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on Innovation |
| By: | Da Rin, M. (Tilburg University, Center For Economic Research); Penas, M.F. (Tilburg University, Center For Economic Research) |
| Abstract: | Venture capital is a specialized form of financial intermediation that often provides funding for costly technological innovation. Venture capital firms need to exit portfolio companies within about five years from the investment to generate returns for institutional investors. This paper is the first to examine the association of venture capital funding with a company’s choice of innovation strategies. We employ a unique dataset of over 10,000 innovative Dutch companies, some of which received venture financing. The data include detailed information on patent applications, innovation activities, financing sources, and other company characteristics. We find that companies backed by venture capital focus on the buildup of absorptive capacity, by engaging in in-house R&D, while at the same time acquiring external knowledge. We interpret this finding as a consequence of the time horizon of venture capital firms. Our results suggest that the correlation between venture capital funding and the build-up of absorptive capacity is not only due to a selection effect. We derive implications of these findings for corporate strategy and public policy. |
| Keywords: | Venture Capital; Entrepreneurship; Innovation Strategy; Research & Development; Public Policy |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiucen:b1fa60be-4744-45a8-8b43-86a74d757ef1&r=ino |
| By: | Fassio, Claudio (Lund University); Montobbio, Fabio (University of Turin); Venturini, Alessandra (University of Turin) |
| Abstract: | This paper uses the French and the UK Labour Force Surveys and the German Microcensus to estimate the effects of different components of the labour force on innovation at the sectoral level between 1994 and 2005. The authors focus, in particular, on the contribution of migrant workers. We adopt a production function approach in which we control for the usual determinants of innovation, such as R&D investments, stock of patents and openness to trade. To address possible endogeneity of migrants we implement instrumental variable strategies using both two-stage least squares with external instruments and GMM-SYS with internal ones. In addition we also account for the possible endogeneity of native workers and instrument them accordingly. Our results show that highly-educated migrants have a positive effect on innovation even if the effect is smaller relative to the positive effect of educated natives. Moreover, this positive effect seems to be confined to the high-tech sectors and among highly-educated migrants from other European countries. |
| Keywords: | innovation, migration, skills, human capital |
| JEL: | O31 O33 F22 J61 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9062&r=ino |
| By: | KWON Seokbeom; MOTOHASHI Kazuyuki |
| Abstract: | The Japanese national innovation system (JP NIS) and that of the United States (U.S. NIS) differ. One of the differences is that firms in the JP NIS are likely to collaborate with historical partners for the purpose of innovation or rely on in-house research and development (R&D), approaches that form a "relationship-driven innovation system." In the U.S. NIS, however, firms have a relatively weak reliance on prior partnerships or internal R&D and are likely to seek entities that know about the necessary technology. Thus, U.S. players acquire technologies through market transactions such as mergers and acquisitions (M&A). This paper primarily discusses how this institutional difference affects country-specific industrial sector specialization. Then, by using a multiagent model of the NIS and conducting simulation, we examine what strategy would help Japanese firms in industries dominated by radical innovation. The results show that the JP NIS provides an institutional advantage in industries with fast-changing consumer demand that require incremental innovation. However, the U.S. NIS benefits industries that require frequent radical innovation. Our analysis reveals that extending the partnership network while keeping internal R&D capability would be a beneficial strategy for Japanese firms in industries driven by radical innovation. Therefore, the present research suggests that policymakers need to differentiate policy that emphasizes business relationship and market mechanism importance according to industrial characteristics in order to improve overall national industrial competitiveness. At the same time, Japanese firms need to strengthen their R&D capability while trying to extend their pool of technology partners in order to improve the flexibility of their responses to radical changes in an industry. |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:15065&r=ino |
| By: | MURATA Takashi; FURUNISHI Makoto; KITAOKA Michiyo |
