nep-ino New Economics Papers
on Innovation
Issue of 2015‒06‒27
thirteen papers chosen by
Steffen Lippert
University of Auckland

  1. Appropriability Mechanisms, Innovation and Productivity:Evidence from the UK By Hall, Bronwyn H.; Sena, Vania
  2. Cournot Competition and “Green” Innovation: An Inverted-U Relationship By Luca Lambertini; Joanna Poyago-Theotoky; Alessandro Tampieri
  3. The Impact of Captive Innovation Offshoring on the Effectiveness of Organizational Adaptation By Baier, Elisabeth; Rammer, Christian; Schubert, Torben
  4. Can Innovation Help U.S. Manufacturing Firms Escape Import Competition from China? By Hombert, Johan; Matray, Adrien
  5. Infringement of Intellectual Property in Innovation Partnerships By Schubert, Torben
  6. R&D Tax Credits, Financial Constraints, and R&D Investments (Japanese) By HOSONO Kaoru; HOTEI Masaki; MIYAKAWA Daisuke
  7. The Use of Patent Statistics for International Comparisons and Analysis of Narrow Technological Fields By Ivan Haščič; Jérôme Silva; Nick Johnstone
  8. Licensing Innovations: The Case of the Inside Patent Holder By Fan, Cuihong; Jun, Byoung Heon; Wolfstetter, Elmar G.
  9. University-enterprise Interaction in Brazil: The Role of the Public Research Infrastructure By Fernanda De Negri; Luiz Ricardo Cavalcante; Patrick Franco Alves
  10. Measuring progress in eco-innovation By Rizos, Vasileios; Behrens, Arno; Taranic, Igor
  11. Financing Entrepreneurial Experimentation By Ramana Nanda; Matthew Rhodes-Kropf
  12. Identifying and inducing breakthrough inventions: An application related to climate change mitigation By Florian Egli; Nick Johnstone; Carlo Menon
  13. Policy Lessons from Financing Innovative Firms By Karen E. Wilson

  1. By: Hall, Bronwyn H. (University of California at Berkeley and University of Maastricht; NBER, IFS London, and NIESR); Sena, Vania (Essex Business School, University of Essex)
    Abstract: We use an extended version of the wellestablished Crepon, Duguet and Mairesse model (1998) to model the relationship between appropriability mechanisms, innovation and firmlevel productivity. We enrich this model in several ways. First, we consider different types of innovation spending and study the differences in estimates when innovation spending (rather than R&D spending) is used to predict innovation in the CDM model. Second, we assume that a firm simultaneously innovates and chooses among different appropriability methods (formal or informal) to protect the innovation. Finally, in the third stage, we estimate the impact of the innovation output conditional on the choice of appropriability mechanisms on firms’ productivity. We find that firms that innovate and rate formal methods for the protection of Intellectual Property (IP) highly are more productive than other firms, but that the same does not hold in the case of informal methods for the protection of a firm’s IP, except possibly for large firms as supposed to SMEs. We also find that this result is strongest for firms in the services, trade, and utility sectors, and negative in the manufacturing sector.
    Keywords: productivity; innovation; intellectual property; appropriability; patents; CDM
    JEL: L25 O30 O34
    Date: 2015–06–18
  2. By: Luca Lambertini (Department of Economics, University of Bologna, Italy; The Rimini Centre for Economic Analysis, Italy); Joanna Poyago-Theotoky (School of Economics, La Trobe University, Australia; The Rimini Centre for Economic Analysis, Italy); Alessandro Tampieri (Faculty of Law, Economics and Finance, University of Luxembourg, Luxembourg)
    Abstract: We examine the relationship between competition and innovation in an industry where production is polluting and R&D aims to reduce emissions (“green” innovation). We present an n-firm oligopoly where firms compete in quantities and decide their investment in “green” R&D. When environmental taxation is exogenous, aggregate R&D investment always increases with the number of firms in the industry. Next we analyse the case where the emission tax is set endogenously by a regulator (committed or time-consistent) with the aim to maximize social welfare. We show that an inverted-U relationship exists between aggregate R&D and industry size under reasonable conditions, and is driven by the presence of R&D spillovers.
