nep-ino New Economics Papers
on Innovation
Issue of 2012‒05‒15
nineteen papers chosen by
Steffen Lippert
University of Otago, Dunedin

  1. Producing Innovations: Determinants of Innovativity and Efficiency By Jaap W.B. Bos; Ryan C.R. van Lamoen; Mark W.J.L. Sanders
  2. Innovation and employment: Some evidence from European sectors By Francesco Bogliacino; Marco Vivarelli
  3. Innovation and Foreign Technology in Italy,1861-2011 By Federico Barbiellini Amidei; John Cantwell; Anna Spadavecchia
  4. Simulating the spillover benefits from R&D by a small producer country embedded in a co-authorship network: Aquaculture R&D in Germany By Guettler, Stefan; Seidel-Lass, Linda; Mueller, Rolf A.E.
  5. Vertical integration, knowledge disclosure and decreasing rival's cost By Chrysovalantou Liou; Emmanuel Petrakis
  6. Variety of Search and Innovation: A Comparative Study of US Manufacturing and Knowledge Intensive Business Services Sectors By Cosh, A.; Zhang, J.
  7. Sunk costs, extensive R&D subsidies and permanent inducement effects By Pere Arqué-Castells; Pierre Mohnen
  8. Sunk costs, extensive R&D subsidies and permanent inducement effects By Arqué-Castells, Pere; Mohnen, Pierre
  9. Antitrust in Innovative Industries: the Optimal Legal Standards By Giovanni Immordino; Michele Polo
  10. Pharmaceutical patents and prices : a preliminary empirical assessment using data from India By Duggan, Mark; Goyal, Aparajita
  11. Open Innovation, the Haldane Principle and the new Production of Knowledge: Science Policy and University-Industry Links in the UK after the Financial Crisis By Hughes, A.
  12. Spatial Competition in Quality, Demand Induced Innovation, and Schumpeterian Growth By Raphael Auer; Philip Sauré
  13. A Microfoundation for Normalized CES Production Functions with Factor-Augmenting Technical Change By Jakub Growiec
  14. Firm Size Distribution under Horizontal and Vertical Innovation By Pedro Mazeda Gil; Fernanda Figueiredo
  15. Technological Dynamics and Social Capability: Comparing U.S. States and European Nations By Jan Fagerberg; Maryann Feldman; Martin Srholec
  16. Equilibrium Innovation Ecosystems: The Dark Side of Collaborating with Complementors By A. Mantovani; F. Ruiz-Aliseda
  17. Interregional Cooperation in the Framework Programme: A Gravity Model By Grazia Cecere; Nicoletta Corrocher
  18. The adoption of innovative cropping systems under price and production risks: a dynamic model of crop rotation choice By Ridier, Aude; Chaib, Karim; Roussy, Caroline
  19. Design et marketing des produits alimentaires : quelles sont les perspectives d'innovation ? By Céline Gallen; Gaëlle Pantin-Sohier

  1. By: Jaap W.B. Bos; Ryan C.R. van Lamoen; Mark W.J.L. Sanders
    Abstract: In this paper we estimate, using stochastic frontier estimation techniques, the relationship between R&D inputs a innovative output in a sample of Dutch firms. We find that over 63% of between firm variation in observed "innovativeness" can be attributed to inefficiency in the innovation process. The remainder is due to differences in the innovation production process itself. We derive our results including the usual controls and find in addition that large firms tend to look more innovative. But when considered more carefully large firms turn out to be less efficient. With standard estimation techniques this inefficiency is masked by a more productive innovation technology. We thus find evidence of economies of scale in line with the Schumpeter mark II hypothesis (large firms are more innovative), but also show that large firms tend to operate at lower levels of efficiency.
    Keywords: Innovation, Scale Economies, Frontier
    JEL: D21 G21 L10 O3
    Date: 2011–09
  2. By: Francesco Bogliacino (Universidad EAFIT and RISE Group, Medellin); Marco Vivarelli (DISCE, Università Cattolica)
    Abstract: In this study we use a unique database covering 25 manufacturing and service sectors for 16 European countries over the period 1996-2005, for a total of 2,295 observations, and apply GMM-SYS panel estimations of a demand-for-labour equation augmented with technology. We find that R&D expenditures have a job-creating effect, in accordance with the previoustheoretical and empirical literature discussed in the paper. Interestingly enough, the labourfriendly nature of R&D emerges in both the flow and the stock specifications. These findings provide further justification for the European Lisbon-Barcelona targets.
