nep-ino New Economics Papers
on Innovation
Issue of 2015‒02‒05
28 papers chosen by
Steffen Lippert
University of Auckland

  1. Finite-length Patents and Functional Differential Equations in a Non-scale R&D-based Growth Model By Lin, Hwan C.; Shampine, L.F.
  2. Knowledge spillovers from clean and dirty technologies By Antoine Dechezlepretre; Ralf Martin; Myra Mohnen
  3. Innovation and SMEs Patent Propensity in Korea By Han, Junghee; Heshmati, Almas
  4. Do Financing Constraints Matter for R&D? By Brown, James R.; Martinsson, Gustav; Petersen, Bruce C.
  5. An Overview of Models of Distributed Innovation. Open Innovation, User Innovation, and Social Innovation By Garry Gabison; Annarosa Pesole
  6. When does Innovation Matter for Exporting? By Blyde, Juan; Iberti, Gonzalo; Mussini, Micaela
  7. Labour flows and R&D: A quantile regression analysis By Di Cintio, Marco; Grassi, Emanuele
  8. Innovation, Governance and Competition By Roychoudhury, Saurav; Bhowmik, Anuj; Chattopadhyay, Srobonti
  9. Public ICT R&D funding in the European Union By Juraj Stan?ík; Ibrahim Kholilul Rohman
  10. Boosting the EU’s attractiveness to international R&D investments: what matters? What works? By Fernando Hervas Soriano; Iulia Siedschlag; Alexander Tuebke
  11. Strategic R&D Commitment and the Gains from Trade By Gerda Dewit; Dermot Leahy
  12. Combinatorial Innovation and Research Strategies: Theoretical Framework and Empirical Evidence from Two Centuries of Patent Data By Clancy, Matthew
  13. Does foreign environmental policy influence domestic innovation?: evidence from the wind industry By Antoine Dechezlepretre; Matthieu Glachant
  14. Trading and enforcing patent rights By Alberto Galasso; Mark Schankerman; Carlos J. Serrano
  15. Innovation and Trade in the Presence of Credit Constraints By Foellmi, Reto; Legge, Stefan; Tiemann, Alexa
  16. Public R&D Investments and Private-sector Patenting: Evidence from NIH Funding Rules By Pierre Azoulay; Joshua S. Graff Zivin; Danielle Li; Bhaven N. Sampat
  17. The ICT Landscape in Brazil, India, and China By Jean-Paul
  18. Internationalization and innovation of firms: evidence and policy By Carlo Altomonte; Tommaso Aquilante; Gábor Békés; Gianmarco I. P. Ottaviano
  19. Localized Knowledge Spillovers: Evidence from the Agglomeration of American R&D Labs and Patent Data By Buzard, Kristy; Carlino, Gerald A.; Hunt, Robert M.; Carr, Jake; Smith, Tony E.
  20. Patents and the global diffusion of new drugs By Iain Cockburn; Jean O. Lanjouw; Mark Schankerman
  21. Corporate Governance, Innovation and Firm Age: Insights and New Evidence. By Bianchini, Stefano; Krafft, Jackie; Quatraro, Francesco; Ravix, Jacques
  22. Resilience, creativity and innovation. The case of Chemical innovations after the 1966 Flood in Florence By Luciana Lazzeretti; Francesco Capone
  23. Innovation and access to technologies for sustainable development: diagnosing weaknesses and identifying interventions in the Transnational Arena By Laura Diaz Anadon; Kira J. M. Matus; Suerie Moon; Gabriel Chan; Alicia Harley; Sharmila Murthy; Vanessa Timmer; Ahmed Abdel Latif; Kathleen Araujo; Kayje Booker; Hyundo Choi; Kristian Dubrawski; Lonia Friedlander; Christina Ingersoll; Erin Kempster; Laura Pereira; Jennie Stephens; Lee Vinsel; William C Clark
  24. ICT and environmental innovations in a complementary fashion. Is the joint adoption by firms economically visible? By Davide Antonioli; Grazia Cecere
  25. Business investment during the global crisis: some evidence from the Italian experience By D'Elia, Enrico; Morettini, Lucio
  26. Trapped factors and China’s impact on global growth By Nicholas Bloom; Paul Romer; Stephen Terry; John Van Reenen
  27. Cultural diversity, innovation and entrepreneurship: firm-level evidence from London By Neil Lee; Max Nathan
  28. The geography and evolution of complex knowledge By Pierre-Alexandre Balland; David L. Rigby

