Korea University, Seoul); Elmar G. Wolfstetter (Humboldt-University at Berlin and Korea University, Seoul)
    Abstract: This paper reconsiders the licensing of a common value innovation to a downstream duopoly, assuming a dual licensing scheme that combines a first-price license auction with royalty contracts for losers. Prior to bidding firms observe imperfect signals of the expected cost reduction; after the auction the winning bid is made public. Bidders may signal strength to their rivals through aggressive bidding, which may however backfire and mislead the innovator to set an excessively high royalty rate. We provide sufficient conditions for existence of monotone bidding strategies and for the profitability of combining auctions and royalty contracts for losers.
    Keywords: Patents, licensing, auctions, royalty, innovation, R&D, mechanism design
    JEL: D21 D43 D44 D45
    Date: 2010
  3. By: Anja Dettmann (Department of Geography, Philipps University Marburg); Sidonia von Proff (Department of Geography, Philipps University Marburg)
    Abstract: The paper compares academic and corporate patents in Germany to shed light on the geographical distribution of the inventors. The residences of the inventors show different patterns in the two datasets. Furthermore, we analyze the spatial distance between inventors for patents invented in collaboration and give insights into the distance’s change over a time period of 14 years. The distance between collaborating inventors of corporate patents exceeds that of inventors of academic patents. In spite of the rise of ICT and cheap passenger transportation the collaboration distances have not increased. This supports earlier literature on the importance of proximity in innovation.
    Keywords: inventor networks, Germany, academic patents, research collaboration
    JEL: R12 O34 L14
    Date: 2010–05
  4. By: Mario Benassi (University of Milan); Daniela Corsaro (Università della Svizzera Italiana); Guido Geenen (University of Milan)
    Abstract: Licensing and reassignment of patents occur either directly or with the assistance of a patent broker. Building forth on previous research on the topic, we investigate under which conditions patent brokers can be a first best. First, we discuss structural reasons that can make patent brokers a preferable option in extracting value from patents. Second, we argue that patent brokers do have specific competences that make their presence necessary. By discussing most relevant managerial theories, we formulate specific hypotheses to be tested empirically. We also offer thoughts on a possible research design as to investigate patent brokers.
    Keywords: IP, brokerage, patents, licensing, technology transfer,
    Date: 2010–01–01
  5. By: Antonelli Cristiano (University of Turin); Crespi Francesco; Scellato Giuseppe
    Date: 2010–06
  6. By: Stucchi, Rodolfo; Giuliodori, David
    Abstract: This paper studies the effect of product and process innovations on the creation of jobs in the Spanish manufacturing sector over the period 1991-2005. We also use a change in the Employment Protection Legislation (EPL) in 1997 to study the effect of innovations on permanent and temporary workers before and after that change. We find that both product and process innovation created jobs in the Spanish manufacturing sector. Additionally, we find that before the change in the EPL in 1997 innovations did not affect the number of permanent workers and all the increase in employment was explained by the increase in the number of temporary workers. After the change in the labor regulations, innovations increased both the number of temporary and permanent employees. Interestingly, while the increase in temporary workers takes place after one year of the innovations, the increase in permanent workers occurs mainly two year after the innovations.
    Keywords: Product Innovation; Process Innovation; Employment; Temporary Workers.
    JEL: J21 J38 O31 L60
    Date: 2010–05–31
  7. By: Justus Baron (CERNA - Centre d'économie industrielle - Mines ParisTech); Henry Delcamp (CERNA - Centre d'économie industrielle - Mines ParisTech)
    Abstract: This article explores what factors determine the decision of a patent pool to accept new inputs. We propose a dynamic analysis of 1337 U.S. patent inputs into 7 important pools. This analysis highlights a trade-off between firm and patent characteristics as the determinants of inclusion of patents into pools. For instance we prove that firms already member of the pool or holding large patent portfolios are able to include lower quality patents. These findings can be explained both by bargaining power and information asymmetry. In particular, as measured by a new indicator, insiders and firms practicing the technology file patents that are better aligned with the criteria of essentiality.
