nep-ino New Economics Papers
on Innovation
Issue of 2013‒11‒22
33 papers chosen by
Steffen Lippert
University of Otago, Dunedin

  1. Sources of spillovers for imitation and innovation. By Cappelli, Riccardo; Czarnitzki, Dirk; Kraft, Kornelius
  2. (International) R&D collaboration and SMEs: The effectiveness of targeted public R&D support schemes. By Hottenrott, Hanna; Lopes Bento, Cindy
  3. How global is R&D? Firm-level determinants of home country bias in R&D. By Belderbos, Rene; Leten, Bart; Suzuki, Shinya
  4. Patent Value and Citations: Creative Destruction or Strategic Disruption? By David S. Abrams; Ufuk Akcigit; Jillian Popadak
  5. Profiting from innovation: Firm level evidence on markups. By Cassiman, Bruno; Vanormelingen, Stijn
  6. Internationalization of R&D activities by multinational firms.. By Suzuki, Shinya
  7. From Bricks to Brains: Increasing the Contribution of Knowledge-based Capital to Growth in Ireland By David Haugh
  8. An examination of the factors influencing relationship building and performance in virtual R&D project teams By Nabila Jawadi; Dominique Bonet-Fernandez
  9. Reaching for the Stars: Exclusivity in Firm-University Links in the Pharmaceutical Industry. By Kelchtermans, Stijn; Belderbos, Rene; Leten, Bart; Desair, Steven
  10. Establishments' and Regions' Cultural Diversity as a Source of Innovation: Evidence from Germany By Stephan Brunow; Bastian Stockinger
  11. Institutional Change and Academic Patenting: French Universities and the Innovation Act of 1999. By Della Malva, Antonio; Lissoni, Francesco; Llerena, Patrick
  12. Innovation - a New Guide By Jan Fagerberg
  14. The Impact of R&D Cooperation on Drug Variety Offered on the Market: Evidence from the Pharmaceutical Industry By Tannista Banerjee; Ralph Siebert
  15. What types of firms tend to be more innovative: A study on Germany By Stephan Brunow; Valentina Nafts
  17. Does competitive pressure spur or hinder corporate basic research?. By Ṧaljanin, Salem; Thorwarth, Susanne
  18. Thanks, but No Thanks: Firms’ Adoption of R&D Tax Credits. By Kelchtermans, Stijn; Neicu, Daniel; Teirlinck, Peter
  19. Heterogeneous Technology Diffusion and Ricardian Trade Patterns By William R. Kerr
  20. A contingency approach of open innovation intermediaries - the management principles of the "intermediary of the unknown" By Marine Agogué; Elsa Berthet; Tobias Fredberg; Pascal Le Masson; Blanche Segrestin; Martin Stoetzel; Martin Wiener; Anna Yström
  21. Testing whether major innovation capabilities are systemic design capabilities: analyzing rule-renewal design capabilities in a case-control study of historical new business developments By Pascal Le Masson; Sylvain Lenfle; Benoît Weil
  22. On the Obituary of Scientific Knowledge Monopoly By Asongu Simplice
  23. Network structural properties for cluster long run dynamics. Evidence from collaborative R&D networks in the European mobile phone industry By Joan Crespo; Raphaël Suire; Jérôme Vicente
  24. Pharmaceutical regulation and innovative performance: a decision-theoretic model By Tannista Banerjee; Stephen Martin
  25. Knowledge spillover effects at the sub-regional level. Theory and estimation By Andrea Bonaccorsi; Cinzia Daraio
  26. Product Market Reforms and Incentives to Innovate in Sweden By Edquist, Harald; Henrekson, Magnus
  27. Coalitional Approaches to Collusive Agreements in Oligopoly Games By Sergio Currarini; Marco A. Marini
  28. Unintended Consequences of Transportation Carbon Policies: Land-Use, Emissions, and Innovation By Stephen P. Holland; Jonathan E. Hughes; Christopher R. Knittel; Nathan C. Parker
  29. The technological origins and novelty of breakthrough inventions. By Arts, Sam; Veugelers, Reinhilde
  30. Innovation and Finance: A Stock Flow Consistent Analysis of Great Surges of Development By Alessandro Caiani; Antoine Godin; Stefano Lucarelli
  31. Teaching at Bauhaus: improving design capacities of creative people? From modular to generic creativity in design-driven innovation By Pascal Le Masson; Armand Hatchuel; Benoît Weil
  32. QWERTY and the search for optimality By Neil M Kay
  33. Immigration and Innovation. By Richard Fabling; Norman Gemmell; Richard Kneller; Lynda Sanderson

  1. By: Cappelli, Riccardo; Czarnitzki, Dirk; Kraft, Kornelius
    Abstract: We estimate the effect of R&D spillovers on sales realized by products new to the firm (imitation) and new to the market (innovation). It turns out that spillovers from rivals lead to more imitation, while inputs from customers and research institutions enhance original innovation.
