nep-ino New Economics Papers
on Innovation
Issue of 2014‒08‒09
nineteen papers chosen by
Steffen Lippert
University of Auckland

  1. The legacy of public subsidies for innovation: input, output and behavioural additionality effects By Stephen Roper; Nola Hewitt-Dundas
  2. Looking beyond the R&D effects on innovation: The contribution of non-R&D activities to total factor productivity growth in the EU By Lopez-Rodriguez, Jesus; Martinez, Diego
  3. Innovation, innovation strategy and survival By Stephen Roper; Helen Xia
  4. Theoretical Perspectives on Localised Knowledge Spillovers and Agglomeration By Leppälä, Samuli
  5. Green Technology and Optimal Emissions Taxation By Stuart McDonald; Joanna Poyago-Theotoky
  6. Open Innovation Effects of Patent Applications: An empirical study of inkjet technology patents (Japanese) By KINUKAWA Shinya
  7. Unpacking open innovation: Absorptive capacity, exploratory and exploitative openness and the growth of entrepreneurial biopharmaceutical firms By Stephen Roper; Helen Xia
  8. Knowledge context, learning and innovation: an integrating framework By Stephen Roper; James H. Love; Ying Zhou
  9. Scientific Sources of Corporate Inventions in Japan: Evidence from an inventor survey (Japanese) By NAGAOKA Sadao; YAMAUCHI Isamu
  10. The Emperical Scope of User Innovation By Jeroen de Jong
  11. Why don’t Poor Countries do R&D? By Edwin Goñi; William F. Maloney
  12. Innovation as Growth Policy: the challenge for Europe By Mariana Mazzucato; Carlota Perez
  13. ICT and R&D as inputs or efficiency determinants? Analysing the manufacturing Italian firms over the 2007-2009 By Bonanno, Graziella
  14. Scale effects in workplace innovations By Jan de Kok; Sophie Doove; Peter Oeij; Karolus Kraan
  15. On patent strength, litigation costs, and patent disputes under alternative damage rules By Bertrand Chopard; Thomas Cortade; Eric Langlais
  16. Research Funding and Academic Output: The Case of Agricultural University of Athens By Kyriakos Drivas; Athanasios T. Balafoutis; Stelios Rozakis
  17. Developing alliance formation process capabilities: replication, adaptation and flexibility in creating research and development consortia By James Hayton; Paul Olk
  18. Entrepreneurship as Experimentation By William R. Kerr; Ramana Nanda; Matthew Rhodes-Kropf
  19. Engineers, Innovative Capacity and Development in the Americas By William F. Maloney; Felipe Valencia Caicedo

  1. By: Stephen Roper (Warwick University Business School); Nola Hewitt-Dundas (Queen's University Belfast)
    Abstract: In many countries significant amounts of public funding are devoted to supporting firms’ R&D and innovation projects. Here, using panel data on the innovation activities of Irish manufacturing firms we examine the legacy effects of public subsidies for new product development and R&D. We examine five alternative mechanisms through which such effects may occur: input additionality, output additionality, and congenital, inter-organisational and experiential behavioural additionality. Tests suggest contrasting legacy effects with R&D subsidies generating legacy output additionality effects while new product development subsidies have legacy congenital and inter-organisational behavioural additionality effects. Our results have implications for innovation policy design and evaluation.
    Keywords: innovation policy, additionality, evaluation, Ireland
    JEL: O32 L1 O38 Q34 L26
    Date: 2014–07–01
  2. By: Lopez-Rodriguez, Jesus; Martinez, Diego
    Abstract: Although non-R&D innovation activities account for a significant portion of innovation efforts carried out across very heterogeneous economies in Europe, how to incorporate them in to economic models is not always straightforward. For instance, the traditional macro approach to estimating the determinants of total factor productivity (TFP) does not handle them well. To counter these problems, this paper proposes applying an augmented macro-theoretical model to estimate the determinants of TFP by jointly considering the effects of R&D and the impact of non-R&D innovation activities on the productivity levels of firms. Estimations from a model of a sample of EU-26 countries covering the period 2004-2008 show that the distinction between R&D and non-R&D effects is significant for a number of different issues. First, the results show a sizeable impact on TFP growth, as the impact of R&D is twice that of non-R&D. Second, absorptive capacity is only linked to R&D endowments. And third, the two types of endowments cannot strictly been seen as complementary, at least for the case of countries with high R&D intensities or high non-R&D intensities.
