nep-ino New Economics Papers
on Innovation
Issue of 2010‒07‒24
eleven papers chosen by
Steffen Lippert
Massey University Department of Commerce

  1. The impact of non-technological innovation on technical innovation: do services differ from manufacturing? An empirical analysis of Luxembourg firms By MOTHE Caroline; NGUYEN Thi Thuc Uyen
  2. Do clusters generate greater innovation and growth? An analysis of European regions By Andrés Rodríguez-Pose; Fabrice Comptour
  3. Employment protection legislation, multinational firms and innovation By Rachel Griffith; Gareth Macartney
  4. Multinationals, R&D and productivity: Evidence for UK Manufacturing firms By Dolores Añon Higon; Miguel Manjon Antolin; Juan A. Mañez
  5. The quality factor in patent systems By Bruno van Pottelsberghe
  6. Innovation and international technology transfer: The case of the Chinese photovoltaic industry By Arnaud De La Tour; Matthieu Glachant; Yann Ménière
  7. Innovations for Reviving Small-Scale Industries By Anil K Gupta
  8. Intellectual Property Protection and the Licensing of Technology to Developing Countries By Sunil Kanwar
  9. Spillovers in Space: Does Geography Matter? By Sergey Lychagin; Joris Pinkse; Margaret E. Slade; John Van Reenen
  10. Would Hotelling Kill the Electric Car? By Chakravorty, Ujjayant; Leach, Andrew; Moreaux, Michel
  11. The Optimal Timing of the Introduction of New Products By Marzia Raybaudi; Martin Sola; Shasikanta Naindebam

  1. By: MOTHE Caroline; NGUYEN Thi Thuc Uyen
    Abstract: Generally speaking, the support of technological innovation has been viewed in terms of input such as R&D and instruments such as legal protection. The literature on innovation highlights the interactive nature of the innovation process in which non-technological activities are essential. However, few works have taken into account the role of other innovative strategies such as marketing and organisational innovation, a role which may differ according to whether the firm is involved in manufacturing or in services. The purpose of this paper is to contribute to fill this gap by highlighting the effects of non-technological innovation strategies on technological innovation. For the empirical work, we used firm-level data drawn from the Community Innovation Survey 2006 for Luxembourg. Our results show that the effects of non-technological innovations differ depending on the phase of the innovation process. Marketing and organisational innovations significantly increase the likelihood of innovation, but not the commercial success of innovation. The study also shows the differentiated effects of the two types of non-technological innovation in manufacturing and service, and confirms the key role of organisational innovation for services.
    Keywords: CIS; Innovation; Marketing; Organisation; Technological Innovation
    JEL: L25 L80 O30 O32
    Date: 2010–01
  2. By: Andrés Rodríguez-Pose (IMDEA Social Sciences Institute); Fabrice Comptour (College of Europe, Bruges)
    Abstract: The analysis of clusters has attracted considerable interest over the last few decades. The articulation of clusters into complex networks and systems of innovation – generally known as regional innovation systems – has, in particular, been associated with the delivery of greater innovation and growth. However, despite the growing economic and policy relevance of clusters, little systematic research has been conducted into their association with other factors promoting innovation and economic growth. This paper addresses this issue by looking at the relationship between innovation and economic growth in 152 regions of Europe during the period between 1995 and 2006. Using an econometric model with a static and a dynamic dimension, the results of the analysis highlight that: a) regional growth through innovation in Europe is fundamentally connected to the presence of an adequate socioeconomic environment and, in particular, to the existence of a well-trained and educated pool of workers; b) the presence of clusters matters for regional growth, but only in combination with a good ‘social filter’, and this association wanes in time; c) more traditional R&D variables have a weak initial connection to economic development, but this connection increases over time and, is, once again, contingent on the existence of adequate socioeconomic conditions.
