nep-ino New Economics Papers
on Innovation
Issue of 2012‒04‒23
fourteen papers chosen by
Steffen Lippert
University of Otago, Dunedin

  1. Innovation strategies and employment in Latin American firms By Crespi, Gustavo; Zuniga, Pluvia
  2. Open innovation, contracts, and intellectual property rights: an exploratory empirical study By Hagedoorn, John; Ridder, Ann-Kristin
  3. Intellectual property rights, technical progress and the volatility of economic growth By Chu, Angus C.; Leung, Charles Ka Yui; TANG, C. H. Edward
  4. The World upside down, China's R&D and innovation strategy By Guilhem Fabre; Stephane Grumbach
  5. Crowdsourcing patent application review: leveraging new opportunities to capitalize on innovation? By Ghafele, Roya; Gibert, Benjamin
  6. Properties of knowledge base and firm survival: Evidence from a sample of French manufacturing firms By Alessandra Colombelli; Jackie Krafft; Francesco Quatraro
  7. Employment effect of innovation: microdata evidence from Bangladesh and Pakistan By Waheed, Abdul
  8. Human Capital, Innovation, and Climate Policy: An Integrated Assessment By Carlo Carraro; Enrica De Cian; Massimo Tavoni
  9. Patent Disclosure in Standard Setting By Bernhard Ganglmair; Emanuele Tarantino
  10. Patent Pendency, Learning Effects, and Innovation Importance at the US Patent Office By Pierre Regibeau; Katharine Rockett; Samrawit Mariam
  11. An exploration of agricultural grassroots innovation in South Africa and implications for innovation indicator development By Letty, Brigid; Shezi, Zanele; Mudhara, Maxwell
  12. Climate Innovation - The Case of the Central German Chemical Industry By Wilfried Ehrenfeld
  13. Patents Wars (2ème partie) : Les conséquences : la paralysie de l'industrie, le freinage de l'innovation By Pierre-André Mangolte
  14. Cross-Border Intellectual Property Rights: Contract Enforcement and Absorptive Capacity By Alireza Naghavi; Yingyi Tsai

  1. By: Crespi, Gustavo (Competitiveness and Innovation Division, Institutions for Development Department, Inter-American Development Bank); Zuniga, Pluvia (UNU-MERIT/MGSoG, University of Maastricht)
    Abstract: This study examines the impact of innovation strategies on employment growth in four Latin American countries (Argentina, Chile, Costa Rica, and Uruguay) using micro-data for manufacturing firms from innovation surveys. Building on the model proposed by Harrison et al. (2008), we relate employment to three innovation strategies: make only (R&D), buy only (external R&D, licensing of patents and know-how, technical assistance, and other external innovation activities) and make and buy (mixed strategy). Firms that conduct in-house innovation activities ("make only") have the greatest impact on employment; the "make and buy" strategy comes in second. Similar results are found for small firms. These results highlight the importance of fostering in-house technological efforts not only for innovation per se, but also to promote growth in firm employment. The impact of "make only" strategies is greater in high-tech industries, whereas "make only" and "make and buy" have a similar impact on employment in low-tech industries. Finally, the study provides evidence of the mechanisms through which innovation strategies affect employment. The findings show that innovation strategies enhance technological innovation, but their impact differs between product and process innovation. Product innovation is mainly motivated by in-house technology investments, followed by mixed strategies, whereas process innovation is basically driven by "buy" strategies.
    Keywords: innovation, employment, external R&D, Latin America, innovation surveys
    JEL: O12 O14 O31 O33 O40 J21
    Date: 2012
  2. By: Hagedoorn, John (UNU-MERIT/MGSoG, and Department of Organization & Strategy, School of Business and Economics, Maastricht University); Ridder, Ann-Kristin (Department of Organization & Strategy, School of Business and Economics, Maastricht University)
    Abstract: Our exploratory empirical study, based on a series of in-depth interviews and a survey of firms, searches for answers on a number of questions that deal with the role of formal contracts and intellectual property rights in the context of open innovation. We find that firms active in open innovation have a strong preference for the governance of their open innovation relationships through formal contracts. These contracts are relevant from both a control and a process monitoring perspective. Also, despite the open nature of open innovation, firms still see intellectual property rights as highly relevant to the protection of their innovative capabilities. In a first attempt to explain this preference for intellectual property rights by open innovation firms, we find the degree of openness of firms, their legalistic attitude, and the competitive dynamics of their product market environment to be related to this preference.