  1. By: Lin, Hwan C.; Shampine, L.F.
    Abstract: The statutory patent length is 20 years in most countries. R&D-based endogenous growth models, however, often presume an infinite patent length. In this paper, finite-length patents are embedded in a non-scale R&D-based growth model, but any patent’s effective life may be terminated prematurely at any moment, subject to two idiosyncratic hazards of imitation and innovation. This gives rise to an autonomous system of mixed-type functional differential equations (FDEs). Its dynamics are driven by current, delayed and advanced states. We present an algorithm to solve the FDEs by solving a sequence of standard BVPs (boundary value problems) for systems of ODEs (ordinary differential equations). We use this algorithm to simulate a calibrated U.S. economy’s transitional dynamics by making discrete changes from the baseline 20 years patent length. We find that if transitional impacts are taken into account, optimizing the patent length incurs a welfare loss, albeit rather small. This suggests that fine-tuning the world’s patent systems may not be a worthwhile effort.
    Keywords: Patent Length, Innovation, Delay Differential Equation, Advance Differential Equation, Transitional Dynamics, Endogenous Growth
    JEL: C63 O31 O34
    Date: 2014–10
  2. By: Antoine Dechezlepretre; Ralf Martin; Myra Mohnen
    Abstract: How much should governments subsidize the development of new clean technologies? We use patent citation data to investigate the relative intensity of knowledge spillovers in clean and dirty technologies in two technological fields: energy production and transportation. We introduce a new methodology that takes into account the whole history of patent citations to capture the indirect knowledge spillovers generated by patents. We find that conditional on a wide range of potential confounding factors clean patents receive on average 43% more citations than dirty patents. Knowledge spillovers from clean technologies are comparable in scale to those observed in the IT sector. The radical novelty of clean technologies relative to more incremental dirty inventions seems to account for their superiority. Our results can support public support for clean R&D. They also suggest that green policies might be able to boost economic growth through induced knowledge spillovers.
    Keywords: Innovation spill-overs; Climate Change; Growth; Patents; Clean technology; Optimal climate policy
    JEL: H23 O30 O54 O55 Q58
    Date: 2014–09
  3. By: Han, Junghee (Chonnam National University); Heshmati, Almas (Jönköping University, Sogang University)
    Abstract: This paper analyzes the patent propensity as an outcome of innovative activities of regional SMEs. To achieve the aims, we apply robust regression analysis to estimate the models to test 5 research hypotheses using 263 firm level data located at Gwangju region in Korea. Our empirical results show that a firm's industry characteristics, such as machinery and automotive parts industry, is negatively related with propensity to patent innovation. Also, unlike expectations, the InnoBiz firms designated as innovative SMEs by the government are not performing differently than general firms. Only the CEO's academic credentials are positively related with propensity to patent. From the findings, we can conclude that patenting propensity is not directly related with a firm's characteristics but mainly to CEO's managerial strategy. Also, we cannot find evidence for policy effectiveness from public support given to InnoBiz firms as part of the state policy to nurture photonic industry to boost regional economic development. Given the lack of strong policy effects, a new industry policy should be considered to actively promote SMEs innovativeness.
    Keywords: patent propensity, photonic industry, SMEs growth, R&D, innovation, InnoBiz, Korea
    JEL: C51 D22 O31 O32
    Date: 2015–01
  4. By: Brown, James R. (Department of Finance, Iowa State University); Martinsson, Gustav (Institute for Financial Research (SIFR) & Centre of Excellence for Science and Innovation Studies (CESIS)); Petersen, Bruce C. (Department of Economics, Washington University in St. Louis)
    Abstract: Information problems and lack of collateral value should make R&D more susceptible to financing frictions than other investments, yet existing evidence on whether financing constraints limit R&D is decidedly mixed, particularly in studies of non-U.S. firms. We study a large sample of European firms and also find little evidence of binding finance constraints when we estimate standard investment-cash flow regressions. However, we find strong evidence that the availability of finance matters for R&D once we directly control for: i) firm efforts to smooth R&D with cash reserves, and ii) firm use of external equity finance. Our study provides a framework for evaluating financing constraints when firms rely extensively on external finance and endogenously manage buffer stocks of liquidity to keep investment smooth, and our findings show that controlling for this smoothing behavior is critical for uncovering the full effect of financing constraints. Our findings also indicate a major role for external equity in financing R&D, highlighting a causal channel through which stock market development and liberalization can promote economic growth by increasing firm-level innovative activity.
