nep-ino New Economics Papers
on Innovation
Issue of 2015‒02‒11
28 papers chosen by
Steffen Lippert
University of Auckland

  1. Innovation and SMEs Patent Propensity in Korea By Han, Junghee; Heshmati, Almas
  2. Creative Destruction or Mere Niche Creation? Innovation Policy Mixes for Sustainability Transitions By Paula Kivimaa; Florian Kern
  3. Do financial constraints make the environment worse off? Understanding the effects of financial barriers on environmental innovations By Claudia Ghisetti; Massimiliano Mazzanti; Susanna Mancinelli; Mariangela Zoli
  4. Essays on capability development through alliances By Kavusan, K.
  5. Law, Stock Markets, and Innovation By Brown, James R.; Martinsson, Gustav; Petersen, Bruce C.
  6. Internationalization and innovation of firms: evidence and policy By Carlo Altomonte; Tommaso Aquilante; Gábor Békés; Gianmarco I. P. Ottaviano
  7. Strategic patenting and software innovation By Michael Noel; Mark Schankerman
  8. Cultural diversity, cities and innovation: firm effects or city effects? By Neil Lee
  9. Do inventors talk to strangers? on proximity and collaborative knowledge creation By Riccardo Crescenzi; Max Nathan; Andrés Rodríguez-Pose
  10. Fluctuations in uncertainty By Nicholas Bloom
  11. Here be startups: exploring a young digital cluster in inner East London By Max Nathan; Emma Vandore
  12. My Precious! the location and diffusion of scientific research: evidence from the synchrotron diamond light source By Christian Helmers; Henry G. Overman
  13. Top team demographics, innovation and business performance: findings from English firms and cities 2008-9 By Max Nathan
  14. A trapped-factors model of innovation By Nicholas Bloom; Paul M. Romer; Stephen J. Terry; John Van Reenen
  15. The impact of ‘clean innovation’ on economic growth: evidence from the transport and energy industries By Ralf Martin; Romesh Vaitilingam
  16. Corporate Governance, Innovation and Firm Age: Insights and New Evidence By Stefano Bianchini; Jackie Krafft; Francesco Quatraro; Jacques Ravix
  17. The Inventor Balance and the Functional Specialization in Global Inventive Activities By Lucio Picci; Luca Savorelli
  18. Joint R and D subsidies, related variety, and regional innovation. By Tom Broekel; Matthias Brachert; Matthias Duschl; Thomas Brenner
  19. The Role of Product Diversification in Skill-Based Technological Change By Nam, Choong Hyun
  20. Quo Vadis? Energy Consumption and Technological Innovation in China's Economic Growth By Wei Jin; ZhongXiang Zhang
  21. Research Intensity and Financial Analysts Earnings Forecast: Signaling Effects of Patents By Mohammadi, Ali; Basir, Nada O.; Beyhaghi, Mehdi
  22. Networks and product innovation across European SMEs By Behncke, Nadine
  23. Killing the Golden Goose? The Decline of Science in Corporate R&D By Ashish Arora; Sharon Belenzon; Andrea Patacconi
  24. From Energy-intensive to Innovation-led Growth: On the Transition Dynamics of China’s Economy By Wei Jin; ZhongXiang Zhang
  25. Globalization and synchronization of innovation cycles By Kiminori Matsuyama; Iryna Sushko; Laura Gardini
  26. Determinants of internal versus external R&D offshoring: Evidence from Spanish firms By Mery Patricia Tamayo; Elena Huergo
  27. Can Innovation Help U.S. Manufacturing Firms Escape Import Competition from China? By Hombert , Johan; Matray , Adrien
  28. Political Activism and Firm Innovation By Ovtchinnikov , Alexei; Reza , Syed

  1. By: Han, Junghee (Chonnam National University); Heshmati, Almas (Centre of Excellence for Science and Innovation Studies (CESIS), Jönköping International Business School, & 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: 2015–01–27
  2. By: Paula Kivimaa (Finnish Environment Institute,P.O.Box 140,Fi-00251 Helsinki, Finland); Florian Kern (SPRU, University of Sussex, Falmer, Brighton, BN1 9SL, UK)
    Abstract: Recently, there has been an increasing interest in policy mixes in innovation studies. while it has long been acknowledged that the stimulation of innovation and technological change involves different types of policy instruments, how such instruments form policy mixes has only recently. become of interest. We argue that an area in which policy mixes are particularly important is the field of sustainability transitions. Transitions imply not only the development of disruptive innovations but also of policies aiming for wider change in socio?technical systems. We propose that ideally policy mixes for transitions might include elements of‘creative destruction', involving both policies aiming for the ‘creation’ of new and for ‘destabilising’ the old. We develop a novel analytical framework including the two policy mix