nep-ino New Economics Papers
on Innovation
Issue of 2010‒10‒09
ten papers chosen by
Steffen Lippert
Massey University, Albany

  1. Outsourcing and R&D Investment with Costly Patent Protection By Che, XiaoGang; Yang, Yibai; Zhang, Haoyu
  2. Patent Portfolio Races in Concentrated Markets for Technology By Florian Jell; Joachim Henkel
  3. Globalization and Knowledge Spillover: International Direct Investment, Exports and Patents By Chang, C-L.; Chen, S-P.; McAleer, M.J.
  4. Firm Strategy, Location and MNE-networks By Lööf, Hans; Johansson, Borje
  5. Do Clusters Really Matter for Innovation Practices in Information Technology? Questioning the Significance of Technological Knowledge Spillovers By Franz Huber
  6. Organizational Learning Strategies of Start-up Firms; Creating the Office Of Strategic Thinking (OST) By Chatterjee, Sidharta
  7. On R&D Information Sharing and Merger By Uday Bhanu Sinha
  8. Network Neutrality and Congestion Sensitive Content Providers: Implications for Service Innovation, Broadband Investment and Regulation By Jan Kraemer; Lukas Wiewiorra
  9. Knowledge Commodification and New Patterns of Specialisation: Professionals and Experts in Knowledge-Intensive Business Services (KIBS) By Simone Strambach
  10. Differentiated Intellectual Property Regimes for Environmental and Climate Technologies By Keith Maskus

  1. By: Che, XiaoGang; Yang, Yibai; Zhang, Haoyu
    Abstract: We analyse decisions of firms on outsourcing of intermediate goods and R&D investment. If firms choose in-house production, a high profit discount is incurred due to the inefficiency of producing the intermediate goods, whereas if firms search for and outsource to specialists, the production costs decrease, but an imitation risk arises by specialists, who may become competitors in the final-good market. Accordingly, patents are used to mitigate this possibility, which are costly. We show that in outsourcing, all firms outsource to the same specialist to minimise the possibility of successful imitation in equilibrium. Moreover, firms still invest in R\&D activities and outsource their intermediate goods with some patent protection even though the selected specialist put effort into imitation.
    Keywords: Patents; Outsourcing; Imitation.
    JEL: D21 D23
    Date: 2010–09–28
  2. By: Florian Jell; Joachim Henkel
    Abstract: Patent application numbers grow exponentially in many industries, a phenomenon that has been linked to high fragmentation of patent ownership. Contradicting these findings and theoretical arguments, we show that such fragmentation is not a precondition for sudden and strong increases in patenting. We describe and analyze a patent portfolio race in an industry with highly concentrated patent ownership, namely the newspaper printing machines oligopoly. Triangulating data from patent analysis, interviews, and document research, we find that patent strategy change by one player triggered a patent portfolio race with its main competitor. Implications for managers are that increasing patent output may yield temporary advantages but, as in a price war, implies the risk of a prisoner’s dilemma-type outcome with potentially severe implications for effectiveness and efficiency of the innovation process.
    Keywords: Patent Strategy; Motives to Patent; Intellectual Property; Patent Thickets
    Date: 2010
  3. By: Chang, C-L.; Chen, S-P.; McAleer, M.J.
    Abstract: This paper examines the impact of the three main channels of international trade on domestic innovation, namely outward direct investment, inward direct investment (IDI) and exports. The number of Triadic patents serves as a proxy for innovation. The data set contains 37 countries that are considered to be highly competitive in the world market, covering the period 1994 to 2005. The empirical results show that increased exports and outward direct investment are able to stimulate an increase in patent output. In contrast, IDI exhibits a negative relationship with domestic patents. The paper shows that the impact of IDI on domestic innovation is characterized by two forces, and the positive effect of cross-border mergers and acquisitions by foreigners is less than the negative effect of the remaining IDI.
    Keywords: international direct investment;export;triadic patent;outward direct investment;inward direct investment;R&D;negative binomial model
    Date: 2010–09–28
  4. By: Lööf, Hans (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Johansson, Borje (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper asks three explicit questions, where the first one concerns the impact of a firm’s choice of innovation strategy and knowledge resources. The study aims at confirming that firms with a strategy with R&D persistency have a markedly higher productivity, profitability and wage level than other firms. The second question is focused on the location of firms, with a distinction between firms dwelling in a metropolitan region and other firms. The hypothesis is that a metropolitan knowledge milieu may augment the performance of firms. The third question concerns knowledge exchange in regional and global networks that pertain to multinational affiliates. Applying Swedish data on individual firms and their location, the paper shows that firm performance is significantly higher when the three factors R&D persistency, metropolitan location and affiliation to a multinational group are combined.