    Keywords: innovation; imitation; spillovers;
    Date: 2013–09
  2. By: Hottenrott, Hanna; Lopes Bento, Cindy
    Abstract: This study analyses the effectiveness of targeted public support for R&D investment. In particular, we test whether the specific policy design aiming at incentivizing (international) collaboration and R&D in small and mediumsized firms achieves the desired objectives on input as well as output additionality. Our results show that the targeted R&D subsidies accelerate R&D spending in the private sector, and especially so in the targeted groups. Further, we differentiate between privately financed R&D and subsidyinduced R&D investment to evaluate their respective effects on innovation performance. The results confirm that the induced R&D is productive as it translates into marketable product innovations. While both types of R&D investments trigger significant output effects, we find that the effect of subsidy-induced R&D investment is higher for firms that collaborate internationally as well as for SMEs.
    Keywords: innovation policy; subsidies; R&D; SMEs; international collaboration;
    Date: 2013–01
  3. By: Belderbos, Rene; Leten, Bart; Suzuki, Shinya
    Abstract: Despite an increasing internationalization of R&D activities by multinational firms, a major portion of corporate R&D still tends to be concentrated in firms’ home countries. We examine to what extent there exists a home country bias in the location of R&D activities of 156 major R&D intensive firms based in Europe, the US and Japan during 1995-2002 and develop hypotheses concerning the firm-level determinants of such home country bias. We define this bias as a share of global R&D activities conducted in the home country that is not proportional to the general attractiveness of the country for multinational firms' R&D activities. We find home bias to be the predominant pattern, but with substantial variation among firms. The extent of the bias increases with the degree of scale and scope economies in R&D, coordination costs of international R&D, and the embeddedness of firms’ R&D in home countries’ innovation systems. Technology leadership is associated with greater home bias if the home country provides relatively strong intellectual property rights protection and firms face potential knowledge dissipation abroad. Our findings imply that home country bias is to an important extent a response to the economics of R&D and centripetal forces favoring centralization of R&D.
    Keywords: R&D internationalization; location strategy; home country bias; innovation;
    Date: 2013–06
  4. By: David S. Abrams; Ufuk Akcigit; Jillian Popadak
    Abstract: Prior work suggests that more valuable patents are cited more and this view has become standard in the empirical innovation literature. Using an NPE-derived dataset with patent-specific revenues we find that the relationship of citations to value in fact forms an inverted-U, with fewer citations at the high end of value than in the middle. Since the value of patents is concentrated in those at the high end, this is a challenge to both the empirical literature and the intuition behind it. We attempt to explain this relationship with a simple model of innovation, allowing for both productive and strategic patents. We find evidence of greater use of strategic patents where it would be most expected: among corporations, in fields of rapid development, in more recent patents and where divisional and continuation applications are employed. These findings have important implications for our basic understanding of growth, innovation, and intellectual property policy.
    JEL: K1 L2 O3
    Date: 2013–11
  5. By: Cassiman, Bruno; Vanormelingen, Stijn
    Abstract: While innovation is argued to create value, private incentives of …rms to innovate are driven by what part of the value created …rms can appropriate. In this paper we explore the relation between innovation and the markups a …rm is able to extract after innovating. We estimate …rm-speci…c price-cost margins from production data and …nd that both product and process innovations are positively related to these markups. Product innovations increase markups on average by 5.1% points by shifting out demand and increasing prices. Process innovation increases markups by 3.8% points due to incomplete pass-through of the cost reductions associated with process innovation. The ability of the …rm to appropriate returns from innovation through higher markups is affected by the actual type of product and process innovation, the …rms patenting and promotion behavior, the age of the …rm and the competition it faces. Moreover, we show that sustained product innovation has a cumulative effect on the …rms markup.
