nep-ino New Economics Papers
on Innovation
Issue of 2013‒11‒02
nineteen papers chosen by
Steffen Lippert
University of Otago, Dunedin

  1. Succeeding in Innovation: Key Insights on the Role of R&D and Technological Acquisition Drawn from Company Data By Conte, Andrea; Vivarelli, Marco
  2. “Mobility, networks and innovation: The role of regions’ absorptive capacity” By Ernest Miguélez; Rosina Moreno
  3. Developing a Dominant Logic of Strategic Innovation By Sammut-Bonnici, Tanya; Paroutis, Sotirios
  4. The Role of Standards in Eco-innovation: Lessons for Policymakers By Herman R.J. Vollebergh; Edwin van der Werf
  5. Strategy Transformation Through Strategic Innovation Capability By Tomoatsu Shibata; Mitsuru Kodama
  6. Public Research Spending in an Endogenous Growth Model By Kunihiko Konishi
  7. M&A and R&D - Asymmetric Effects on Acquirers and Targets? By Florian Szücs
  8. Contracting Over the Disclosure of Scientific Knowledge: Intellectual Property and Academic Publication By Joshua S. Gans; Fiona E. Murray; Scott Stern
  9. Composite indicator ECAICI and positioning of Georgia’s innovative capacities in Europe-Central Asia Region By Gogodze, Joseph
  10. Globalization, Unemployment, and Product Cycles: Short- and Long-Run Effects By Finn Martensen
  11. Coordination of joint search in distributed innovation processes: Lessons from the effects of initial code release in Open Source Software development By Francesco Rullani; Francesco Zirpoli
  12. Research into Ambidextrous R&D in Product Development New Product Development at a Precision Device Maker By Mitsuru Kodama; Tomoatsu Shibata
  13. Technology Transfer from Publicly Funded Research in Germany: A Note on Patenting and Licensing Practices By Sabyasachi Saha
  14. Breaking Up a Research Consortium By Niedermayer, Andras; Wu, Jianjun
  15. The Future Costs of Nuclear Power Using Multiple Expert Elicitations: Effects of RD&D and Elicitation Design By Laura Diaz Anadon; Gregory Nemet; Elena Verdolini
  16. Preliminary report on KETs priorities declared by regions in the context of their work on Research and Innovation Strategies for Smart Specialisation (RIS3) By Jens Sörvik; Ruslan Rakhmatullin; Manuel Palazuelos-Martinez
  17. Cooperation vs. Collusion: How Essentiality Shapes Co-opetition By Rey, Patrick; Tirole, Jean
  18. “A gravity model of migration between ENC and EU” By Raul Ramos; Jordi Suriñach
  19. Incentives and creativity in groups By Ramm, Joachim; Tjøtta, Sigve; Torsvik, Gaute

  1. By: Conte, Andrea (European Commission); Vivarelli, Marco (Università Cattolica del Sacro Cuore)
    Abstract: This paper discusses the relationship between a company's investment in innovation and its success in introducing new product and/or process innovations. In doing so, this analysis departs from the standard approach which puts forward a homogenous R&D-based knowledge production function by introducing different types of innovation investments (R&D and technology acquisition) for different sets of companies. Using the Community Innovation Survey (CIS) dataset comprising more than 3000 Italian manufacturing companies, the econometric analysis adopts a set of techniques which allows to control for the sample selection, endogeneity and simultaneity problems which arise when dealing with CIS data. The main findings are summarised as follows: (1) beyond the acknowledged effect of R&D in increasing the probability of success of product innovation, a larger-than-expected role is played by technology acquisition in the innovation process; (2) the relative importance of R&D and technology acquisition varies significantly across different types of companies where crucial dimensions of analysis are company size and the technological domain of a sector.
    Keywords: R&D, product innovation, process innovation, embodied technical change, sample selection, SUR, community innovation survey
    JEL: O31
    Date: 2013–10
  2. By: Ernest Miguélez (Economics and Statistics Division, World Intellectual Property Organization & AQR-IREA & CReAM); Rosina Moreno (Faculty of Economics, University of Barcelona)
    Abstract: The purpose of this paper is to assess the extent to which regions’ absorptive capacity determines knowledge flows’ impact on regional innovation intensity. In particular, it looks at the role of the cross-regional co-patenting and mobility of inventors in fostering innovation, and how regions with large absorptive capacity make the most of these two phenomena. The paper uses a panel of 274 regions over 8 years to estimate a regional knowledge production function with fixed-effects. Network and mobility variables, and interactions with regions’ absorptive capacity, are included among the r.h.s. variables to test the hypotheses. We find evidence of the role of both mobility and networks. However, inflows of inventors are critical for wealthier regions, while have more nuanced effects for less developed areas. It also shows that regions’ absorptive capacity critically adds an innovation premium to the benefits to tap into external knowledge pools. Indeed, the present study corroborates earlier work on the role of mobility and networks for spatial knowledge diffusion and subsequent innovation. However, it clearly illustrates that a certain level of technological development is critical to take advantage of these phenomena, and therefore “one-size-fits-all” innovation policies need to be reconsidered.