    Keywords: Technological change, corporate R&D, employment, product innovation, GMMSYS.
    JEL: O33
    Date: 2011–12
  3. By: Federico Barbiellini Amidei (Bank of Italy); John Cantwell (Rutgers University); Anna Spadavecchia (University of Reading)
    Abstract: The paper explores the long run evolution of Italy's performance in technological innovation as a function of international technology transfer, reconstructing the different phases and dimensions of Italian innovative activity, tracking the transfer of foreign technological knowledge through a number of channels, analysing the impact of imported technology. The study is based on a newly constructed dataset, over the 1861-2009 period, composed of variables related to: innovation activity performance; foreign technology transfer; domestic absorptive and innovative capability. The analysis highlights, also by econometric assessment, the significant contribution of foreign technology both to innovation activity results and to productivity growth. Differences across channels of technology transfer and historical phases emerge, also in connection with the evolution of human capital endowment and domestic innovative capacity. Machinery imports contributed positively both to innovation activity and to productivity growth; inward FDI contributed positively to productivity growth, but not to indigenous innovation activity; the accumulation of technical human capital fuelled both. In the long Italian Golden Age, for the first time the association of foreign technological knowledge with indigenous innovation processes strengthened productivity significantly. More recently instead the dismal productivity growth is negatively associated with formalised innovation activity under-performance and reduced imports of disembodied technology
    Keywords: Italy,Technology Transfer,Innovation,Absorptive Capability,Patenting
    JEL: N10 O31 O33 F23 O19
    Date: 2011–10
  4. By: Guettler, Stefan; Seidel-Lass, Linda; Mueller, Rolf A.E.
    Keywords: Aquaculture R&D, Bibliometric Network Analysis, DREAM simulation, Agricultural and Food Policy, Research and Development/Tech Change/Emerging Technologies,
    Date: 2012
  5. By: Chrysovalantou Liou; Emmanuel Petrakis
    Abstract: We study vertical integration incorporating the fact that it creates the possibility of knowledge disclosure. We consider a setting where, through integrating, an upstream monopolist learns its downstream partner’s innovation, and can disclose it to its downstream rival. We show that a vertically integrated firm chooses to fully disclose its knowledge to its downstream rival. Knowledge disclosure intensifies downstream competition but, at the same time, expands the downstream market size. We also show that, due to knowledge disclosure, vertical integration increases firms’ innovation incentives, consumer and total welfare, and decreases, instead of raises, the rival’s cost.
    Keywords: Vertical integration, R&D investments, Market floreclosure, Knowledge disclosure
    JEL: L13 L22 L42
    Date: 2012–04
  6. By: Cosh, A.; Zhang, J.
    Abstract: Whilst the variety of search activities promotes innovation, there is a central tension between a firm's potential benefits from wide and diverse search activities and its ability to reap these potential benefits. In this paper, we argue that the potential and realised benefits from a firm' search activities are influenced not only by its resources and capabilities, but also by the nature of innovation activities at sector level. Drawing upon a statistical analysis of a large scale survey conducted in the US, we examine the impact of a firm's external search strategy along two dimensions (search intensity and direction) on its innovative performance. Our findings suggest that manufacturing firms tend to benefit from wide and diversified search activities whereas knowledge intensive business services (KIBS) firms tend to benefit from narrow and specialised search activities. Furthermore, when taking account of firm size and absorptive capacity, a more nuanced picture emerges. Implications and contributions to the innovation search literature are discussed.