    Keywords: R&D; knowledge; productivity; profitability; regional milieu
    JEL: F23 L25 O31 O33 R11
    Date: 2010–09–28
  5. By: Franz Huber
    Abstract: A widespread assumption in economic geography and the economics of innovation is that firms located in clusters benefit from territorial learning and knowledge spillovers. However, it remains unclear to what extent these benefits actually occur. This paper aims to address this issue and examines to what extent research and development (R&D) workers in the Cambridge Information Technology (IT) Cluster benefit from being located in the Cluster. The study shows why many do not believe that their work benefits from being located in the Cluster. The results suggest that academics as well as policy makers need to be more careful with the assumption of technological knowledge spillovers in innovative clusters. The significant advantages of the Cambridge IT Cluster seem to be of a different nature; in particular they concern labour market advantages and benefits from the global ‘brand’ of Cambridge.
    Keywords: Clusters; Knowledge Spillovers; Territorial Learning; Agglomeration Economies
    JEL: D83 O18 R11
    Date: 2010
  6. By: Chatterjee, Sidharta
    Abstract: In this short paper, we discuss some efficient strategic content management practices that would help enhance a firm’s business horizons to deliver better quality product to their end customers. Since business firms who operate data mining and knowledge-based services related to market research needs to evolve sound information management practices through efficient data re-engineering, research and analysis (R&A) techniques. Companies in the business of market research needs to develop certain skills to win on empowered consumers and hence to stay ahead in debate in this age of hyper-competition. These companies in either way continuously innovate and standardize their content development strategic activities through process improvement from knowledge gain and expertise as well from knowledge manipulation in order to move up the value-chain. To this end, we propose some innovative, yet flexible strategies that shed some fresh light on the thought development process by proposing the establishment of a new Office of Strategic Thinking (OST) under an existing R&D set up for setting standards which are of highest and best in quality, while retaining the ability to innovate contemporaneously. Our study concentrates mainly on market research firms and new entrants who put in great effort to keep abreast of skills and process development methodologies in this ever-changing business environment.
    Keywords: Content management; OST; organizational approach to learning; market competition; knowledge innovation; market research; information management; value-creation; firm growth
    JEL: L16 L26 O32 O31 L15
    Date: 2010–08
  7. By: Uday Bhanu Sinha
    Abstract: The paper deals with the issue of information sharing in a Cournot duopoly by an innovating firm in the face of a merger with its rival. The innovating firm would share information about the cost realization with its rival provided the market size is relatively small or, the R&D technology is relatively more efficient in a medium market size. However, in a large market, or in a medium market size with less efficient R&D technology, the innovating firm does not share information with its rival. They also show that the social welfare may be higher under incomplete information regime. [Working Paper No. 145]
    Keywords: Information sharing, market size, R&D, merger and welfare
    Date: 2010
  8. By: Jan Kraemer (Karlsruhe Institute of Technology, Institute of Information Systems and Management); Lukas Wiewiorra (Karlsruhe Institute of Technology, Institute of Information Systems and Management)
    Abstract: We consider a two-sided market model with a monopolistic Internet Service Provider (ISP), network congestion sensitive content providers (CPs), and Internet customers in order to study the impact of Quality-of-Service (QoS) tiering on service innovation, broadband investments, and welfare in comparison to network neutrality. We find that QoS tiering is the more efficient regime in the short-run. However it does not promote entry by new, congestion sensitive CPs, because the ISP can expropriate much of the CPs' surplus. In the long-run, QoS tiering may lead to more or less broadband capacity and welfare, depending on the competition-elasticity of CPs' revenues.
    Keywords: Telecommunications, Net Neutrality, Quality of Service, Innovation, Investment, Regulation
    JEL: D42 L12 L43 L51 L52 L96
    Date: 2010–09
  9. By: Simone Strambach (Department of Geography, Philipps University Marburg)
    Abstract: The knowledge society is characterized by knowledge becoming a kind of commodity that can be traded and priced. Knowledge-intensive business services (KIBS) are representative for such a knowledge-based economy, since their main input and output factor is directly related to knowledge itself. While research on KIBS has been mainly conducted on the firm and sector level, focusing on their role in innovation processes, little attention has been paid to the knowledge workers within the firms, whose knowledge assets have to be acquired, configured and deployed. Yet these knowledge creation processes on the micro-level are central to understand how KIBS can drive innovation in regional and national economies by contributing to new patterns of knowledge specialisation and the diversification of knowledge markets. Hence this paper seeks to elaborate on the generic processes which underlay knowledge processing and production. It will introduce the influences of different types of knowledge and knowledge bases of KIBS sub-sectors on the processes and structures in which knowledge is produced. Thereby it will reveal that by gaining experience-based expertise in horizontal and vertical knowledge domains of both their knowledge workers and their clients KIBS foster the emergence of composite and combinatorial knowledge driving knowledge specialisation further.