    Keywords: Financing innovation; R&D financing constraints; Finance and growth; Stock market development; Value of liquidity
    JEL: G31 G32
    Date: 2015–01–21
  5. By: Garry Gabison (European Commission – JRC - IPTS); Annarosa Pesole (European Commission – JRC - IPTS)
    Abstract: This report discusses models of distributed innovation and how they differ in their nature, effects, and origins. Starting from Open Innovation, the paper analyses its methodological evolution, some of its applications, and the opportunities to apply it in a social context. Open Innovation has gained traction in the last ten years and because of this popularity, Open Innovation has been endowed with numerous meanings. This paper dives into the large literature associated with Open Innovation. First, this paper describes Open Innovation. Second, it explains how Open Innovation has evolved from a linear model of innovation to a model that includes feedback loops. Third, it describes the parallel evolution of Open Innovation and User Innovation, where users are actively involved. This new perspective on the user involvement further contributes to the evolution of Open Innovation into Open Innovation 2.0. Finally, the paper considers the role of Open Innovation in tackling societal challenges and how and if this new innovation process could help Social Innovation to find ways to scale up and reproduce successful results.
    Keywords: Ditributed Innovation, Open Innovation, User Innovation
    Date: 2014–12
  6. By: Blyde, Juan; Iberti, Gonzalo; Mussini, Micaela
    Abstract: A growing number of studies that look at the relationship between innovation and exports find that more innovation tends to allow firms to export more. But very little is known about the heterogeneous impacts of innovation on exports. Since innovation is not a costless activity, it is important to know the specific situations in which a firm most likely needs to innovate to raise its exports. Using data from Chile, we combine information on innovation activities at the firm level with a rich dataset on exports at the transaction level. We find that the firms that engage in innovation tend to export more than other firms because they are able to sell goods and target markets that reward innovation. We show that the goods and markets in which innovative exporters outperform non-innovative exporters are those where innovation can lead to substantial differences in terms of quality. Innovative firms do not have an edge in exporting goods and in targeting markets that do not reward innovation. In particular, innovative firms do not outperform non-innovative firms when exporting goods and penetrating markets in which differentiation in terms of quality is not possible or not relevant.
    Keywords: Innovation, exports, product quality
    JEL: F10 F14 O30
    Date: 2015–01–23
  7. By: Di Cintio, Marco; Grassi, Emanuele
    Abstract: Does R&D affect hirings, separations or both? Different answers to this question imply different behavioural responses of firms to innovation. Using a sample of Italian manufacturing firms, this paper explores the effects of R&D intensity on hiring, separation and churning rates. Based on quantile regression models, the results indicate that initial R&D intensity has a positive impact on subsequent hirings and churning and a negligible effect on separations. The results remain stable when the estimates are based on the two and three year averages of the labour flow rates and when we account for lagged R&D intensity, for different subperiods and for an alternative measure of the hiring, separation and churning rates.
    Keywords: Labour flows; R&D; Quantile regression
    JEL: J63 L25 M51 O33
    Date: 2015–01–30
  8. By: Roychoudhury, Saurav; Bhowmik, Anuj; Chattopadhyay, Srobonti
    Abstract: We consider a two period career concern model where corporate governance is a decisive factor for innovation efforts by a manager. In the beginning of the frst period, a manager decides whether to innovate. Prior to the innovation decision, the ability of the manager is unknown to the firm but known to the manager and an expected wage is paid based on a probability distribution of managerial abilities. The success of the innovation is both a function of the managerial ability and the product market competition and the beliefs about the managerial ability is updated if the manager innovates and the wage is set for the second period accordingly. Our model predicts that the rate of innovation would be higher under a more democratic governance structure and relatively low product market competition. Using a panel dataset from 1990s, compiled from Aghion et al.(2013b) and Gompers, Ishii,and Metrick (2003), containing time-varying information of patent citations, R&D, product market competition, and Governance index, we show that there is a robust association between innovation and the quality of governance and this relationship is strongest in industries with relatively low competition.