    Keywords: absorptive capacity, inventor mobility, spatial networks, patents, regional innovation. JEL classification:
    Date: 2013–10
  3. By: Sammut-Bonnici, Tanya; Paroutis, Sotirios
    Abstract: Purpose: This paper aims to lay the foundations to develop a dominant logic and a common thematic framework of strategic innovation, and to encourage consensus over the field’s core foundation of main themes. Methods: We explore the intersection between the constituent fields of strategic management and innovation management through a concept mapping process. We categorize the main themes and search for common ground in order to develop the core thematic framework of strategic innovation. We look at the sub themes of strategic innovation in published research and develop a more detailed framework. The conceptual categories derived from the process are then placed in a logical sequence according to how they occur in practice or in the order of how the concepts develop from one other. Findings: The results yield seven main themes that form the main taxonomy of strategic innovation: types of strategic innovation, environmental analysis of strategic innovation, strategic innovation planning, enabling strategic innovation, collaborative networks, managing knowledge, and strategic outcomes. Research limitations and implications: The new thematic framework we are proposing for strategic innovation remains preliminary in nature and would need to be tried and tested by researchers and practitioners in order to gain acceptability. Academic rigor and methodological structure are not sufficient to determine whether our conceptual framework will become widely diffused in academia and industry. It would have to pass through an emergent, evolutionary process of selection, adoption and an inevitable degree of change and adaptation, just like any other innovation. Practical implications: The practical implications concern the production of instructive material and the application of strategic management initiatives in industry. The proposed themes and sub themes can serve as a logical framework to develop and update publications, which have been instrumental in their own right to shape the field. The paper also provides a checklist of potential research projects in strategic innovation, which will improve and strengthen the field. The new framework provides a comprehensive checklist of strategic management initiatives that will help industry to initiate, plan and execute effective innovation strategies. Originality: The concept mapping of the themes of strategic innovation yield a new dominant logic, which will influence the evolution of the field and its relevance to both academia and industry.
    Keywords: Strategic innovation, dominant logic, thematic framework, taxonomy, strategic management, innovation management
    JEL: O3 O30 O31 O32 O33
    Date: 2013–03–30
  4. By: Herman R.J. Vollebergh (CentER and Tilburg Sustainability Centre, Tilburg University, PBL Netherlands Environmental Assessment Agency, CESifo); Edwin van der Werf (Wageningen University, CESifo)
    Abstract: This paper aims to help policy makers identify how standards can contribute to the effective and cost-efficient development and deployment of eco-innovations (innovations that result in a reduction of environmental impact). To that end we discuss what standards are, how the process of standardization works, and how standards are related to induced innovation and diffusion in different type of markets, e.g. markets for add-on technologies versus markets for integrated resource- or emission-saving technologies. This broad perspective enables us to identify interesting economic dimensions of standards, such as their contribution to positive network externalities, and the extent to which they are substitutes or complements to environmental policy instruments. Finally we discuss how governments might contribute to eco-innovation by selecting, stimulating or creating (inter)national standards.
    Keywords: Standards, Technological Change, Eco-innovation, Environmental Policy Instruments
    JEL: Q38 Q55 Q58
    Date: 2013–09
  5. By: Tomoatsu Shibata; Mitsuru Kodama
    Abstract: This paper presents a theoretical framework under which large companies should be able to bring about strategy transformation. Firstly, we present the concept of "strategic innovation capability," a corporate system capability to achieve corporate strategy transformation by strategic innovation. Then, we consider strategic innovation capability by comparing it to previous theories (dynamic capability, major innovation dynamic capability, breakthrough innovation capability). Secondly, we present the case example of strategy transformation at Fanuc, a company that holds the top global share in the numeric control (NC) market. In this case study research, we consider and analyze historically how the company aimed for new creativity in the NC market, developed innovative NC technology for the machine tool market, and using that technology energetically commercialized products. From the strategic innovation capability framework, the core theory of this paper, we also analyze and consider how top management made conscious efforts to form a new development organization within the company, and the processes involved in achieving strategy transformation to establish competitive superiority in this field. Finally, we discuss the implications drawn from this case analysis, and the issues for future research.
