nep-ino New Economics Papers
on Innovation
Issue of 2012‒11‒11
twelve papers chosen by
Steffen Lippert
University of Otago, Dunedin

  1. Wrongful Discharge Laws and Innovation By Viral V. Acharya; Ramin P. Baghai; Krishnamurthy V. Subramanian
  2. University Startups and Entrepreneurship: New Data, New Results By Richard Jensen
  4. Micro Evidence on International Patenting By Maurseth, Per Botolf; Svensson, Roger
  5. The ownership of academic patents and their impact. Evidence from five European countries By Francesco LISSONI (GREThA, CNRS, UMR 5113); Fabio MONTOBBIO (KITeS, Université BOCCONI - Milan)
  6. Innovation and e-commerce in clusters of small firms: The case of a regional e-marketplace By Eleonora Lorenzini
  7. Liquidity, Innovation and Growth By Aleksander Berentsen; Mariana Rojas Breu; Shouyong Shi
  8. Rapid Innovation Diffusion with Local Interaction By Gabriel E. Kreindler; H. Peyton Young
  9. To Convert or not to Convert to the Upgraded Version of de-facto Standard Software By Yang, Hee Dong; Karon, Christoph; Kang, Sora
  10. Trade Costs, Innovation, and the Gains from Trade By Jeff Thurk
  11. Directed technological change: It's all about knowledge By Hart, Rob
  12. Institutions and Venture Capital By Lerner, Josh; Tåg, Joacim