dimensions (‘creation’"and ‘destruction’) by broadening the technological innovation system functions approach, and by expanding the concept of ‘motors of innovation’. We test this framework by analysing‘low"energy’ policy mixes in Finland and the UK. We find that both countries have diverse policy mixes to support energy efficiency and reduce energy demand with instruments to cover all functions on the creation side. Despite the demonstrated need for such policies, unsurprisingly destabilising functions are addressed by fewer policies, but there are empirical examples of such policies in both countries. The concept of ‘motors" of creative destruction’ is introduced to expand innovation and technology policy debates to go beyond policy mixes consisting of technology push and demand pull instruments, and to consider a wider range of policy instruments which may contribute to sustainability transitions.
    Date: 2015–01
  3. By: Claudia Ghisetti (Department of Economics and Management, University of Ferrara, Italy.); Massimiliano Mazzanti (Deptartment of Economics and Management. University of Ferrara, Italy.); Susanna Mancinelli (Deptartment of Economics and Management. University of Ferrara, Italy.); Mariangela Zoli (Università di Roma Tor Vergata, Italy.)
    Abstract: We analyse the role of financial barriers behind the adoption of environmental innovations with a focus on SMEs by using recent survey data at EU level. Finance is a key lever of innovation, especially relevant in the current phase of the economic cycle, and might play a critical role in defining green economy directions. Empirical analyses confirm financial barriers as a deterrent for the innovative capacity of EU firms. This is true for the economy as a whole, and for manufacturing firms taken alone. Being smaller and having a low amount of human capital in the firm also hampers environmental innovations . On the ‘positive’ side, we note that existing regulations and expected increasing demand for green products both support EI adoption. Financial barriers are perceived by firms and influenced by technological lock-ins, uncertainty in investments, non-competitive markets, and a lack of subsidies. We observe that the ‘deterrent barrier hypothesis’, alternative to the ‘revealed barrier hypothesis’, is not rejected here, as in recent analyses of traditional innovations: perceived financial constraints deter innovative strategies.
    Keywords: Environmental innovations, Financial barriers, Firms, Environmental Regulations
    JEL: Q55 O31
    Date: 2015–01
  4. By: Kavusan, K. (Tilburg University, School of Economics and Management)
    Abstract: As a result of the surging rate of technological innovation in the last decades, firms in high-technology industries increasingly rely on alliances to tap into external knowledge sources and to develop new products and services. While alliances are of vital importance to many firms to develop new capabilities, they also inflict substantial economic costs to firms engaging in these activities, making effective design and management of alliance strategies crucial. Nevertheless, empirical evidence about the specific strategies for firms to benefit from alliances as well as about how firms make alliance formation decisions remains inconclusive. To address these issues, the three studies in this dissertation explore the antecedents and consequences of capability development through alliances in high-technology industries. By illuminating the antecedents and outcomes of different knowledge utilization strategies in alliances, the findings of this dissertation aim to improve the understanding and management of strategic alliances and provide actionable guidelines to managers and other corporate stakeholders in shaping the corporate development strategies of their firms.
    Date: 2015
  5. 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), Royal Institute of Technology); Petersen, Bruce C. (Department of Economics, Washington University in St. Louis)
    Abstract: We study a broad sample of firms across 32 countries and find that strong shareholder protections and better access to stock market financing lead to substantially higher long-run rates of R&D investment, particularly in small firms, but are unimportant for fixed capital investment. Credit market development has a modest impact on fixed investment but no impact on R&D. These findings connect law and stock markets with innovative activities key to economic growth, and show that legal rules and financial developments affecting the availability of external equity financing are particularly important for risky, intangible investments not easily financed with debt.
