nep-ino New Economics Papers
on Innovation
Issue of 2012‒04‒03
eight papers chosen by
Steffen Lippert
University of Otago, Dunedin

  1. How does obtaining intellectual property rights impact technology commercialization strategy? Reconciling the competing effects on licensing vs. financing By Simon Wakeman
  2. The relationship between market structure and innovation in industry equilibrium: a case study of the global automobile industry By Aamir Rafique HASHMI; Johannes VAN BIESEBROECK
  3. Uncertainty, flexible labour relations and R&D expenditure By Grassi, Emanuele; Di Cintio, Marco
  4. Brain-Based Guided Experience Approach to Teaching Entrepreneurship Students the Practice of Innovation By Ronald Jean Degen
  5. Endogenous human capital formation, distance to frontier and growth By Basu, Sujata; Mehra, Meeta K
  6. Human Capital, Innovation, and Climate Policy: An Integrated Assessment By Carraro, Carlo; De Cian, Enrica; Tavoni, Massimo
  7. Innovation and employment in economic cycles. By Mario Pianta; Matteo Lucchese

  1. By: Simon Wakeman (ESMT European School of Management and Technology)
    Abstract: The importance of obtaining intellectual property (IP) rights for commercializing innovation is well established. Separate streams of literature have shown a positive relationship between IP rights and both product licensing and third-party (especially VC) financing. However, since raising third-party finance enables an innovating firm to continue commercializing its innovation alone, product licensing and raising third-party finance may be considered substitutes and the impact of obtaining IP rights on commercialization mode is unclear. This paper attempts to reconcile these two competing effects of obtaining IP rights. The paper empirically examines the relationship between the status of the primary patent covering an innovation and whether the innovating firm’s licenses its innovation or raises external finance. The results show that patent filing significantly increases the likelihood of raising finance, while patent allowance has a positive effect on licensing. These results suggest that patent filings may act signals to financial investors but when it comes to licensing IP rights matter most as appropriability mechanisms.
    Keywords: intellectual property, licensing, financing, innovation, strategy
    Date: 2012–03–22
  2. By: Aamir Rafique HASHMI; Johannes VAN BIESEBROECK
    Abstract: We first estimate a dynamic game for the global automobile industry and then compute a Markov Perfect equilibrium to study the equilibrium relationship between market structure and innovation. The key state variable in the model is the efficiency level of each firm and the market structure is characterized by the vector of efficiency levels across all firms. Efficiency is estimated to be stochastically increasing in the dynamic control-innovation-which is proxied by patenting behavior. Equilibrium innovation is a function of all state variables in the industry and the cost of R&D which includes a privately observed cost shock. We find that it exhibits the following patterns: 1) innovation by the industry leader is decreasing in the efficiency of other firms; 2) innovation is decreasing in the efficiency dispersion; 3) innovation is more concentrated that efficiency; 4) innovation is declining in the number of active firms; 5) the innovation gap between the leader and other firms increases with competition.
    Date: 2012–01
  3. By: Grassi, Emanuele; Di Cintio, Marco
    Abstract: This paper examines the effects of uncertainty and flexible labour contracts on the Research and Development (R&D) expenditure. Using a panel of Italian manufacturing firms, we find a hump-shaped relationship between workforce flexibility and R&D outlays. Moreover, as predicted by the real options theory, our results suggest that product market uncertainty reduces R&D efforts and that flexible labour contracts countervail the adverse effect of uncertainty on R&D.
    Keywords: Real options theory; R&D; uncertainty; temporary workers
    JEL: D21 D81 O31
    Date: 2012–03–26
  4. By: Ronald Jean Degen (International School of Management Paris)
    Abstract: This paper presents a new approach to coaching entrepreneurship students to practice innovation and to identify adequate high-impact business opportunities. The coaching approach is based on the methodology for guided experience learning that was developed by Caine, Caine, McClintic, and Klimek (2009) in 12 Brain/Mind Learning Principles in Action, and on the innovation framework that was introduced by Verganti (2009) in Design-Driven Innovation. The cognitive perspective of creativity explained by Weisberg (2006) in his book Creativity is used to show how the practice of innovation can be learned. The model used for the creative process is based on Wallas? (1926) The Art of Thought, and on recent neurological findings on the deliberate and spontaneous pathways to creativity, that were described by Carson (2010) in Your Creative Brain. For the validation of radical innovations, the effectual process, described by Sarasvathy (2008) in Effectuation, is used.
