nep-ino New Economics Papers
on Innovation
Issue of 2014‒12‒13
fifteen papers chosen by
Steffen Lippert
University of Auckland

  1. Innovation and firm collaboration: An exploration of survey data. By Bjerke, Lina; Johansson, Sara
  2. Orchestrating innovation with user communities in the creative industries By G. Parmentier; Vincent Mangematin
  3. Appropriability mechanisms, innovation and productivity: Evidence from the UK By Hall B.H.; Sena V.
  4. Globalization, the rise of biotechnology and catching up in agricultural innovation: The case of Bt technology in India By Iizuka M.; Thutupalli A.
  5. Innovation of knowledge intensive service firms in urban areas By Hammer, Andrea
  6. Do Tax Credits Affect R&D Expenditures by Small Firms? Evidence from Canada By Ajay Agrawal; Carlos Rosell; Timothy S. Simcoe
  7. Network Competence and Open Innovation Behaviour in the Food Sector: An Empirical Investigation By Lefebvre, Virginie M.; Molnàr, Adrienn; Kühne, Bianka; Gellynck, Xavier
  8. The size of patent categories: USPTO 1976-2006 By Lafond F.D.
  9. The adoption of information and communication technologies in the design sector and their impact on firm performance: Evidence from the Dutch design sector By Bashir, Sadaf; Matzat, U.; Sadowski, B. M.
  10. The Impact of 'Clean Innovation' on Economic Growth: Evidence from the Transport and Energy Industries' By Ralf Martin
  11. The Dynamic Implication of Agricultural Research and Development Investment for Economic Development By Didier, Y. Alia; Reed, Michael R.
  12. Identifying Expectations for Innovations in Management Practices in Dairy Sector by Using Q Methodology By Latvala, Terhi; Mandolesi, Serena; Nicholas, Phillipa; Zanoli, Raffaele
  13. An Explanation of Economic Change and Development By Fusari, Angelo
  14. Varieties of knowledge-based bioeconomies By Urmetzer, Sophie; Pyka, Andreas
  15. Addressing elimination and selection by aspects decision rules in discrete choice experiments: does it matter? By Erdem, Seda; Campbell, Danny; Thompson, Carl

  1. By: Bjerke, Lina (Jönköping International Business School (JIBS), Economics, Finance and Statistics.); Johansson, Sara (Jönköping International Business School (JIBS), and Centre of Excellence for Science and Innovation Studies (CESIS).)
    Abstract: Recent literature on firm innovation emphasize the importance of combinations of different knowledge sources in innovation processes. Moreover, the literature on firm collaboration has evolved stepwise: (1) knowledge networks tend to be geographically bounded, and (2) proximity in other dimensions than physical distance, such as cognitive and organisational proximity, may influence the evolution and influences of networks. The results from this empirical study support these ideas by indicating that firms’ probability to innovate is enhanced when they collaborate. However, not all types of collaborations are as important. By using data from a survey on innovation and collaboration of 636 firms in the county of Jönköping, Sweden, we find that extra-regional collaboration matters the most for the innovation performance of these firms. Moreover, collaborations tend to be most favourable for innovation when the collaborators involved has some organisational or cognitive proximity. Collaborations that imply vertical linkages in the value added chain appear to more important than horizontal linkages.
    Keywords: Innovation; innovation networks; innovation survey; proximity; firm collaboration
    JEL: C83 O31 R10
    Date: 2014–11–07
  2. By: G. Parmentier (CERAG - Centre d'études et de recherches appliquées à la gestion - CNRS : UMR5820 - Université Pierre-Mendès-France - Grenoble II); Vincent Mangematin (MTS - Management Technologique et Strategique - Grenoble École de Management (GEM))
    Abstract: The digital creative industries exemplify innovation processes in which user communities are highly involved in product and service development, bringing new ideas, and developing tools for new product uses and environments. We explore the role of user communities in such co-innovation processes via four case studies of interrelations between firms and their communities. The digitization and virtualization of firm/community interactions are changing how boundaries are defined and how co-innovation is managed. The transformation of innovation management is characterized by three elements: opening and redefining firm boundaries; opening of products and services to community input and reducing property rights; and reshaping organization and product identities. Innovation in collaboration with user communities requires firms to orchestrate their communities and their inter-relationships to encourage the creativity and motivation of users, and develop the community's innovatory capacity.