    Date: 2013–10
  6. By: Suzuki, Shinya
    Date: 2012–03–12
  7. By: David Haugh
    Abstract: With sound framework conditions, fine universities, good infrastructure and policies friendly towards foreign direct investment, Ireland scores high in international innovation scoreboards. Overall, policies to boost innovation and entrepreneurship are on the right track, but investment in knowledge-based capital could be made a more dynamic source of growth and jobs. While Ireland has made good progress towards building up its scientific capabilities, innovation capacity remains weaker than in other small advanced OECD countries, such as Austria, Denmark, Sweden and Switzerland. To become more effective, the innovation strategy should be simplified, with a drastic reduction in the number of government agencies involved in funding innovation, so as to better focus on strengthening the linkages between the business and academic communities. While attracting high-tech multinationals should remain central, there is potential to better develop spillovers between these firms and domestic SMEs, notably by establishing applied research centres. Entrepreneurship should be fostered by improving the business environment, including access to non-bank finance, streamlining the insolvency regime and transfer of intellectual property rights, and upgrading the broadband network. This working paper relates to the 2013 Economic Survey of Ireland ( De l'économie traditionnelle à l'économie du savoir : Accroître la contribution du capital intellectuel à la croissance en Irlande Avec des conditions-cadres propices, des universités de qualité, une bonne infrastructure et des politiques favorables à l’investissement direct étranger, l’Irlande figure en bonne place sur les tableaux de bord internationaux de l’innovation. Dans l’ensemble, les politiques de stimulation de l’innovation et de l’entrepreneuriat vont dans la bonne direction, mais il serait possible de faire de l’investissement en capital intellectuel une source plus dynamique de croissance et d’emplois. Si l’Irlande a bien progressé du point de vue du renforcement de ses capacités scientifiques, sa capacité d’innovation reste plus faible que celle d’autres petites économies avancées de l’OCDE, comme l’Autriche, le Danemark, la Suède et la Suisse. Pour devenir plus efficace, la stratégie d’innovation doit être simplifiée, avec une réduction draconienne du nombre d’organismes publics qui participent au financement de l’innovation, de façon à mieux se focaliser sur le resserrement des liens entre les entreprises et les milieux universitaires. Même s’il doit rester essentiel d’attirer des multinationales de haute technologie, il est possible de favoriser davantage les retombées entre ces entreprises et les PME nationales, notamment en créant des centres de recherche appliquée. Il faudrait stimuler l’entrepreneuriat en améliorant les conditions d’activité des entreprises, notamment l’accès aux financements non bancaires, la simplification du régime de faillite et le transfert de droits de propriété intellectuelle, et en mettant à niveau le réseau haut débit. Ce Document de travail se rapporte à l’Étude économique de l’OCDE de l’Irlande, 2013 (
    Keywords: venture capital, higher education, innovation, Ireland, entrepreneurship, science, start-ups, internationalisation, R&D tax credits, insolvency, SME financing, intellectual property rights, direct foreign investment, ICT infrastructure, investissement direct, enseignement supérieur, Irlande, capital risque, droits de propriété intellectuelle, infrastructure des TIC, crédit d’impôt en faveur de la R-D, internationalisation, financement des PME, jeunes entreprises, coûts des faillites, science, entrepreneuriat, innovation
    JEL: F21 G24 O31 O32 O33 O34
    Date: 2013–11–12
  8. By: Nabila Jawadi; Dominique Bonet-Fernandez
    Abstract: Recent research on virtual teams highlights the importance of high quality relationships to achieve high team performance. For research and development (R&D) virtual project teams, relationships characterized by cooperation and trust are expected to enhance creativity and innovation among team members. The purpose of this paper is to identify variables enabling high quality relationship building in virtual R&D teams and to analyze their influence on team performance. To this end, this study examines the effects of leadership, work organization and communication practices on the quality of the relationship between team members. The theoretical developments are illustrated through a case study of a car development project in a leading French car-making firm. Our findings show that dynamic and positive leadership plays an important role in enhancing relationships between team members. The results also highlight the importance of synchronous meetings and frequent and regular interaction to build cooperative and trusty relationships leading to high performance.
    Keywords: virtual R&D project teams, team performance, relationshipmanagement, leadership, communication.