    Date: 2015–06
  3. By: Baier, Elisabeth (PTV Group AG, Karlsruhe, Germany); Rammer, Christian (ZEW, Mannheim, Germany); Schubert, Torben (CIRCLE, Lund University & Fraunhofer ISI, Karlsruhe, Germany)
    Abstract: We analyze the effects of captive offshoring of innovation activities on the ability of the firms to adapt their organizational structures. Basing our arguments on complexity theory, we use three consecutive waves of the German part of the Community Innovation Survey to test our hypotheses. We find an inverted u-shape of innovation offshoring on the effectiveness of organizational adaptability, implying an optimal threshold value of innovation offshoring. This value is 11% for share of offshored R&D, 15% for downstream innovation activities such as local market adaptation, and 34% for design activities. We also analyze several contingency variables. In particular, we show that the costs of innovation offshoring in terms of reduced organizational adaptation are increased by a regional dispersion of the offshoring activities and strong embeddedness in onshore networks. We also show that smaller firms find it easier to deal with the management complexity induced by geographical dispersion of innovation activities.
    Keywords: Internationalization; Offshoring; Innovation; Organizational Adaptation; Organizational Adaptability
    JEL: O31 O32
    Date: 2015–06–21
  4. By: Hombert, Johan; Matray, Adrien
    Abstract: We study whether R&D-intensive firms are more resilient to trade shocks. We 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: China; import competition; innovation; R&D tax credit
    JEL: F14 L25 L60 O33
    Date: 2015–06
  5. By: Schubert, Torben (CIRCLE, Lund University & Fraunhofer ISI, Karlsruhe, Germany)
    Abstract: Using data from the German Community Innovation Survey (CIS) from 2008 we analyze whether innovation partnering increases the risk of experiencing infringement of intellectual property (IP). The results show that depending on types of IP innovation partnerships increase the risk of infringement by up to 37% compared to the average risk in the sample. The results suggest that this massive increase can be reduced by intellectual property rights and contracts to govern the partnerships. Yet we show that formal protection mechanisms do not eliminate the sources of opportunistic infringement, since that infringement in innovation partnerships more commonly relates to the infringement of formally unprotected intellectual property, such as tacit knowledge and know-how.
    Keywords: infringement; intellectual property; innovation; partnerships; alliances; protection
    JEL: O32 O34
    Date: 2015–06–21
  6. By: HOSONO Kaoru; HOTEI Masaki; MIYAKAWA Daisuke
    Abstract: Research and development (R&D) expenditures are affected potentially by the present and past use of R&D tax credits through two channels. While the present use of R&D tax credits promotes R&D investment through a reduction in capital cost, the past use promotes the investment through an increase in internal funds. We empirically investigate how these two channels affect the R&D investment of Japanese manufacturing firms by using firm-level data. Our results can be summarized as follows. First, the effect of the present use of R&D tax credit on R&D investment is smaller for firms that are more likely to depend on external finance (i.e., firms that operate in industries with higher dependence on external finance) than for those that are less likely to depend on external finance, suggesting that higher agency cost associated with the larger use of external finance partially mitigates the effect of R&D tax credits. Second, the past use of R&D tax credits does not necessarily lead to significant increase in the internal funds for firms that are more likely to depend on external finance, which implies that the use of R&D tax credits does not contribute to the promotion of firms' R&D investment. These results jointly imply that the effect of R&D tax credits on R&D investment is limited for financially constrained firms.
    Date: 2015–06
  7. By: Ivan Haščič; Jérôme Silva; Nick Johnstone
    Abstract: Patent data provide an increasingly used means to analyse innovation performance worldwide including in countries with incomplete data coverage, such as some developing countries. This paper discusses the specific issues associated with using patent data for measuring and analysing innovation in narrow technological fields, such as many environment-related technologies. To improve cross-country comparability of patent statistics, the paper advocates the use of indicators based on patent family size because they are more flexible and can be adapted to various applications. The paper also examines certain idiosyncratic characteristics of patent databases and proposes approaches to mitigate potential biases in empirical cross-country analyses. While doing so is particularly important for analyses of narrow technological fields such as many environment- and climate-related technologies, some of these issues are relevant for patent analysis more broadly.
    Keywords: innovation, indicators, environmental technologies
    JEL: O3 O31 O34 Q2 Q4 Q5
    Date: 2015–06–24
  8. By: Fan, Cuihong; Jun, Byoung Heon; Wolfstetter, Elmar G.
    Abstract: The present paper reconsiders the inside innovators’ licensing problem under incomplete information. Employing an optimal mechanism design approach, we show that, contrary to what is claimed in the literature, the optimal mechanism may prescribe fixed fees, royalty rates lower than the cost reduction, and even negative royalty rates.
    Keywords: Innovation; licensing; industrial organization.