    Keywords: Online communities; User; Innovation; Video game; Community management; Co-innovation
    Date: 2014
  3. By: Hall B.H.; Sena V. (UNU-MERIT)
    Abstract: We use an extended version of the well-established Crepon, Duguet and Mairesse model 1998 to model the relationship between appropriability mechanisms, innovation and firm-level productivity. We enrich this model in several ways. First, we consider different types of innovation spending and study the differences in estimates when innovation spending rather than RD spending is used to predict innovation in the CDM model. Second, we assume that a firm simultaneously innovates and chooses among different appropriability methods formal or informal to protect the innovation. Finally, in the third stage, we estimate the impact of the innovation output conditional on the choice of appropriability mechanisms on firmsf productivity. We find that firms that innovate and rate formal methods for the protection of Intellectual Property IP highly are more productive than other firms, but that the same does not hold in the case of informal methods for the protection of a firmfs IP, except possibly for large firms as opposed to SMEs. We also find that this result is strongest for firms in the services, trade, and utility sectors, and negative in the manufacturing sector.
    Keywords: Firm Performance: Size, Diversification, and Scope; Technological Change; Research and Development; Intellectual Property Rights: General; Intellectual Property Rights;
    JEL: O34 O30 L25
    Date: 2014
  4. By: Iizuka M.; Thutupalli A. (UNU-MERIT)
    Abstract: The agricultural sector has played an important role in the provision of food, foreign exchange and sustainable energy to many developing countries. This sector, however, has not been considered as a driving force of innovation as compared to other productive sectors. However, recent economics and international business literature suggests that the agricultural sector 1 has become knowledge intensive with the rise of biotechnology Bt; and 2 is a sector where firms in developing countries can play an important role in production and innovation due to their latent advantage in the context-specific or in-situ knowledge base. In this paper, we first present a conceptual framework that characterizes the knowledge required for successful agricultural innovation against the backdrop of globalization and rise of biotechnology. We then examine the case of diffusion of Bt cotton hybrids Bacillus thuringiensis, an insect resistant seed technology in India to illustrate the dynamics of knowledge creation and catching up by the local seed firms based on their interactions with global as well as other local firms. Our analysis reveals that the local firms with absorptive capacity, that is, the ability to effectively integrate location-specific in-situ knowledge and generic scientific knowledge global knowledge can catch up with global frontier technologies to gain significant domestic market shares.
    Keywords: Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products; Innovation and Invention: Processes and Incentives; Management of Technological Innovation and R&D; Agricultural R&D; Agricultural Technology; Biofuels; Agricultural Extension Services;
    JEL: O13 O31 O32 Q16
    Date: 2014
  5. By: Hammer, Andrea
    Abstract: This paper investigates the agglomeration of Knowledge Intensive Service (KIS) firms in urban areas. In accordance with the Regional Innovation Systems approach it is argued that cities provide crucial innovation advantages working as centripetal forces for KIS. Applying multivariate logit regressions to a company survey of the city of Karlsruhe, the second largest city of the German federal state of Baden-Württemberg, shows positive effects of local cooperation and urban infrastructures on the innovation probability of KIS firms. However, the effects vary with the type of innovation pursued, thus demonstrating a high complexity of local relations conducive to KIS firm innovation.
    Keywords: Knowledge Intensive Services,Regional Innovation Systems,urban innovation,innovation in services,local cooperation,urban infrastructure
    JEL: R48 L92 Q55
    Date: 2014
  6. By: Ajay Agrawal; Carlos Rosell; Timothy S. Simcoe
    Abstract: We exploit a change in eligibility rules for the Canadian Scientific Research and Experimental Development (SRED) tax credit to gain insight on how tax credits impact small-firm R&D expenditures. After a 2004 program change, privately owned firms that became eligible for a 35 percent tax credit (up from a 20 percent rate) on a greater amount of qualifying R&D expenditures increased their R&D spending by an average of 15 percent. Using policy-induced variation in tax rates and R&D tax credits, we estimate the after-tax cost elasticity of R&D to be roughly -1.5. We also show that the response to changes in the after-tax cost of R&D is larger for contract R&D expenditures than for the R&D wage bill and is larger for firms that (a) perform contract R&D services or (b) recently made R&D-related capital investments. We interpret this heterogeneity as evidence that small firms face fixed adjustment costs that lower their responsiveness to a change in the after-tax cost of R&D.