    Keywords: clusters; regional innovation systems; innovation; regional economic growth; socioeconomic conditions; regions; European Union
    Date: 2010–07–12
  3. By: Rachel Griffith (Institute for Fiscal Studies and University College London); Gareth Macartney (Institute for Fiscal Studies and University College London)
    Abstract: <p>The theoretical effects of labour regulations such as employment protection legislation (EPL) on innovation is ambiguous, and empirical evidence has thus far been inconclusive. EPL increases job security and the greater enforceability of job contracts may increase worker investment in innovative activity. On the other hand EPL increases adjustment costs faced by firms, and this may lead to under-investment in activities that are likely to require adjustment, including technologically advanced innovation. In this paper we find empirical evidence that both effects are at work - multinational enterprises locate more innovative activity in countries with high EPL, however they locate more technologically advanced innovation in countries with low EPL.</p>
    Keywords: Innovation, employment protection, multinational firm location
    JEL: D21 F23 O31 J24
    Date: 2010–01
  4. By: Dolores Añon Higon (ERI-CES); Miguel Manjon Antolin (Universidad Rovira i Virgili); Juan A. Mañez (ERI-CES)
    Abstract: In this study we analyze multinationality (domestic-based firms vs. multinationals) and foreignness (foreign vs. domestic firms) effects in the returns of R&D to productivity. We follow a two-step strategy. In the first step, we consistently estimate firm’s productivity by GMM and numerically compute the sample distribution of the R&D returns. In the second step, we use stochastic dominance techniques to make inferences on the multinationality and foreignness effects. Results for a panel of UK manufacturing firms suggest that multinationality and foreignness effects operate in an opposite way: whilst the multinationality effect enhances R&D returns, the foreignness diminishes them.
    Keywords: multinationals, foreignness, R&D, productivity
    JEL: C14 D24 F23
    Date: 2010–07
  5. By: Bruno van Pottelsberghe
    Abstract: In this paper, Bruegel senior Fellow Bruno van Pottelsberghe develops a methodology to compare the quality of examination services in different patent offices. Quality is defined as the extent to which patent offices comply with their patentability conditions in a transparent way. The methodology consists of a two-layer analytical framework encompassing 'legal standards' and their 'operational design', which includes several interdependent componentsthat affect the stringency and transparency of the filtering process.
    Date: 2010–07
  6. By: Arnaud De La Tour (CERNA - Centre d'économie industrielle - Mines ParisTech); Matthieu Glachant (CERNA - Centre d'économie industrielle - Mines ParisTech); Yann Ménière (CERNA - Centre d'économie industrielle - Mines ParisTech)
    Abstract: China is the largest solar photovoltaic cell producer in the world, with more than one third of worldwide production in 2008, exporting more than 95 percent of what it produces. The purpose of this paper is to understand the drivers of this success and its limits, with a particular emphasis on the role of technology transfers and innovation. Our analysis combines a review of international patent data at a detailed technology level with field interviews of ten Chinese PV companies. We show that Chinese producers have acquired the technologies and skills necessary to produce PV products through two main channels: the purchasing of manufacturing equipment in a competitive international market and the recruitment of skilled executives from the Chinese diaspora who built pioneer PV firms. The success of these firms in their market is, however, not reflected in their performance in terms of innovation. Rather, patent data rather highlight a policy-driven effort to catch up in critical technological areas.