    Date: 2013–11–14
  9. By: Kelchtermans, Stijn; Belderbos, Rene; Leten, Bart; Desair, Steven
    Abstract: This paper analyzes under which conditions joint basic research with academic ‘star’ scientists improves firms’ technological performance. Using data on 61 of the most R&D intensive firms in the biopharmaceutical sector in 1991-2003, we find that collaboration with academic stars for basic research increases inequality in technological performance across firms, with only the upper tail of the performance distribution benefiting from such partnerships. Further, we find that joint basic research with top academic scientists is more beneficial if the firm and the star also do joint applied work. Finally, we find a dual effect of firms’ exclusive access to academic stars, with a positive impact on technological performance for exclusive access to ‘translational’ stars versus a negative effect for exclusive access to ‘ivory tower’ stars.
    Keywords: innovation; Pharmaceutical Industry; Industry-science links; Star scientists;
    Date: 2013–03
  10. By: Stephan Brunow (Institute for Employment Research (IAB); Bastian Stockinger (Otto-Friedrich University of Bamberg)
    Date: 2013–11
  11. By: Della Malva, Antonio; Lissoni, Francesco; Llerena, Patrick
    Date: 2013
  12. By: Jan Fagerberg (TIK, University of Oslo; IKE, Aalborg University; CIRCLE, Lund University)
    Abstract: There is no shortage of syntheses or overviews on specific topics within innovation studies. Much more rare are attempts to synthesize the syntheses, i.e., cover the entire area of innovation studies, emphasize the achievements that have been made, discuss the implications for policy and point to developments that require further research. The introductory chapter “Innovation: A Guide to the literature” in The Oxford Handbook of Innovation (2004) was an attempt to do just that. However, as a guide it is by now a bit out of date. This paper is an attempt to update and extend it, taking into account lessons from new research on the development of innovation studies - and the knowledge base underpinning it - as well important additions to this knowledgebase from the last decade. A more elaborate discussion of innovation policy, including its theoretical underpinnings and what it may achieve, has also been added.
    Date: 2013–11
  13. By: Paul O'Sullivan (Department of Economics Finance and Accounting, National University of Ireland, Maynooth)
    Abstract: This paper analyses the incentives of incumbent firms to form a first-mover RJV when faced with possible entry. If entry is accommodated, firms’ relative profits under R&D competition and RJV formation depend on R&D spillovers and firms’ R&D efficiency. RJV formation may make entry unprofitable if spillovers are sufficiently low. If entry is deterred, RJV formation may be more profitable. Similarly, whether accommodation or deterrence is more profitable under RJV formation depends on spillovers and the firms’ efficiency. How welfare is affected by RJV formation depends on whether output is exported or domestically consumed. There may be a role for active government policy to affect market outcomes.
    JEL: D2 L2 L4
    Date: 2013
  14. By: Tannista Banerjee; Ralph Siebert
    Abstract: This study shows that R&D cooperation can be used as an instrument to coordinate drug development portfolios among participating firms, which has crucial implications on the number of drugs offered on the market. Our study puts special attention to the fact that R&D cooperation, formed at different stages throughout the drug development process, have different impacts on the technology and product markets. Using a comprehensive dataset on the pharmaceutical industry, our results show that R&D cooperation formed at the early stages increase the number of R&D projects and the number of drugs launched on the product market. Late stage R&D cooperation, however, have a positive impact on the drug development process and drug variety only in the short run. In the long run, late stage cooperation provoke that firms re-optimize their drug development portfolios which reduces the number of drugs offered on the market.
    Keywords: Drug development; Dynamics; Co-development; Pharmaceutical industry; Product variety; Product market competition; Research and Development cooperation
    JEL: L24 L25 L65 D22
    Date: 2013–11
  15. By: Stephan Brunow (Institute for Employment Research (IAB)); Valentina Nafts (Institute for Employment Research (IAB))
    Abstract: Innovation is a key driver of technological progress and growth in a knowledge-based economy. There are various motives for individual firms to innovate: improving quality secures market leadership, introducing new products leads the firm into new markets, adopting new technologies could be seen as a catch-up strategy within an industry or an improvement of the firm’s own products when the technology adopted is based on ideas from other industries. Firms can perform innovation activities in one or more of these areas or in none of them. We therefore raise the question of what types of firms tend to be more innovative, i.e. which firms innovate in more of these areas. For this purpose we employ firm-level survey data and combine it with administrative data from Germany’s social security system. An ordered logit model is estimated using a variety of characteristics which describe the workforce employed and other firm-related variables, the regional environment where the firm is located, as well as industry and region fixed effects.
