nep-ino New Economics Papers
on Innovation
Issue of 2011‒03‒26
thirteen papers chosen by
Steffen Lippert
Massey University, Albany

  1. R&D collaboration with uncertain intellectual property rights By Czarnitzki, Dirk; Hussinger, Katrin; Schneider, Cédric
  2. Costs and benefits of inter-departmental innovation collaboration By Cuijpers, Maarten; Guenter, Hannes; Hussinger, Katrin
  3. The contribution of international R&D to firm profitability By Peters, Bettina; Schmiele, Anja
  4. Modelling credit risk for innovative firms: the role of innovation measures By Chiara Pederzoli; Grid Thoma; Costanza Torricelli
  5. R&D, Innovation and Exporting By Richard Harris; John Moffat
  6. EU Patent System: to be or not to be? By Ãlvaro Escribano; Marco S. Giarratana
  7. Cost Innovation: Schumpeter and Equilibrium - Part 1: Robinson Crusoe By Martin Shubik; William D. Sudderth
  8. Localized knowledge spillovers and patent citations: A distance-based approach By Yasusada Murata; Ryo Nakajima; Ryosuke Okamoto; Ryuichi Tamura
  9. Does Cultural Diversity Help Innovation in Cities: Evidence from London Firms By Neil Lee; Max Nathan
  10. Pôle de compétitivité, spillovers et coopération R et D By Iritié, J.J.
  11. A Multilevel Analysis of Innovation in Developing Countries By Martin Srholec
  12. Delay and secrecy: Does industry sponsorship jeopardize disclosure of academic research? By Czarnitzki, Dirk; Grimpe, Christoph; Toole, Andrew A.
  13. Intellectual Property Rights Protection and Enforcement in a Software Duopoly By Jiri Strelicky; Kresimir Zigic

  1. By: Czarnitzki, Dirk; Hussinger, Katrin; Schneider, Cédric
    Abstract: Patent pendencies create uncertainty in research and development (R&D) collaboration agreements, resulting in a threat of expropriation of unprotected knowledge by potential partners, reduced bargaining power and enhanced search costs. In this paper, we show that - depending of the type of partner - uncertain intellectual property rights (IPR) lead to reduced collaboration between firms and may hinder the production of knowledge. This has implications for technology policy as R&D collaborations are exempt from anti-trust legislation in order to increase R&D in the economy. We argue that a functional IPR system is needed for successful utilization of this policy. --
    Keywords: R&D collaboration,intellectual property,uncertainty,patents
    JEL: O31 O38
    Date: 2011
  2. By: Cuijpers, Maarten; Guenter, Hannes; Hussinger, Katrin
    Abstract: Inter-departmental innovation collaboration facilitates innovation performance. At the same time, it has been identified as source of increased coordination costs. Using organizational information processing theory, this paper builds and tests hypotheses on the costs and benefits of innovation-related collaboration within firms. Based on a sample of 433 German manufacturing firms we show inter-departmental innovation collaboration to increase process innovation performance, but also to produce costs in terms of project delay and project termination. These costs, however, do not affect innovation performance at the firm level. This finding suggests firms to be well able to balance the costs and benefits of interdepartmental collaboration across their innovation project portfolio. Theoretical and managerial implications are discussed. --
    Keywords: Inter-departmental innovation collaboration,innovation performance,project delay,project termination
    JEL: O32 M54 O31
    Date: 2011
  3. By: Peters, Bettina; Schmiele, Anja
    Abstract: The internationalisation of corporate R&D opens up the chances to participate in international knowledge sharing. This increasingly motivates firms to accelerate the pace and extent of their international R&D activities in order to enhance innovativeness and consequently competitiveness and profitability. Such business ventures, however, might be associated with huge organizational costs as well as risks of outgoing knowledge spillovers. In this paper we empirically address the question whether international R&D activities boost profitability. We employ a large data set of about 1300 firms from the German Community Innovation Survey (CIS). The empirical results demonstrate that R&D location matters for profitability. Firms with both domestic and foreign R&D activities make significantly higher profits than all other firms, including those that carry out solely domestic R&D. We furthermore ascertain that the degree of R&D internationalisation affects profitability. Our findings suggest that medium decentralised firms which innovate in two or three foreign countries outperform firms with centralized or highly decentralized international R&D strategies. Notwithstanding, decentralized firms achieve a higher firm performance than firms that solely conduct R&D activities in their home country. --
    Keywords: R&D,Innovation,Internationalisation,Firm performance,Profit
    JEL: O32 F23
    Date: 2011
  4. By: Chiara Pederzoli; Grid Thoma; Costanza Torricelli
    Abstract: Financial constraints are particularly severe for R&D projects of SMEs, which cannot generally rely on equity markets and, in the EU, on a sufficiently developed VC industry. If innovative SMEs have to depend on banks to finance their R&D projects, it is particularly important to develop models able to estimate their probability of default (PD) in consideration of their peculiar features. Based on the signaling value of some innovative assets, the purpose of this paper is to show the importance to include them into models which have proved to be successful for SMEs. To this end, we take a logit model and test it on a unique dataset of innovative SMEs (based on PATSTAT database, EPO BULLETIN and AMADEUS) to estimate a two-year PD with default years 2006-2008. In the regression analysis the innovation-related variables are two in order to account for R&D productivity at the level of the firm and to consider the value of the inventive output. Our analyses first address measurement issues concerning innovation-related variable and then show that, while the accounting variables and the patent value are always significant with the expected sign, the patent number per se reduces the PD only in the presence of an appropriate equity level.