    Keywords: open innovation, contracts, intellectual property rights
    JEL: K11 K12 L24
    Date: 2012
  3. By: Chu, Angus C.; Leung, Charles Ka Yui; TANG, C. H. Edward
    Abstract: In this note, we analyze the effects of intellectual property rights on the volatility of economic growth. Our analysis is motivated by the observation that the strengthening of patent protection and the increase in R&D in the US coincide with a reduction in growth volatility beginning in the mid 1980’s. To analyze this phenomenon, we develop an R&D-based growth model with aggregate uncertainty in the innovation process and apply the model to ask whether increasing patent strength and R&D can lead to a significant reduction in growth volatility. We find a small but non-negligible effect that explains no less than 10% of the observed reduction in growth volatility in the US.
    Keywords: Economic growth; Intellectual property rights; Growth volatility
    JEL: E32 O34 O33
    Date: 2012–04
  4. By: Guilhem Fabre (CCJ - Chine, Corée, Japon - CNRS : UMR8173 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Université Paris VII - Paris Diderot); Stephane Grumbach (LIAMA - NETQUEST - CIRAD - CNRS - INRA - INRIA - Chinese Academy of Science (CAS) - Institute of Automation, Chinese Academy of Sciences)
    Abstract: R&D and innovation have become much more strategic than ever before for the growth of China as well as for its global societal upgrade. The Chinese authorities have designed an innovation strategy to face new economic and social challenges. The first part of the paper is focused on the emergence of the policy, in the 2006-2020 Plan for S&T, with a historical perspective explaining the legacy of the past in today's choices. In the second part, we illustrate China's catching up strategy through four sectors (high-speed trains, aeronautics, clean energy, IT) and discuss its potential impact on the world industry.
    Keywords: R&D; innovation; strategy; high speed trains; aeronautics; clean energy; IT
    Date: 2012–02–28
  5. By: Ghafele, Roya; Gibert, Benjamin
    Abstract: This paper evaluates the value proposition of public-private partnerships to patent review by analyzing the potential impact of crowdsourced prior art search on the European patent system. This first requires outlining the current challenges patent offices in Europe face due to their tremendous workload. The worst consequence of this for the innovation system – a drop in granted patent quality - is then described. Low standards in patent quality are believed to be the result of enormous strain on, and unreasonable expectations of, patent offices. Crowdsourcing offers a solution to many of these problems and presents a valuable resource for patent offices if the process is managed efficiently. The United States Patent and Trademark Office (USPTO) and Japanese Patent Office’s (JPO) pilot projects in community patent review are presented as opportunities from which Europe can learn. Promoting public-private partnerships in the management of crowdsourced prior art search can be a valuable solution to mitigate current challenges.
    Keywords: crowdsourcing; patent quality; patent offices; innovation
    JEL: O38 O34
    Date: 2011–06
  6. By: Alessandra Colombelli (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR6227 - Université de Nice Sophia Antipolis (UNS)); Jackie Krafft (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR6227 - Université de Nice Sophia Antipolis (UNS)); Francesco Quatraro (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR6227 - Université de Nice Sophia Antipolis (UNS))
    Abstract: The paper analyzes the effects of the properties of firms' knowledge base on the survival likelihood of firms. Drawing upon the analysis of the patterns of co-occurrence of technological classes in patent applications, we derive the coherence, variety and cognitive distance indexes, accounting respectively for technological complementarity, differentiation and (dis)similarity in the firms' patent portfolios. The results of our analysis are in line with the previous literature, showing that innovation enhances the survival likelihood of firms. In addition, we show that the search strategies at work in the development of firms' knowledge base matter in reducing the likelihood of a failure event. Knowledge coherence and variety appear to be positively related to firms' survival, while cognitive distance exerts a negative effect. We conclude that firms able to exploit the accumulated technological competences have more chances to be successful in competing durably in the market arena, and derive some policy implications concerning the role of public intervention in the orientation of search efforts in local contexts.