    Keywords: Financial development; Investor protection; Stock markets; R&D; Innovation; Economic growth
    JEL: G32 K20 O16 O30
    Date: 2015–01–21
  6. 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 likely 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: economic integration; European Union; export; globalization; industrial enterprise; industrial policy; innovation; manufacturing; sustainable development
    JEL: R14 J01
    Date: 2013–10
  7. By: Michael Noel; Mark Schankerman
    Abstract: Strategic patenting is widely believed to raise the costs of innovating, especially in industries characterised by cumulative innovation. This paper studies the effects of strategic patenting on R&D, patenting and market value in the computer software industry. We focus on two key aspects: patent portfolio size, which affects bargaining power in patent disputes, and the fragmentation of patent rights (‘patent thickets’) which increases the transaction costs of enforcement. We develop a model that incorporates both effects, as well as knowledge spill overs. Using panel data for 121 firms covering the period 1980–99, we show that strategic patenting and spill overs affect innovation and market value of software firms, that there is a patent premium accounting for 20 per cent of the returns to R&D, and that software firms do not appear to be trapped in a prisoners' dilemma of ‘excessive patenting.
    JEL: N0
    Date: 2013–09
  8. By: Neil Lee
    Abstract: Growing cultural diversity is seen as important for innovation. Research has focused on two potential mechanisms: a firm effect, with diversity at the firm level improving knowledge sourcing or ideas generation, and a city effect, where diverse cities helping firms innovate. This paper uses a dataset of over 2,000 UK SMEs to test between these two. Controlling for firm characteristics, city characteristics and firm and city diversity, there is strong evidence for the firm effect. Firms with a greater share of migrant owners or partners are more likely to introduce new products and processes. This effect has diminishing returns, suggesting that it is a ‘diversity’ effect rather than simply the benefits of migrant run firms. However, there is no relationship between the share of foreign workers in a local labour market and firm level innovation, nor do migrant-run firms in diverse cities appear particularly innovative. But urban context does matter and firms in London with more migrant owners and partners are more innovative than others.
    Keywords: cultural diversity; innovation; cities; SMEs; migration
    JEL: J61 L21 M13 O11 O31 R23
    Date: 2013–10
  9. By: Riccardo Crescenzi; Max Nathan; Andrés Rodríguez-Pose
    Abstract: This paper investigates how physical, organisational, institutional, cognitive, social, and ethnic proximities between inventors shape their collaboration decisions. Using a new panel of UK inventors and a novel identification strategy, this paper systematically explores the net effects of all these ‘proximities’ on co-patenting. The regression analysis allows us to identify the full effects of each proximity, both on choice of collaborator and on the underlying decision to collaborate. The results show that physical proximity is an important influence on collaboration, but is mediated by organisational and ethnic factors. Over time, physical proximity increases in salience. For multiple inventors, geographic proximity is, however, much less important than organisational, social, and ethnic links. For inventors as a whole, proximities are fundamentally complementary, while for multiple inventors they are substitutes.
    Keywords: innovation; patents; proximities; cities; regions; knowledge spillovers; collaboration; ethnicity
    JEL: O31 O33 R11 R23
    Date: 2014–01
  10. By: Nicholas Bloom
    Abstract: This review article tries to answer four questions: (i) what are the stylized facts about uncertainty over time; (ii) why does uncertainty vary; (iii) do fluctuations in uncertainty matter; and (iv) did higher uncertainty worsen the Great Recession of 2007-2009? On the first question both macro and micro uncertainty appears to rise sharply in recessions. On the second question the types of exogenous shocks like wars, financial panics and oil price jumps that cause recessions appear to directly increase uncertainty, and uncertainty also appears to endogenously rise further during recessions. On the third question, the evidence suggests uncertainty is damaging for short-run investment and hiring, but there is some evidence it may stimulate longer-run innovation. Finally, in terms of the Great Recession, the large jump in uncertainty in 2008 potentially accounted for about one third of the drop in GDP.