    Keywords: Knowledge development, Innovation, Professional Services, Business Services, Organization
    JEL: D23 L1 L84 O3
    Date: 2010–09
  10. By: Keith Maskus
    Abstract: Prior to the Copenhagen meeting on developing a new framework for climate-change policy there were sharp differences between the positions of developed and developing countries regarding the role of intellectual property rights (IPRs) in fostering international technology transfer (ITT). Expanding effective ITT is central to meeting needs for acquiring and adapting environmentally sound technologies (ESTs) in poor nations. Policymakers in developed economies generally view IPRs, particularly patents and trade secrets, as positive and critical inducements to ITT, while those in developing countries often describe them as sources of market power that impede access to new technology. This report reviews the economic logic of these positions and reviews available empirical evidence. The relationships among IPRs, innovation, ITT and local adaptation are complex and neither of the basic views described captures them well. Policy should be based on a more nuanced view. In that regard, to date there is little systematic evidence that patents and other IPRs restrict access to ESTs, which largely exist in sectors based on mature technologies in which there are numerous substitutes among global competitors. This situation may change as new technologies based on biotechnologies and synthetic fuels, which are likely to be more dependent on patent protection, become more prominent. At present, however, there is little evidence to support significant limitations on the issuance and use of IPRs in this area. In particular, it is unlikely that an international agreement on a compulsory licensing regime could achieve significant ITT benefits, while it may raise considerable costs. However, there may be scope for beneficial differentiation in patent rights, which is the primary subject of the report. Among these elements include ex ante extensions of patent terms tied to licensing commitments, expedited patent examinations in ESTs, investments in patent transparency and landscaping efforts, and facilitation of voluntary patent pools. The report argues that such changes are unlikely to achieve significant gains in innovation and ITT unless they are accompanied by broader policy approaches, including publicly financed fiscal supports for local technology needs and adaptation. Perhaps most important are finding means to raise the global costs of using carbon-based energy resources and improving the climate for investments in poor countries.<BR>Avant le Sommet de Copenhague sur l’élaboration d’un nouveau cadre d’action pour la lutte contre le changement climatique, pays développés et pays en développement nourrissaient des conceptions divergentes quant à l’incidence des droits de propriété intellectuelle (DPI) sur la promotion du transfert international de technologies. Or, pour répondre aux besoins d’acquisition et d’adaptation de technologies écologiquement rationnelles dans les pays pauvres, il est indispensable d’accroître l’efficacité de ces transferts. Les décideurs des pays développés considèrent généralement les DPI, en particulier les brevets et les secrets de fabrique, comme des incitations positives essentielles pour le transfert international de technologies, tandis que ceux des pays en développement les présentent souvent comme des sources de pouvoir de marché qui les empêchent d’accéder aux nouvelles technologies. Le présent rapport examine la logique économique de ces positions et passe en revue les données empiriques disponibles. Entre les DPI, l’innovation, le transfert international de technologies et l’adaptation locale, il existe une relation complexe dont aucune des deux conceptions très générales évoquées précédemment ne rend véritablement compte. Les politiques publiques doivent se fonder sur un point de vue plus nuancé. A ce jour, on ne dispose guère d’éléments solides attestant que les brevets et autres DPI restreignent l’accès aux technologies écologiquement rationnelles, car ces droits concernent essentiellement des secteurs basés sur des technologies matures pour lesquelles la concurrence mondiale offre de nombreux produits de substitution. La donne pourrait changer au fur et à mesure de la montée en puissance de nouvelles technologies faisant appel aux biotechnologies et aux carburants de synthèse, qui risquent d’être davantage protégés par des brevets. Pour l’heure toutefois, il n’y a guère d’arguments incitant à limiter notablement l’attribution et l’utilisation des DPI dans ce domaine. En particulier, un accord international sur un régime de licences obligatoires ne serait probablement pas très efficace en termes de transfert international de technologies, alors qu’il risquerait d’imposer des coûts considérables. En revanche, il serait possible d’apporter diverses modifications aux conditions attachées aux brevets, ce qui constitue le principal thème de ce rapport. Parmi les possibilités figurent la prolongation ex ante de la durée de validité du brevet assortie d’engagements en matière d’octroi de licences, l’examen accéléré des demandes de brevets visant les technologies écologiquement rationnelles, les investissements dans les efforts de transparence et de cartographie des brevets, les incitations à créer des communautés volontaires de brevets. D’après le rapport, des changements de ce type ne sauraient procurer des avantages significatifs en termes d’innovation et de transfert international de technologies s’ils ne s’accompagnent pas de stratégies publiques plus larges, comprenant des aides publiques pour répondre aux besoins en technologies et assurer leur adaptation à l’échelle locale. Mais l’essentiel est peut-être de trouver les moyens d’augmenter le coût d’utilisation des ressources énergétiques à base de carbone et d’améliorer le climat de l’investissement dans les pays pauvres.
    Keywords: environment, innovation, intellectual property rights, technology, climate change, environnement, innovation, droit de propriété intellectuelle, changement climatique, technologies
    JEL: O31 O34 Q27 Q56
    Date: 2010–05–05

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