    Keywords: Knowledge coherence; variety; cognitive distance; firms' survival
    Date: 2012–04–06
  7. By: Waheed, Abdul (UNU-MERIT/MGSoG, Maastricht University)
    Abstract: The analysis of the impact of innovation on employment growth is an important topic for policy makers, because (un)employment is an important social topic, and the effects of innovation on employment are often poorly understood. Despite the significant importance of this relationship, very few studies on this topic for developing countries are yet available compared with developed ones. This paper contributes to this scanty literature by investigating the employment effect of innovation for two South Asian developing countries: Bangladesh and Pakistan. We further analyze whether this relationship shows country-specific and industry-specific differences. Finally, we investigate whether complementarity between process and product innovation exists or which effect (displacement or compensation) of one particular innovation type dominates the other, in order to influence employment. One of the striking findings of our analysis is that both product and process innovation spur employment in this region as a whole, regardless of low-tech and high-tech industries, even after controlling for a number of firm-specific characteristics. Moreover, although both innovation types also have significantly positive impacts on employment growth of all Bangladeshi and of all Pakistani firms separately, they are important factors for employment growth of only high-tech Bangladeshi firms and of only low-tech Pakistani firms. Moreover, we observe a strong complementarity between both innovation types in order to stimulate employment. Contrary to the most previous studies, we witness an insignificantly negative effect of labour cost on employment change, perhaps owing to the availability of labour force to hire at cheaper rates compared with developed countries. We notice that some of the innovation determinants exert different influences across industries and across both countries. The same is the case for the determinants of employment growth.
    Keywords: Bangladesh, Employment growth, Pakistan, Product innovation, Process innovation Process innovation
    JEL: J23 O31 O33
    Date: 2012
  8. By: Carlo Carraro (University of Venice, Fondazione Enrico Mattei, CEPR, CESifo and CMCC); Enrica De Cian (Fondazione Enrico Mattei and CMCC); Massimo Tavoni (Fondazione Enrico Mattei and CMCC)
    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 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, Innovation, Human capital
    JEL: O33 O41 Q43
    Date: 2012–03
  9. By: Bernhard Ganglmair; Emanuele Tarantino
    Abstract: In a model of industry standard setting with private information about firms' intellectual property, we analyze (a) firms' incentives to contribute to the development and improvement of a standard, and (b) firms' decision to disclose the existence of relevant intellectual property to other participants of the standard-setting process. If participants can disclose after the end of the process and fully exploit their bargaining leverage, then patent holders aspire to disclose always after the end of the process. However, if a patent holder cannot rely on the other participants to always contribute to the process, then it may be inclined to disclose before the end of the process. We also analyze under which conditions firms enter cross-licensing agreements that eliminate the strategic aspect of patent disclosure, and show that, in an institutional setting that implies a waiver of intellectual property rights if patents are not disclosed timely, firms aspire to disclose before the end of the process. Finally, we study the effect of product-market competition on patent disclosure.
    JEL: D71 D83 L15 O34
    Date: 2012–04
  10. By: Pierre Regibeau; Katharine Rockett; Samrawit Mariam
    Abstract: We replicate and extend the results of Regibeau and Rockett (2010) on a new data set. We confirm that importance of a patent and the delay in approval at the patent office are negatively related. This relation survives even if we do not control for learning effects and so suggests that carefully defining the technology is sufficient to recover the negative relation. We use new measures to test for the existence of patent “thickets”, thereby ruling out some strategic considerations in delay behaviour. It appears that delay is attributable to patent office, not filer, behaviour in our sample. A more careful analysis of the possible effect of examiner workload finds that larger workloads per examiner are associated with shorter approval time, lending credence to Lemley and Shapiro’s concern that heavy workloads force examiners to devote too little time to each patent review.
    Date: 2012–03–01
  11. By: Letty, Brigid (Institute of Natural Resources, South Africa); Shezi, Zanele (Farmer Support Group, University of KwaZulu-Natal); Mudhara, Maxwell (Farmer Support Group, University of KwaZulu-Natal)
    Abstract: The core of this paper consists of two case studies of 'grassroots' innovation led by innovative smallholder farmers in a village in South Africa - one about developing an alternative production practice for growing potatoes, and the other about introducing a new cash crop (cherry peppers) and the establishment of a new marketing relationship. One of the purposes of the study was to explore questions about the development of innovation indicators that might support policy and management concerned with this kind of innovation. The case studies are therefore located in the context of a review of existing science, technology and innovation indicators and their limitations with respect to this area of agricultural innovation. Another purpose was to identify and clarify the position of 'grassroots' innovation within other perspectives on different kinds of innovation system (or mode of innovation) in agriculture in developing countries. The case studies are also therefore set in the context of a review of literature about these other system perspectives, focusing in particular in 'formal' and 'informal' systems, and on 'grassroots' and 'participatory' modes of innovation involving interactions between formal and informal systems. The combination of case studies and broader reviews leads to two main conclusions: (1) grassroots and other participatory modes of agricultural innovation merit much greater policy attention than they have received; but (2) the base of available analysis and indicators about these approaches to innovation and their effectiveness is still inadequate to inform and support policy and management in this area. The paper therefore concludes with a discussion of steps that might be taken to improve the available information, understanding and indicators about these modes of innovation.
