nep-ino New Economics Papers
on Innovation
Issue of 2010‒11‒06
twenty papers chosen by
Steffen Lippert
Massey University, Albany

  1. Growth through Heterogeneous Innovations By Ufuk Akcigit; William R. Kerr
  2. Optimal Patentability Requirements with Fragmented Property Rights By Vincenzo Denicolò; Christine Halmenschlager
  3. Institutional Change and Academic Patenting: French Universities and the Innovation Act of the 1999 By Antonio Della Malva; Francesco Lissoni; Maria Patrick Llerena
  4. Why Junior Doctors Don’t Want to Become General Practitioners: A Discrete Choice Experiment from the MABEL Longitudinal Study of Doctors By Paul H. Jensen; Elizabeth Webster
  5. Competition and Innovation: ICT- and non-ICT-enabled Product and Process Innovations By Nepelski, Daniel
  6. Co-innovation by KIBS in Environmental Services: A Resource-based View By Carolina Castaldi; Jan Faber; Maikel Kishna
  7. R&D, Innovation and Liquidity Constraints By Maria Luisa Mancusi; Andrea Vezzulli
  8. The interplay between standardization and technological change: A study on wireless technologies, technological trajectories, and essential patent claims By Rudi Bekkers; Arianna Martinelli
  9. Learning and innovation under changing market conditions: the auto parts industry in Mexico. By Vallejo Carlos, Bertha
  10. Foreign Acquisitions, Domestic Multinationals, and R&D By Bandick, Roger; Görg, Holger; Karpaty, Patrik
  11. Two-stage public-private partnership proposal for R&D on neglected diseases By Brigitte Granville; Eshref Trushin
  12. Are Patent Citations Driven by Quality? By Christian Ghiglino; Nicole Kuschy
  13. Managing Knowledge Workers in Global Value Chains By Brown, Clair; Linden, Greg
  14. Strategic Niche Management of Social Innovations: the Case of Social Entrepreneurship By Marten J. Witkamp; Rob P. J. M. Raven; Lambèr M. M. Royakkers
  15. Revisiting the Returns to U.S. Public Agricultural Research: New Measures, Models, Results, and Interpretation By Alston, Julian M.; Andersen, Matt A.; James, Jennifer S.; Pardey, Philip G.
  16. Economic Growth, Technology Trade and R&D By Daniel Toro Gonzalez
  17. The citation impact of research collaboration in science-based industries: A spatial-institutional analysis By Koen Frenken; Roderik Ponds; Frank van Oort
  18. Creative destruction and asset prices By Grammig, Joachim; Jank, Stephan
  19. Comparative Study of the Use of Patents in Different Industries By Luigi Orsenigo; Valerio Sterzi
  20. On Managing Research Collaborations: Which Form of Governance? By Claudio Panico

  1. By: Ufuk Akcigit (Department of Economics, University of Pennsylvania); William R. Kerr (Department of Economics, Harvard University)
    Abstract: We study how exploration versus exploitation innovations impact economic growth through a tractable endogenous growth framework that contains multiple innovation sizes, multi-product firms, and entry/exit. Firms invest in exploration R&D to acquire new product lines and exploitation R&D to improve their existing product lines. We model and show empirically that exploration R&D does not scale as strongly with firm size as exploitation R&D. The resulting framework conforms to many regularities regarding innovation and growth differences across the firm size distribution. We also incorporate patent citations into our theoretical framework. The framework generates a simple test using patent citations that indicates that entrants and small firms have relatively higher growth spillover effects.
    Keywords: : Endogenous Growth, Innovation, Exploration, Exploitation, Research and Development, Patents, Citations, Scientists, Entrepreneurs.
    JEL: O31 O33 O41 L16
    Date: 2010–10–27
  2. By: Vincenzo Denicolò (Università di Bologna); Christine Halmenschlager (University Paris II)
    Abstract: We study the effect of the fragmentation of intellectual property rights on optimal patent design. The major finding is that when several complementary innovative components must be assembled to operate a new technology, the patentability requirements should be stronger than in the case of stand-alone innovation. This reduces the fragmentation of intellectual property, which is socially costly. However, to preserve the incentives to innovate, if a patent is granted the strength of protection should be generally higher than in the stand-alone case.
