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on Innovation |
| By: | Ufuk Akcigit; William R. Kerr |
| Abstract: | We study how exploration versus exploitation innovations impact economic growth through a tractable endogenous growth framework that contains multiple innovation sizes, multiproduct firms, and entry/exit. Firms invest in exploration R&D to acquire new product lines and exploitation R&D to improve their existing product lines. We model and show empirically that exploration R&D does not scale as strongly with firm size as exploitation R&D. The resulting framework conforms to many regularities regarding innovation and growth differences across the firm size distribution. We also incorporate patent citations into our theoretical framework. The framework generates a simple test using patent citations that indicates that entrants and small firms have relatively higher growth spillover effects. |
| Keywords: | CES,economic,research,micro,data,microdata,endogenous growth, innovation, exploration, exploitation, research and development, patents, citations, scientists, engineers |
| JEL: | O31 O33 O41 L16 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:12-08&r=ino |
| By: | Martin Berger; Heinz Hollenstein |
| Abstract: | The paper complements entry mode research by dealing with the choice of alternative modes of governance in the specific case of foreign R&D and its impact on a parent firm’s performance. Firstly, we identify the factors that determine whether a firm locates abroad any R&D activities, and, if it does so, whether it chooses an equity-based rather than a non-equity co-operative mode of governance. The OLI paradigm is used as theoretical background of this analysis. Secondly, we determine the impact of foreign R&D on a parent firm’s performance in terms of innovation output and labour productivity, and investigate whether this effect differs among firms using the one or the other governance mode. The study is based on separate estimations for Switzerland and Austria using comparable firm data and model specifications. The two countries are interesting cases as they strongly differ in terms of level and pattern of internationalisation. |
| Keywords: | Internationalisation of R&D, Governance of foreign R&D, International R&D co-operation, Foreign R&D and performance, OLI paradigm and R&D |
| JEL: | F23 L22 L24 O31 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:wsr:wpaper:y:2012:i:097&r=ino |
| By: | Chia-Lin Chang (Department of Applied Economics, Department of Finance, National Chung Hsing University Taichung, Taiwan); Sung-Po Chen (Department of Applied Economics, National Chung Hsing University Taichung, Taiwan); Michael McAleer (Econometric Institute, Erasmus School of Economics, Erasmus University Rotterdam and Tinbergen Institute, The Netherlands, Department of Quantitative Economics, Complutense University of Madrid, and Institute of Economic Research, Kyoto University.) |
| Abstract: | This paper examines the impact of the three main channels of international trade on domestic innovation, namely outward direct investment (ODI), inward direct investment (IDI), and exports. The number of Triadic patents serves as a proxy for innovation. The data set contains 37 countries that are considered to be highly competitive in the world market, covering the period 1994 to 2005. The empirical results show that increased exports and outward direct investment are able to stimulate an increase in patent output. In contrast, IDI exhibits a negative relationship with domestic patents. The paper shows that the impact of IDI on domestic innovation is characterized by two forces, and the positive effects of cross-border mergers and acquisitions by foreigners is less than the negative effect of the remaining IDI. |
| Keywords: | International direct investment, Exports, Imports, Triadic Patent, Outward direct investment, Inward direct investment, R&D, negative binomial model. |
| JEL: | F14 F21 O30 O57 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:ucm:doicae:1216&r=ino |
| By: | Henry R. Delcamp; Aija Leiponen |
| Abstract: | We empirically examine the effects of industry consortia on the coordination of innovation strategies of the members. Our analyses utilize membership data from 32 consortia in wireless telecommunication technology subfields from 2000 to 2005 and prior art citations in standards-essential patents. We find that connections among firms in informal technically-oriented consortia significantly increase the likelihood that firms cite each other’s patents in subsequent patents essential for the UMTS wireless telecommunication standard. Inventions that are likely to become part of the UMTS telecommunication system tend to build on inventions by firm peers who were members in the same consortia, controlling for patent or firm fixed effects, technology class, and other characteristics. Consortia may enhance productivity of invention and increase the incentives to invest in R&D by internalizing potential externalities. They may also enhance efficiency of standardization by facilitating the interaction of committee and market processes. Consortia thus structure and constrain the process of innovating standardized technologies. This is problematic if consortia are not truly accessible for all the relevant parties. Policymakers thus need to balance these effects. For managers, the results show that participation in a variety of technical consortia enables influencing peers’ innovation strategies related to compatibility standards. |
| JEL: | D23 L15 L23 L24 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18179&r=ino |
| By: | Fernandes, Ana M.; Paunov, Caroline |
| Abstract: | While innovation is a source of competitiveness, it may expose plants to survival risks. Using a rich set of plant-product data for Chilean manufacturing plants during the period 1996-2006 and discrete-time hazard models controlling for unobserved plant heterogeneity, this paper shows that innovating plants have higher survival odds. However, risk plays an important role for the innovation-survival link: only innovators that retain diversified sources of revenues survive longer. Single-product innovators are at greater risk of exiting. In addition, only innovators facing lower market risk, measured by fewer innovative competitors, low-pricing strategies, or lower sales volatility in the new products'markets, see their odds of survival increase significantly. Technical risk, measured by the proximity of product innovations to the plants'past expertise, the degree of sophistication of new products, or their novelty to the Chilean market, does not play a substantial role in the innovation-survival link. Engaging in risky innovation is not an irrational decision, since plants reap big payoffs -- higher productivity, employment and sales growth -- from such innovations. However, those payoffs are not always higher than those from cautious innovation, suggesting that constraining factors, such as credit constraints, force plants to take on more risk when innovating. An implication of the findings for industry dynamics is that among innovators, only the survival of cautious innovators is guaranteed. Since engaging in cautious innovation may not be feasible for all plants, there could be a role for policy in reducing innovators'exposure to risks and providing assistance to deal with failed innovations, while setting the right incentives. |
