nep-ino New Economics Papers
on Innovation
Issue of 2011‒06‒11
sixteen papers chosen by
Steffen Lippert
Massey University, Albany

  1. State-led technological development: A case of China's nanotechnology development By Huang, Can; Wu, Yilin
  2. Determinants of Firm R&D: The Role of Relationship-specific Interactions for R&D Spillovers By Gustavsson , Patrik; Poldahl, Andreas
  3. Venture Capital, Patenting, and Usefulness of Innovations By Fabrizi, Simona; Lippert, Steffen; Norbäck, Pehr-Johan; Persson, Lars
  4. The link between public support and private r&d effort: what is the optimal subsidy? By Néstor Duch-Brown; José García-Quevedo; Daniel Montolio
  5. The Structure of the R&D Lag in Japanese Firms: R&D project, patent application and commercial use (Japanese) By SUZUKI Jun
  6. Innovation, Research and Development Investment and Productivity in Colombian Firms By Maria Angelica Arbelaez; Monica Parra Torrado
  7. The importance of Intermediaries organizations in international R&D cooperation: an empirical multivariate study across Europe By Aurora A. C. Teixeira; Margarida Catarino
  8. The "Matthew Effect" in R&D Public Subsidies: the Italian Evidence By Antonelli Cristiano; Crespi Francesco
  9. Impact of University Intellectual Property Policy on the Performance of University-Industry Research Collaboration By Okamuro, Hiroyuki; Nishimura, Junichi
  10. On Firm Growth and Innovation. Some new empirical perspectives using French CIS (1992-2004) By Alessandra Colombelli; Naciba Haned; Christian Le Bas
  11. Productive process innovation as sequential adjustment of the hybrid governance structure: the case of the poultry sector By Gaetano Martino; Paolo Polinori
  12. Voluntary agreements and community development as CSR in innovation strategies By Mukherjee, Vivekananda; Ramani, Shyama V.
  13. Patterns of Collaborations between Regional Firms and Universities: Evidence from the Piedmont region in Italy By Bodas Freitas Isabel Maria; Geuna Aldo; Rossi Federica
  14. Complexity and Technological Change: Knowledge Interactions and Firm Level Total Factor Productivity By Antonelli Cristiano; Scellato Giuseppe
  15. Corporate taxes and the location of intellectual property By Griffith, Rachel; Miller, Helen; O'Connell, Martin
  16. The Role of External Knowledge in the Introduction of Product and Process Innovations By Antonelli Cristiano; Fassio Claudio

  1. By: Huang, Can (UNU-MERIT, and Maastricht University); Wu, Yilin (Center for Applied Statistic and School of Statistics, Renmin University of China)
    Abstract: We analyze the nanotechnology patent applications filed in China from 1998 to 2008 and find that the extraordinary nanotechnology development in China has been primarily promoted by the public sector but not driven by industry and market force. This finding implies that developing countries such as China with public research capacity and commitment to technological development can make rapid progress in basic research of emerging technologies, but it remains uncertain whether and when local industry can benefit from public R&D investment to actively develop indigenous innovation.
    Keywords: New Technologies, Nanotechnology, Asia, China, R&D, Patents, State-led R&D, Innovation, R&D Investment
    JEL: O14 O33 O38
    Date: 2011
  2. By: Gustavsson , Patrik (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Poldahl, Andreas (Statistics Sweden (SCB))
    Abstract: Research and Development (R&D) is a key component behind technological development and economic growth; therefore, understanding the drivers of R&D is crucial. An interesting question is the role of technology spillovers, transferred by trade, and their impact on firm R&D. Here we analyze not only how international and domestic inter- and intra-industry technology spillovers affect firm R&D but also the relatively unexplored issue of how relationship-specific interactions between buyer and seller affect such spillovers. We find international technology spillovers to be larger and more significant than domestic inter- and intra-industry spillovers. Moreover, relationship-specific interactions between seller and buyer enhance technology spillovers in general and international spillovers in particular.
    Keywords: R&D; spillovers; imports; relationship-specific investments
    JEL: L10 L60 O10 O30
    Date: 2011–06–03
  3. By: Fabrizi, Simona; Lippert, Steffen; Norbäck, Pehr-Johan; Persson, Lars
    Abstract: We analyze incentives to develop entrepreneurial ideas for venture capitalists (VCs) and incumbent firms. If VCs are sufficiently better at judging an idea's value and if it is sufficiently more costly to patent low than high value ideas, VCs acquire valuable ideas, develop them beyond the level incumbents would have chosen, and use patents to signal their companies' high value to acquirers prior to exiting. This increases the VC-backed companies' patenting intensity and long-run performance, but also infl ates their acquisition prices, and lowers their acquirers' overall profits. Patent law usefulness clauses would reduce such excessive, signaling-driven investment and patenting intensity.