    Keywords: brain-based guided experience, teaching entrepreneurship, practice of innovation, innovation framework, cognitive perspective of creativity, creativity process
    JEL: M0 M1
    Date: 2012–03–26
  5. By: Basu, Sujata; Mehra, Meeta K
    Abstract: We examine human capital's contribution to economy-wide technological progress through two channels -- imitation and innovation -- innovation being more skilled-intensive than innovation. We develop a growth model considering an endogenous ability-driven skill acquisition decision of an individual. We show that skilled labor is growth enhancing in the ``imitation-innovation" regime and the ``innovation-only" regime whereas unskilled labor is growth enhancing in the ``imitation-only" regime. Steady state exists and, in the long run, an economy may or may not converge to the world technology frontier, depending on its initial position and the growth rate of the frontier economy. In the diversified regime, technological progress raises the return to ability and generates an increase in wage inequality between and within groups -- consistent with the pattern observed across countries.
    Keywords: Economic Growth; Endogenous Labor Composition; Imitation-Innovation; Convergence; Wage Inequality
    JEL: O43 I21 O3
    Date: 2011–07–14
  6. By: Carraro, Carlo; De Cian, Enrica; Tavoni, Massimo
    Abstract: This paper looks at the interplay between human capital and innovation in the presence of climate and educational policies. Using recent empirical estimates, human capital and general purpose R&D are introduced in an integrated assessment model that has been extensively applied to study the climate change mitigation. Our results suggest that climate policy stimulates general purpose as well as clean energy R&D but reduces the incentive to invest in human capital formation. Human capital increases the productivity of labour and the complementarity between labour and energy drives its pollution-using effect (direct effect). When human capital is an essential input in the production of generic and energy dedicated knowledge, the crowding out induced by climate policy is mitigated, thought not completely offset (indirect effect). The pollution-using implications of the direct effect prevail over the indirect contribution of human capital to the creation of new and cleaner knowledge. A policy mix that combines educational as well as climate objectives offsets the human capital crowding-out with a moderate, short-term consumption loss. Human capital is complement to all forms of innovation and an educational policy stimulates both energy and general purpose innovation. This result has important policy implications considering the growing concern that effective climate policy is conditional on solid economic development and therefore it needs to be supplemented by other policy targets.
    Keywords: Climate Policy; Human Capital; Innovation; Sustainable Development
    JEL: O33 O41 Q43
    Date: 2012–03
  7. By: Mario Pianta (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo"); Matteo Lucchese (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo")
    Abstract: This article explores the way economic cycles influence the relationship between innovation and employment in manufacturing industries. We investigate whether the ups and downs of cycles alter the possibility of exploiting technological opportunities and affecting patterns of job creation. A model that explains industries’ employment change by combining technology and demand is proposed; the empirical test is based on data on 21 manufacturing sectors from 1995 to 2007 for Germany, France, Italy, the UK, the Netherlands and Spain. Results show that, in upswings, employment change is affected by new products, exports and wage growth, while during downswings new processes contribute to restructuring and job losses.
    Keywords: Innovation, Cycles, Employment, Demand.
    JEL: L6 J20 O30 E32
    Date: 2012
  8. By: James B. Ang; Jakob B. Madsen
    Abstract: This paper examines the importance of the domestic R&D stock and foreign knowledge spillovers on total factor productivity for six Asian miracle economies over the period from 1955 to 2006. The productivity effects of international knowledge spillovers through the following channels are considered: imports, exports, inward foreign direct investment, patents, geographical proximity and no specific channel. The estimates show that knowledge has been transmitted through all the channels considered but that the import channel and the no-weighting channel have probably been the most important ones for the Asian miracle economies.
    Keywords: Asian miracle; knowledge spillovers; R&D; TFP
    JEL: O10 O30 O40
    Date: 2012–03

This nep-ino issue is ©2012 by Steffen Lippert. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.