    Keywords: firm innovation, labor diversity, ordered logit
    JEL: J44 O31 R12
    Date: 2013–11
  16. By: Paul O'Sullivan (Department of Economics Finance and Accounting, National University of Ireland, Maynooth)
    Abstract: This paper examines a one-shot game where two symmetric incumbents are faced with possible entry into an industry, where firms may differ in the efficiency of R&D in reducing marginal production costs. The decision facing the incumbents is whether to compete at the R&D stage or to form a RJV. R&D competition may imply that remaining in the market is not viable for the incumbents and the entrant is a monopolist. Conversely, RJV formation may make entry unprofitable and, possibly, increase welfare. The effect on welfare will depend on whether output is exported in its entirety or consumed domestically.
    JEL: D2 L2 L4
    Date: 2013
  17. By: Ṧaljanin, Salem; Thorwarth, Susanne
    Abstract: Corporate basic research is of great economic relevance. However, since potential payoffs of basic research activities are so long-term, firms facing competitive pressure may focus on more near-term, hence more applied research and development projects. This paper addresses the effect of market competition on firms’ in-house R&D investment and on its components basic research as well as applied research and development. We use the stated number of competitors as an indicator for competitive pressure. Our results indicate that increasing competitive pressure leads to a reduction of basic research activities and boosts firms’ expenditures in applied research and development.
    Keywords: basic research; R&D; competition;
    Date: 2013–04
  18. By: Kelchtermans, Stijn; Neicu, Daniel; Teirlinck, Peter
    Abstract: This paper sets out to investigate whether firms learn from their peers with respect to managing the R&D process. We do this by considering to what extent firms with similar economic activities and located in the same region mimic peers’ adoption of newly introduced tax credits for R&D, independent from other explanations such as unobserved correlated effects. Using hazard rate models on a dataset of R&D active Belgian companies, we find that there are significant regional and industry-level peer effects from firms that have accessed tax credits on the other enterprises’ probability of doing the same in the future. Specifically, the more companies access tax credits within an industry and region, the higher the probability of their peers doing so in subsequent years. Due to known issues with the econometric identification of peer effects, we use various specifications in order to check the robustness of our results.
    Keywords: R&D tax credits; peer effects; young innovative companies; information diffusion;
    Date: 2013–08–30
  19. By: William R. Kerr (Harvard Business School, Entrepreneurial Management Unit)
    Abstract: This study tests the importance of Ricardian technology differences for international trade. The empirical analysis has three comparative advantages: including emerging and advanced economies, isolating panel variation regarding the link between productivity and exports, and exploiting heterogeneous technology diffusion from immigrant communities in the United States for identification. The latter instruments are developed by combining panel variation on the development of new technologies across U.S. cities with historical settlement patterns for migrants from countries. The instrumented elasticity of export growth on the intensive margin with respect to the exporter's productivity growth is between 1.6 and 2.4 depending upon weighting.
    Keywords: Trade; Exports; Comparative Advantage; Technological Transfer; Patents; Innovation; Research and Development; Immigration; Networks;
    JEL: F11 F14 F15 F22 J44 J61 L14 O31 O33 O57
    Date: 2013–11
  20. By: Marine Agogué (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris); Elsa Berthet (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris, SADAPT - Sciences pour l'Action et le Développement : Activités, Produits, Territoires - Institut national de la recherche agronomique (INRA) : UMR1048 - AgroParisTech); Tobias Fredberg (Management of Organizational Renewal and Entrepreneurship - Chalmers University of Technology); Pascal Le Masson (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris); Blanche Segrestin (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris); Martin Stoetzel (Chair of Information Systems III - University Erlangen-Nuremberg); Martin Wiener (Chair of Information Systems III - University Erlangen-Nuremberg); Anna Yström (Management of Organizational Renewal and Entrepreneurship - Chalmers University of Technology)
    Abstract: Research has improved our understanding of the managerial challenges inherent in exploratory intermediation. For instance knowledge brokers help to solve well-defined problems based on existing competences. But what if the relevant actor networks are not known, if there is no clear common interest, or if there are only ill-defined, wicked problems and no legitimate common place where they can be discussed? The aim of this paper is to explore these management principles for intermediation of the unknown. Can intermediaries be active when the degree of unknown is high? And if so, what can they do and how can they manage and drive collective innovation? We first build on a review of the literature to highlight common core functions of the different types of intermediaries. Then, we introduce the "degree of unknown" as a new dimension for analyzing the role of intermediaries, and we discuss whether the core functions of the intermediary could be fulfilled when the degree of unknown is very high. Our analysis is based on four different empirical case studies in Sweden, France, and Germany where these functions have been tackled in particular because of the low level of pre-existing knowledge. We describe the managerial challenges these intermediaries face in the unknown and we demonstrate examples of how they have been handled. We conclude by discussing the theoretical and empirical perspectives raised by this work. The paper contributes to the theory of innovation intermediaries by exploring the properties of a form of intermediary for which the degree of unknown is a key contingency variable, and describes management principles for such intermediaries. In this way we characterize a new role -the "intermediary of the unknown" - that may be well spread in practice but scarcely analysed in the literature.