    Keywords: Agriculture, innovation, grassroots innovation, informal economy
    JEL: O13 O17 O33
    Date: 2012
  12. By: Wilfried Ehrenfeld
    Abstract: In this article, we describe the results of a multiple case study on the indirect corporate innovation impact of climate change in the Central German chemical industry. We investigate the demands imposed on enterprises in this context as well as the sources, outcomes and determining factors in the innovative process at the corporate level. We argue that climate change drives corporate innovations through various channels. A main finding is that rising energy prices were a key driver for incremental energy efficiency innovations in the enterprises’ production processes. For product innovation, customer requests were a main driver, though often these requests are not directly related to climate issues. The introduction or extension of environmental and energy management systems as well as the certification of these are the most common forms of organizational innovations. For marketing purposes, the topic of climate change was hardly utilized so far. As the most important determinants for corporate climate innovations, corporate structure and flexibility of the product portfolio, political asymmetry regarding environmental regulation and governmental funding were identified.
    Keywords: climate change, innovation, chemical industry, Central Germany
    JEL: Q55 O33 O38 Q54 O31
    Date: 2012–04
  13. By: Pierre-André Mangolte (CEPN - Centre d'Economie de l'Université Paris Nord - Université Paris XIII - Paris Nord - CNRS : UMR7234)
    Abstract: Dans cette deuxième partie de l'étude "Patent Wars", et dans une approche toujours comparative, sont analysées les conséquences pour l'activité industrielle et le changement technique des différentes guerres des patents. Dans les trois industries émergentes du cinéma, de l'automobile et de l'aviation, cohabitent alors deux types de modèles économiques, les modèles proprement industriels, accompagnés ou non par des titres, et les modèles plus spécifiquement construits sur la détention et l'exploitation de patents. Ces deux types de modèles économiques sont clairement contradictoires. L'importance accordée aux patents et aux droits des inventeurs et propriétaires de patents aux Etats-Unis explique en effet très largement les évolutions et performances globales, c'est-à-dire la suprématie mondiale du cinéma français sur le cinéma américain jusqu'en 1914, un phénomène étonnant à bien des égards, mais aussi le retard, en dépit de l'invention majeure et de l'avance des frères Wright, et même si d'autres éléments interviennent ici, de l'industrie américaine de la construction des avions; l'automobile représentant alors une sorte de contre-exemple, explicable par le déroulement particulier de l'affaire du brevet Selden. L'étude, détaillée et comparative, montre précisément dans chacune des industries, en quoi et dans quelle mesure les différents "patents wars" ont freiné le développement des activités industrielles et même l'innovation.
    Keywords: guerre des brevets; industrie émergente; innovation; Edison; frères Wright; Selden; Henry Ford
    Date: 2012–03–26
  14. By: Alireza Naghavi (Department of Economics, University of Bologna and Fondazione Eni Enrico Mattei); Yingyi Tsai (Department of Applied Economics, National University of Kaohsiung)
    Abstract: This paper studies cross-border intellectual property rights (IPR) as a North-South contract using a Nash bargaining approach and distinguishes between the outcome and its actual enforcement. The absorptive capacity of the Southern country to exploit technology transfer plays a key role in the negotiated level of IPRs and its post-treaty enforcement. The optimal level of IPR protection relates positively to absorptive capacity. This provides a rationale for the longer time-frame provided to least developed countries in Article 66 of TRIPS to implement its provisions. In addition, monitoring is only effective in preventing contract violation up to a critical level of absorptive capacity. We relate this to the US Trade Representative “Special 301” report, which flags countries that deny adequate IPR protection as “priority watch list”. While disputes with less developed economies are promptly resolved, emerging economies, where most losses from copyright piracy originates from, continue to remain on the list.
    Keywords: Intellectual Property Rights, TRIPS, Nash Bargaining, Contract Enforcement, Development, Absorptive Capacity, Monitoring
    JEL: O34 F13 F53 D78 L10 O33 C70
    Date: 2012–04

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