    Keywords: innovation; patent law; patenting intensity; preemptive vs late acquisition strategies; signaling; usefulness requirement; venture capital
    JEL: C70 D21 D82 G24 L26 M13 O31 O34
    Date: 2011–05
  4. By: Néstor Duch-Brown (Universitat de Barcelona & IEB); José García-Quevedo (Universitat de Barcelona & IEB); Daniel Montolio (Universitat de Barcelona & IEB)
    Abstract: The effectiveness of R&D subsidies can vary substantially depending on their characteristics. Specifically, the amount and intensity of such subsidies are crucial issues in the design of public schemes supporting private R&D. Public agencies determine the intensities of R&D subsidies for firms in line with their eligibility criteria, although assessing the effects of R&D projects accurately is far from straightforward. The main aim of this paper is to examine whether there is an optimal intensity for R&D subsidies through an analysis of their impact on private R&D effort. We examine the decisions of a public agency to grant subsidies taking into account not only the characteristics of the firms but also, as few previous studies have done to date, those of the R&D projects. In determining the optimal subsidy we use both parametric and non-parametric techniques. The results show a non-linear relationship between the percentage of subsidy received and the firms’ R&D effort. These results have implications for technology policy, particularly for the design of R&D subsidies that ensure enhanced effectiveness.
    Keywords: R&D, public subsidies, evaluation
    JEL: O38 H32
    Date: 2011
  5. By: SUZUKI Jun
    Abstract: The R&D lag consists of several different types of time periods, and each of these could have different characteristics and distribution. Based on RIETI Inventor Survey data, we have analyzed on a continuous stretch of time the terms in the R&D process, i.e., from the beginning of the R&D project to the stage of patent application , as well as from the stage of patent application to the beginning of commercial use of the patented technology. The data show that each of the time periods has very skewed distribution in the length, and the sum of the time periods yields 33 months for the median value. Our results show that the factors related to the decision on the commercial use of the patent are largely independent with respect to the factors related to the duration of the lead time to the beginning of the use. The decision on the commercial use is mostly related to the technological importance (advancement) of the patent. On the other hand, the lead time to the stage of commercial use is closely related to the size of the R&D project and the strategy of the firm. We have not found tangible evidence that supports the view that there has been a general trend of either less time required to complete an R&D project or that R&D projects are being completed more quickly. Meanwhile, our results suggest that the change in the patent system in 1997 caused a shortening in the lead time to the commercial use of the patent in Japan.
    Date: 2011–01
  6. By: Maria Angelica Arbelaez; Monica Parra Torrado
    Abstract: This paper attempts to establish a formal relationship between innovation and productivity using Colombian firm-level data. It is found that the production of goods and services new to the firm and to the domestic market enhances firms` sales per worker, and innovation that results in introducing new goods and services to the international market boosts both sales and Total Factor Productivity (TFP). Innovation in processes likewise improves firms` productivity and sales. Finally, innovation in marketing and management increases sales per worker and enhances TFP when investment is made in Research and Development. The paper also studies the factors behind firms` decision to invest in innovation, the intensity of such investment and the returns to investment in innovation.
    JEL: C21 C31 C34 C35 L60 O31 O32 O14 O47
    Date: 2011–05
  7. By: Aurora A. C. Teixeira (CEF.UP, Faculdade de Economia, Universidade do Porto; INESC Porto, OBEGEF); Margarida Catarino (Faculdade de Economia, Universidade do Porto)
    Abstract: Despite the large number of publications related to business cooperation in R&D and the wide perception of the importance of intermediary institutions in the R&D cooperation process, empirical studies on its role are scarce, scattered and fragmented. Moreover, the academic work developed in this area is basically of a theoretical nature, whereas the international perspective of R&D cooperation is seldom approached. Departing from a unique database that includes 473 R&D cooperation projects developed within the 6th Framework Programme, involving firms and intermediaries from all European Union countries, this paper gauges the determinants of the importance attached to Intermediaries, through a direct survey to the organizations involved. Based on an estimation of the multivariate model, this study demonstrates that the importance given to Intermediaries depends more on project features than on the characteristics of the participating organizations. In particular, the nationality of participating organizations and the promoter emerged with a strong explanatory power: ceteris paribus, projects with at least one participant from the United Kingdom tend to assign greater importance to intermediaries in international R&D cooperation. Unambiguously, results evidence that the innovating capacity of an organization emerges (both positively and significantly) associated with a greater importance attached to Intermediaries.