    Keywords: uncertainty; risk; volatility; investment
    JEL: Q54
    Date: 2013–12
  11. By: Max Nathan; Emma Vandore
    Abstract: The digital industries cluster known as 'Silicon Roundabout' has been quietly growing in East London since the 1990s. Now rebranded 'Tech City', it is now the focus of huge public and government attention. National and local policymakers wish to accelerate the local area's development: such cluster policies are back in vogue as part of a re-awakened interest in industrial policy in many developed countries. Surprisingly little is known about Tech City's firms or the wider ecosystem, however, and existing cluster policies have a high failure rate. This paper performs a detailed mixed-methods analysis, combining rich enterprise-level data with semi-structured interviews. We track firm and employment growth from 1997-2010 and identify a number of distinctive features: branching from creative to digital content industries, street-level sorting of firms, the importance of local amenities and a lack of conventional cluster actors such as universities or anchor businesses. We also argue that the existing policy mix embodies a number of tensions, and suggest areas for improvement.
    Keywords: digital economy; cities; clusters; innovation; London; silicon roundabout; tech city
    JEL: L2 L52 M13 O18 O31 R11
    Date: 2013–11
  12. By: Christian Helmers; Henry G. Overman
    Abstract: We analyze the impact of the establishment of a GBP 380 million basic scientific research facility in the UK on the geographical distribution of related research. We investigate whether the siting of the Diamond Light Source, a 3rd generation synchrotron light source, in Oxfordshire induced a clustering of related research in its geographic proximity. To account for the potentially endogenous location choice of the synchrotron, we exploit the availability of a `runner-up' site near Manchester. We use both academic publications and patent data to trace the geographical distribution of related knowledge and innovation. Our results suggest that the siting of the synchrotron in Oxfordshire created a highly localized cluster of related scientific research.
    Keywords: synchrotron; location; innovation; patents defaults; unobserved components model
    JEL: O31 O38 R12 R58
    Date: 2013–03
  13. By: Max Nathan
    Abstract: High levels of net migration to the UK have contributed to growing cultural diversity, and researchers are turning their attention to the long-term effects of diversity on productivity. Yet little is known about these issues. This paper asks: what are the links between the composition of firms' top teams and business performance? What role do ethnic diversity and co-ethnic networks play? And do cities amplify or dampen these channels? I explore using a rich dataset of over 6,000 English firms. Owners, partners and directors set firms' strategic direction. Top team demography might generate production externalities through diversity (a wider range of ideas/ experiences, helping problem solving) and/or 'sameness' (via specialist knowledge or better access to international markets). These channels may be balanced by internal downsides (lower trust) and external barriers (discrimination), so that overall effects on business performance are unclear. In addition, urban locations (particularly big cities) may amplify any demographics-performance effects. I create a repeat cross-section of firms from the RDA National Business Survey. I construct measures of diversity and sameness across ethnicity and gender 'bases', alongside information on revenues, product and process innovation. I then regress these measures of business performance on top team demographics, plus firm level controls, area, year and detailed industry fixed effects. My results suggest a non-linear link between diversity and business performance, which is net positive for process innovation and net negative for turnover. Further tests on diverse and minority/female-headed firms find positive links for diverse top teams, negative for minority and female-only top teams. This implies that while diversity has internal and external benefits, penalties from being 'too diverse' probably result from external constraints. Further tests for intervening effects of capital cities, metropolitan hierarchies and urban form find some evidence of amplifying and dampening effects – which are generally stronger in London and larger cities.
    Keywords: cities; innovation; entrepreneurship; cultural diversity; migration; gender
    JEL: J1
    Date: 2013–03
  14. By: Nicholas Bloom; Paul M. Romer; Stephen J. Terry; John Van Reenen
    Abstract: We explain a counterintuitive empirical finding: Firms facing more import competition do more innovation. In our model, factors are trapped inside a firm. An increase in import competition encourages a firm to innovate by reducing the opportunity cost of inputs. Without trapped factors, trade liberalization leads to a small permanent increase in the worldwide rate of growth. With trapped factors, firms that face more import competition do relatively more innovation. The extra innovation induced by trapped factors induces a small permanent increase in aggregate output, consumption, and welfare, generalizing the appropriate estimate of the gains from trade.