    Keywords: Governance, Compeition
    JEL: G3
    Date: 2015–01–15
  9. By: Juraj Stan?ík (European Commission – JRC - IPTS); Ibrahim Kholilul Rohman (European Commission – JRC - IPTS)
    Abstract: The report provides a detailed analysis of the state of public expenditure on Information and Communication Technologies (ICT) Research and Development (R&D) in the European Union (EU). We also provide an interim assessment of the extent to which the Digital Agenda target about doubling public ICT R&D expenditures has been achieved. Furthermore, besides focusing on the EU, we compare these expenditures with public expenditures on ICT R&D in the EU’s main counterpart, the United States of America (US). Our analysis, covering the period 2006-2011, shows that EU ICT R&D public funding has been steadily growing. In 2011, it reached €6.1 billion which represented 6.6% of the whole public R&D funding. Regarding the comparison with the US, we conclude that the US government devotes more ICT R&D funds than all the EU Member States governments together but this gap has been shrinking and during the period 2006-2011 it decreased by 50%.
    Keywords: ICT; information and communication technologies; innovation; R&D; NABS; GBAORD; public funding; ICT R&D; EU; the US
    JEL: E61 H50 O32 O52 R12 R28
    Date: 2014–12
  10. By: Fernando Hervas Soriano (European Commission JRC-IPTS); Iulia Siedschlag (European Commission JRC-IPTS); Alexander Tuebke (European Commission JRC-IPTS)
    Abstract: This Policy Brief discusses recent evidence on patterns and trends in the internationalisation of EU corporate R&D activities and the factors which drive location choices. This evidence suggests that boosting international investment in R&D activities requires a combination of policy measures aimed at enhancing the knowledge base of locations, and investment promotion policies tailored to investors from different countries. The policy mix should include measures aiming at improving the efficiency of national and regional innovation systems, particularly through: a) Increasing the quality of education systems and skills, to enable the emergence of centres of research excellence, b) Facilitating the clustering of R&D activities, given the importance of proximity for knowledge spillovers.
    Keywords: international, R&D, investment, EU
    Date: 2014–12
  11. By: Gerda Dewit (Department of Economics, Finance and Accounting, Maynooth University.); Dermot Leahy (Department of Economics, Finance and Accounting, Maynooth University.)
    Abstract: This paper examines how trade liberalisation affects innovation, profits and welfare in a reciprocal markets model when firms pre-commit to R&D investment. First, we show that, for a range of trade costs, there are multiple equilibria, implying that the path of trade liberalisation is not unique. Second, welfare at “incipient” trade always exceeds welfare in autarky. Third, we show that, if the effectiveness of R&D is sufficiently high, trade always yields higher welfare than autarky. These new results suggests that when firms, operating in an oligopolistic environment, strategically precommit to R&D, the welfare gains from trade liberalisation are enhanced.
    Keywords: Reciprocal Markets, Strategic R&D Investment, Trade Costs, Trade Liberalisation, Effectiveness of R&D
    JEL: F12 F13 F15 L13
    Date: 2015
  12. By: Clancy, Matthew
    Abstract: I develop a knowledge production function where new ideas are built from combinations of pre- existing elements. Parameters governing the connections between these elements stochastically determine whether a new combination yields a useful idea. Researchers use Bayesian reasoning to update their beliefs about the value of these parameters and thereby improve their selection of viable research projects. The optimal research strategy is a mix of harvesting the ideas that look best, given what researchers currently believe, and performing exploratory research in order to obtain better information about the unknown parameters. Moreover, this model predicts research productivity in any one field declines over time if new elements for combination or new information about underlying parameters are not discovered. I investigate some of these properties using a large dataset, consisting of all US utility patents granted from 1836 to 2012. I use fine-grained technological classifications to show that optimal research in my model is consistent with actual innovation outcomes, and that the model can be used to improve the forecasting of patent activity in different technology classes. 
    Keywords: innovation; patents
    JEL: O31 O34
    Date: 2015–01–22
  13. By: Antoine Dechezlepretre; Matthieu Glachant
    Abstract: This paper analyses the relative influence of domestic and foreign demand-pull policies in wind power across OECD countries on the rate of innovation in this technology. We use annual wind power generation to capture the stringency of the portfolio of demand-pull policies in place (e.g., guaranteed tariffs, investment and production tax credits), and patent data as an indicator of innovation activity. We find that wind technology improvements respond positively to policies both home and abroad, but the marginal effect of domestic policies is 12 times greater. The influence of foreign polices is reduced by barriers to technology diffusion, in particular lax intellectual property rights. Reducing such barriers therefore constitutes a powerful policy leverage for boosting environmental innovation globally.