    Keywords: TFP; R&D; non-R&D expenditures; EU countries
    JEL: O0 O3 O4
    Date: 2014–06
  3. By: Stephen Roper (Warwick University Business School); Helen Xia (Loughborough University)
    Abstract: Innovation has a recognised effect on survival. Undertaking more risky innovation, for example, may increase the risk of business failure, while more incremental innovation may reduce failure risk. Here, we investigate how firms’ innovation strategy choices – which may reduce the riskiness or costs of innovation and/or increase the innovation rewards – moderate the innovation-survival relationship. Our analysis is based on UK Community Innovation Survey data matched with survival data from firms’ published accounts. We are able to match nearly 80 per cent of UK CIS respondents. Contrary to expectations we find that innovation partnering and intellectual property protection have little or no moderating effect on the innovation-survival relationship. However, receiving public support for innovation has significant positive moderating effects. This suggests the notion of “survival additionality”, i.e. firms receiving public support derive more persistent benefits from innovation than firms which did not receive public support. Specifically, firms which receive public support for innovation are 2.7 per cent more likely to survive for eight years than firms which innovate but without public support. This result is strongest for product and service rather than process change, with implications for innovation policy design and evaluation.
    Keywords: Innovation, survival, strategy, public support, additionality, UK
    JEL: O32 L1 O38 Q34 L26
    Date: 2014–02–02
  4. By: Leppälä, Samuli (Cardiff Business School)
    Abstract: There is substantial empirical evidence that innovation is geographically concentrated. Unlike what is generally assumed, however, it is not clear that localised knowledge spillovers provide a theoretically valid explanation for this. Studying spillovers of cost-reducing technology between Cournot oligopolists we show that 1) localised knowledge spillovers of any level do encourage agglomeration, but 2) whether this leads to higher levels of effective R&D depends on the type and level of knowledge spillovers, the number of firms, and the industry's R&D efficiency.
    Keywords: knowledge spillovers; agglomeration economies; innovation; location
    JEL: O33 R32 L13
    Date: 2014–07
  5. By: Stuart McDonald (School of Economics, The Universty of Queensland); Joanna Poyago-Theotoky (School of Economics, La Trobe University Rimini Centre for Economic Analysis (RCEA))
    Abstract: We examine the impact of an optimal emissions tax on research and development of emission reducing green technology (E-R&D) in the presence of R&D spillovers. We show that the size and effectiveness of the optimal emissions tax depends on the type of the R&D spillover: input or output spillover. In the case of R&D input spillovers (where only knowledge spillovers are accounted for), the optimal emissions tax required to stimulate R&D is always higher than when there is an R&D output spillover (where abatement and knowledge spillovers exist simultaneously). We also find that optimal emissions taxation and cooperative R&D complement each other when R&D spillovers are small, leading to lower emissions.
    Keywords: Environmental R&D, Green Technology, R&D Spillover, Emissions Tax
    JEL: H23 L11 Q55
    Date: 2014–06
  6. By: KINUKAWA Shinya
    Abstract: Firms apply for patents not only to obtain the right to exclude but also to prevent their rivals from obtaining patents of competing technologies. Patent applications for the latter purpose are usually called "defensive applications," which have caused the low appraisal rate of Japanese patents. However, since every patent application is published after 18 months from the application date, the defensive applications can be information sources of new technologies for firms that are not directly competing against the applicants, and the external effects of the defensive applications on different technological fields may be growing in the open innovation era. This paper examines such external effects in the field of inkjet technology using patent citation data, and confirms that even patent applications without examination requests had the effects. Moreover, this paper examines the effects of two patent policy changes on firms' patent applications: the temporary decrease in the novelty standard in the 1990s and the shortening of the examination request period since the 2000s. The regression results show that the former and the latter increased and decreased the number of patent applications, respectively.