    JEL: D21 F14 L21 O31
    Date: 2013–05
  15. By: Ralf Martin; Romesh Vaitilingam
    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: H23 O30 O38 Q54 Q55 Q58
    Date: 2014–11
  16. By: Stefano Bianchini (Sant' Anna School of Advanced Studies; BETA, Université de Strasbourg); Jackie Krafft (Université Nice Sophia Antipolis; GREDEG-CNRS); Francesco Quatraro (Université Nice Sophia Antipolis and GREDEG-CNRS; Collegio Carlo Alberto; Department of Economics and Statistics Cognetti de Martiis, University of Torino); Jacques Ravix (Université Nice Sophia Antipolis; GREDEG-CNRS)
    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 ISS Risk 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.
    Keywords: Corporate governance, Age, Lifecycle, Innovation, Non-parametric regression, ISS Risk Metrics
    JEL: G30 L20 L10 O33
    Date: 2015–01
  17. By: Lucio Picci (University of Bologna); Luca Savorelli (University of St Andrews)
    Abstract: We study the functional specialization whereby some countries contribute relatively more inventors vs. organizations in the production of inventions at a global scale. We propose a conceptual framework to explain this type of functional specialization, which posits the presence of feedbacks between two distinct sub-systems, each one providing inventors and organizations. We quantify the phenomenon by means of a new metric, the “inventor balance”, which we compute using patent data. We show that the observed imbalances, which are often conspicuous, are determined by several factors: the innovativeness of a country relative to its level of economic development, relative factor endowments, the degree of technological specialization and, last, cultural traits. We argue that the “inventor balance” is a useful indicator for policy makers, and its routine analysis could lead to better informed innovation policies.
    Keywords: Patents, Inventor balance, Inventor criterion, Applicant criterion, Internationalization of R&D, Specialization.
    JEL: O31 O34 F21 F23 F29
    Date: 2015–01–19
  18. By: Tom Broekel (1 Institute of Economic and Cultural Geography, Leibniz University of Hanover, Germany,; Matthias Brachert (Department Structural Economics, Halle Institute for Economic Research, Germany;; Matthias Duschl (Department of Geography, Philipps University of Marburg, Germany,; Thomas Brenner (Department of Geography, Philipps University of Marburg, Germany, Philipps University of Marburg, Germany,
    Abstract: Subsidies for R and D are an important tool of public R and D policy, which motivates extensive scientific analyses and evaluations. The paper adds to this literature by arguing that the effects of R and D subsidies go beyond the extension of organizations’ monetary resources invested into R and D. It is argued that collaboration induced by subsidized joint R and D projects yield significant effects that are missed in traditional analyses. An empirical study on the level of German labor market regions substantiates this claim showing that collaborative R and D subsidies impact regions’ innovation growth when providing access to related variety and embedding regions into central positions in cross-regional knowledge networks.
    Keywords: collaborative R and D projects, related variety, regional innovation
    JEL: L14 O31 R12
    Date: 2015–01–26
  19. By: Nam, Choong Hyun (Department of Economics, University of Warwick)
    Abstract: Since the 1980s, kabour demand has shifted towards more educated workers in the US. The most common explanation is that the productivity of skilled workers has risen to the unskilled, but it is not east to explain why aggregate labour productivity was stagnant during the 1980s. This paper suggests an alternative story: introducing new goods involves a fixed labour input, which is biased towards white-collar workers. Hence the transition from Ford-style mass production towards more a diversified one has shifted labour demand toward white-collar workers. Key words: Skill demand; product innovation; inequality; productivity JEL classification: E24; E32; J31; L1; O3; O4
    Date: 2015
  20. By: Wei Jin (School of Public Policy, Zhejiang University); ZhongXiang Zhang (School of Economics, Fudan University)
    Abstract: There is a growing body of literature mentioning the slow pace of energy technological progress as compared to other technologies like information technology (IT), but the reasons why energy sector is perplexed by slow innovation remain unexplained. Based on a variety-expanding endogenous technological change model, this paper provides a rigorous economic exposition of the mechanism that underlies the slow progress of energy technological innovation. We show that in decentralized market equilibrium the growth rate of energy technology variety is lower than that of IT variety. This stems from both market fundamentals where the homogeneity of end-use energy goods is less likely to harness the pecuniary externality embedded in the householdÕs love-for-variety preference, and technology fundamentals where the capital-intensiveness of energy technology inhibits the non-pecuniary technological externality due to knowledge spillovers. We further show that a social planner solution can promote energy technological progress, yet still cannot achieve an outcome in which energy technology variety grows faster than IT variety. By targeting subsidies on energy technology R&D and the use of intermediate primary energy inputs by secondary energy producers, the decentralized market equilibrium can achieve an outcome in which energy technology grows faster than IT.