    Keywords: variety of search, open innovation, SME, manufacturing, Knowledge intensive business services, US survey
    JEL: L25 O14 O32
    Date: 2012–03
  7. By: Pere Arqué-Castells (Universitat Autònoma de Barcelona & IEB); Pierre Mohnen (University of Maastricht)
    Abstract: We study whether there is scope for using subsidies to smooth out barriers to R&D performance and expand the share of R&D firms in Spain. We consider a dynamic model with sunk entry costs in which firms’ optimal participation strategy is defined in terms of two subsidy thresholds that characterise entry and continuation. We compute the subsidy thresholds from the estimates of a dynamic panel data type-2 tobit model for an unbalanced panel of about 2,000 Spanish manufacturing firms. The results suggest that “extensive” subsidies are a feasible and efficient tool for expanding the share of R&D firms.
    Keywords: R&D, persistence, subsidies, dynamic models
    JEL: H2 O2 C1 D2
    Date: 2012
  8. By: Arqué-Castells, Pere (Universitat de Barcelona, and Institut d’Economia de Barcelona); Mohnen, Pierre (UNU-MERIT / MGSOG Maastricht University)
    Abstract: We study whether there is scope for using subsidies to smooth out barriers to R&D performance and expand the share of R&D firms in Spain. We consider a dynamic model with sunk entry costs in which firms’ optimal participation strategy is defined in terms of two subsidy thresholds that characterize entry and continuation. We compute the subsidy thresholds from the estimates of a dynamic panel data type-2 tobit model for an unbalanced panel of about 2,000 Spanish manufacturing firms. The results suggest that “extensive” subsidies are a feasible and efficient tool for expanding the share of R&D firms.
    Keywords: R&D, Persistence, Subsidies, Dynamic models
    JEL: H25 O23 O31 O38 C15 D22
    Date: 2012
  9. By: Giovanni Immordino; Michele Polo
    Abstract: We study the interaction between a ?rm that invests in research and, if successful, undertakes a practice to exploit the innovation, and an enforcer that sets legal standards, ?nes and accuracy. In innovative industries deterrence on actions interacts with deterrence on research. A per-se legality rule prevails when the practice increases expected welfare, moving to a discriminating rule combined with type-I accuracy for higher probabilities of social harm. Moreover, discriminating rules should be adopted more frequently in traditional industries than in innovative environments; patent and antitrust policies are substitutes; additional room for per-se (illegality) rules emerges when ?nes are bounded. Keywords: legal standards, accuracy, antitrust, innovative activity, enforcement. JEL classi?cation: D73, K21, K42, L51.
    Date: 2012
  10. By: Duggan, Mark; Goyal, Aparajita
    Abstract: The enforcement of stringent intellectual property rights in the pharmaceutical sector of developing countries generates considerable controversy, due to both the extensive research investment and the public policy importance of this sector. This paper explores the likely effects of enforcing product patents on prices and utilization of drugs in the Central Nervous System market in India. The Central Nervous System segment is the second largest therapeutic category in terms of retail sales in the world and is one of the fastest growing segments in India. Using information on product patents granted by the government and panel data on pharmaceutical prices and utilization from 2003-2008, the paper finds limited evidence of overall price increase following the introduction of product patents. However, there appear to be heterogeneous effects on prices by the type of product patent granted on drugs, implying the need for a careful examination of the product patent portfolio.
    Keywords: Markets and Market Access,Pharmaceuticals&Pharmacoeconomics,Real&Intellectual Property Law,E-Business,Access to Markets
    Date: 2012–05–01
  11. By: Hughes, A.
    Abstract: This paper analyses science policy resource allocation in the light of a comparison of the open innovation and Mode 2 new production of knowledge conceptual frameworks. It provides a brief historical review of the evolution of science funding and the application of the Haldane principle in the UK. The core of the paper analyses academic and business attitudes to university-industry links using two recent large scale surveys and argues that there is a largely false dichotomy drawn between applied and basic research. University-industry links are already extensive and encompass a wide range of interactions than those captured by the usual debate over science engineering and narrow conceptions of commercialisation based on patenting and spin-outs.