    JEL: H2 H71 O25 O31 O38
    Date: 2014–10
  7. By: Lefebvre, Virginie M.; Molnàr, Adrienn; Kühne, Bianka; Gellynck, Xavier
    Abstract: In today business world where knowledge and resources are increasingly spread among organizations, enterprises often develop a wide variety of relationships with other organizations in order to access new technologies, know-how and resources. Increasingly, the use of external resources for innovation – also referred as inbound open innovation in literature – is seen as a key factor to remain innovative and hence competitive. While the impact of open innovation on the firm’s innovativeness and performance has received quite some attention by scholars, the mechanisms that push firm to open up their innovation process remain under investigated. The aim of this paper is to contribute to fill in this gap by developing and testing empirically a research framework on the firm specific factors impacting the firm’s degree of openness. In order to reach the research objective, an extensive literature review was performed based on which several research hypotheses were developed. A web-questionnaire was then designed and distributed to the CEOs of food SMEs in Europe. A major result of this study is that network competence – defined as the firm’s ability to establish and use relationships with other organization – drives the firm’s openness in terms of ambidexterity (i.e. new versus existing relationships) and breadth (number of external sources or search channels that the firm relies upon in its innovative activities).
    Keywords: Open innovation, network competence, low-tech sector, Agribusiness, Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety, Research and Development/Tech Change/Emerging Technologies,
    Date: 2013–09
  8. By: Lafond F.D. (UNU-MERIT)
    Abstract: Categorization is an important phenomenon in science and society, and classification systems reflect the mesoscale organization of knowledge. The Yule-Simon-Naranan model, which assumes exponential growth of the number of categories and exponential growth of individual categories predicts a power law Pareto size distribution, and a power law size-rank relation Zipfs law. However, the size distribution of patent subclasses departs from a pure power law, and is shown to be closer to a shifted power law. At a higher aggregation level patent classes, the rank-size relation deviates even more from a pure power law, and is shown to be closer to a generalized beta curve. These patterns can be explained by assuming a shifted exponential growth of individual categories to obtain a shifted power law size distribution for subclasses, and by assuming an asymmetric logistic growth of the number of categories to obtain a generalized beta size-rank relationship for classes. This may suggest a shift towards incremental more than radical innovation.
    Keywords: Technological Change; Research and Development; Intellectual Property Rights: General; Innovation and Invention: Processes and Incentives;
    JEL: O30 O31
    Date: 2014
  9. By: Bashir, Sadaf; Matzat, U.; Sadowski, B. M.
    Abstract: This paper analyzes processes and effects of ICT enabled innovation in the Dutch design sector. Although the adoption of Information and Communication Technologies (ICT) is considered as vital in the design sector, little is known about whether and how ICTs affect the firm performance of small and medium-sized companies (SMEs) in the industry. In introducing a conceptual distinction between ICT supporting the information processing and communication, the paper first examines the determinants of ICT adoption. Next, we analyze the effects of ICT adoption on product and process innovation as well as on firm performance, focusing on the mediating role of the innovation processes. The analyses rest on survey data of a sample of 189 Dutch companies in the Web, Graphic, and Industrial Design Sector in the Netherlands. The results indicate that information processing role of ICT supports the exploitation and communication role facilitates the exploration in organizational learning. The exploitation enables process innovation while exploration enables product innovation. Lastly, Information processing technologies and product innovation are important determinants of superior firm performance.
    Date: 2014
  10. By: Ralf Martin
    Abstract: Policies on climate change that encourage 'clean innovation' while displacing 'dirty innovation' could have a positive impact on short-term economic growth while avoiding the potentially disastrous reduction in GDP that could result from climate change over the longer term.
    Keywords: Innovation spill-overs, Climate Change, Growth, Patents, Clean technology, Optimal climate policy
    JEL: O30 O44 Q54 Q55 Q58 H23
    Date: 2014–11
  11. By: Didier, Y. Alia; Reed, Michael R.
    Abstract: This paper presents some evidence of a positive effect of Agriculture R&D investment on economic growth in general dynamic setting using annual data for 57 developing countries for the period 1981-2010. The potential endogeneity of Research and Development Investment is also addressed to identify causal effect using GMM Style internal instrument that successfully pass various validity tests. Our analysis separates the growth effect and the level effect of R&D investment. The result appears to be robust to various proxies for Agriculture R&D investment. The finding suggests the intensification of investment in research and development in developing countries to boost agricultural productivity and economic growth.