    Keywords: energy technological innovation; product homogeneity; knowledge spillovers; love-for-variety effect
    JEL: Q55 Q58 Q41 Q43 Q48 O31
    Date: 2015–01
  21. By: Mohammadi, Ali (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Basir, Nada O. (Faculty of Business and IT, University of Ontario Institute of Technology); Beyhaghi, Mehdi (College of Business,University of Texas at San Antonio)
    Abstract: In this paper, we study how R&D investment affect financial analyst’s earnings forecasts and how intellectual capital endowments moderate this effect. We argue that high information asymmetry and uncertainty associated with R&D investment increase a financial analysts’ earnings forecast error. Patents can remedy this relationship by signaling the ability of a firm in transforming research investments into new and valuable knowledge. Using a panel of 2,253 publicly listed U.S firms, we find that higher R & D intensity is positively correlated with financial analysts’ earnings forecast error. The endowment of intellectual capital (i.e. patents) moderates this relationship negatively. However we do not find any moderating effect for the value of patents measured as forward citations.
    Keywords: R&D intensity; Analyst forecasts; Patent; information asymmetry; uncertainty; Capital market
    JEL: G24 O32 O34
    Date: 2015–02–03
  22. By: Behncke, Nadine
    Abstract: This paper analyzes the effect of different cooperation forms on innovation in small and medium enterprises in Belgium, Germany, Portugal and Spain using Community Innovation Survey data from 2008. We find that vertical cooperation and knowledge cooperation increases the probability to introduce product innovations in all countries. The positive effect is driven by cooperation in the home country in Germany and Spain while it comes from cooperations with foreign countries in Belgium and Portugal. However, our results suggest that SME are not able to capitalize from these cooperations. We find a significant and positive effect of horizontal cooperation on sales due to product innovation only in Germany.
    Keywords: networks,SMEs,innovation
    JEL: L14 L25 L2
    Date: 2015
  23. By: Ashish Arora; Sharon Belenzon; Andrea Patacconi
    Abstract: Scientific knowledge is believed to be the wellspring of innovation. Historically, firms have also invested in research to fuel innovation and growth. In this paper, we document a shift away from scientific research by large corporations between 1980 and 2007. We find that publications by company scientists have declined over time in a range of industries. We also find that the value attributable to scientific research has dropped, whereas the value attributable to technical knowledge (as measured by patents) has remained stable. These effects appear to be associated with globalization and narrower firm scope, rather than changes in publication practices or a decline in the usefulness of science as an input into innovation. Large firms appear to value the golden eggs of science (as reflected in patents) but not the golden goose itself (the scientific capabilities). These findings have important implications for both public policy and management.
    JEL: O31 O32
    Date: 2015–01
  24. By: Wei Jin (School of Public Policy, Zhejiang University, Hangzhou, China); ZhongXiang Zhang (School of Economics, Fudan University, Shanghai, China)
    Abstract: Whether China continues its current energy-intensive growth path or adopts a sustainable development prospect has significant implication for energy and climate governance. Building on a Ramsey-Cass-Koopmans growth model incorporating the mechanism of endogenous technological change and its interaction with fossil energy use and economic growth, this paper contributes to an economic exposition of China’s potential transition from an energy-intensive to an innovation-led growth path. We find that in China’s initial growth period the small amount of capital stock creates higher dynamic benefits of capital investment and incentives of capital stock accumulation rather than R&D-related innovation. Accumulation of energy-consuming capital stock along this non-innovation-led growth path thus leads to an intensive use of fossil energy - an energy-intensive growth pattern. To avoid this undesirable outcome, China’s social planner should consider locating a transition point to an innovation-led balanced growth path (BGP). When the growth dynamics reaches that transition point, China’s economy would embark on investment in physical capital and R&D simultaneously, and make a transition into the innovation-led BGP along which consumption, capital investment, and R&D have a balanced share. Also in this innovation-led BGP, consumption, physical capital stock, and knowledge stock all grow, fossil energy uses decline.
