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on Innovation |
| By: | Czarnitzki, Dirk; Hall, Bronwyn H.; Hottenrott, Hanna |
| Abstract: | Information about the success of a new technology is usually held asymmetrically between the research and development (R&D)-performing firm and potential lenders and investors. This raises the cost of capital for financing R&D externally, resulting in financing constraints on R&D especially for firms with limited internal resources. Previous literature provided evidence for start-up firms on the role of patents as signals to investors, in particular to Venture Capitalists. This study adds to previous insights by studying the effects of firms' patenting activity on the degree of financing constraints on R&D for a panel of established firms. The results show that patents do indeed attenuate financing constraints for small firms where information asymmetries may be particularly high and collateral value is low. Larger firms are not only less subject to financing constraints, but also do not seem to benefit from a patent quality signal. -- |
| Keywords: | Patents,Quality Signal,Research and Development,Financial Constraints,Innovation Policy |
| JEL: | O31 O32 O38 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:14023&r=ino |
| By: | Hud, Martin; Hussinger, Katrin |
| Abstract: | This study investigates the impact of R&D subsidies on R&D investment during the past financial crisis. We conduct a treatment effects analysis and show that R&D subsidies increased R&D spending among subsidized small and medium sized firms in Germany during the crisis years. In the first crisis year, the additionality effect induced by public support was, however, smaller than in other years. This temporary decrease may be caused by an altered innovation subsidy scheme in crisis years or by a different innovation investment behavior of the subsidy recipients. We do not find support for the countercyclical innovation subsidy scheme having caused the smaller additionality effect and conclude that it is likely to be driven by subsidy recipient behavior. -- |
| Keywords: | R&D,Subsidies,Policy Evaluation,Financial Crisis,Treatment Effects |
| JEL: | C14 C21 G01 H50 O38 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:14024&r=ino |
| By: | Zhang, Xiao-Bing (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | This paper investigates the strategic interactions between carbon taxation by a resource-consumers’ coalition and (wellhead) energy pricing by a producers’ cartel under possible innovation in a cheap carbon-free technology through a dynamic game. The arrival time of innovation is uncertain, but can be affected by the amount spent on R&D. The results show that the expectation of possible innovation decreases both the initial carbon tax and producer price, resulting in higher initial resource extraction or carbon emissions. Even though this 'green paradox' effect will appear in the cooperative case (no strategic interactions) as well, the presence of strategic interactions between resource producers and consumers can somewhat restrain such an effect. The optimal R&D to stimulate innovation is an increasing function of the initial CO2 concentration for both the resource consumers and a global planner. However, the resource consumers can over-invest in R&D (compared with the global efficient investment. |
| Keywords: | Carbon taxation; Innovation; Uncertainty; Dynamic game |
| JEL: | C73 H21 Q23 Q54 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0589&r=ino |
| By: | Gray, Elie; Grimaud, André |
| Abstract: | What is the social value of innovations in Schumpeterian growth models? This issue is tackled by introducing the concept of Lindahl equilibrium in a standard endogenous growth model with vertical innovations which is extended by explicitly considering knowledge diffusion. Assuming that knowledge diffuses on a Salop (1979) circle allows us to formalize the creation of the pools of knowledge in which research and development (R&D) activities draw from to produce innovations. Within this model, we compare two equilibria. The standard Schumpeterian equilibrium à la Aghion & Howitt (1992) is mainly characterized by incomplete markets since knowledge is not priced. It provides the usual private value of innovations. The Lindahl equilibrium is a benchmark enabling us to compute the system of prices that sustains the first-best social optimum, and thus to define and to determine analytically the social value of innovations. It provides a suitable methodology for revisiting issues involving the presence of knowledge, often studied in the industrial organization and endogenous growth literatures. This comparison sheds a new light on the consequences of non-rivalry of knowledge and of market incompleteness on innovators’ behavior in the Schumpeterian equilibrium. We notably revisit the issues of Pareto sub-optimality and of R&D incentives in presence of cumulative innovations. Basically, the key externality triggered by market incompleteness implies that knowledge creation is indirectly funded by means of intellectual property rights on rival goods embodying knowledge. Therefore, because the private value of innovations differs from the social one, innovators are not given the optimal incentives. |
| Keywords: | Schumpeterian growth theory - Lindahl equilibrium - Social value of innovations - Pareto sub-optimality - Cumulative innovations - Knowledge spillovers |
| JEL: | D52 O31 O33 O40 O41 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:27915&r=ino |
| By: | Stefan Lutz (Royal Docks Business School, University of East London) |
| Abstract: | Economic theory implies that research and development (R&D) efforts increase firm productivity and ultimately profits. In particular, R&D expenses lead to the development of intangible assets in the form of intellectual property (IP) and these assets command a return that increases overall profits of the firm. This hypothesis is investigated for the North American and European automotive supplier industries. Results indicate that R&D expenses in fact increase both intangible asset levels and their profit contributions. In particular, increases in the R&D expense to sales ratio lead to increases in the profit contribution of intangible assets relative to sales. This indicates that more R&D intensive IP should command higher royalty rates per sales when licensed to third parties and within multinational enterprises alike. |