    Date: 2013–05
  6. By: Kunihiko Konishi (Graduate School of Economics, Osaka University)
    Abstract: This study constructs a variety expansion growth model with public research spending, in which public researchers raise the productivity of private R&D. We show that the rela- tionship between public research spending and the growth rate follows an inverted U-shape. This is because public research spending increases private R&D productivity, but crowds out labor input to private R&D. It is also shown that the welfare-maximizing level of pub- lic research spending is below the growth-maximizing level. With regards to tax policy, a zero-proffit tax maximizes both growth and welfare. Finally, the study analyzes the stability of the steady state, showing that the equilibrium is indeterminate when the governmentfs revenue source depends on asset income tax.
    Keywords: Public expenditure, Endogenous growth, Innovation, Indeterminacy
    JEL: E62 O41
    Date: 2013–10
  7. By: Florian Szücs
    Abstract: We evaluate the impact of M&A activity on the growth of R&D spending and R&D intensity of 265 acquiring firms and 133 merger targets between 1990 and 2009. We use different matching techniques to construct separate control groups for acquirers and targets and use appropriate difference-in-difference estimation methods to single out the causal effect of mergers on R&D growth and intensity. We find that target firms substantially decrease their R&D efforts after a merger, while the R&D intensity of acquirers drops due to a sharp increase in sales.
    Keywords: Mergers, R&D growth, R&D intensity, propensity-score matching, difference in difference estimation
    JEL: D22 G34 O3
    Date: 2013
  8. By: Joshua S. Gans; Fiona E. Murray; Scott Stern
    Abstract: This paper provides a theoretical investigation of the tension over knowledge disclosure between firms and their scientific employees. While empirical research suggests that scientists exhibit a ‘taste for science,’ such open disclosures can limit a firm’s competitive advantage. To explore how this tension is resolved we focus on the strategic interaction between researchers and firms bargaining over whether (and how) knowledge will be disclosed. We evaluate four disclosure strategies: secrecy, patenting, open science (scientific publication) and patent-paper pairs providing insights into the determinants of the disclosure strategy of a firm. We find that patents and publications are complementary instruments facilitating the disclosure of knowledge and, counter-intuitively, that stronger IP protection regimes are likely to drive openness by firms.
    JEL: M55 O32 O34
    Date: 2013–10
  9. By: Gogodze, Joseph
    Abstract: This paper presents a brief analysis of the current innovative capabilities of Georgia based on the Europe-Central Asia Innovative Capability Indicator (ECAICI). This composite indicator is constructed using factor analysis tools. Research reveals that innovative processes in the Europe-Central Asia (ECA) region (by the World Bank classification) are mainly affected by four unobservable factors: knowledge creation, economic sophistication, knowlege absorption-diffusion, and human capital production. We show that the ECAICI is closely related to other well-known innovation indicators and to GDP per capita. The ECAICI was used to analyze the innovative capability dynamics during 1996–2010. This study serves as an illustration for the use of the ECAICI as an instrument for innovative capability assessment and analysis in Georgia and other post-USSR countries
    Keywords: National innovation systems, Developing countries, Countries in transition, Composite indicator, Factor analysis
    JEL: C43 O30 C81
    Date: 2013–01–20
  10. By: Finn Martensen (Department of Economics, University of Konstanz, Germany)
    Abstract: In a North-South product-cycle model, I study the short- and long-run effects on Northern unemployment of (i) trade liberalization, (ii) tighter international patent protection, and (iii) Southern market expansion. Besides production workers, I also consider R&D workers, which is new to the literature on short-run effects. In the short run, R&D workers are affected before production workers in case of trade liberalization and tighter international patent protection. Unilateral Northern trade liberalization increases unemployment in the short and long run, while Southern trade liberalization has stronger opposite effects. Surprisingly, tighter international patent protection yields a short-run unemployment increase, although it decreases unemployment in the long run. An expansion of the Southern market yields a short- and long-run decrease in unemployment.
    Keywords: Product Cycles, Globalization, Trade Liberalization, International Patent Protection, Unemployment
    JEL: E24 F16 F43
    Date: 2013–10–23
  11. By: Francesco Rullani (Dept. of Business and Management, LUISS Guido Carli Author-Name: Markus C. Becker; Strategic Organization Design Unit, University of Southern Denmark); Francesco Zirpoli (Dept. of Management, Università Ca' Foscari Venice)
    Abstract: This paper casts light on the role of initial code release for providing coordination of joint search processes, i.e., search processes that involve several agents who search together. We develop hypotheses about the role of initial code release for providing coordination, and for whether development projects remain active. We test these hypotheses on a dataset of 5703 open source software projects registered on SourceForge during a two-year period. We find that initial code release is indeed associated with improved coordination, and a higher chance that software development projects will actually release further code subsequently. We contribute to theory on coordination in joint search, common in distributed innovation settings.