    Date: 2010
  8. By: Henry Delcamp (CERNA - Centre d'économie industrielle - Mines ParisTech)
    Abstract: This paper analyzes empirically the value - as measured by patent citations - of a set of 1363 essential patents belonging to 9 different patent pools. We find that pooled patents receive more cites than control patents having the same characteristics but not included in a pool. This difference stems only partly from the pools' ability to select the most cited patents. Indeed we show that being included in a pool also tends to increase the value of patents. This induced effect reflects the incentive for patent owners to join a pool. We analyze it in details in order to better understand the drivers of enhanced patent value.
    Date: 2010
  9. By: Bascavusoglu-Moreau, Elif
    Abstract: Although very dynamic and flexible, Turkish SMEs are less innovative than their European counterparts. The analysis undertaken in this paper allows to assess whether this low level of innovative activities is related to a lack of entrepreneurial behaviour
    Keywords: entrepreneurship, national systems of innovation, SMEs, innovative capabilities,
    Date: 2010
  10. By: Kristina Steffenson McElheran (Harvard Business School, Technology and Operations Management Unit)
    Abstract: This paper investigates how market position influences firm propensity to adopt new process innovations. Using detailed data from the U.S. Census of Manufactures, I study the adoption of frontier e-business practices during the early diffusion of the commercial internet. Consistent with conventional wisdom that leading firms are more likely to adopt incremental process innovations, I find evidence that larger firms in 1999 were far more likely than smaller firms to conduct indirect purchasing over the internet ("e-buying"). However, they were commensurately reticent to adopt e-selling. I argue that the best explanation is that e-selling was more radical an advance than is commonly understood and explore the notion that business process innovations can be disproportionately costly for larger firms if they require changes to core activities that also span the firm boundary.
    JEL: L21 O33 D24
    Date: 2010–05
  11. By: Sebastian von Engelhardt (School of Economics and Business Administration, Friedrich-Schiller-University Jena)
    Abstract: In the ICT sector, product-software is an important factor for the quality of the products (e.g. cell phones). In this context, open source software enables firms to avoid quality competition as they can cooperate on quality without an explicit contract. The economics of open source (OS) versus closed source (CS) business models are analyzed in a general two- stage model that combines aspects of non-cooperative R&D with the theory of differentiated oligopolies: In stage one, firms develop software, either as OS or CS, or as a an OS-CS-mix if the license allows. In stage two, firms bundle this with complementary products and compete à la Cournot. The model allows for horizontal product differentiation in stage two. The finding are: 1.) While CS-decisions are always strategic substitutes, OS-decisions can be strategic complements. Furthermore, CS is a strategic substitute to OS and vice versa. 2.) The type of OS-license plays a crucial role: only if the license prohibits a direct OS-CS code mix (like the GPL), then Nash-equilibria with firms producing OS code exist for all parameters. 3.) In the equilibrium of a mixed industry with restricted licenses, OS-firms offer lower quality than their CS-rivals.
    Keywords: open source, commercial open source, Cournot, R&D
    JEL: D43 L17 O34
    Date: 2010–06–03
  12. By: Justus Baron (CERNA - Centre d'économie industrielle - Mines ParisTech); Henry Delcamp (CERNA - Centre d'économie industrielle - Mines ParisTech)
    Abstract: This article compares indicators of patent quality in complex and discrete technologies using factor analysis and econometric methods. The application of common indicators such as forward citations to complex technologies has repeatedly been put into question. We study the interchangeability of indicators and their capacity to predict litigation on a sample of 9255 patents. Our results do not support the criticism. Even though there are significant differences in the behavior of indicators between samples of complex and discrete patents, issues of complex innovation do not seem to affect the interpretability of quality indicators. Consistently, both forward citations and a compound quality indicator perform equally well for complex and discrete technologies in predicting the likelihood of litigation.