| Keywords: | Productivity; Intellectual property; Royalties; MNE; Transfer pricing. |
| JEL: | D24 L20 L62 M21 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:ucm:doicae:1407&r=ino |
| By: | Godart, Olivier (Kiel Institute for the World Economy); Görg, Holger (Kiel Institute for the World Economy); Hanley, Aoife (Kiel Institute for the World Economy) |
| Abstract: | We explore whether the introduction of trust based working hours is related to the subsequent innovation performance of firms. Employing a panel data set of over 5,000 German establishments, we implement a propensity score matching approach where we only consider firms that did not use trust based work contracts initially. Our results show that firms which adopt such contracts tend to be between 11 to 14 percent more likely to improve products. These results hold when we control for another form of flexible time work arrangements, namely working time accounts. Thus, the positive relationship between the adoption of trust based working hours and innovation seems to be driven by the degree of control and self-management over working days, rather than by merely allowing time flexibility. |
| Keywords: | trust based work time, innovation, firm performance |
| JEL: | M54 M12 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8097&r=ino |
| By: | Gibbs, Michael (University of Chicago); Neckermann, Susanne (Erasmus University Rotterdam); Siemroth, Christoph (University of Mannheim) |
| Abstract: | We study the effects of a field experiment designed to motivate employee ideas, at a large technology company. Employees were encouraged to submit ideas on process and product improvements via an online system. In the experiment, the company randomized 19 account teams into treatment and control groups. Employees in treatment teams received rewards if their ideas were approved. Nothing changed for employees in control teams. Our main finding is that rewards substantially increased the quality of ideas submitted. Further, rewards increased participation in the suggestion system, but decreased the number of ideas per participating employee, with zero net effect on the total quantity of ideas. The broader participation base persisted even after the reward was discontinued, suggesting habituation. We find no evidence for motivational crowding out. Our findings suggest that rewards can improve innovation and creativity, and that there may be a tradeoff between the quantity and quality of ideas. |
| Keywords: | innovation, creativity, intrinsic motivation, incentives |
| JEL: | C93 J24 M52 O32 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8096&r=ino |
| By: | Blom, Martin; Castellacci, Fulvio; Fevolden, Arne |
| Abstract: | The paper investigates the trade-off between innovation and defence industrial policy. It presents an agent-based simulation model calibrated for the Norwegian defence industry that compares different policy scenarios and examines the effects of a pending EU market liberalization process. The paper points to two main results. (1) It finds that a pure scenario where national authorities focus on, and provide support exclusively for, either a) international competitiveness or b) national defence and security objectives, is more Pareto efficient than a corresponding mixed strategy where policy makers simultaneously pursue both international competitiveness and defence and security objectives. (2) Under the conditions of the new EU liberalization regime, a stronger and more visible trade-off will emerge between international competitiveness and national defence and security objectives. Policy makers will have to choose which to prioritise, and set a clear agenda focusing on one of the two objectives. |
| Keywords: | Innovation policy; industrial policy; defense industry; EU liberalization; agent-based simulation model |
| JEL: | C6 H0 L1 O3 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55326&r=ino |
| By: | Fowler, A.F. |
| Abstract: | The world is said to be confronted with complex issues working against the long term well-being of people and planet that can only be effectively addressed through (hyper) collective effort. How necessary collaboration comes about and progresses shows numerous approaches, professional specialisations, studies and examples. However, there is little in the way of a comprehensive, comparative perspective examining the instigator(s) of diverse collective action objectives and participants in co-creative relationships for societal change that are maintained over time and brought to fruition. More critically, organisational innovations suggest that what currently exists to tackle intractable problems by getting institutions and their organisational actors to cooperate needs updating. Past approaches to collaboration are not good enough for operating in tomorrow’s conditions. Drawing on Actor Network Theory, this paper therefore explores a category of actant – an interlocutor – as potentially crucial in committing to, arranging and holding together complex collective action engagements. From multiple angles and using examples of organisational innovation, the analysis considers the interplay between interlocutor attributes and interlocution processes. A preliminary conclusion is that a combination of characteristics exhibited by an interlocutor offers a helpful category to explain and bring about multi-institutional problem solving. As importantly, increasing the number and variety of interlocutors across the world may be an agenda worth pursuing. |
| Keywords: | interlocutor, institutions, innovation, collective action, actor networks |
| Date: | 2014–04–14 |
| URL: | http://d.repec.org/n?u=RePEc:ems:euriss:51129&r=ino |