    Keywords: Research and Development, Agriculture, Economic Growth, International Development, Research and Development/Tech Change/Emerging Technologies,
    Date: 2014–05
  12. By: Latvala, Terhi; Mandolesi, Serena; Nicholas, Phillipa; Zanoli, Raffaele
    Abstract: In this paper, expectations along the Finnish dairy supply chain for innovation to achieve more sustainable farming systems are identified. Four focus group discussions and three interviews for low input and organic dairy supply chain members were performed. The Q Methodology was used to highlight common ground and divergence in the expectations that organic and low input dairying can deliver. The common view is that innovation in housing aimed at improving animal welfare should be fostered. Animal welfare innovations were highlighted especially by the consumer group. Other supply chain members encouraged in accordance with consumer group animal welfare, but also innovations linking with the efficiency of production and feed quality. Common understanding between actors is that innovations linking to genetic modification are not acceptable. Many respondents also considered unnaturally those innovations that were linking with acceleration of genetic selection, speeding up calf development, and supporting in 100 % indoor dairy systems.
    Keywords: organic, low input, milk, dairy, Q method, innovation, sustainability, Agribusiness, Farm Management, Production Economics, Productivity Analysis, Research Methods/ Statistical Methods,
    Date: 2013–09
  13. By: Fusari, Angelo
    Abstract: The contribution to the explanation of economic change that this paper sets out is centered on a core of interconnected endogenous variables, mainly innovation, radical uncertainty and entrepreneurship, which current economic analyses consider only in part and separately, sometimes as endogenous but for the most as exogenous. The article (and the formalized model) suppose that the functioning of the economy is not disturbed by the operation of pathological factors mainly concerning public sector, as largely happens in current time, for instance: excessive public debt and public deficit; great inefficiencies and wastes in public sector and administration, and hence high taxation; inefficiencies, slowness and arbitrariness of judicial power; diffused organized criminality; financial capital operating, mainly at the international level, as master instead of servant of production, that is, largely devoted to speculation. A proper and efficient operation of the economy needs that those anomalies are absent. We attempt to explain economic change and development with regard to modern dynamic economies where the above pathologies have been removed. This supposition would be strengthened by the reduction of the model to only ‘necessary’ variables, as devised in sub-section 3.1.2 The theoretical frame of the proposed explanation is a dynamic competitive process: that is, a competition based not merely on prices but also put into action by entrepreneurs’ search for opportunities of profit attached to successful innovations, which generate profits through temporary monopolies and also engender disequilibria and radical uncertainty that will provide additional opportunities of profit. This dynamic competitive process is a great agent of economic change and evolutionary motion. As a first stage approximation, it can be thought of as a combination of Schumpeterian innovative entrepreneurship and action with the neo-Austrian market process and entrepreneurship: a combination describing the advent of innovations and the subsequent adaptive push enacted by the imitative diffusion of innovations and the search for other opportunities of profit allowed by rising disequilibria and uncertainty; a push that leads towards the reduction of the inconsistencies and radical uncertainty caused by innovation and (hence) towards a reorganization and re-equilibration of the economy on new structural bases. The understanding of the process of change and development is greatly obscured by the current separation of the two theoretical perspectives above. But it must be added that the explanation of such processes requires more than the simple combination of the two perspectives. In particular, it is essential that the notion of radical uncertainty – of which the Schumpeterian theory of economic development gives no explicit importance – is deepened. For its part, the neo-Austrian analysis of the market process, while attributing a great importance to radical uncertainty, thinks of it simply as a fog, an exogenous variable. We shall see that the explanation and measurement of radical uncertainty is a crucial – albeit very controversial and delicate – element of the understanding of the process of economic change and development. Moreover, we shall underline that the two theoretical perspectives (Schumpeterian and neo-Austrian) lack an adequate explanatory analysis of both the main agent of the whole process, that is, entrepreneurship (mainly its availability) and innovations. 