| Keywords: | Labor Policies,E-Business,Markets and Market Access,Innovation,Knowledge for Development |
| Date: | 2012–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6103&r=ino |
| By: | Anne Layne-Farrar (Compass Lexecon); Gerard Llobet (CEMFI, Centro de Estudios Monetarios y Financieros); Jorge Padilla (Compass Lexecon) |
| Abstract: | This paper studies the effects of a Standard Setting Organization (SSO) imposing a licensing cap for patents incorporated into a standard. In particular, we evaluate the \Incremental Value" rule as a way to reward firms that contribute technology to a standard. This rule has been proposed as a means of avoiding patent hold-up of licensing firms by granting patent holders compensation equal to the value that their technology contributes to the standard on an ex-ante basis, as compared to the next best alternative. Our analysis shows that even in contexts where this rule is efficient from an ex-post point of view, it induces important distortions in the decisions of firms to innovate and participate in the SSO. Specifically, firms being rewarded according to this rule will inefficiently decide not to join the SSO, under the expectation that their technology becomes ex-post essential at which point they may negotiate larger payments from the SSO. |
| Keywords: | Intellectual property, standard setting organizations, licensing, incremental value. |
| JEL: | L15 L24 O31 O34 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:cmf:wpaper:wp2012_1203&r=ino |
| By: | Raffaele Paci; Emanuela Marrocu |
| Abstract: | Regional competitiveness, especially in the industrialised countries, is increasingly reliant on the availability of an adequate endowment of knowledge assets at the local level, like technological and human capital. These intangible factors enhance regional efficiency directly as inputs of the production function, but they also play a crucial role in allowing the territory to absorb the potential knowledge spillovers from the neighbouring regions. The aim of this paper is to analyse the role of the internal and external factors in determining the productivity level for a large set of regions belonging to the EU27 plus Norway and Switzerland. We estimate a Cobb-Douglas production function over the period 2000-2008 where, in addition to the traditional inputs of physical capital and units of labour, we consider innovation activities and human capital endowments as relevant knowledge assets. We also control for other geographical and industrial features of the regions. In order to take into account the commonly found geographic association across regions, our analysis is carried out within the spatial panel econometric framework. Main results, robust to a wide array of sensitivity checks, show that knowledge assets exhibit positive and significant coefficients and the impact of human capital on GDP is higher than the one found for technological capital in most of the estimated empirical models. Moreover, we find evidence of spatial spillovers directly associated with the two immaterial assets, which turn out to be much more effective in the regions of the 12 new accession countries with respect to all other European regions. The significant presence of such spillovers emphasizes the important role played by highly educated labour forces in increasing the regions’ absorptive capacity of new external knowledge and in ensuring its effective use in the production process. |
| Keywords: | knowledge; innovation; human capital; production function; spatial spillovers; European regions |
| JEL: | C23 O33 R11 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:cns:cnscwp:201213&r=ino |
| By: | Naomi Hausman |
| Abstract: | Universities, often situated at the center of innovative clusters, are believed to be important drivers of local economic growth. This paper identifies the extent to which U.S. universities stimulate nearby economic activity using the interaction of a national shock to the spread of innovation from universities - the Bayh-Dole Act of 1980 - with pre-determined variation both within a university in academic strengths and across universities in federal research funding. Using longitudinal establishment-level data from the Census, I find that longrun employment and payroll per worker around universities rise particularly rapidly after Bayh-Dole in industries more closely related to local university innovative strengths. The impact of university innovation increases with geographic proximity to the university. Counties surrounding universities that received more pre-Bayh-Dole federal funding - particularly from the Department of Defense and the National Institutes of Health - experienced faster employment growth after the law. Entering establishments - in particular multi-unit firm expansions - over the period from 1977 to 1997 were especially important in generating long-run employment growth, while incumbents experienced modest declines, consistent with creative destruction. Suggestive of their complementarities with universities, large establishments contributed more substantially to the total 20-year growth effect than did small establishments. |
| Keywords: | CES,economic,research,micro,data,microdata, clusters, innovation, local economic growth, universities |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:12-10&r=ino |
| By: | Agulles, Remei (IESE Business School); Prats, Maria Julia (IESE Business School) |
| Abstract: | Companies desiring to keep and improve their competitive advantage must be flexible enough to undergo change when needed. Meaningful change requires the ability to learn from their own as well as from others' experience. But learning is not easy, and there are many factors that may prevent it to occur. This paper explores existing literature and provides a classification of the different obstacles that may appear in the way. At the same time, without the pretension of being exhaustive, it suggests some solution paths. |
| Keywords: | organizational learning; strategic management; corporate culture; organizational change; knowledge management; innovation; |
| Date: | 2012–05–03 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0955&r=ino |
| By: | William R. Kerr; Scott Duke Kominers |
| Abstract: | We model spatial clusters of similar firms. Our model highlights how agglomerative forces lead to localized, individual connections among firms, while interaction costs generate a defined distance over which attraction forces operate. Overlapping firm interactions yield agglomeration clusters that are much larger than the underlying agglomerative forces themselves. Empirically, we demonstrate that our model’s assumptions are present in the structure of technology and labor flows within Silicon Valley and its surrounding areas. Our model further identifies how the lengths over which agglomerative forces operate influence the shapes and sizes of industrial clusters; we confirm these predictions using variations across both technology clusters and industry agglomeration. |
| Keywords: | CES,economic,research,micro,data,microdata, agglomeration, clusters, industrial organization, Silicon Valley, entrepreneurship, labor markets, technology flows, patents, natural advantages |
| JEL: | J2 J6 L1 L2 L6 O3 R1 R3 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:12-09&r=ino |