    Keywords: Technological Innovation, Energy Consumption, Economic Growth Model
    JEL: Q55 Q58 Q43 Q48 O13 O31 O33 O44 F18
    Date: 2014–12
  25. By: Kiminori Matsuyama (Northwestern University, USA); Iryna Sushko (Institute of Mathematics, National Academy of Science of Ukraine); Laura Gardini
    Abstract: We propose and analyze a two-country model of endogenous innovation cycles. In autarky, innovation fluctuations in the two countries are decoupled. As the trade costs fall and intra-industry trade rises, they become synchronized. This is because globalization leads to the alignment of innovation incentives across firms based in different countries, as they operate in the increasingly global (hence common) market environment. Furthermore, synchronization occurs faster (i.e., with a smaller reduction in trade costs) when the country sizes are more unequal, and it is the larger country that dictates the tempo of global innovation cycles with the smaller country adjusting its rhythm to the rhythm of the larger country. These results suggest that adding endogenous sources of productivity fluctuations might help improve our understanding of why countries that trade more with each other have more synchronized business cycles.
    Keywords: Endogenous innovation cycles and productivity co-movements; Globalization, Home market effect; Synchronized vs. Asynchronized cycles; Synchronization of coupled oscillators; Basins of attraction; Two-dimensional, piecewise smooth, noninvertible maps
    JEL: C61 E32 F12 F44 O31
    Date: 2015–02
  26. By: Mery Patricia Tamayo; Elena Huergo
    Abstract: This paper analyzes the determinants of R&D offshoring of Spanish firms using information from the Panel of Technological Innovation. We find that being an exporter, continuous R&D engagement, applying for patents, being a subsidiary, and firm size are factors that positively affect the decision to offshore R&D. In addition, we obtain that the factors that influence this decision for firms that belong to a business group differ depending on whether the firm purchases R&D services within the group or through the market: the lack of information is an obstacle relatively less important for internal R&D offshoring than for external R&D offshoring, while a higher degree of importance assigned to institutional and market sources of information for innovation as compared to internal sources increases the probability of R&D offshoring through the market.
    Keywords: R&D offshoring; firms’ strategies; obstacles to innovation; independent firms; sub?sidiaries
    JEL: L24 O32
    Date: 2014–12–15
  27. By: Hombert , Johan; Matray , Adrien
    Abstract: The authors study whether R&D-intensive firms are more resilient to trade shocks. They correct for the endogeneity of R&D using tax-induced changes to the cost of R&D. On average across US manufacturing firms, rising imports from China lead to slower sales growth and lower profitability. These effects are, however, significantly smaller for firms with a larger stock of R&D -- by about half when moving from the 25th percentile to the 75th percentile of the R&D stock distribution. As a result, while the average firm in import-competing industries cuts capital expenditures and employment, R&D-intensive firms downsize considerably less.
    Keywords: R&D; Innovation; Product Market Competition; Trade Shocks
    JEL: F14 G31 O33
    Date: 2014–12–24
  28. By: Ovtchinnikov , Alexei; Reza , Syed
    Abstract: Political activism positively affects firm innovation. Firms that support more politicians, politicians on Congressional committees with jurisdictional authority over the firms’ industries and politicians who join those committees innovate more. The authors employ instrumental variables estimation and a natural experiment to show a causal effect of political activism on innovation. The results are consistent with the hypothesis that political activism is valuable because it helps reduce policy uncertainty, which, in turn, fosters firm innovation. Also consistent with this hypothesis, we show that politically active firms successfully time future legislation and set their innovation strategies in expectation of future legislative changes.
    Keywords: political contributions; innovation; investment policy; policy uncertainty
    JEL: D72 D80 G31 G38 O31 O38
    Date: 2014–07–24

This nep-ino issue is ©2015 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.