    Date: 2014–07
  7. By: Stephen Roper (Warwick University Business School); Helen Xia (Loughborough University)
    Abstract: In this paper we explore the relationship between two key aspects of open innovation in small firms – absorptive capacity and external relationships – and their effects on growth in the US and European biopharmaceutical sectors. Results from an international sample of 349 biopharmaceutical firms surveyed in the US, UK, France and Germany suggest that realized absorptive capacity plays an important role in determining firms’ growth. In terms of the interaction between firms’ absorptive capacity and external relationships, we find that engagement with exploratory relationships depends strongly on the continuity of R&D, while participation in exploitative relationships is more conditional on firms’ realized absorptive capacity.
    Keywords: alliances, absorptive capacity, bio-technology, US, Europe
    JEL: O31 L25 L65
    Date: 2014–05–02
  8. By: Stephen Roper (Warwick University Business School); James H. Love (Aston University Business School); Ying Zhou (Aston University Business School)
    Abstract: In this paper we develop a framework to identify those elements of firms’ knowledge context which are important for innovation, and the mechanisms through which that knowledge impacts on firms’ innovation performance. We make four main contributions to the existing literature. First, our characterisation of knowledge context provides the basis for a more specific identification of which elements of firms’ knowledge environment are important for innovation, discriminating between spatial, industrial and network influences. Second, we reflect the role of innovation ambition in shaping firms’ knowledge search strategies. Third, we differentiate between firms’ interactive and non-interactive knowledge search activities and recognise that these may be complemented by unanticipated and serendipitous knowledge spillovers. Finally, we introduce the notion of encoding capacity to reflect firms’ internal ability to assimilate and apply external knowledge. Our framework provides an integrating mechanism for existing empirical studies, suggests a number of new research directions related to the determinants of innovation performance and the heterogeneity of innovation outcomes.
    Keywords: Knowledge, innovation, spatial, industry, learning
    Date: 2014–06–01
  9. By: NAGAOKA Sadao; YAMAUCHI Isamu
    Abstract: We conducted an inventor survey to examine the contribution of science to corporate inventions. The survey results show that for about one-quarter of the inventions, scientific knowledge embodied in literature, equipment, or research materials in the last 15 years was essential to conceive or implement research and development (R&D). If it were not for the collaboration with universities, 3% of the R&D projects would not have been implemented. In total, for two-thirds of the inventions, scientific knowledge contributed to implementing and accelerating R&D. These results indicate the importance of scientific knowledge as a public good to promote corporate inventions. We also found that about 70% of the scientific knowledge source of Japanese inventions was generated in Japan: the suppliers of scientific sources were located domestically. If the scientific sources are cited in the patent document, they are more likely to be cited at where the prior art is described rather than where the invention is described. Moreover, the results show that only 15% of the inventions with important scientific sources cite such important literature in the patent document, and only 16% of the inventions citing non patent literature actually cite the important scientific sources. This result means that the patent citation is an incomplete and noisy index to trace the knowledge flow.