    Keywords: Intellectual Property Rights, Fragmentation, Patent Requirements
    JEL: O3 O34
    Date: 2010–10
  3. By: Antonio Della Malva (Maastricht University (The Netherlands)); Francesco Lissoni (DIMI-Università di Brescia and KITES-Universitá Bocconi, Milan (Italy)); Maria Patrick Llerena (BETA, Universitè de Strasbourg (France))
    Abstract: The Innovation Act was introduced by the French government in 1999, with the aim of encouraging academic institutions to protect and commercialize their scientists’ inventions. We explore the effects of the Act on the distribution of Intellectual Property Rights (IPRs) over academic scientists’ inventions. We find that before the Act, academic institutions had a strong tendency to leave such IPRs in the hands of their main funders, namely public research organizations (such as CNRS or INSERM), and business companies. After the introduction of the Act, French academic institutions have increased their propensity to claim IPRs over their employees’ invention, mainly under the form of co-ownership with business companies. This result vary with the technological class of the patent, the presence and age of a TTO within the university, and the university size and type.
    Keywords: academic inventions, academic research, intellectual property, patents
    JEL: L31 O31 O34
    Date: 2010–01
  4. By: Paul H. Jensen (Melbourne Institute of Applied Economic and Social Research, and Intellectual Property Research Institute of Australia, The University of Melbourne); Elizabeth Webster (Melbourne Institute of Applied Economic and Social Research, and Intellectual Property Research Institute of Australia, The University of Melbourne)
    Abstract: We use data from 3000 academic scientists to estimate the effects of other parties' patents on the academics' research. Nearly half of all scientists report that their choice of research projects has been affected by the presence of other parties' patents. We find that transaction costs and the culture of the workplace have the largest influence over whether or not patents affect the direction of research but that scientists’ understanding of patent law; their recent experience seeking permission to use patented material; and the source of research funds are also significant.
    Keywords: public science, innovation, R&D, invention, public research, patent
    JEL: O31 O34
    Date: 2010–10
  5. By: Nepelski, Daniel
    Abstract: The reason for contradictory predictions of the models studying the impact of competi¬tion on innovation is the varying assumptions with respect to competition or innovation type. Thus, we study how the impact of competition changes with different types of innova¬tive Output. In particular, we distinguish between non-ICT - and ICT-enabled product and process innovations. To allow for such flexibility, we apply Bayesian inference techniques and use direct measures of innovative that control for the heterogeneity of innovation Output. Our analysis provides evidence that supports the hypothesis that the effect of market com¬petition on innovation is not alike for all types of innovation. We observe an inverse U-shape relationship between competition and non-ICT-enabled and a clear U-shape dependency for ICT-enabled innovations. However, the results become considerably weaker, once industry effects are taken into account. Thus, although the impact of competition on innovation varies with the type of innovation, other factors seem to have a stronger impact on the incentives to innovate.
    Keywords: Competition, innovation, Information and communication technologies
    JEL: L20 L22 O31
    Date: 2010–06–01
  6. By: Carolina Castaldi; Jan Faber; Maikel Kishna
    Abstract: This paper investigates the ability of knowledge intensive business firms (KIBS) to engage in co-innovation with client firms. Co-innovation relates to KIBS competitive advantage as knowledge creators and sources of innovation. We propose a resource-based model where knowledge-related resources and capabilities explain why certain KIBS firms are able to co-innovate. We explore the model on a sample of Dutch environmental investigation firms. Our exploratory results confirm the expected dominant role played by the learning capabilities of KIBS firms in explaining their ability to co-innovate.