    Keywords: artefact, coordination, open source, distributed innovation, innovation process, search process
    JEL: O32 O33 M21
    Date: 2013–10
  12. By: Mitsuru Kodama; Tomoatsu Shibata
    Abstract: Through research into new product development processes at a precision device maker, this paper discusses the skilful management of knowledge boundaries that lie between various organizations, and between specialized human skills and functions that make up a project organization, and presents the ways in which new organizational capabilities are brought about for the development of new products, as exploratory activities that dynamically merge and integrated the various knowledge within a company. This paper describes some of the implications derived from analysis and observations of the new organizational forms of the company's ambidextrous R&D management which the company uses to engage in both 'uncertainty management (exploration)' and 'existing product management (exploitation),' through the partnering of its existing formal organizations and dynamic structuring of diverse multifunctional teams formed as projects spanning different specializations and capabilities.
    Date: 2013–05
  13. By: Sabyasachi Saha
    Abstract: This paper explores patenting and licensing of public funded inventions in Germany in order to capture nuances underlying the institution of IPR in the context of public funded research. We look at two mechanisms in Germany that concerns patenting and licensing of publicly funded science. The first is the operations of Ipal GmbH which undertakes patenting and licensing of technologies originating in the universities in Berlin and the second is that of the Max Planck Innovations (MPI), nodal centre for technology transfer of the Max Planck Society (Max-Planck-Gesellschaft-MPG). Accordingly, our paper presents case studies of patenting and licensing practices at the Humboldt University of Berlin (against the Ipal GmbH model) and that of the MPG (the MPI model). The analysis is structured around core issues pertaining to IPR and academic research, science-industry interface and technology transfer.
    Keywords: working paper, daadpartnership, finance-and-trade
    Date: 2013–10
  14. By: Niedermayer, Andras; Wu, Jianjun
    Abstract: Inter-firm R&D collaborations through contractual arrangements have become increasingly popular, but in many cases they are broken up without any joint discovery. We provide a rationale for the breakup date in R&D collaboration agreements. More specifically, we consider a research consortium initiated by a firm A with a firm B. B has private information about whether it is committed to the project or a free-rider. We show that under fairly general conditions, a breakup date in the contract is a (secondbest) optimal screening device for firm A to screen out free-riders. With the additional constraint of renegotiation proofness, A can only partially screen out free-riders: entry by some free-riders makes sure that A does not have an incentive to renegotiate the contract ex post. We also propose empirical strategies for identifying the three likely causes of a breakup date: adverse selection, moral hazard, and project non-viability.
    Keywords: Optimal R&D contracts; adverse selection; breakup date; R&D collaboration
    JEL: C72 D82 L20
    Date: 2013–05–14
  15. By: Laura Diaz Anadon (Belfer Center for Science and International Affairs, John F. Kennedy School of Government, Harvard University, USA); Gregory Nemet (Nelson Institute Center for Sustainability and the Global Environment (SAGE), University of Wisconsin, and La Follette School of Public Affairs, University of Wisconsin, USA); Elena Verdolini (Fondazione Eni Enrico Mattei and CMCC, Italy)
    Abstract: Characterizing the anticipated performance of energy technologies to inform policy decisions increasingly relies on expert elicitation. Knowledge about how elicitation design factors impact the probabilistic estimates emerging from these studies is however scarce. We focus on nuclear power, a large-scale low-carbon power option, for which future cost estimates are important to designing energy policies and climate change mitigation efforts. We use data from three elicitations in the USA and in Europe and assess the role of government Research, Development, and Demonstration (RD&D) investments on expected nuclear costs in 2030. We show that controlling for expert, technology, and design characteristics increases experts’ implied public RD&D elasticity of expected costs by 25%. Public sector and industry experts’ costs expectations are 14% and 32% higher, respectively than academics. US experts are more optimistic than their EU counterparts, with median expected costs 22% lower. On average, a doubling of public RD&D is expected to result in an 8% cost reduction, but uncertainty is large. The difference between the 90th and 10th percentile estimates is on average 58% of the experts’ median estimates. Public RD&D investments do not affect uncertainty ranges, but US experts’ are less confident about costs than Europeans.