    Keywords: R&D Cooperation; Intermediaries; International projects; Europe
    JEL: O32 O52
    Date: 2011–05
  8. By: Antonelli Cristiano; Crespi Francesco (University of Turin)
    Abstract: Public policy plays a key role in supporting R&D activities and a variety of policy tools have been applied to contrast the undersupply of technological knowledge including the provision of subsidies to private firms performing R&D activities. A large literature has identified the sources of ‘government failures’ in discretionary procedures in problems related to asymmetric information and the operation of interest groups. This paper explores the causes and effects of persistence in the discretionary allocation of public subsidies to R&D activities performed by private firms and elaborates a crucial distinction between vicious Matthew-effects and virtuous Matthew-effects. The latter identifies the role of dynamics increasing returns based upon accumulation of competence stemming from learning, learning to learn and knowledge cumulability. On the contrary vicious Matthew-effects lead to substitution of private funds with public ones and represent an additional source of ‘government failure’ which has not been specifically addressed by previous literature. The empirical analysis based upon Transition Probability Matrices, Probit regression and Propensity Score Matching tested the relevance of these arguments on a sample of about 750 Italian firms in the years 1998-2003. Our results show that the persistence in the discretionary allocation of public subsidies is relevant and that virtuous Matthew-effects prevail when a ‘picking the winner strategy’ is adopted by granting authorities. We conclude that while the decision to rely on discretionary incentives based on beauty context selection procedures may imply relevant costs, their benefits can be increased by pursuing a ‘picking the winner strategy
    Date: 2011–03
  9. By: Okamuro, Hiroyuki; Nishimura, Junichi
    Abstract: Despite various expected advantages, university-industry research collaboration (UIC), a relationship between two different worlds, often faces serious difficulties. Thus, the performance of UIC depends on the research partners’ strategies to bridge the gaps between them according to the institutional environment. In Japan, UIC has developed rapidly since the late 1990s based on drastic institutional changes regarding universities. We pay special attention to the role of the university intellectual property (IP) policy introduced after 2003 and empirically examine its impact on the performance of UIC projects. A clear and equitable IP policy that can be applied flexibly to the needs of partners would be optimal for a UIC to be efficiently managed. Otherwise, the project might face serious conflicts of interests and low incentive for cooperation. Using a sample of Japanese firms from our original survey, we find that the IP policy of partner universities indeed has a positive and significant impact on various performances of UIC projects, controlling for firm and project characteristics and considering potential selection bias from UIC participation.
    Keywords: university, intellectual property policy, research collaboration, project performance, Japan
    JEL: D23 L24 O32 O34
    Date: 2011–05
  10. By: Alessandra Colombelli; Naciba Haned; Christian Le Bas
    Abstract: In the paper we wish to examine if the firms that innovate know a higher growth than the firm that do not. We use diverse waves of CIS for the French industries over the period 1992- 2004 and carry out different models and new econometric methods (quantile regression). Our main findings are that innovative firms produce more growth than non innovative firms. The estimates show that the results are robust to the different types of models that we have implemented. Process innovators are more productive in terms of growth than product innovators when OLS and Random effects models are used. The reverse is true for Fix effect model and quantile regression. In the three growth equations estimated by GMM the coefficients related to innovation product are always higher. Our study does not give definitive results with respect to the magnitude of the effects of the type of innovation on firm growth.
    Keywords: Innovation, process and product, firm growth, CIS
    JEL: L20 L60 O31 O33
    Date: 2011–06
  11. By: Gaetano Martino; Paolo Polinori
    Abstract: The paper concerns production process innovation in an existing hybrid governance form. Adopting a Transaction Cost Economics perspective, we consider process innovation here in the conceptual context of the organization of production and technological change. It is assumed that the determinants of innovation act as emerging disturbances, and it is argued that innovation is achieved via adaptive, sequential adaptation based on specific, costly contractual rules. To support this thesis, the analytical framework introduces hypotheses to be tested by evidence. First, it is conjectured that the parties to a hybrid adopt flexibility techniques (MacNeil, 1978) to cope with the necessity of future process innovation. This hypothesis is compared with a competitive one, focusing the interests of the parties explicitly with regard to collaboration. Second, further hypotheses are tested that concern the influence of asset specificity, behavioral uncertainty and the allocation of resources to the costs of the contractual rules supporting innovation. A two-step method is proposed to test the hypothesis and to estimate the transaction costs associated with the contractual rules. The empirical results corroborate the analytical framework. Although this paper addresses a very specific issue, its main contribution relates to how hybrid governance forms organize production activities.
    Keywords: process innovation, hybrids organizations, adaptation, transaction costs, choice experiment, quantile regression.