    Keywords: innovation; international technology diffusion; renewable energy policy; wind power
    JEL: O31 O42
    Date: 2014–06
  14. By: Alberto Galasso; Mark Schankerman; Carlos J. Serrano
    Abstract: We study how the market for innovation affects enforcement of patent rights. We show that patent transactions arising from comparative advantages in commercialization increase litigation, but trades driven by advantages in patent enforcement reduce it. Using data on trade and litigation of individually owned patents in the United States, we exploit variation in capital gains tax rates across states as an instrument to identify the causal effect of trade on litigation. We find that taxes strongly affect patent transactions, and that trade reduces litigation on average, but the impact is heterogeneous. Patents with larger potential gains from trade are more likely to change ownership, and the impact depends critically on transaction characteristics.
    JEL: L81 E6
    Date: 2013–06
  15. By: Foellmi, Reto; Legge, Stefan; Tiemann, Alexa
    Abstract: This paper examines how trade liberalization affects investments in R&D at the firm level. We provide a model with entrepreneurs differing in their wealth endowment, causing them to rely differently on external funds. In the presence of capital market imperfections, this implies heterogeneous access to external funds such that poor entrepreneurs run smaller firms, are less likely to invest in R&D, and more likely to exit the market. Decreasing trade costs resulting from tariff reductions exacerbate these characteristics. Using firm-level panel data on seven Latin American countries for 2006 and 2010, we find support for our theoretical predictions. While recent studies emphasize a positive impact of trade liberalization on firms' productivity-enhancing activities, we provide novel evidence showing that financial constraints can impair the effect on R&D efforts. These results suggest that imperfect capital markets can prevent welfare gains from trade liberalization to materialize.
    Keywords: Financial constraints, innovation, trade liberalization
    JEL: F14 O12 O16
    Date: 2015–01
  16. By: Pierre Azoulay; Joshua S. Graff Zivin; Danielle Li; Bhaven N. Sampat
    Abstract: We quantify the impact of scientific grant funding at the National Institutes of Health (NIH) on the rate of patent production by pharmaceutical and biotechnology firms. Our paper makes two contributions. First, we use newly constructed bibliometric data to develop a method for flexibly linking specific grant expenditures to private-sector innovations. Second, we take advantage of idiosyncratic rigidities in the rules that govern peer review within NIH to generate exogenous variation in funding across research areas. Our results show that NIH funding spurs the development of private-sector patents: a $10 million boost in NIH funding leads to a net increase of 3.1 patents. A back-of-the-envelope calculation, focusing solely on patents for FDA-approved biopharmaceuticals, suggests that one dollar of NIH funding generates $2 in expected lifetime drug sales (or 70 cents in median lifetime drug sales).
    JEL: O3 O33 O38
    Date: 2015–01
  17. By: Jean-Paul
    Abstract: The Information Society Unit at IPTS (European Commission) has been investigating the Information and Communication Technologies (ICT) sector and ICT R&D in Asia for several years. This research exercise led to three reports, written by national experts, on China, India and Taiwan, each one including a dataset and a technical annex. This report offers a synthesis on three out of the four BRIC countries (Brazil, India, Russia, China). The report describes, for each of the three countries (Brazil, India, China), its ICT sector, and gives a company level assessment. It also analyses Indian ICT R&D strategies, and assesses the innovation model. In 2010, BRIC countries accounted for 13% of global demand, with spending of about €328 billion in ICT (EITO, 2011). Therefore, they are becoming major players as producers of ICT goods and services. China has become the world’s largest producer of ICT products (exports of ICT increased fourfold between 2004 and 2008). This impressive growth of the ICT market is translated into R&D expenditures and output. Innovative capability in Asia has grown, the dynamics in terms of catching up are strong. Asian countries are increasingly present in the ICT R&D global landscape.
    Keywords: ICT, landscape, Brazil, India, China
    Date: 2014–12
  18. By: Carlo Altomonte; Tommaso Aquilante; Gábor Békés; Gianmarco I. P. Ottaviano
    Abstract: We use a representative and cross-country comparable sample of manufacturing firms (EFIGE) to document patterns of interaction among firm-level internationalization, innovation and productivity across seven European countries (Austria, France, Germany, Hungary, Italy, Spain, United Kingdom). We find strong evidence of positive association among the three firm-level characteristics across countries and sectors. We also find that the positive correlation between internationalization and innovation survives after controlling for productivity, with some evidence of causality running from the latter to the former. Our analysis suggests that export promotion per se is unlikely to lead to sustainable internationalization because internationalization goes beyond export and because, in the medium-to-long term, internationalization is driven by innovation. We recommend coordination and integration of internationalization and innovation policies ‘under one roof’ at both the national and EU levels, and propose a bigger coordinating role for EU institutions.