    Keywords: Solar photovoltaic energy; technology diffusion; technology transfer; China
    Date: 2010
  7. By: Anil K Gupta
    Abstract: Given the economic distress worldwide, the micro, small and medium scale enterprises (MSME) had been hit hard. Large numbers of workers have been laid off because of depressed demand, piled up inventory, pending retrievables and squeezed credit market. A sector which provides maximum employment cannot be left to fend for itself without a major transformation led by the entrepreneurs, policy makers and also other support organizations. There are several innovative options that one can try at four different levels such as (a) stimulating demand, (b) upgrading technology and skills, (c) promoting innovations for developing new products and services and (d) forging new partnerships among the entrepreneurs and also with the R&D institutions, grassroots innovation networks and the technology students. Some of the urgent steps required are: (a) technology audit of MSMEs by formal R&D institutions, (b) Creation of National Innovation and R&D Fund for MSMEs, dedicated for replacing age old materials, technologies and production processes, (c) awards for innovations by and for MSMEs, particularly, engaging youth as attempted by Karnataka Council of Science and Technology and Indian Institute of Science, Bangalore and (d) dedicated R&D centres for various industrial clusters. This is a painful time for the MSMEs and the workers being laid off. A bipartition approach is required among the major political parties to put forward a revitalization plan. Millions of workers and small entrepreneurs will anyway soon vote on the vision of the parties in taking country out of the current stressful situation. [W.P. No. 2009-03-03]
    Keywords: Economic distress, medium scale industries, entrepreneurs, policy makers, technology, skills, R&D institutions, grassroots innovation networks, MSME's
    Date: 2010
  8. By: Sunil Kanwar (Department of Economics, Delhi School of Economics, Delhi, India)
    Abstract: In this paper we study the influence of stronger intellectual property protection on technology transfer into developing countries via licensing. Using panel data for the post-TRIPs period 1995-2005, we find that stronger protection is associated with increased royalty and license fee payments by developing countries, implying greater technology transfer into these countries. This result is robust to the inclusion of country fixed effects, as well as alternative specifications of the model estimated. The strong overall statistical significance of the protection variable is found to be driven by the sub-index of coverage, which makes eminent sense in view of the substantial increase in the coverage of patentable subject matter by developing countries post- TRIPs. Other factors of importance are scale variables such as per capita income and population, as well as human capital and trade openness of the technology-importing countries. The economic significance of the protection variable also appears to be substantial, with changes in this variable accounting for technology inflows of about US $3.4 billion to US $5.5 billion (base year 2000) in the post-TRIPs sample period. These magnitudes comprise 3.5% to 5.7% of the total value of royalty and license fees over 1995-2005 (at 2000 prices). Overall, our results are noteworthy.
    Keywords: intellectual property protection, licensing technology
    JEL: O34 O31
    Date: 2010–07
  9. By: Sergey Lychagin; Joris Pinkse; Margaret E. Slade; John Van Reenen
    Abstract: We simultaneously assess the contributions to productivity of three sources of research and development spillovers: geographic, technology and product–market proximity. To do this, we construct a new measure of geographic proximity that is based on the distribution of a firm’s inventor locations rather than its headquarters, and we report both parametric and semiparametric estimates of our geographic– distance functions. We find that: i) Geographic space matters even after conditioning on horizontal and technological spillovers; ii) Technological proximity matters; iii) Product–market proximity is less important; iv) Locations of researchers are more important than headquarters but both have explanatory power; and v) Geographic markets are very local.
    JEL: C23 L60 O33
    Date: 2010–07
  10. By: Chakravorty, Ujjayant (University of Alberta, Department of Economics); Leach, Andrew (University of Alberta School of Business); Moreaux, Michel (Toulouse School of Economics)
    Abstract: In this paper, we show that the potential for endogenous technological change in alternative energy sources may alter the behaviour of resource-owning firms. When technological progress in an alternative energy source can occur through learning-by-doing, resource owners face competing incentives to extract rents from the resource and to prevent expansion of the new technology. We show that in such a context, it is not necessarily the case that scarcity-driven higher traditional energy prices over time will induce alternative energy supply as resources are exhausted. Rather, we show that as we increase the learning potential in the substitute technology, lower equilibrium energy prices prevail and there may be increased resource extraction and greenhouse gas emissions. We show that the effectiveness and the incidence of emissions reduction policies may be altered by increased potential for technological change. Our results suggest that treating finite resource rents as endogenous consequences of both technological progress and policy changes will be important for the accurate assessment of climate change policy.
    Keywords: resource extraction; climate change; induced innovation; learning-by-doing
    JEL: Q30 Q42 Q54
    Date: 2010–04–01
  11. By: Marzia Raybaudi; Martin Sola; Shasikanta Naindebam
    Abstract: This paper addresses the e¤ects for partial equilibrium models of relaxing one of the critical underlying assumptions of the textbook approach (Dixit and Pyndick, 1994) to investment under uncertainty: either the potential investor has access to a single project or she can consider competing (or complementary) projects independently. This paper studies the investment decision of a multi-product monopolist where the projects exhibit interdepen- dence between the cash ‡ows of di¤erent products. We derive the optimal entry time for each product and show that both the choice and timing of investment is di¤erent from that suggested by the textbook approach. The decision to produce related goods simultaneously or sequentially crucially depends on their degree of substitutability or complementarity.
    JEL: D21 D24 D42 D81
    Date: 2010–07

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