| Abstract: | Innovation is indispensable for keeping our social and economic activities not only internationally competitive but sustainable. It is, therefore, one of the most important national policies to create the social and economic fundamentals which may create innovation. We call them “innovative fundamentals.” The recent expansion of social networks supported by ICT (information & communications technology) is characterized by the enormous spread of information and creation of a wide range of networks in our society. These significantly affect the way we interact with existing ideas and create new ideas. Responding to such changes, ideas and knowledge attained by research & development (R&D) activities must be flexibly utilized further for the creation of new innovation. However, we rarely expect innovation by using only one type of idea and/or knowledge. Innovation happens only after the use of new ideas stemming from the interaction of various ideas and knowledge. Different types of intellectual property in the common domain must have the force necessary to interact with one another and create the strong fundamentals needed for future innovation. In this paper, we indicate the importance of strengthening intellectual property in the common domain to advance innovation. In addition, we discuss several policy measures based on the idea of the Commons for the creation of such environment that can cause innovation continuously. |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:esj:esridp:316&r=ino |
| By: | Sunil Kanwar; Bronwyn H. Hall |
| Abstract: | We revisit the relationship between market value and innovation in the context of manufacturing firms in a developing country, using Indian data from 2001 through 2010. Surprisingly, we find that financial markets value the R&D investment of Indian firms the same or higher than such investment is valued in developed economies like the US. Using a proxy for the option value of R&D, we find that this accounts for a very small part of the R&D valuation (5% at most). We also find that the market value-R&D relationship does not vary significantly across industry groups, although these results are imprecise. |
| JEL: | G12 O16 O30 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21196&r=ino |
| By: | HUO Dong; MOTOHASHI Kazuyuki |
| Abstract: | This study investigates the relationship between the technological value of collaborative research and development (R&D) outcomes and technological diversity in inter-firm R&D alliances. We differentiate technological diversity into two types—relational technological diversity (RTD) and distributional technological diversity (DTD)—and relate them to distinct mechanisms. By empirically analyzing 18,575 granted U.S. patent applications from 1993 to 2002, we find that RTD and DTD is negatively associated and positively associated, respectively, with the technological value of R&D outcomes. In addition, we consider two hypothesized moderators—team size and exploratory degree—in order to examine the moderation effects. The results show that the negative effect of RTD becomes stronger when team size is larger, and the positive effect of DTD becomes greater when an alliance attempts to invent in a less familiar technological field where the exploratory degree is higher. Moreover, we find that RTD and DTD interact in their influences on outcomes. |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:15064&r=ino |
| By: | Taalbi, Josef |
| Abstract: | The notion of development blocks suggests the co-evolution of technologies and industries through complementarities and the overcoming of imbalances. This paper studies groups of closely related industries and their co-evolution in the network of Swedish product innovations, by combining statistical methods and qualitative data from a newly constructed innovation output database, SWINNO. The study finds ten sets of closely related industries in which innovation activity has been prompted by the emergence of technological imbalances or by the exploitation of new technological opportunities. |
| Keywords: | Development Blocks; Community Detection; Network Analysis; Technological Imbalances |
| JEL: | N1 N7 O3 |
| Date: | 2015–05–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:64549&r=ino |
| By: | Aristei, David; Sterlacchini, Alessandro; Venturini, Francesco |
| Abstract: | Using homogenous firm-level data for the largest Member States of the EU over the period 2007-2009, we test whether manufacturing firms receiving R&D public supports (subsidies and/or tax incentives) spent more on R&D. The analysis is performed by means of both non-parametric (Propensity Score Matching) and parametric estimations (OLS and mixed-model system, with the latter accounting for the possible endogeneity of public supports). The hypothesis of full crowding-out of private with public funds (i.e. public support reduced privately-funded R&D expenses) is rejected for all countries, with the partial exception of Spain. However, we do not find evidence for the hypothesis of additionality of R&D subsidies (i.e. direct funding did not raise private R&D). These findings contrast with earlier works and might be due to the period under assessment, which covers the financial turmoil and the subsequent economic downturn. A focused analysis on France suggests that R&D tax credits exerted a positive impact on R&D. Overall, our findings indicate that, albeit they were not expansive, public supports avoided the reduction of firm R&D at the outset of financial crisis. |
| Keywords: | R&D; subsidies; tax incentives; policy evaluation; EU manufacturing firms |
| JEL: | C21 D04 O32 O38 |
| Date: | 2015–05–26 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:64611&r=ino |
| By: | Becker, Lasse; Bizer, Kilian |