    Keywords: Nuclear Power, Uncertainty, Returns to RD&D, Expert Elicitations, Meta-Analysis
    JEL: O3 Q5 Q55
    Date: 2013–10
  16. By: Jens Sörvik (European Commission – JRC - IPTS); Ruslan Rakhmatullin (European Commission – JRC - IPTS); Manuel Palazuelos-Martinez (European Commission – JRC - IPTS)
    Abstract: The KETs preliminary report consists of information on KETs and Smart specialisation that the S3 Platform has developed and diffused in different forms, as well as relevant information that has been identified by participation in different kinds of events. The first part of the report focuses briefly on the role of KETs in smart specialisation as a means of regional development, i.e. the policy rationale for regions to invest in KETs. The second part summarises policy recommendations and tools with regard to Smart Specialisation and KETs, as have been identified in events on the topic, where the S3 Platform has participated. The third part provides maps on regional priorities related to KETs. The data for this section come from the new web-based priority mapping tool called Eye@RIS3. This tool displays a range of priorities identified and declared by regions for their RIS3 and includes, the names of the regions that are in the database (69), the names of those that have indicated a priority with relation to KETs (48 in total), a list of the priorities related to KETs (96 -around 20% of the total number of listed priorities), connection to regional innovation scoreboard, and connection to patent data as an indicator of regional capabilities. The report presents the following initial conclusions and envisaged next steps: i) Regions tend to indicate that in the context of the RIS3, exercise horizontal priorities need to be defined and that these could involve the diffusion and/or application of KETs; ii) still there are many questions related to state aid and financing of KETs; iii) all types of regions aim for KETs: not only leaders, but all of the range from leader to modest; and iv) around 2/3 of all regions whose data are included in the "Eye@RIS3" database mention KETs as a priority of their RIS3. Around 20% of all priorities declared by regions whose data are included in the "Eye@RIS3" database are related to KETs.
    Keywords: European cohesion policy, Structural Funds, smart specialisation, Innovation Union
    Date: 2013–09
  17. By: Rey, Patrick; Tirole, Jean
    Abstract: The paper makes two related contributions. First, and in contrast with the rich body of literature on collusion with (mainly perfect) substitutes, it derives general results on the sustainability of tacit coordination for a class of nested demand functions that allows for the full range between perfect substitutes and perfect complements. Second, it studies the desirability of joint marketing alliances, an alternative to mergers. It shows that a combination of two informationfree regulatory requirements, mandated unbundling by the joint marketing entity and unfettered independent marketing by the firms, makes joint-marketing alliances always socially desirable, whether tacit coordination is feasible or not.
    Keywords: tacit collusion, cooperation, substitutes and complements, essentiality, joint marketing agreements, patent pools, independent licensing, unbundling, co-opetition.
    JEL: D43 L24 L41 O34
    Date: 2013–10–23
  18. By: Raul Ramos (Faculty of Economics, University of Barcelona); Jordi Suriñach (Faculty of Economics, University of Barcelona)
    Abstract: Due to ageing population and low birth rates, the European Union (EU) will need to import foreign labour in the next decades. In this context, the EU neighbouring countries (ENC) are the main countries of origin and transit of legal and illegal migration towards Europe. Their economic, cultural and historical links also make them an important potential source of labour force. The objective of this paper is to analyse past and future trends in ENC-EU bilateral migration relationships. With this aim, two different empirical analyses are carried out. First, we specify and estimate a gravity model for nearly 200 countries between 1960 and 2010; and, second, we focus on within EU-27 migration flows before and after the enlargement of the EU. Our results show a clear increase in migratory pressures from ENC to the EU in the near future, but South-South migration will also become more relevant.
    Keywords: absorptive capacity, inventor mobility, spatial networks, patents, regional innovation. JEL classification: J11, J15, J61, C23, C53
    Date: 2013–10
  19. By: Ramm, Joachim (Minestry of Local Governmenet and Regional Development); Tjøtta, Sigve (University of Bergen); Torsvik, Gaute (University of Bergen)
    Abstract: It has been argued that monetary incentives restrain individual creativity and hamper performance in jobs requiring out of the box thinking. This paper reports from an experiment designed to test if the negative incentive effect is present also when individuals work together to solve such problems. We do not find a negative impact of incentives on group performance. As a comparison we ran the same experiment (the Candle Problem) with and without incentives for individuals as well. Incentives did not reduce performance there either. Comparing individuals with groups we find that team-work facilitates creative problems solving. Individuals appear to be more creative when working together than when working alone.
    Keywords: Incentives; innovation; creativity
    JEL: J24 J31 M11 O31
    Date: 2013–06–01

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