    Date: 2011–04–01
  12. By: Mukherjee, Vivekananda (Department of Economics, Jadavpur University); Ramani, Shyama V. (UNU-MERIT, and Ecole Polytechnique Paris)
    Abstract: The present paper examines how an innovating firm decides between two forms of voluntary agreements (VA) in a context, where a non-governmental organization (NGO) rather than a regulator watches over citizens' interests. The innovation generates profit and consumer surplus as well as environmental damage. Corporate social responsibility (CSR) within the innovation process is considered in terms of a redistribution of profit towards community development, with or without additional abatement efforts via a VA. Bargaining between firm and NGO yields the amount allocated to community development. The model demonstrates that the firm's choice of VA hinges on the tradeoffs between appropriating the full innovation profit and paying a higher lump sum towards community development or sacrificing some of the innovation profit by lowering innovation effort, but gaining in terms of paying a lesser amount towards community development. CSR with abatement is unlikely in the case of radical innovations. There is also a clear divergence of interests between the firm, the NGO and the State for some parameter configurations, which are duly identified.
    Keywords: Corporate social responsibility, voluntary agreements, community development, donations, innovation
    JEL: M14 O32 O33
    Date: 2011
  13. By: Bodas Freitas Isabel Maria; Geuna Aldo; Rossi Federica (University of Turin)
    Abstract: This paper explores the factors affecting firms’ decisions concerning whether to collaborate with universities in their region or elsewhere, and the level of investment in the collaboration. Building upon an original survey of a representative sample of firms in the Italian region of Piedmont, the paper examines the effect of firm and collaboration characteristics (including the type and diversity of each collaboration’s objectives) on the location of the university partners and on the investment in university-industry collaborations. We find that firms that are smaller, less engaged in international markets, less vertically integrated, and that engage in collaborations with universities in order to solve organizational problems, tend to collaborate more with regional universities. Firms tend to invest more in collaborations focused only on R&D activities with nearby universities, though the maximum amount spent in a collaboration was with a foreign university.
    Date: 2011–03
  14. By: Antonelli Cristiano; Scellato Giuseppe (University of Turin)
    Abstract: The analysis of social interactions as drivers of economic dynamics represents a growing field of the economics of complexity. Social interactions are a specific form of interdependence whereby the changes in the behavior of other agents affect utility functions for households and production functions for producers. In this paper, we apply the general concept of social interactions to the area of the economics of innovation and we articulate the view that knowledge interactions play a central role in the generation of new technological knowledge so that innovation becomes the emergent property of a system, rather then the product of individual actions. In particular, we articulate and test the hypothesis that different layers of knowledge interactions play a crucial role in determining the rate of technological change that each firm is able to introduce. The paper presents an empirical analysis of firm level total factor productivity (TFP) for a sample of 7020 Italian manufacturing companies observed during the years 1996-2005 that is able identify the distinctive role of regional, inter-industrial and localized intra-industrial knowledge interactions as distinctive and significant determinants, together with internal research and innovation efforts, of changes in firm level TFP
    Date: 2011–03
  15. By: Griffith, Rachel; Miller, Helen; O'Connell, Martin
    Abstract: The literature suggests that tax rates on mobile activities should fall to zero. Intellectual property is very mobile and has grown in importance. Firms can use intellectual property to shift income offshore and reduce their corporate income tax liability. Yet most intellectual property is held in relatively high tax countries. We estimate the impact of corporate taxes on where firms hold patents. We consider domestic and international taxes, and control for the potential non-tax costs and benefits associated with different locations. We allow heterogeneity across industries, firm size and, most importantly, unobservable patent specific heterogeneity in the responsiveness of patent location to tax. Our results suggest that, on average, corporate tax rates have a negative impact on the likelihood of a firm choosing a location, and that there is substantial heterogeneity in responses. We simulate the impact of recent reforms that apply a lower tax rate to patent income, finding that they attract patent income but result in losses in government revenues.
    Keywords: corporate tax; intellectual property; multinational firms; Patent Box
    JEL: F21 F23 H3 O3
    Date: 2011–06
  16. By: Antonelli Cristiano; Fassio Claudio (University of Turin)
    Abstract: This paper contributes a novel approach to appreciating the role of external knowledge in the innovative process based upon the notion of knowledge generation function. In so doing this paper impinges upon the rich literature on spillovers and yet introduces a sharp discontinuity that highlights the role of external knowledge as a necessary and costly input into the generation of new technological knowledge. It attempts to identify the contribution of external knowledge directly to the generation of technological innovations and to explore the matching between kinds of technological innovations that are introduced according to its sources. This approach enables to avoid the systematic confusion between the effects of external knowledge upon knowledge exploitation and its effects on knowledge generation and is able to assess more directly and specifically the role of horizontal and vertical flows of external knowledge on both the rate and the direction of introduction of new technologies. The results of the empirical investigations confirm that external knowledge is a crucial input into the generation of new technological knowledge and in the eventual exploitation to introduce technological innovations. Moreover it shows that external knowledge generated by upstream suppliers and flowing vertically, embodied in capital goods, within interindustrial filieres, plays a strong and positive role on the introduction of process innovations, while external knowledge that flows horizontally from competitors has stronger effects on the introduction of product innovations
    Date: 2011–03

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