    Keywords: innovative SMEs; default probability; patent value
    JEL: G21 G32 C25 O31 O34
    Date: 2011–03
  5. By: Richard Harris; John Moffat
    Abstract: This study considers the determinants of whether a firm exports, undertakes R&D and/or innovates, and, in particular, the contemporaneous links between these variables using three waves of the UK Community Innovation Survey (CIS). Where appropriate, an instrumental variables procedure is employed to overcome problems of endogeneity. The results show that in both manufacturing and services, being involved in exporting increased the probability that an establishment was engaged in spending on R&D. Spending on R&D in manufacturing had a much larger impact on the probability of exporting which implies that spending on R&D was not simply to boost the probability of producing new goods and services, but also to improve the establishment's knowledge assets which would in turn help it break down barriers to international markets. In non-manufacturing, spending on R&D increased the probability of innovating but had no significant impact on whether the establishment exported; rather, innovating increased the probability of exporting. Exporting had no direct impact on whether innovation occurred in either sector. Given the key role of R&D, innovation and exporting in determining productivity, it is important that government understands these complex interactions between R&D, innovation and exporting and takes advantage of them when devising and implementing productivity-enhancing policies at the micro-level.
    Keywords: R&D, innovation, exporting, endogeneity
    JEL: C35 O32 R11
    Date: 2011–03
  6. By: Ãlvaro Escribano; Marco S. Giarratana
    Abstract: This paper introduce a list of desirable efficiency properties that any a patent system should have in order to enhance innovation, trade competitiveness, employment mobility and economic growth. We briefly overview the literature on patents and discuss the advantages and disadvantages of the present and recent proposals for the future of the European Union Patents System. In particular, we discuss the costinefficiencies observed in the current design of the EU Patent System based in a double structure layer divided in a central European Patent Office (EPO) and several nationalbased patent offices. This paper analyzes the likely backlashes of creating a third layer for a subâ€sample of EU countries. The paper suggests an alternative more efficient Patent System together with some policy implications.
    Keywords: Innovation, Patents, Knowledge spillovers, Common European patent, Welfare losses, Patents’ languages, Cultural proximity, Competitive trade
    JEL: O31 O34 D02 F15 L24
    Date: 2011–02
  7. By: Martin Shubik; William D. Sudderth
    Date: 2011–03–20
  8. By: Yasusada Murata (Advanced Research Institute for the Sciences and Humanities, Nihon University); Ryo Nakajima (Department of Economics, Yokohama National University); Ryosuke Okamoto (National Graduate Institute for Policy Studies); Ryuichi Tamura (Graduate School of Humanities and Social Sciences, University of Tsukuba)
    Abstract: We develop a new approach to localized knowledge spillovers by incorporating the concept of control patents (Jaffe, Trajtenberg and Henderson 1993) into the distancebased test of localization (Duranton and Overman, 2005). Using microgeographic data, we identify localization distance while allowing for cross-boundary spillovers, unlike the existing literature where the extent of localized knowledge spillovers is detected at the state or metropolitan statistical area level. We revisit the recent debate by Thompson and Fox-Kean (2005) and Henderson, Jaffe and Trajtenberg (2005) on the existence of localized knowledge spillovers, and find solid evidence supporting localization, even when finer controls are used.