    Date: 2010
  13. By: Antoine Dechezleprêtre (CERNA - Centre d'économie industrielle - Mines ParisTech, Grantham Research Institute on Climate Change and the Environment - London School of Economics and Political Science); Matthieu Glachant (CERNA - Centre d'économie industrielle - Mines ParisTech); Ivan Hascic (chercheur indépendant - Casa de Velázquez); Nick Johnstone (chercheur indépendant - Casa de Velázquez); Yann Ménière (CERNA - Centre d'économie industrielle - Mines ParisTech)
    Abstract: This paper uses the EPO/OECD World Patent Statistical Database (PATSTAT) to provide a quantitative description of the geographic distribution of inventions in thirteen climate mitigation technologies since 1978 and their international diffusion on a global scale. Statistics suggest that innovation has mostly been driven by energy prices until 1990. Since then, environmental policies, and climate policies more recently, have accelerated the pace of innovation. Innovation is highly concentrated in three countries—Japan, Germany and the USA—which account for 60% of total innovations. Surprisingly, the innovation performance of emerging economies is far from being negligible as China and South Korea together represent about 15% of total inventions. However, they export much less inventions than industrialized countries, suggesting their inventions have less value. More generally, international transfers mostly occur between developed countries (73% of exported inventions). Exports from developed countries to emerging economies are still limited (22%) but are growing rapidly, especially to China.
    Date: 2010
  14. By: Jarle Hildrum; Dieter Ernst; Jan Fagerberg
    Abstract: Traditionally many studies of knowledge in economics have focused on localized networks and intra-regional collaborations. However, the rising frequency by which firms collaborate within the context of global networks of production and innovation, the increasingly intricate divisions of labor involved and the extensive use of the Internet to facilitate interaction are all relatively novel trends that underline the importance of knowledge creation and flows across different locations. Focusing on this topic, the present chapter examines the complex interactions between global production networks (GPN), digital information systems (DIS) and knowledge transfers in information technology industries. It seeks to disentangle the various conduits through which different kinds of knowledge are transferred within such networks, and investigate how recent generations of DIS are affecting those knowledge transfers. The paper concludes that the dual expansion of GPN and DIS is adding new complexity to the practice of innovation: To access knowledge necessary for sustained creativity firms often have to link up with remote partners in GPN, but to be able to absorb and utilize this knowledge, they also frequently have to engage in local interactive learning processes. These local- global linkages - and the various skills necessary to operate them - are strongly interdependent, mutually reinforcing and critical for the development and maintenance of innovation-based competitiveness.
    Date: 2010–04
  15. By: Mark Dodgson; Alan Hughes; John Foster; J.S. Metcalfe (School of Economics, The University of Queensland)
    Abstract: Innovation policy is increasingly informed from the perspective of a national innovation system (NIS), but, despite the fact that research findings emphasize the importance of national differences in the framing conditions for innovation, policy prescriptions tend to be uniform. Justifications for innovation policy by organizations such as the OECD generally relate to notions of market failure, and the USA, with its focus on the commercialization of public sector research and entrepreneurship, is commonly portrayed as the best model for international emulation. In this paper we develop a broad framework for NIS analysis, involving free market, coordination and complex-evolutionary system approaches. We argue that empirical evidence supporting the hypothesis that the ‘free market’ can be relied upon to promote innovation is limited, even in the USA, and the global financial crisis provides us with new opportunities to consider alternatives. The case of Australia is particularly interesting: a successful economy, but one that faces continuing productivity and innovation challenges. Drawing on information and analysis collected for a major review of Australia’s NIS, and the government’s 10-year plan in response to it, we show how the free market trajectory of policy-making of past decades is being extended, complemented and refocused by new approaches to coordination and complex-evolutionary system thinking. These approaches are shown to emphasize the importance of systemic connectivity, evolving institutions and organizational capabilities. Nonetheless, despite the fact that there has been much progress in this direction in the Australian debate, the predominant logic behind policy choices still remains one of addressing market failure, and the primary focus of policy attention continues to be science and research rather than demand-led approaches. We discuss how the development and elaboration of notions of systems failure, rather than just market failure, can further improve policy-making in the future.
    Date: 2010
  16. By: Mueller, Elisabeth; Reize, Frank
    Abstract: This study examines the consequences of loan denials for the investment performance of small and medium-sized German enterprises. As a consequence of a loan denial, innovative companies experience a smaller drop in the share of actual to planned investment than non-innovative companies. The non-randomness of loan denials is controlled for with a selection equation employing the intensity of banking competition at the district level as an exclusion restriction. We can explain the better performance of innovative companies by their ability to increase the use of external equity financing, such as venture capital or mezzanine capital, when facing a loan denial. --
    Keywords: Investment,loan availability,innovation,private equity
    JEL: G21 G31 O32
    Date: 2010

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