    JEL: D21 D43 D44 D45
    Date: 2015–05–21
  9. By: Fernanda De Negri; Luiz Ricardo Cavalcante; Patrick Franco Alves
    Abstract: This paper discusses the university-enterprise interactions in the Brazilian innovation system by focusing on the characteristics of the public research infrastructure which affects its propensity to interact with the industrial sector. Logistic regressions have been used to identify, in a wide set of explanatory variables, the characteristics of the research infrastructure which increase its probability of supplying technological services to firms. Besides the primary data collected from a survey carried out in a sample of institutions related to the Brazilian Ministry of Science, Technology and Innovation (MCTI), data concerning the scientific and technological production of the researchers affiliated to each laboratory have also been used in the regressions. The choice of the explanatory variables was based in a brief literature review on the role of the research infrastructure in the national innovation systems. Aiming at supporting the discussion of the results of the regressions, this review also included a brief report of the recent interactions between the research infrastructure and the industrial sector in Brazil. The main findings of the logistic regressions are: i) the size of the laboratory (as measured by the number of affiliated researchers) and of the qualification of its research team positively and significantly affects its propensity to interact with the industrial sector; ii) multidisciplinary laboratories tend to interact more with the industrial sector than laboratories focused on a single field of expertise; iii) there seems to be a tradeoff between scientific publications and market oriented research, since the number of papers published by the affiliated researchers is negatively correlated to the probability of supplying technological services to firms.
    Date: 2015–01
  10. By: Rizos, Vasileios; Behrens, Arno; Taranic, Igor
    Abstract: Eco-innovation has been identified as one of the key drivers of change that need to be harnessed for a sustainable future. Given the complexity of eco-innovation as a concept, there are various challenges to measuring its progress. This CEPS Working Document briefly explores the evolution of the concept of eco-innovation and emphasises its role in the EU 2020 strategy. It then gives an overview of the different measurement approaches and challenges associated with identifying and using indicators for measuring progress in eco-innovation. Within this context, the paper describes the added value and key features of the web tool, which aims to improve the way in which policy-makers and others involved in the policy process can access, understand and use green economy and eco-innovation indicators. The web tool was developed as part of a systematic overview by the NETGREEN project research team of the large and fragmented body of work in the field of green economy indicators. The paper concludes with a number of messages for policy-makers in this field.
    Date: 2015–06
  11. By: Ramana Nanda; Matthew Rhodes-Kropf
    Abstract: The fundamental uncertainty of new technologies at their earliest stages implies that it is virtually impossible to know the true potential of a venture without learning about its viability through a sequence of investments over time. We show how this process of experimentation can be particularly valuable in the context of entrepreneurship because most new ventures fail completely, and only a few become extremely successful. We also shed light on important costs to this process of experimentation, and demonstrate how these can fundamentally alter both the rate and direction of startup innovation across industries, regions and periods of time.
    JEL: G24 L26 O31
    Date: 2015–06
  12. By: Florian Egli; Nick Johnstone; Carlo Menon
    Abstract: Most of the projections of the cost of meeting climate change mitigation targets hinge crucially upon assumptions made about the cost and timing of the development of breakthrough technologies. However, very little is known about the conditions which are likely to give rise to breakthrough technologies. This paper seeks to uncover attributes of inventions – as reflected in patent data – which serve as “leading indicators” of subsequent technological and market development in climate change mitigation technologies. The role of industrial generality emerges as being robustly correlated with subsequent technological diffusion, whether measured as subsequent patent counts, commercial applicability, or attractiveness to risk finance. The indicator of closeness to science shows also a positive association with later technological diffusion. Originality and radicalness have more ambiguous results. This work can be seen as a foundation for the future development of a methodology providing guidance to policymakers in the choices made with respect to public support for different technological fields.
    Keywords: green growth, climate change mitigation policy
    JEL: O31 O33 Q54 Q55
    Date: 2015–06–24
  13. By: Karen E. Wilson
    Abstract: There has been increasing concern from policy makers around the world about the lack of access to finance for young innovative firms. As a result, governments in many OECD countries have sought to address the financing gap and perceived market failures by supporting the seed and early stage market. This paper seeks to summarise the lessons learned in seed and early stage finance based on OECD work over the past several years focused on policies related to financing high growth firms, including angel investment and venture capital. That research was supplemented with a questionnaire on seed and early stage financing policies in 2012 and a series of policy workshops held between 2012 and 2014. The workshops provided deeper insights into experiences and lessons learned from OECD member countries. The OECD has been working on seed and early stage finance within the Committee for Industry, Innovation and Entrepreneurship (CIIE) in the Directorate for Science, Technology and Industry as well as across other Directorates. This work has highlighted the growth in seed and early stage finance policies as well as the importance of high-growth firms for job creation and the role that financial development and other policies play in firm dynamics and the growth of such firms.
    Date: 2015–06–24

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