    Keywords: localized knowledge spillovers; distance-based tests; microgeographic data; K-density; patent citations; control patents
    JEL: O31 R12
    Date: 2011–03
  9. By: Neil Lee; Max Nathan
    Abstract: London is one of the world's major cities, and one of its most diverse. London's cultural diversity is widely seen as a social asset, but there is little hard evidence on its importance for the city's businesses. Theory and evidence suggest various links between urban cultural diversity and innovation, at individual, firm and urban level. This paper uses a sample of 7,400 firms to investigate, exploiting the natural experiment of A8 accession. The results, which are robust to most endogeneity challenges, suggest there is a small but significant 'diversity bonus' for London firms. Diverse management teams are particularly important for ideas generation, reaching international markets and serving London's cosmopolitan population.
    Keywords: cities, innovation, entrepreneurship, cultural diversity, migration, London
    JEL: J61 L21 M13 O11 O31 R23
    Date: 2011–02
  10. By: Iritié, J.J.
    Abstract: Les pôles de compétitivité, basés sur le modèle des clusters, sont au coeur de la nouvelle politique industrielle française. Ils ont pour objet de favoriser un environnement propice à l'innovation à fort potentiel technologique, moteur de croissance économique. L'objectif de ce papier est d'analyser les effets de ce dispositif industriel sur les incitations à innover des firmes et sur la performance de la coopération R et D. Pour ce faire, nous développons un modèle de duopole, coopératif en R et D, co-localisé sur un territoire avec d'autres firmes et intégrant les spillovers localisés. Les résultats montrent que les pôles créent des incitations informationnelles socialement sous-optimales pour corriger totalementle problème classique de sous-investissement en matière de R et D. Ce qui justifie les incitations financières publiques. Par ailleurs, on montre que les pôles peuvent favoriser des comportements collusifs, inattendus, entre les firmes et qui déstabiliseraient la coopération R et D.
    JEL: L00 O25 O31 R00
    Date: 2011
  11. By: Martin Srholec
    Abstract: Innovation is a multilevel phenomenon. Not only attributes of firms but also the framework conditions within which firms operate matter. Although this has been recognized in the literature for a long time, a quantitative test that explicitly considers this hypothesis has been lacking. Using a large sample of firms from many developing countries, we estimate a multilevel model of innovation which connects micro and macro levels of analysis in an integrated framework. National economic, technological and institutional framework conditions are shown to directly predict the likelihood of firms to innovate. More specifically, general education, taxation of income and democratic political institutions turn out to be highly relevant, while macroeconomic stability is somewhat less relevant. But what tends to be perceived as “good” governance and the extent of public research infrastructure do not seem to make much difference. The latter result is interpreted as indicating that what matters is not how much money governments spend on the research infrastructure but rather how effectively these resources are used to leverage innovation. Nevertheless, the results also draw attention to the limits of the existing models, methods and data.
    Keywords: innovation; technological capability; multilevel modeling; institutions; developing countries; innovation, technological capability, multilevel modeling, institutions, developing countries.
    JEL: O12 O14 C39 O31 O43
    Date: 2011–01
  12. By: Czarnitzki, Dirk; Grimpe, Christoph; Toole, Andrew A.
    Abstract: The viability of modern open science norms and practices depend on public disclosure of new knowledge, methods, and materials. Aggregate data from the OECD show a broad shift in the institutional financing structure that supports academic research from public to private sponsorship. This paper examines the relationship between industry sponsorship and restrictions on disclosure using individual-level data on German academic researchers. Accounting for selfselection into extramural sponsorship, our evidence strongly supports the perspective that industry sponsorship jeopardizes public disclosure of academic research. --
    Keywords: Open science,research funding,industry sponsorship,disclosure,secrecy
    JEL: O31 O32 L33
    Date: 2011
  13. By: Jiri Strelicky; Kresimir Zigic
    Abstract: We study the economic impacts of the interaction between a regulator's Intellectual Property Rights (IPR) protection policy against software piracy on the one side and the forms of IPR protection that software producers may themselves undertake to protect their intellectual property on the other side. Two developers, each offering a variety of different quality, compete for heterogeneous users who choose among purchasing a legal version, using an illegal copy, and not using a product at all. Using an illegal version violates IPR and is thus punishable when disclosed. If a developer considers the level of piracy as high, he can either introduce a form of physical protection for his product or introduce a protection in the form of restricting support and other services to illegal users. The quality of each developer's product is exogenously given, and the developers compete in prices. We examine the above issues within the framework of Bertrand and Stackelberg competition while the monopoly set-up serves as a point of reference.
    Keywords: vertically differentiated duopoly, software piracy, Bertrand competition, private and public intellectual property rights protection
    JEL: D43 L11 L21 O25 O34
    Date: 2011–03

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