    Keywords: Science Policy, Haldane Principle, Open Innovation, University-Industry Links
    JEL: O31 O38
    Date: 2011–09
  12. By: Raphael Auer; Philip Sauré
    Abstract: We develop a general equilibrium model of vertical innovation in which multiple firms compete monopolistically in the quality space. The model features many firms that each hold the monopoly to produce a unique quality level of an otherwise homogenous good and consumers who are heterogeneous in their valuation of the good’s quality. If the marginal cost of production is convex with respect to quality, multiple firms coexist and their equilibrium markups are determined by the degree of convexity and the density of quality-competition. To endogenize the latter, we nest this industry setup in a Schumpeterian model of endogenous growth. Each firm enters the industry as the technology leader and successively transits through the product cycle as it becomes superseded by further innovations. The intrinsic reason of why innovation happens in our economy is not one of displacing the incumbent, but rather, innovation is a means to differentiate oneself from existing firms and target new consumers. Aggregate growth arises if, on the one hand increasingly wealthy consumers are willing to pay for higher quality and on the other hand, private firms’ innovation generates income growth by enlarging the set of available technologies. Since the frequency of innovation determines the toughness of product market competition, in our framework the relation between growth and competition is reversed compared to standard Schumpeterian framework. Our setup does not feature business stealing in the sense that already marginal innovations grant non-negligible profits. Rather, innovators sell to a set of consumers that was served relatively poorly by pre-existing firms. Never the less, "creative destruction" prevails as new entrants make the set of available goods more differentiated, thereby exerting a pro-competitive effect on the entire industry.
    Date: 2011–09
  13. By: Jakub Growiec
    Abstract: We derive the aggregate normalized CES production function from idea-based microfoundations where firms are allowed to choose their capital- and labor-augmenting technology optimally from a menu of available technologies. This menu is in turn augmented through factor-specific R&D. The considered model yields a number of interesting results. First, normalization can be maintained simultaneously at the local and at the aggregate level, greatly facilitating interpretation of the aggregate production function's parameters in terms of the underlying idea distributions. Second, in line with earlier findings, if capital- and labor-augmenting ideas are independently Weibull-distributed then the aggregate production function is CES; if they are independently Pareto-distributed, then it is Cobb-Douglas. Third, by disentangling technology choice by firms from R&D output, one can draw a clear-cut distinction between the direction of R&D and the direction of technical change actually observed in the economy, which are distinct concepts. Finally, it is argued that the Weibull distribution should be a good approximation of the true unit factor productivity distribution (and thus the CES should be a good approximation of the true aggregate production function) if a \technology" is in fact an assembly of a large number of complementary components.
    Keywords: CES production function, normalization, Weibull distribution, direction of technical change, directed R&D, optimal technology choice
    JEL: E23 E25 O47
    Date: 2011–09
  14. By: Pedro Mazeda Gil; Fernanda Figueiredo
    Abstract: This paper studies the firm size distribution arising from an endogenous growth model of quality ladders with expanding variety. The probability distribution function of a given cohort of firms is a Poisson distribution that converges asymptotically to a normal of log size. However, due to firm entry propelled by horizontal R&D, the total distribution – i.e., when the entire population of firms is considered – is a mixture of overlapping Poisson distributions which is systematically right skewed and exhibits a fatter upper tail than the normal distribution of log size. Our theoretical results qualitatively match the empirical evidence found both for the cohort and the total distribution, and which has been presented as a challenge for theory to explain. Moreover, by obtaining a total distribution with a gradually falling variance over a long time span, the model is able to address complementary empirical evidence that points to a total distribution subtly evolving over time.
    Keywords: Firm size distribution; Skewness; Heavy tails; Endogenous growth; Horizontal and vertical R&D
    Date: 2011–09
  15. By: Jan Fagerberg; Maryann Feldman; Martin Srholec
    Abstract: This paper analyzes factors that shape the technological capabilities of individual U.S. states and European countries, which are arguably comparable policy units. The analysis demonstrates convergence in technological capabilities from 2000 to 2007. The results indicate that social capabilities, such as a highly educated labor force, an egalitarian distribution of income, a participatory democracy and prevalence of public safety, condition the growth of technological capability. The analysis also considers other aspects of territorial dynamics, such as the possible effects of spatial agglomeration, urbanization economies, and differences in industrial specialization and knowledge spillovers from neighboring regions.