    Keywords: KIBS, co-innovation, resource-based, knowledge
    Date: 2010–03
  7. By: Maria Luisa Mancusi (KITeS, Bocconi University, Milan, Italy); Andrea Vezzulli (Department of Management, University of Bologna, Bologna, Italy and KITeS, Bocconi University, Milan, Italy)
    Abstract: We study the effect of financing constraints on the decision to do R&D and on the level of R&D investment using survey data and complete financial accounting data on a large number of Italian manufacturing SMEs from 2001 to 2003. We use a direct indicator of credit constraints and employ an econometric approach allowing for the existence of binding financing constraints to be endogenously determined. We find that there is a significantly negative effect on the probability to set up R&D activities due to the presence of financing constraints, ceteris paribus. We also find that ignoring the endogeneity of the financing constraints indicator and the sample selection originating from firms not interested in doing R&D induces a bias in the estimated effect, which turns out to be positive and significant. We find the same result when studying the effect of liquidity constraints on R&D spending and are able to show that its reduction of liquidity constraints is largely to be associated with the reduction in the likelihood to do R&D (the R&D participation decision), rather than with a reduced level of investment. Finally, but importantly, firms that are both young and small appear to have additional difficulties in obtaining financing - even after controlling for both size and age - and disply a higher probability of being subject to credit constraints, ceteris paribus.
    Keywords: R&D, financing constraints, bivariate probit, IV Tobit
    JEL: G32 C35 O31
    Date: 2010–05
  8. By: Rudi Bekkers; Arianna Martinelli
    Abstract: In many technology fields, standardization is the primary method of achieving alignment between actors. Especially if strong network effects and increasing returns are present, the market often ends up with a single standard that dominates the technical direction, activities and search heuristics, for at least one full technology generation. Although literature has addressed such decision processes quite extensively, relatively little attention has been paid to the way in which standards affect - and are affected by - technological change. Building upon the concepts of technological regimes and trajectories (Dosi, 1982), and on the methodology proposed by (Hummon & Doreian, 1989) to empirically investigate such trajectories, this papers aims to study the interplay between standardisation and technological change. We conclude that the empirically derived technological trajectories very well match the standardisation activities and the main technological challenges derived from the engineering literature. Moreover, we also observe that the Hummon & Doreian methodology can indeed reveal technological discontinuities. To the best of our knowledge, this has not been the case in earlier studies using this technology, and refutes concerns that this methodology has a (too) strong bias towards incremental, continuous technological paths. Finally, we compare the set of patents in the most important technological trajectories to the set of so-called essential patent claims at standards bodies, and conclude that there is no significant relationship. This confirms earlier arguments that essential patents are not necessarily ‘important’ patents in a technical sense.
    Keywords: technological trajectories, standardization, innovation
    Date: 2010–09
  9. By: Vallejo Carlos, Bertha (Maastricht University)
    Date: 2010
  10. By: Bandick, Roger (Aarhus School of Business); Görg, Holger (Kiel Institute for the World Economy); Karpaty, Patrik (Örebro University)
    Abstract: The aim of this paper is to evaluate the causal effect of foreign acquisition on R&D intensity in targeted domestic firms. We are able to distinguish domestic multinationals and non-multinationals, which allows us to investigate the fear that the change in ownership of domestic to foreign multinationals leads to a reduction in R&D activity in the country, as headquarter activities are relocated to the new owner's home country. We use unique and rich firm level data for the Swedish manufacturing sector and different micro-econometric estimation strategies in order to control for the potential endogeneity of the acquisition dummy. Overall, our results give no support to the fears that foreign acquisition of domestic firms lead to a brain drain of R&D activity in Swedish MNEs. Rather, this paper finds robust evidence that foreign acquisitions lead to increasing R&D intensity in acquired domestic MNEs and non-MNEs.
    Keywords: domestic multinationals, foreign acquisitions, R&D
    JEL: F23
    Date: 2010–10
  11. By: Brigitte Granville; Eshref Trushin
    Abstract: We propose a 2-stage procurement model of public-private partnership to provide better incentives for R&D on neglected diseases. The model combines advance market commitment, subsidized clinical trials, and rewards based on therapeutical contributions of new drugs through a prize screening mechanism. The model is primarily intended to facilitate small firms’ R&D by providing cash flow, rewarding quality of new drugs, and sharing risks and costs of new drugs development, while limiting moral hazards. The model’s advantages include reduction of overpayments, better disclosure of information, provision of production licences, and direct targeting of better quality drugs.