| Abstract: | Private innovative activities receive public innovation support from different political levels. Few studies have empirically evaluated the influence of political systems on the reception of public innovation support and no other studies have evaluated innovation support across Europe with CIS data. This paper analyses the differences between federal, semi-federal and centralist political systems with CIS data from sixteen European countries. The results show that regional programmes in federal and semi-federal countries reach firms with barriers to innovate, such as small and medium-sized enterprises, while other programmes only claim to reach them. Federal and semi-federal countries therefore support a broader variety of firms compared with centralist countries. European support reaches SMEs better in centralist countries compared with federal and semi-federal countries. Regular and higher expenditure on innovative activities shows a positive influence on the reception of support in all countries, while indicators such as market focus vary between countries and political levels. Regional programmes focus more strongly on companies with a regional market focus, which can be seen as another barrier to innovation. As a policy implication, the paper implies that barriers to innovation can be reduced by a decentralized innovation framework with stronger regional programmes. |
| Keywords: | innovation,innovation support,SME,Europe,federalism,decentralization |
| JEL: | O31 O38 H77 H71 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cegedp:245&r=ino |
| By: | Francesco Di Comite (European Commission – JRC - IPTS); D'Artis Kancs (European Commission – JRC - IPTS) |
| Abstract: | This report compares the modelling of R&D in four macroeconomic models used by the European Commission for ex-ante policy impact assessment: QUEST, RHOMOLO, GEM-E3 and NEMESIS. Whereas the former three are general equilibrium models, the latter is a reduced form macro-econometric model. QUEST and RHOMOLO are in-house models developed and used within the European Commission, whereas GEM-E3 and NEMESIS are external models of University of Athens and University of Paris, respectively. The report highlights particularly those parts of the models that are relevant to R&D transmission mechanisms and interfaces for implementing policy shocks. |
| Keywords: | QUEST, RHOMOLO, GEM-E3, NEMESIS, Macro-Economic Models, R&D Policies |
| JEL: | C68 D24 D58 H50 O31 O32 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc94323&r=ino |
| By: | TONOGI Akiyuki; KITAOKA Michiyo; Wendy C. Y. Li |
| Abstract: | The Japanese Government is planning to change the estimation methods of the Japanese System of National Accounts (JSNA) in 2016, from the 1993 System of National Accounts (SNA) to the 2008 SNA. Following this change, research and development (R&D) expenditures will be counted as investments and will be capitalized in the GDP accounts. To capitalize R&D expenditures, we need to estimate R&D capital stock; hence, the methods of estimating R&D depreciation rates are critical. This paper investigates the R&D depreciation in the JSNA based on the methodology developed by Li (2012a). By adopting Li’s model and using data on industry outputs and R&D investments from Japan, we estimate the R&D depreciation rates of 20 Japanese industries. The estimates we obtain are consistent with the results of prior studies and the recent survey results reported by Miyagawa et al. (2014). |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:esj:esridp:319&r=ino |
| By: | Moretti, Enrico (University of California, Berkeley); Wilson, Daniel J. (Federal Reserve Bank of San Francisco) |
| Abstract: | Using data on the universe of U.S. patents filed between 1976 and 2010, we quantify how sensitive is migration by star scientists to changes in personal and business tax differentials across states. We uncover large, stable, and precisely estimated effects of personal and corporate taxes on star scientists’ migration patterns. The long run elasticity of mobility relative to taxes is 1.6 for personal income taxes, 2.3 for state corporate income tax and -2.6 for the investment tax credit. The effect on mobility is small in the short run, and tends to grow over time. We find no evidence of pre-trends: Changes in mobility follow changes in taxes and do not to precede them. Consistent with their high income, star scientists’ migratory flows are sensitive to changes in the 99th percentile marginal tax rate, but are insensitive to changes in taxes for the median income. As expected, the effect of corporate income taxes is concentrated among private sector inventors: no effect is found on academic and government researchers. Moreover, corporate taxes only matter in states where the wage bill enters the state’s formula for apportioning multi-state income. No effect is found in states that apportion income based only on sales (in which case labor’s location has little or no effect on the tax bill). We also find no evidence that changes in state taxes are correlated with changes in the fortunes of local firms in the innovation sector in the years leading up to the tax change. Overall, we conclude that state taxes have significant effect of the geographical location of star scientists and possibly other highly skilled workers. While there are many other factors that drive when innovative individual and innovative companies decide to locate, there are enough firms and workers on the margin that relative taxes matter. |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfwp:2015-06&r=ino |