    Keywords: innovation; technological capabilities; European Union; United States;
    JEL: R11 R12 O32 O33
    Date: 2012–03
  16. By: A. Mantovani; F. Ruiz-Aliseda
    Abstract: The recent years have exhibited a burst in the amount of collaborative activities among firms selling complementary products. This paper aims at providing a rationale for such a large extent of collaboration ties among complementors. To this end, we analyze a game in which the two producers of a certain component have the possibility to form pairwise collaboration ties with each of the two producers of a complementary component. Once ties are formed, each of the four firms decides how much to invest in improving the quality of the match with each possible complementor, under the assumption that collaborating with a complementor makes it cheaper to invest in enhancing match quality with such complementor. Once investment choices have taken place, all firms choose prices for their respective components. Our main finding in this setting is that firms end up forming as many collaboration ties as it is possible, although they would all prefer a scenario where collaboration were forbidden, unlike a social planner.
    JEL: L13 M21
    Date: 2012–05
  17. By: Grazia Cecere; Nicoletta Corrocher
    Abstract: The cohesion across European member states and regions has been constantly promoted by EU science policy. Research networks and collaborations have for long constituted one of the most important vehicles of EU research integration. The presence of EU research funding can influence the collaborative behaviour among member states and, potentially, the integration of Eastern European countries in the European Research Area. However, the efforts of the EU policy to increase the internationalisation of research go hand in hand with strong interactions at the regional level. We estimate the intensity of interregional cooperation of ICT R&D projects by means of a gravity model, examining the variables affecting the strength of bilateral collaborations between different EU regions (NUTS 2 level). The dataset includes 245 NUTS-2 regions and 1635 FP research projects in the domain of the ICT. We compute all the bilateral ties for the 245 regions and we use indicators for the interregional collaboration in research projects that are coherent with the principle of fractional counting. Using the information on the budget allocation of each project by partner/region, we can provide a better account of the strength of the relationship. Geographical distance between the two regions reduces the strength of cooperation, while the individual regions‘ involvement in research projects has a positive effect, as well as the ICT capabilities of the regions in terms of employee and patents in the ICT sector. Interestingly, cooperation between regions belonging to different tiers of EU member states (EU15 and EU27) is weak.
    Date: 2011–09
  18. By: Ridier, Aude; Chaib, Karim; Roussy, Caroline
    Abstract: In the paper we investigate the role played by both production and market risks on farmer’s decision to adopt long rotations (over 2 years), considered as innovative cropping systems. We build a multiperiod dynamic farm model (run under GAMS) that arbitrates each year between traditional and innovative rotations. With discrete stochastic programming, the production risk is accounted as an intra-year risk; yearly farming operations are declined according to a decision tree where probabilities are assigned. Subjective yield and cost distributions linked to this decision tree are elicited among a sample of 13 farmers that are experiencing this innovation in South-western France. The price risk is randomly distributed with a given market trend. The crop acreage can be revised according to the market situation. The simulations show that substantive sunk costs are incentive to remain in the long rotation when the farmer is already engaged and when he is supported for this engagement. They also show that both a high risk aversion and a highly positive market trend tend to slow down the conversion towards innovative systems.
    Keywords: innovative cropping systems, dynamic model, crop rotation decision, risk, subjective probabilities, Risk and Uncertainty, C61, D0, Q12, Q55,
    Date: 2012–02–23
  19. By: Céline Gallen (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Université de Nantes : EA4272); Gaëlle Pantin-Sohier (GRANEM - Groupe de Recherche ANgevin en Economie et Management - Université d'Angers)
    Abstract: Le design appliqué à l'aliment est devenu une discipline à part entière. Véritable enjeu stratégique pour les entreprises agro-alimentaires, il pose la question de sa valorisation au sein des organisations et de son acceptabilité auprès des consommateurs qui voient leurs attentes bouleversées. Cet article propose des pistes managériales pour insérer le design dans le processus de production et pour répondre aux attentes des consommateurs.
    Keywords: aliments ; design ; innovation ; processus de production ; perception
    Date: 2012–05–04

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