    Keywords: neglected diseases, prize screening, pharmaceutical R&D
    JEL: I12 I18 D82 H41
    Date: 2010–10
  12. By: Christian Ghiglino; Nicole Kuschy
    Abstract: The present paper builds a simple model of patent citations not based on the rich-get-richer aspect of preferential attachment. In our model the dynamics of citations are driven by known heterogeneities in the applicability of existing patents and aging. The model matches closely the hazard rates of citations for the vast majority of patents in a random sample of patents granted by the USPTO between 1975 and 1999. Furthermore, we show that the long run distribution of patent citations is well fitted when the distribution of applicability across patents follows a Gamma-distribution.We also discuss the possibility that popularity of patents might influence citation decisions if innovators are not perfectly informed about patents' applicability. We find that popularity matters but the size of the effect is very small. Finally, the possibility to distinguish between citations to patents within the same class and to different classes allows us to show that the magnitude of the influence of popularity is increasing in technological distance.
    Date: 2010–10–29
  13. By: Brown, Clair; Linden, Greg
    Abstract: Global value chains span national and organizational boundaries in a growing number of industries. Knowledge creation and exchange within these diffuse networks is more complex than in the centralized R&D process of the past. This research, based on extensive fieldwork with engineers and managers in multinational headquarters and subsidiaries in a number of high-tech industries, analyzes alternative modes of managing knowledge workers in this global setting. Strategic human resource management (SHRM), of which formal HR policies are but a small part, is necessary to structure formal and informal network activities, both within and beyond the firm. We compare two archetypal high-performance SHRM systems and describe how they have evolved in practice. We analyze SHRM for global knowledge flows with offshore subsidiaries, value chain partners, allies, acquisitions, and corporate ventures. We also look at knowledge flows in informal personal networks and via the global circulation of knowledge workers. Finally we review lessons learned about SHRM practices to create and manage knowledge workers in global value chains.
    Date: 2010–10–20
  14. By: Marten J. Witkamp; Rob P. J. M. Raven; Lambèr M. M. Royakkers
    Abstract: Strategic niche management (SNM), a tool to understand and manage radical socio-technical innovations and facilitate their diffusion, has always departed from a technical artefact. Many radical innovations, however, do not revolve around such an artefact. Social entrepreneurship is a new business model that combines a social goal with a business mentality and is heralded as an important new way to create social value such as sustainability. This study examines if and how SNM can be applied to such a social innovation. It identifies theoretical and practical limitations and proposes solutions. The main conclusion is that SNM can be used to analyse radical social innovation, although it requires rethinking the initial entry point for research and management. Exemplifying quotes are proposed as an alternative. Second, this paper suggests using values to describe niche-regime interaction as a better way to anticipate future niche-regime interactions.
    Keywords: Multi-Level Perspective, Social Entrepreneurship, Social Innovation, Socio-technical Regime, Strategic Niche Management, Value
    Date: 2010–07
  15. By: Alston, Julian M.; Andersen, Matt A.; James, Jennifer S.; Pardey, Philip G.
    Abstract: Studies of the returns to agricultural R&D are severely constrained by data limitations, and vulnerable to specification biases resulting from modeling choices made to address those constraints. This article makes use of a newly constructed set of uncommonly rich and detailed state-level data on both U.S. agricultural productivity and federal and state-government investments in agricultural R&D to explore the consequences of common modeling choices and their implications for measures of research returns. Particular attention is paid to the specification of the research lag structure and spatial spillovers. The results indicate that state-to-state spillover effects are important, that the R&D lag is longer than many studies have allowed, and that misspecification of these aspects can give rise to significant biases. Our modeling choices imply benefit-cost ratios (or rates of return) that are much smaller than typically reported in the literature, but nonetheless large and indicating a significant pervasive underinvestment. We present heuristic arguments and evidence to show why our results are plausible given the high value of agricultural productivity growth compared with annual R&D investments.