    Keywords: Internationalization; innovation; firm-level data; exports; foreign direct investment; outsourcing
    JEL: F13 F23 O31 O38
    Date: 2014–04
  19. By: Buzard, Kristy (Syracuse University); Carlino, Gerald A. (Federal Reserve Bank of Philadelphia); Hunt, Robert M. (Federal Reserve Bank of Philadelphia); Carr, Jake (The Ohio State University); Smith, Tony E. (University of Pennsylvania)
    Abstract: We employ a unique data set to examine the spatial clustering of private R&D labs, and, using patent citations data, we provide evidence of localized knowledge spillovers within these clusters. Jaffe, Trajtenberg, and Henderson (1993, hereafter JTH) provide an aggregate measure of the importance of knowledge spillovers at either the state or metropolitan area level. However, much information is lost regarding differences in the localization of knowledge spillovers in specific geographic areas. In this article, we show that such differences can be quite substantial. Instead of using fixed spatial boundaries, we develop a new procedure — the multiscale core-cluster approach — for identifying the location and size of specific R&D clusters. This approach allows us to better capture the geographic extent of knowledge spillovers. We examine the evidence for knowledge spillovers within R&D clusters in two regions: the Northeast Corridor and California. In the former, we find that citations are from three to six times more likely to come from the same cluster as earlier patents than in comparable control samples. Our results are even stronger for labs located in California: Citations are roughly 10 to 12 times more likely to come from the same cluster. Our tests reveal evidence of the attenuation of localization effects as distance increases: The localization of knowledge spillovers is strongest at small spatial scales (5 miles or less) and diminishes rapidly with distance. At the smallest spatial scales, our localization statistics are generally much larger than JTH report for the metropolitan areas included in their tests.
    Keywords: Spatial clustering; R&D; Knowledge spillover;
    JEL: O31 R12
    Date: 2015–01–01
  20. By: Iain Cockburn; Jean O. Lanjouw; Mark Schankerman
    Abstract: This paper studies how patent rights and price regulation affect how fast new drugs are launched in different countries, using newly constructed data on launches of 642 new drugs in 76 countries for the period 1983-2002, and information on the duration and content of patent and price control regimes. Price regulation strongly delays launch, while longer and more extensive patent protection accelerates it. Health policy institutions, and economic and demographic factors that make markets more profitable, also speed up diffusion. The effects are robust to using instruments to control for endogeneity of policy regimes. The results point to an important role for patents and other policy choices in driving the diffusion of new innovations. This project was initiated by Jean (Jenny) Lanjouw. Tragically, Jenny died in late 2005, but had asked us to complete the project. This took much longer than expected because it involved complete reconstruction of the data set and empirical work. It is essentially a new paper in its current form, but it remains an important part of Jenny’s legacy and a topic to which she devoted much of her intellectual and policy efforts. We hope she would be satisfied with our work which, for us, was a labor of love.
    Keywords: Patents; pharmaceuticals; diffusion; drug launches; price regulation
    JEL: I18 K19 L65 O31 O33 O34 O38
    Date: 2014–09
  21. By: Bianchini, Stefano; Krafft, Jackie; Quatraro, Francesco; Ravix, Jacques (University of Turin)
    Abstract: This paper investigates the relationship between corporate governance (CG) and innovation according to firms’ age by combining insights from the recent strand of contributions analysing CG and innovation with the lifecycle literature. We find a negative relationship between CG and innovation which is stronger for young firms than for mature ones. The empirical analysis is carried out on a sample of firms drawn from the ISSR isk Metrics database and observed over the period 2003 -2008. The parametric methodology provides results that are consistent with the literature and supports the idea that mature firms are better off than young ones. We check for possible non-linearities by implementing a non-parametric analysis and suggest that the negative relationship between CG and innovation is mostly driven by higher values of CG.