    Date: 2014–07
  10. By: Jeroen de Jong
    Abstract: Until seven years ago, user innovation studies focused on specific cases or industries, leaving room for criticism that the phenomenon is marginal. This chapter summarizes and discusses the empirical work concerned with the scope of user innovation in broader samples. A first finding is that user innovation is widespread. The share of firms developing and/or modifying processes for in-house use is generally about 15 to 20 percent, while amongst consumers four to six percent innovated to satisfy personal needs in the past three years. This corresponds with millions of innovating businesses and consumers across the globe. For firms, user innovation indicators measure process-related innovation activities which remain partly invisible in official surveys, while user innovation by individual consumers is not at all present in the official statistics. A second finding is that user innovation is more open than traditional, producer-oriented innovation. Especially innovating consumers do not patent their knowledge, and 10 to 30 percent of them even shares their knowledge freely with other users and/or adopting businesses. Finally, it appears that users’ innovations can be useful to other economic actors. Diffusion mechanisms include free revealing to other users, new venture creation, and adoption by commercial producers. Overall, the empirical studies suggest that user innovation indicators should be part of the official innovation metrics.
    Date: 2014–05–22
  11. By: Edwin Goñi; William F. Maloney
    Abstract: Using a global panel on research and development (R&D) expenditures, this paper documents that on average poor countries do far less R&D than rich as a share of GDP. This is arguably counter intuitive since the gains from doing the R&D required for technological catch up are thought to be very high and Griffith et al. (2oo4) have documented that in the OECD returns increase dramatically with distance from the frontier. Exploiting recent advances in instrumental variables in a varying coefficient context we find than the rates of return follow an inverted U: they rise with distance to the frontier and then fall thereafter, potentially turning negative for the poorest countries. The findings are consistent with the importance of factors complementary to R&D, such as education, the quality of scientific infrastructure and the overall functioning of the national innovation system, and the quality of the private sector, which become increasingly weak with distance from the frontier and the absence of which can offset the catch up effect. China’s and India’s explosive growth in R&D investment trajectories in spite of expected low returns may be justified by their importing the complementary factors in the form of multinational corporations who do most of the patentable research.
    Keywords: R&D, Technology Adoption, Development, Complementarities, Instrumental Variable Varying Coefficient Models.
    JEL: O1 O32 O33 O4
    Date: 2014–06–19
  12. By: Mariana Mazzucato (SPRU, University of Sussex, UK); Carlota Perez (SPRU, University of Sussex, UK; London School of Economics, UK; Nurkse Institute, Estonia)
    Keywords: Growth policy, innovation, green growth, inclusive growth, technological revolutions, role of government, mission-oriented investments, value creation, definancialisation, respecialisation
    Date: 2014–07
  13. By: Bonanno, Graziella
    Abstract: Are Information and Communication Technology (ICT) and Research & Development (R&D) inputs or efficiency determinants? This is the topic of the paper which is developed by analysing a sample of 2691 Italian manufacturing firms over the period 2007-2009. The empirical setting is based on a production function estimated through the Stochastic Frontier (SF) approach. ICT and R&D are used once as inputs, once as efficiency determinants (Coelli et al., 1999). Results show that the rates of return of ICT and R&D investments are high (0.08 for ICT and 0.04 for R&D) when they enter into the model only as inputs. We also documented that ICT and R&D contribute positively to explain the efficiency scores.
    Keywords: ICT, R&D, Stochastic Frontier Approach, efficiency
    JEL: D22 D24 L69 O39
    Date: 2014–07–29
  14. By: Jan de Kok; Sophie Doove; Peter Oeij; Karolus Kraan
    Abstract: Workplace innovation can be defined as the implementation of new and combined interventions in work organisation, HRM and supportive technologies, and strategies to improve performance of organisations and quality of jobs. Previous research confirms the presence of a positive relationship between workplace innovation and firm performance. Within this study we are interested in the scale effects in workplace innovation. Does firm size moderate the relationship between workplace innovation and organisational performance?
    Date: 2014–04–03
  15. By: Bertrand Chopard; Thomas Cortade; Eric Langlais
    Abstract: This paper analyzes the effects of two damage rules (Lost Profi…t vs Unjust Enrichment) mainly used by Courts in patent litigations. In our model, the Infringer either is a mere imitator of the Patentee or introduces incremental innovations, and litigation costs are private information such that a pretrial settlement may be better for both litigants. We show that the Unjust Enrichment rule yields less trials than the Lost Pro…fit one. But regarding three main objectives, Patentee's protection, incentives to invest in R&D, and social welfare maximization,we …find that no rule is better than the other generally speaking. Our model also allows to emphasize how the combination between the size of litigation costs, the negotiation gains and the IPR strength, shapes the incentives to enforce as well infringe a IPR, although in a way specifi…c to each rule.