    Keywords: Spatial technology spillovers, knowledge stocks, R&D lags, public agricultural R&D, U.S. states, Research and Development/Tech Change/Emerging Technologies,
    Date: 2010–10
  16. By: Daniel Toro Gonzalez
    Abstract: The present project is oriented to evaluate the performance of technological trade and research and development (R&D) expenditure, as a measure of productivity in explaining economic growth. Using data for OECD countries under a simple neoclassical growth model framework, the role of technology trade and investment in R&D is verified as an approximate measurement of productivity. In this case two thirds of total economic growth can be explained jointly by the introduction of these two variables in to the model specification together with human and capital accumulation.
    Date: 2010–10–27
  17. By: Koen Frenken; Roderik Ponds; Frank van Oort
    Abstract: This study shows for eight science-based industries that the citation impact of research collaboration is higher for international collaboration than for national and regional collaboration. A further analysis of institutional affiliations shows that university-industry-government collaborations profit from being organised at the regional scale only in the cases of biotechnology and organic fine chemistry. The alleged importance of physical proximity for successful interaction between university, industry and government thus is not robust across industries. We discuss the policy implications that follow.
    Keywords: proximity, citation, globalisation, university-industry-government collaboration, triple helixience, economics of science, geography of science, sociology of scientific knowledge
    JEL: O30 R10
    Date: 2010–03
  18. By: Grammig, Joachim; Jank, Stephan
    Abstract: This paper introduces Schumpeter's idea of creative destruction into asset pricing. The key point of our model is that small and value firms are more likely destroyed during technological revolutions, resulting into higher expected returns for these stocks. A two-factor model including market return and patent activity growth - the proxy for creative destruction risk - accounts for a large portion of the cross-sectional variation of size and book-to-market sorted portfolios and prices HML and SMB. The expected return difference between assets with the highest and lowest exposure to creative destruction risk amounts to 8.6 percent annually. --
    Keywords: creative destruction,asset pricing,size and value premium,patents
    JEL: G12
    Date: 2010
  19. By: Luigi Orsenigo (Dimi, University of Brescia, Brescia, Italy and KITeS, Bocconi University, Milan, Italy); Valerio Sterzi (KITeS, Bocconi University, Milan, Italy)
    Abstract: It has been long recognised that the role and effects of patents vary considerably across industries. This observation raises immediately to important sets of questions. First, can we document systematically this heterogeneity and can we provide a conceptual framework for explaining this diversity? Second, how should the patent system deal with these differences? Should patent laws be tailored to industry specificities or should they be kept as homogeneous as possible? In this paper, we focus mainly on the first question and only tangentially on the second one. In particular, we try to review what is known about the inter-sectoral differences in the uses of patents and their more recent evolution and we suggest that such diversity is just to expected as it depends on complex interactions between the properties of technologies, the nature of markets and the patterns of competition, the evolution of legislation and its interpretation.
    Date: 2010
  20. By: Claudio Panico (KITeS, Bocconi University, Milan, Italy)
    Abstract: Managing research collaborations remains challenging in many respects. The research efforts of the parties involved are hardly verifiable, and it is not possible to contract a clearly defined research output in advance. The parties negotiate to allocate potential gains, but the collaboration still is unstable and prone to disintegration. Although contractual forms of collaboration have become increasingly common and sophisticated, formal contracts are incomplete and produce a large variety of governance structures with specified ownership patterns and the configurations of control. In the context of a research collaboration between two parties with asymmetric positions, such as a large pharmaceutical company contracting with a small biotech, the company must decide how to allocate ownership and control rights while considering the effects on the biotech's bargaining position in the negotiation. This study shows that the forms of governance vary with the contractibility of effort and the stability of the collaboration, which suggests novel prescriptions for the management of research collaborations.
    Keywords: research collaborations, governance, contracts, property rights, control rights
    Date: 2010–06

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