    Date: 2015–01
  22. By: Luciana Lazzeretti (Dipartimento di Scienze per l'Economia e l'Impresa); Francesco Capone (Dipartimento di Scienze per l'Economia e l'Impresa)
    Abstract: Over the last decade, the debate on Evolutionary Economic Geography has been enriched thanks to the ecological approach and its application to the concept of resilience to social systems. Resilience is not only the capacity to absorb shocks and maintain functions, but also includes the capacity for renewal, reorganisation and development. This “adaptive capacity” may be consider in creative approaches as a “creative capacity” able to generate ideas and innovations after a shock, in a creative milieu such a creative city. This paper aims to contribute to the still under-researched debate on resilience and innovation, integrating the resilience approach with the creative one, and developing the still neglected idea of a creative and resilient city. We focus on the city of Florence and on the innovations in conservation sciences developed after the 1966 flood. Combining these perspectives, we consider the city of art as a creative and resilient system, not only to absorb shocks, but also to transform ad renew itself through a “creative adaptive capacity”, where the cultural and art heritage may be both a source for innovation and a source for resilience. We investigate lateral and transversal innovations developed from cross-fertilisation processes in the scientific and humanistic knowledge embedded in the territory. In particular, we focus on the innovations in chemistry in conservation sciences of cultural heritage developed by a scientific network rooted in Florence. The flood was the starting point for the rise of a new innovative trajectory, forming a new scientific niche in modern conservation sciences.
    Keywords: Resilience, restoration, cultural heritage, chemical innovations, flood, Florence
    JEL: O31 L65
    Date: 2015
  23. By: Laura Diaz Anadon; Kira J. M. Matus; Suerie Moon; Gabriel Chan; Alicia Harley; Sharmila Murthy; Vanessa Timmer; Ahmed Abdel Latif; Kathleen Araujo; Kayje Booker; Hyundo Choi; Kristian Dubrawski; Lonia Friedlander; Christina Ingersoll; Erin Kempster; Laura Pereira; Jennie Stephens; Lee Vinsel; William C Clark
    Abstract: Sustainable development – improving human well-being across present generations without compromising the ability of future generations to meet their own needs – is a central challenge for the 21st century. Technological innovation can play an important role in moving society toward sustainable development. However, poor, marginalized, and future populations often do not fully benefit from innovation due to their lack of market or political power to influence innovation processes. As a result, current innovation systems fail to contribute as much as they might to meeting sustainable development goals. This paper focuses on how actors and institutions operating in the transnational arena can mitigate such shortfalls. To identify the most important transnational functions required to meet sustainable development needs our analysis undertook three main steps. First, we developed a framework to diagnose blockages in the global innovation system for particular technologies. This framework was built on existing theory and new empirical analysis. On the theory side, we drew from the literatures of systems dynamics; technology and sectoral innovation systems, science and technology studies, the economics of innovation, and global governance. On the empirical front, we conducted eighteen detailed case studies of technology innovation in multiple sectors relevant to sustainable development: water, energy, health, food, and manufactured goods. We use the framework to analyze our case studies in the common language of (1) technology stocks, (2) non-linear flows between stocks substantiated by specific mechanisms, and (3) characteristics of actors and socio-technical conditions (STCs) which mediate the flows between stocks . We identify blockages in the innovation system for each of the cases, diagnosing where in the innovation system flows were hindered and which specific sets of STCs and actor characteristics were associated with these blockages. Figure E.1 displays the components of our framework and how they relate.
    JEL: O30 O38
    Date: 2014–05
  24. By: Davide Antonioli (Dipartimento di Economia e Management, Via Voltapaletto 11, Ferrara, Italy.); Grazia Cecere (Telecom Ecole de Management, Institut Mines-Telecom d Author-Name: Massimiliano Mazzanti)
    Abstract: We analyse how the joint adoption of ICT practices and environmental innovation affect the labour productivity of firms. We study complementarity in innovation adoption, with respect to the specific research hypotheses that the higher thediffusion and radicalness of ICT and EI, the higher might firm\rquote s productivitybe. As ICT are considered to be able to reduce the environmental footprint of different economics activities. We exploit original survey data which cover manufacturing firms for a dense SME area in the North-East of Italy (Emilia-Romagna region). We originally merge innovation survey data over 2006-2008 with firm\rquote s balance sheets over 2010-2011 to achieve this aim.The empirical evidence shows that for Emilia-Romagna manufacturing firms there are still wide margins for improving ICT-EIs integration in order to exploit their potential benefits on firm economic performance. However, the awareness of specific synergies seems to mainly characterizethe heavy polluting firms, subject to ETS schemes, while for the remaining firms prevalently emerge some substitutabilityrelations between ICT and EI. The latter firms are strategically less capable of exploiting the potential synergies between ICT and EI.
    Keywords: ICT, environmental innovation, adoption, SME, polluting sectors, Porter hypothesis, complementarity, labor productivity.