    Keywords: innovation intermediaries; open innovation; collaborative innovation; degree of unknown; innovation management
    Date: 2013
  21. By: Pascal Le Masson (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris); Sylvain Lenfle (CRG - Centre de recherche en gestion - Polytechnique - X - CNRS : UMR7176); Benoît Weil (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris)
    Abstract: In this paper, we empirically test the proposition that major innovation (MI) capabilities are systemic, dynamic capabilities. We rely on design theories and characterize the systemic, dynamic capabilities as design capabilities that renew a core of stabilized design rules. For the specific case of projects leading to new business development, we conducted a case-control study of 46 historical projects; 26 of these led to new business development, and 20 do not lead to new business development. Utilizing this sample, we show that our measurement model, based on rule-reuse vs. rule-renewal design capabilities, has a good fit. We find that rule-renewal design capabilities are positively related to new business development, whereas rule-reuse design capabilities (maintaining an invariant set of design rules) are independent of new business development. We discuss different combinations of rule-reuse and rule-renewal design capabilities. This paper contributes to the literature on MI capabilities. It also theoretically and methodologically contributes to the analysis of the dynamic capabilities of design activities
    Keywords: major innovation; design capabilities; renewal design capabilities; history; project management principles
    Date: 2013
  22. By: Asongu Simplice (Yaoundé/Cameroun)
    Abstract: The August 15th 2013 Shanghai Academic Rankings of World Universities (ARWU) should leave policy makers wondering about whether the impressive growth experienced by ‘latecomers in the industry\' has moved hand-in-hand with contribution to knowledge by means of scientific publications. Against this background, we model the obituary of scientific knowledge monopoly in 99 countries using 21 catch-up panels from 6 regions (South Asia, Europe & Central Asia, East Asia & the Pacific, Middle East & North Africa, Latin America & the Caribbean and, Sub-Saharan Africa). The findings broadly show that the obituary of scientific knowledge monopoly by developed countries is not in the near-horizon. Advanced nations that have mastered the dynamics of knowledge monopoly will continue to lead the course of knowledge economy. Justifications for the patterns and policy implications are discussed.
    Keywords: Research & Development; Catch-up; Knowledge Economy
    JEL: F42 O10 O30 O38 O57
    Date: 2013–09
  23. By: Joan Crespo; Raphaël Suire; Jérôme Vicente
    Abstract: In a recent literature, the structural properties of knowledge networks have been pointed out as a critical factor for cluster structural changes and long run dynamics. Mixing evolutionary economic geography and network-based approach of clusters, this contribution aims at capturing and discussing the particular influence of hierarchy (degree distribution) and assortativity (degree correlation) in the innovative capabilities of clusters along the industry life cycle. We test our propositions in the field of the mobile phone industry in Europe from 1988 to 2008. We use EPO PATSTAT and OECD REGPAT to capture cluster trends, and R&D relations from European Framework Programs to capture knowledge networks and their evolving structural properties. Our findings provide new insights to understand the organization of clusters over time in order to perform along the industry life cycle.
    Keywords: smart specialization, constructing regional advantage, Regional Cohesion Policy
    JEL: D85 L63 O33 R11
    Date: 2013–11
  24. By: Tannista Banerjee; Stephen Martin
    Abstract: In this paper we develop a model of the impact of the drug approval process on the terms of a contract between a pharmaceutical company that requires the services of a contract research organization (CRO) to carry out testing of new drug molecules. Results show that if the equilibrium contract includes a variable payment (royalty), the CRO gives more effort to create a more accurate result, the more strict the FDA approval process. We also find that given the royalty shares in the contract if the FDA demands more accuracy in results as a condition of approval, then the CRO will generate more accurate results from late stage tests. However, greater FDA stringency in the approval process benefits pharmaceutical companies because the greater is FDA stringency, the less is the risk of a drug recall. We also find that in order to employ a CRO in the testing process, the pharmaceutical company's prior probability that the drug is of high quality must be very high.