  1. By: Viral V. Acharya; Ramin P. Baghai; Krishnamurthy V. Subramanian
    Abstract: We show that wrongful discharge laws – laws that protect employees against unjust dismissal – spur innovation and new firm creation. Wrongful discharge laws, particularly those that prohibit employers from acting in bad faith ex post, limit employers' ability to hold up innovating employees after the innovation is successful. By reducing the possibility of hold-up, these laws enhance employees' innovative efforts and encourage firms to invest in risky, but potentially mould-breaking, projects. We develop a model and provide supporting empirical evidence of this effect using the staggered adoption of wrongful discharge laws across the U.S. states.
    JEL: G3 J5 J8 K31
    Date: 2012–11
  2. By: Richard Jensen (Department of Economics, University of Notre Dame)
    Abstract: This paper empirically examines commercialization of university faculty inventions through startup firms from 1994 through 2008. Using data from the Association of University Technology Managers and the 2010 NRC doctoral rankings, our research reveals several findings. We find that university entrepreneurship is more common in bad economic times and that engineering department quality and biological sciences department size are more important after the NASDAQ stock market crash in 2000. We also find that the quality of a biological sciences department is positively associated with startup company activity. Conditional on creating one startup, each additional TTO employee significantly increases university startups.
    Keywords: Startups, Entrepreneurship, Innovation
    JEL: I23 M13 O31
    Date: 2012–07
  3. By: Paola Cardamone; Valeria Pupo; Fernanda Ricotta (Dipartimento di Economia e Statistica, Università della Calabria)
    Abstract: This paper analyses the influence of universities on Italian firm TFP at the provincial level separating the effects of main university functions, such as the creation of knowledge through research, the creation of human capital through teaching and the technology transfer. Overall, results show that the presence of the universities does not seem to affect firm productivity. If, instead, we focus only on the most developed and productive area of the country, the North of Italy, the results change: we find that university activities significantly improve firm performance.
    Keywords: University, R&D activities, Total Factor Productivity
    JEL: O30 D24 C21
    Date: 2012–10
  4. By: Maurseth, Per Botolf (Department of Economics); Svensson, Roger (Research Institute of Industrial Economics (IFN))
    Abstract: Globalization, high growth rates in high-tech industries, growing emerging markets and harmonization of patent institutions across countries have stimulated patenting in foreign markets. We use a simple model of international patenting, where the decision to patent in a foreign country depends on country characteristics and the quality of the patented invention. With access to a detailed database on individual patents owned by Swedish small firms and inventors, we are able to estimate some of these relationships and test their validity. Our results indicate that the propensity to apply for international patent protection increases with indicators of the quality of the invention and indicators of technological rivalry and market size in the host market.
    Keywords: International patenting; Host country characteristics; Patent value
    JEL: O33 O34
    Date: 2012–10–25
  5. By: Francesco LISSONI (GREThA, CNRS, UMR 5113); Fabio MONTOBBIO (KITeS, Université BOCCONI - Milan)
    Abstract: This paper compares the value and impact of academic patents in five European countries with different institutional frameworks: Denmark, France, Italy, the Netherlands, and Sweden. Ownership patterns of academic patents are found to: (i) differ greatly across country, due to a combination of legal norms on IP and institutional features of the university system; (ii) be strongly associated to academic patents\' value, as measured by patent citations. Company-owned academic patents tend to be as cited as non-academic ones, while university-owned tend to be less cited. Academic patents in the Netherlands are more cited than non-academic ones, irrespective to their ownership, while university-owned patents get fewer citations in both France and Italy. We propose an explanation of these results based on the different autonomy and experience in dealing with IP and technology transfer enjoyed by universities in the countries considered. We also find that company-owned academic patents in Sweden get many fewer citations than non-academic. Individually-owned academic patents are more cited than non-academic patents similarly owned by their inventors.
    Keywords: Academic patents, Academic entrepreneurship, Patent citations, University system, Technology Transfer, Professor privilege
    JEL: O31 O32 O33 O34
    Date: 2012
  6. By: Eleonora Lorenzini (Department of Economics and Management, University of Pavia)
    Abstract: This paper draws on the literature on innovation in clusters and e-commerce to investigate how a particular kind of innovation project, the establishment of a regional e-marketplace (REM), may contribute to regional development. Using a firm-centred perspective, the role of geographical and cognitive proximity, absorptive capacity and other firm characteristics in the adoption and development of this particular type of innovation project is assessed. Hypotheses are tested with reference to the case of an REM recently established in the Italian area of Valtellina. The policy implications of the study are that REMs deserve support as an instrument of territorial development both in the establishment and in the implementation phase, more with “soft policies” than with “hard policies”.
    Keywords: clusters, innovation policy, e-commerce, proximity, Italy
    Date: 2012–10
  7. By: Aleksander Berentsen; Mariana Rojas Breu; Shouyong Shi
    Abstract: Many countries simultaneously suffer from high inflation, low growth and poorly developed financial sectors. In this paper, we integrate a microfounded model of money and finance into a model of endogenous growth to examine the effects of inflation on welfare, growth and the size of the financial sector. A novel feature is that the innovation sector is decentralized. Financial intermediaries arise endogenously to provide liquidity to this sector. Consistent with the data but in contrast to previous work, reducing inflation generates large growth gains. These large gains cannot be easily reproduced by imposing a cash-in-advance constraint in the innovation sector.
    Keywords: Inflation; Growth; Search; Innovation; Credit.
    JEL: E5 O42
    Date: 2012–11–04
  8. By: Gabriel E. Kreindler; H. Peyton Young
    Abstract: The diffusion of an innovation can be represented by a stochastic process in which agents choose noisy best responses to what their neighbors are currently doing. Diffusion is said to be fast if the expected time until a majority of agents play the stochastically stable (risk-dominant) equilibrium scales with the size of the network. Previous work has identified specific topological properties of networks that result in fast diffusion. Here we derive topology-free bounds such that diffusion is fast in any network with a given degree distribution (and no restriction on the topology), so long as the payoff gain from the innovation is sufficiently high and the response function is moderately noisy. In particular for the logit response function it suffices that the error rate be on the order of 5% and the payoff gain on the order of 80% to achieve fast diffusion in any regular network.
    Keywords: Innovation diffusion, Convergence time, Local Interaction
    JEL: C72 C73
    Date: 2012
  9. By: Yang, Hee Dong; Karon, Christoph; Kang, Sora
    Abstract: This work extends the innovation diffusion theory to understand the causal relationship among influential factors on the adoption of the upgraded software. Especially, this study focuses on the de-facto standard software (e.g., Microsoft Office) that competes against its previous versions. This paper makes three unprecedented contributions. First, we re-categorize the eight factors in innovation diffusion theory into Kano’s (1984) three factor framework on customer satis-faction, and develop the causal relationship among these factors. Second, we distinguish two different dependent varia-bles, positive attitude (on behalf of adopting the new version) and negative attitude (for staying put with the old version), and include them together in our research model. Inhibitors and facilitators are well distinguished in our study and their respective causal models are suggested., Our results demonstrate that own experiences through triability and demonstrat-ed results have significant influence on compatibility and ease of use, while social influences caused by visibility and image relate significantly to compatibility, relative advantage, and monetary value. We also find that negative attitude is influence by the lack of compatibility and ease of use, whereas positive attitude is promoted by relative advantage and monetary value.
    Keywords: Innovation diffusion theory, de-facto Standard, Kano's three factor model on customer satisfaction
    Date: 2012–08
  10. By: Jeff Thurk (University of Notre Dame)
    Abstract: We ask whether incorporating product quality differentiation has real effects on trade flows and welfare. We develop and calibrate a multi-country, general equilibrium model of international trade that includes endogenous product quality differentiation amongst heterogeneous firms. Separable transportation and ad valorem trade costs as in Hummels and Skiba (2004) creates a mechanism for product quality to have real effects. The model provides a framework to quantify the effects of quality dierentiation on trade flows and welfare in response to a trade liberalization. We find that this channel amplifies the effects of trade liberalization on welfare and exports by 46% and 34%, respectively. Roughly 80% of these effects are driven by liberalization of tariffs rather than transport or fixed export costs.
    Date: 2012
  11. By: Hart, Rob (Department of Economics, Swedish University of Agricultural Sciences)
    Abstract: Directed technological change concerns how stocks of factor-augmenting knowledge evolve relative to each other. In a simple framework we show that relative investment rates depend directly on the relative factor shares, and that the resulting evolution of the economy depends on the substitutability between the factors and the nature of the links between the knowledge stocks. We thus generalize and reinterpret existing results. Furthermore, we propose a novel model of spillovers between stocks of factor-augmenting knowledge which results in multiple equilibria when the factors are substitutes. This may have profound implications for the modelling of technological transitions\m such as from `dirty' to `clean' technology, or from low-skill/low-tech to high-skill/high-tech production systems\m and hence for modelling long-run economic change in general.
    Keywords: Growth; directed technological change; knowledge spillovers.
    JEL: O11 O33
    Date: 2012–05–04
  12. By: Lerner, Josh (Harvard Business School); Tåg, Joacim (Research Institute of Industrial Economics (IFN))
    Abstract: We survey the literature on venture capital and institutions and present a case study comparing the development of the venture capital market in the US to Sweden. Our literature survey underscores that the legal environment, financial market development, the tax system, labor market regulations, and public spending on research and development correlates with venture capital activities across countries. Our case study suggests these institutional differences led to the later development of an active venture capital market in Sweden compared to the US. In particular, a later development of financial markets and a heavier tax burden for entrepreneurs have played a key role.
    Keywords: Financial market development; Institutions; IPOs; Labor markets; Legal environment; R&D; Taxation; Stock markets; Venture capital
    JEL: E02 G24 G28 N20 O16 O43 O57
    Date: 2012–01–03

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