1 It must be underlined that the notion of profit relevant with regard to the envisaged dynamic competition process does not include interest on the employed capital; it concerns only true profits, the so-called extra-profits resulting from entrepreneurial gains from successful innovations and the profit opportunities attached to the consequent disequilibria and uncertain perspectives. The ratio between those profits and the capital employed, expressed as the profit rate, is relevant mainly in that it is the only reliable indicator of the degree of success of an entrepreneur’s decision making, primarily in introducing innovations and meeting disequilibria and uncertainty. However, here we are not interested in the distribution of profits, that is, whether profit takes on a capitalist nature or is yielded by public or self-managed firms, etc. Such distributive characteristics express simply a choice of civilization, which is incidental to the mere question of economic change and development. Our model is not limited to the explanation of the core variables (that is, various kinds of innovation, such as radical and incremental process innovations and innovations of product, the demand and supply of entrepreneurship, and radical uncertainty) crucial in the representation of the whole process of change and the inherent disequilibrating and re-equilibrating evolutionary motion. The specified model also includes (and explains) other important variables such as output, employment, investment, prices, and wages. It refers to the maximum level of sectoral disaggregation, a sector for each specific good, and describes long waves. A specification with a restricted number of sectors is used for simulations. The structure of the paper is as follows: Section 1 concerns the introduction, while a second section is dedicated to a literary presentation of the theoretical construction, concerned mainly with the main variables enacting dynamic competition (entrepreneurship, radical uncertainty, innovation, profit) and long waves. A third section presents the formal specification of the model. This section is divided into five blocks. Block 1 concerns the explanation of radical process innovations and the advent of new products (that occur as soon as their explanatory functions reach some specified trigger values) and incremental innovations, while some Gamma distributions describe the diffusion of the radical process innovations across the economy, that is, the adaptive process following the innovative breakthroughs. Block 2 includes the equations explaining uncertainty, the availability of entrepreneurship, its demand and hence the excess of entrepreneurial skills. Block 3, which includes the equations of prices, wages and profits, has a conventional content, with the exception of some explanations of mark up and the definition of the rate of true profit, which excludes interests on capital. Block 4 concerns consumption and, in particular, the diffusion of new goods. Block 5 concerns capital and investment. A fourth section presents three simulations of the model that suppose different degrees of intensity of dynamic competition. A final section exposes some reference to a previous micro-specification of the model at the level of the firm. 2.
    Keywords: Development and growth,technological change, Innovations and their diffusion, economic evolution
    JEL: O1 O11 O30 O33
    Date: 2014
  14. By: Urmetzer, Sophie; Pyka, Andreas
    Abstract: Governments around the world seek for strategies to overcome the reliance on fossil resources and provide solutions for the most challenging contemporary global issues: food shortage, depletion of natural resources, environmental degradation and climate change. A very recent and widely diffused proposition is to transform economic systems into bio-based economies, which are based on new ways of intelligent and efficient use of biological resources and processes. If taken seriously, such endeavour calls for the creation and diffusion of new knowledge as basis for innovation and behavioural change on various levels and therefore often is referred to as knowledge-based bioeconomy. In the current debate, the requirement for innovation is mostly seen in the advance of the biotechnology sector. However, in order to fulfil the requirement of sustainability, which implicitly is connected with the bio-based economy, the transformation towards a bioeconomy requires a fundamental socio-economic transition and must comprise changes in technology as well as in markets, user practices, policy, culture and institutions. To illustrate a nation's capability for this transition, we refer to the concept of national innovation systems in its broad approach. With the help of an indicator-based multivariate analysis we detect similarities and dissimilarities of different national systems within the European Union as basis for a transition towards a knowledge-based bioeconomy. The analysis allows to compare the different strategies and to identify bottlenecks as well as success factors and promising approaches in order to design policy instruments to foster this imperative transformation.
    Date: 2014
  15. By: Erdem, Seda; Campbell, Danny; Thompson, Carl
    Abstract: Priorities for public health innovations are typically not considered equally by all members of the public. When faced with a choice between various innovation options, it is, therefore, possible that some respondents eliminate and/or select innovations based on certain characteristics. This paper proposes a flexible method for exploring and accommodating situations where respondents exhibit such behaviours, whilst addressing preference heterogeneity. We present an empirical case study on the public’s preferences for health service innovations. We show that allowing for elimination-by-aspects and/or selection-by-aspects behavioural rules leads to substantial improvements in model fit and, importantly, has implications for willingness to pay estimates and scenario analysis.
    Keywords: Discrete Choice Experiments, elimination by aspects, selection by aspects, latent class logit model, health service innovations., Consumer/Household Economics, Health Economics and Policy, Institutional and Behavioral Economics, Public Economics, Research Methods/ Statistical Methods,
    Date: 2014

This nep-ino issue is ©2014 by Steffen Lippert. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.