    Keywords: Pharmaceutical regulation; Food and Drug Administration; R&D outsourcing; contract research
    JEL: L24 L65
    Date: 2013–11
  25. By: Andrea Bonaccorsi (Department of Energy and Systems Engineering, University of Pisa, Italy); Cinzia Daraio (Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza")
    Abstract: In this paper, we investigate a new approach for the measurement of spillovers. The concept of spillovers is central in many theories of geography, innovation and growth, particularly at the regional level. We evaluate the impact of size and intensity of knowledge production, as observed in publications and patents at the sub-regional level, on the efficiency of manufacturing activity. We employ nonparametric and robust conditional measures in efficiency analysis to a unique dataset at the subregional level (province) for Italy. We find that most Italian provinces are located in a region of absence or extremely low impact of knowledge spillovers. Nevertheless, a few provinces with maximum volume in both patents and publications and some medium-sized provinces with high knowledge intensity show knowledge spillovers.
    Keywords: knowledge spillovers, manufacturing industry, growth, efficiency analysis, conditional efficiency, robust nonparametric estimation
    Date: 2013
  26. By: Edquist, Harald (Fores); Henrekson, Magnus (Research Institute of Industrial Economics (IFN))
    Abstract: The Swedish economy has developed rapidly since the mid-1990s relative to most comparable countries, in particular relative to almost all other EU-15 countries. We investigate two policy areas that are believed to have been important for the strong economic development in Sweden during the last two decades, namely product market reforms and incentives to innovate. The paper provides a short description of the policy changes that have taken place within these areas since the early 1990s and offers ideas for additional policy reforms that would pave the way for continued successful economic development.
    Keywords: Economic reforms; Entrepreneurship; Innovation; Institutions; Product market regulations; Sweden
    JEL: L53 O31 O52
    Date: 2013–11–13
  27. By: Sergio Currarini (University of Leicester, Universita' di Venezia and Euro-Mediterranean Center on Climate Change); Marco A. Marini (Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza")
    Abstract: We study the welfare effects of parallel trade (PT) considering investment in quality. We thus revisit the case for allowing PT in research-intensive industries. We find that quality may be higher with than without PT, depending on how consumersÕ preferences for quality differ across countries. Conditional on quality, consumer surplus may rise in the source country, or fall in the destination country of PT. We find that PT reduces ex post welfare, and improving quality is a necessary (and sometimes sufficient) condition for PT to increase welfare ex ante.
    Keywords: Parallel trade; Price discrimination; R&D investment; Intellectual property rights
    Date: 2013
  28. By: Stephen P. Holland; Jonathan E. Hughes; Christopher R. Knittel; Nathan C. Parker
    Abstract: Renewable fuel standards, low carbon fuel standards, and ethanol subsidies are popular policies to incentivize ethanol production and reduce emissions from transportation. Compared to carbon trading, these policies lead to large shifts in agricultural activity and unexpected social costs. We simulate the 2022 Federal Renewable Fuel Standard (RFS) and find that energy crop production increases by 39 million acres. Land- use costs from erosion and habitat loss are between $277 and $693 million. A low carbon fuel standard (LCFS) and ethanol subsidies have similar effects while costs under an equivalent cap and trade (CAT) system are essentially zero. In addition, the alternatives to CAT magnify errors in assigning emissions rates to fuels and can over or under-incentivize innovation. These results highlight the potential negative efficiency effects of the RFS, LCFS and subsidies, effects that would be less severe under a CAT policy.
    JEL: H4 Q2 Q4 Q5
    Date: 2013–11
  29. By: Arts, Sam; Veugelers, Reinhilde
    Abstract: We explore the relationship between the technological origins and novelty of inventions on the one hand and their technological impact on the other hand. In particular, we are interested into the technological origins and novelty of breakthrough inventions. By jointly looking at the effects of the origins and novelty on an invention’s average impact, on the likelihood of a very poor invention, and on the likelihood of a breakthrough, we identify some trade-offs researchers face when exploring breakthroughs. For evidence, we consider the US patent record in biotechnology from 1976 to 2001. Our analysis shows that breakthroughs in biotechnology rely more on non-technical and technical prior art, particularly more recent technical prior art, prior art from many different technology fields, and prior art from unfamiliar technology fields. Yet, breakthroughs are less likely to have a dissimilar set of technical prior art citations, as they are more likely to use prior art previously cited by many other inventions. Besides differences in the origins, we find significant differences in the technological novelty. Breakthroughs are more novel in the sense that they are more likely to recombine technological components for the first time in history, particularly more familiar technological components.