    JEL: D22 L23 L25 L60 M15
    Date: 2014–06
  25. By: D'Elia, Enrico; Morettini, Lucio
    Abstract: The paper investigates investment decisions by using a new source of data, that is the OBI annual survey on firms. The main focus of our analysis mainly is the influence of credit market conditions on investment decisions and we find that the main obstacle to the investment is the level of guarantees that bank demand to grant loans. This element was a constant among all our results, it is relevant for realized investment and for planned ones. All these elements suggest without doubt that the requested guarantees is the most important obstacle in the relationship between firms and banks. An exception to this situation is represented by investments in innovation: guarantees and other elements related to the credit market have no influence on investment decisions suggesting that if the investment project aims at an improvement of firms’ productivity, banks are less hesitant to grant the necessary funding. About economic situation, we found that investments are mainly connected to economic cycle and only a small number of firms invest in order to contrast present economic difficulties. Other interesting results were found for external factors: while for firms the proximity of efficient financial and R&D structures is always important, the tax system plays a role only on future and not defined programs. For firms that have already decided to invest, the proximity of factors that can give them an adequate financial and technical support is more important.
    Keywords: Firms, Investment, Business cycle, Innovation
    JEL: D22 E22
    Date: 2014–12
  26. By: Nicholas Bloom; Paul Romer; Stephen Terry; John Van Reenen
    Abstract: In a general equilibrium product-cycle model, lower trade barriers in-crease Southern purchasing power, which lifts long-run growth by increasing the profit from innovation. In the short run, factors of production must be reallocated inside firms, which lowers the opportunity cost of innovation, generating an additional “trapped factor” effect. Starting from a baseline OECD growth rate of 2% we find that trade integration with low-wage countries in the decade around China’s WTO accession could have increased long-run growth to 2.4%. There is an additional short-run trapped factors effect, raising growth to 2.7%. China accounts for about half of these growth increases.
    Keywords: Innovation; trade; China; endogenous growth
    JEL: C23 D8 D92 E22
    Date: 2014–03
  27. By: Neil Lee; Max Nathan
    Abstract: A growing body of research is making links between diversity and the economic performance of cities and regions. Most of the underlying mechanisms take place within firms, but only a handful of organization-level studies have been conducted. We contribute to this underexplored literature by using a unique sample of 7,600 firms to investigate links among cultural diversity, innovation, entrepreneurship, and sales strategies in London businesses between 2005 and 2007. London is one of the world's major cities, with a rich cultural diversity that is widely seen as a social and economic asset. Our data allowed us to distinguish owner/partner and wider workforce characteristics, identify migrant/minority-headed firms, and differentiate firms along multiple dimensions. The results, which are robust to most challenges, suggest a small but significant “diversity bonus” for all types of London firms. First, companies with diverse management are more likely to introduce new product innovations than are those with homogeneous “top teams.” Second, diversity is particularly important for reaching international markets and serving London's cosmopolitan population. Third, migrant status has positive links to entrepreneurship. Overall, the results provide some support for claims that diversity is an economic asset, as well as a social benefit.
    Keywords: cultural diversity; innovation; entrepreneurship; management; immigration; economic development; diasporas; cities; London
    JEL: N0
    Date: 2013–07–02
  28. By: Pierre-Alexandre Balland; David L. Rigby
    Abstract: There is consensus among scholars and policy makers that knowledge is one of the key drivers of long-run economic growth. It is also clear from the literature that not all knowledge has the same value. However, too often in economic geography and cognate fields we have been obsessed with counting knowledge inputs and outputs rather than assessing the quality of knowledge produced. In this paper we measure the complexity of knowledge across patent classes and we map the distribution and the evolution of knowledge complexity across U.S. cities from 1975 to 2004. We build on the 2-mode structural network analysis proposed by Hidalgo and Hausmann (2009) to develop a knowledge complexity index (KCI) for Metropolitan Statistical Areas (MSAs). The KCI is based on more than 2 million patent records from the USPTO, and combines information on the technological structure of 366 MSAs with the 2-mode network that connects cities to the 438 primary (USPTO) technology classes in which they have Relative Technological Advantage (RTA). The complexity of the knowledge structure of cities is based on the range and ubiquity of the technologies they develop. The KCI indicates whether the knowledge generated in a given city can be produced in many other places, or if it is so sophisticated that it can be produced only in a few select locations. We find that knowledge complexity is unevenly distributed across the U.S. and that cities with the most complex technological structures are not necessarily those that produce most patents.
    Keywords: Knowledge complexity, cities, patents, network analysis, economic geography, United States
    Date: 2015–01

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