    Keywords: intellectual property, probabilistic patents, patent litigations, incremental innovations, pretrial negotiations, legal costs, imperfect competition.
    JEL: L1 L4 D8 K2 K4
    Date: 2014
  16. By: Kyriakos Drivas (Agricultural University of Athens); Athanasios T. Balafoutis (Agricultural University of Athens); Stelios Rozakis (Agricultural University of Athens)
    Abstract: This paper uses detailed data on funding information and research output from Agricultural University of Athens to examine how each type of funding source is related to the quantity and quality of academic research output. Of special interest are the corporate sponsors, the Greek government and European Union funding. We find that after controlling for unobserved heterogeneity from each research lab, all types of research sponsors are similarly related to both the count of publications and citations. Further, we find that research labs that have filed for at least one patent application, produce on average more publications and citations and receive more funding both from corporate and public sponsors.
    Keywords: research sponsor, corporate funding, government sponsor, European Union funding, publications, patents.
    JEL: O32 O33 O34
    Date: 2014
  17. By: James Hayton (University of Warwick Business School); Paul Olk (Daniels College of Business, University of Denver)
    Abstract: Our study draws from learning theory and path dependence research to hypothesize how companies build the capability for managing strategic alliance formation processes. Specifically, we focus on firms’ patterns of R&D consortia formation processes in the United States. Prior research identified two different consortium formation processes: emergent and engineered processes. This study explores the sequences of these processes for 1063 companies entering into alliances with 737 US-based consortia between 1984-2005, resulting in 3767 independent consortium joining events. Our results suggest that companies build alliance formation capabilities through a combination of replication, adaptability and flexibility. In showing these results, our study contributes to the alliance capability literature, the alliance formation process literature and research into organizational learning and path dependence.
    Keywords: alliance capability, formation process, R&D consortia, organizational learning, path dependence
    Date: 2013–11–02
  18. By: William R. Kerr; Ramana Nanda; Matthew Rhodes-Kropf
    Abstract: Entrepreneurship research is on the rise but many questions about its fundamental nature still exist. We argue that entrepreneurship is about experimentation: the probabilities of success are low, extremely skewed and unknowable until an investment is made. At a macro level experimentation by new firms underlies the Schumpeterian notion of creative destruction. However, at a micro level investment and continuation decisions are not always made in a competitive Darwinian contest. Instead, a few investors make decisions that are impacted by incentive, agency and coordination problems, often before a new idea even has a chance to compete in a market. We contend that costs and constraints on the ability to experiment alter the type of organizational form surrounding innovation and influence when innovation is more likely to occur. These factors not only govern how much experimentation is undertaken in the economy, but also the trajectory of experimentation, with potentially very deep economic consequences.
    JEL: G24 L26 O32
    Date: 2014–07
  19. By: William F. Maloney; Felipe Valencia Caicedo
    Abstract: Using newly collected national and sub-national data and historical case studies, this paper argues that differences in innovative capacity, captured by the density of engineers at the dawn of the Second Industrial Revolution, are important to explaining present in come differences, and, in particular, the poor performance of Latin America relative to North America. This remains the case after controlling for literacy, other higher order human capital, such as lawyers, as well as demand side elements that might be confounded with engineering. The analysis then finds that agglomeration, certain geographical fundamentals, and extractive institutions such as slavery affect innovative capacity. However, a large effect associated with being a Spanish colony remains suggesting important inherited factors.
    Keywords: Innovative Capacity, Engineers, Technology Diffusion, Human Capital, Growth, Development, History
    JEL: O1 O31 O33 O4 N1
    Date: 2014–06–19

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