    Keywords: origins; novelty; breakthrough; invention; biotechnology; patents;
    Date: 2013–01
  30. By: Alessandro Caiani; Antoine Godin; Stefano Lucarelli
    Abstract: The present work aims at contributing to the recent stream of literature which attempts to link the Neo-Schumpeterian/Evolutonary and the Post-Keynesian theory. The paper adopts the Post-Keynesian Stock Flow Consistent modelling approach to analyze the process of development triggered by the emergence of a new-innovative productive sector into the economic system. The model depicts a multi-sectorial economy composed of consumption and capital goods industries, a banking sector and two households sectors: capitalists and wage earners. Furthermore, it provides an explicit representation of the stock market. In line with the schumpeterian tradition, our work highlights the cyclical nature of the development process and stresses the relevance of the finance-innovation nexus, analyzing the feed-back effects between the real and financial sides of the economic system. In this way we aim at setting the basis of a comprehensive and co- herent framework to study the relationship between technological change, demand and finance along the structural change process triggered by technological innovation.
    Date: 2013–11
  31. By: Pascal Le Masson (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris); Armand Hatchuel (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris); Benoît Weil (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris)
    Abstract: In this paper we analyse teaching at Bauhaus (1919-1933), through the courses of Itten and Klee. We show that these courses not only aimed at teaching the styles. They aimed at increasing students creative design capacities and at providing them techniques to create their own style, in the sense of being able to be generically creative - ie be creative on as many languages as possible. The analyses of the two courses leads to identify two critical features to get a generic creative design capacity: 1-A knowledge structure that is characterized by non-determinism and non-independence; 2-A genesis process that helps to progressively "superimpose" languages on the object in a robust way. These features are strongly different from the knowledge structure and design process of Engineering Systematic Design. We finally show that these features actually correspond to two sufficient conditions for a mathematical model of sets to be "forced" (Cohen 1964) ie to lead to the creation of a new, extended model of sets that is generically different from the original one and still based on the law of this original one. This underlines the deep similarity between the logic of artistic creation and the logic of mathematical creation.
    Date: 2013
  32. By: Neil M Kay (Department of Economics, University of Strathclyde)
    Abstract: This paper shows how one of the developers of QWERTY continued to use the trade secret that underlay its development to seek further efficiency improvements after its introduction. It provides further evidence that this was the principle used to design QWERTY in the first place and adds further weight to arguments that QWERTY itself was a consequence of creative design and an integral part of a highly efficient system rather than an accident of history. This further serves to raise questions over QWERTY’s forced servitude as “paradigm case†of inferior standard in the path dependence literature. The paper also shows how complementarities in forms of intellectual property rights protection played integral roles in the development of QWERTY and the search for improvements on it, and also helped effectively conceal the source of the efficiency advantages that QWERTY helped deliver.
    Keywords: QWERTY, invention, path dependence, path creation, patents, trade secrets
    Date: 2013–10
  33. By: Richard Fabling (Motu Economic and Public Policy Research); Norman Gemmell (Victoria University of Wellington); Richard Kneller (University of Nottingham); Lynda Sanderson (The Treasury)
    Abstract: Effective marginal tax rates (EMTRs) can be very different from the statutory rate and vary across firms, reflecting such factors as the extent and nature of taxable deductions (losses, depreciation), asset and ownership structures, and debt/equity financing. We estimate firm-specific EMTRs and related user cost of capital (UCC) measures allowing for shareholder-level taxation using data for 2000-2010 from the Longitudinal Business Database. Examining distributions of various UCC measures we find substantial firm-level heterogeneity, systematic changes as a result of tax reforms between 2004 and 2011, and systematic differences between foreign-owned and domestically-owned firms. Choices among alternative UCC measures make a difference to interpretations.
    Keywords: User cost of capital, tax reform, EMTR, New Zealand
    JEL: D22 G30 H25
    Date: 2013–11

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