nep-ino New Economics Papers
on Innovation
Issue of 2016‒01‒18
nineteen papers chosen by
Uwe Cantner
University of Jena

  1. Innovation in Eastern Europe : a case study of Czech Republic By Kashcheeva, Mila; Nabeshima, Kaoru
  2. The effects of innovation policies on firm level patenting By Marit E. Klemetsen
  3. Various approaches to measuring business innovation: their relevance for capturing social innovation By Attila Havas
  4. Essay on the State of Research and Innovation in France and the European Union By Antoine Kornprobst
  5. Multinationals and the Globalization of R&D By María García-Vega; Patricia Hofmann; Richard Kneller
  6. Financing Constraints, Radical versus Incremental Innovation, and Aggregate Productivity By Andrea Caggese
  7. Something New: Where do new industries come from? By Feldman , Maryann P.; Tavassoli , Sam
  8. The impact of firm financing constraints on R&D over the business cycle By Kadri Männasoo; Jaanika Meriküll
  9. Persistence and Change of Regional New Business Formation in the National League Table By Michael Fritsch; Sandra Kublina
  10. The Roles of Emerging Multinational Companies’ Technology-driven FDIs in their Learning Processes for Innovation: A dynamic and contextual perspective By Liu , Ju; Lema , Rasmus
  11. What best transfers knowledge? : capital, goods, and innovative labor in East Asia By Kang, Byeongwoo
  12. The Supply-side Effects of Energy Efficiency Labels By David Comerford; Ian Lange; Mirko Moro
  13. Identifying Key Drivers and Bottlenecks in the Adoption of E-Book Readers in Korea By Dongnyok Shim; Jin Gyo Kim; Jorn Altmann
  14. A Vision of the Growth Process in a Technologically Progressive Economy:the United States, 1899-1941. By Bakker, Gerben; Crafts, Nicholas; Woltjer, Pieter
  15. Trade Competition, Technology and Labor Re-allocation By Bahar Baziki, Selva; Ginja, Rita; Borota Milicevic, Teodora
  16. Entrepreneurial intention in the time of crisis: a field study By A. Arrighetti; F. Landini; L. Caricati; N. Monacelli
  17. Long-run evolution of the global economy - Part 2: Hindcasts of innovation and growth By Timothy J. Garrett
  18. Why Social Enterprises Are Asking to Be Multi-stakeholder and Deliberative: An Explanation around the Costs of Exclusion By Carlo Borzaga; Silvia Sacchetti
  19. Long-Run Energy Use and the Efficiency Paradox By Jan Abrell; Sebastian Rausch; Hagen Schwerin

  1. By: Kashcheeva, Mila; Nabeshima, Kaoru
    Abstract: In this study we evaluate innovative performance of the economies of Central and Eastern Europe (CEE) based on the available statistics of innovation processes. We compare such country-level indicators as educational levels, investments in R&D, FDI, trade and licensing flows, patents and scientific articles, and find that the most developed CEE economies are also the most innovative. At the same time, as supported by the results of the interviews in Czech Republic, one of the top performers in the CEE region, its economy is facing a number of challenges that are similar to other middle-income countries around the world. We suggest addressing these challenges from the prospective of the Middle Income Trap, when a middle-income economy to sustain growth must learn to compete with advanced economies in high-skill innovation. Development of effective innovation policy should be a priority for the CEE countries to escape from the middle income trap.
    Keywords: Czech Republic, East Europe, Economic growth, Technological innovations, Innovation policy, Middle income trap, Central and Eastern Europe
    JEL: O31 O10 O20
    Date: 2015–03
  2. By: Marit E. Klemetsen (Statistics Norway)
    Abstract: This paper examines the impacts of R&D tax credits and direct R&D subsidies on Norwegian firms' patenting, with a particular focus on environmental patenting. Whereas direct subsidies are aimed at projects with low private and high social return, tax credits do not discriminate between projects or technologies. We find that both direct subsidies and tax credits have significant positive effects on patenting in general. Although direct subsidies have triggered more patents, tax credits are more efficient in the sense that they have triggered more patents relative to the typical subsidy amount received. With regard to environmental patenting, we find no significant effects of tax credits, whereas the effects of direct subsidies are large and significant. A possible explanation is that environmental innovations face the environmental externality, greater knowledge externalities and require funding that is willing to take more risks and allow more patience. Tax credits currently favor small and medium sized firms and firms with relatively low R&D investments. For large firms, we find large and significant effects of direct subsidies, but no significant effects of tax credits.
    Keywords: R&D tax credits; SkatteFUNN; direct R&D subsidies; environmental innovation; SMEs; Poission count model; fixed effects
    JEL: C54 D22 O31 O38 Q55
    Date: 2015–12
  3. By: Attila Havas (Institute of Economics - Centre for Economic and Regional Studies - Hungarian Academy of Sciences)
    Abstract: This paper reviews various approaches to measuring business innovation from the angle of capturing social innovations and offers several methodological and policy conclusions. First, the Innovation Union Scoreboard (IUS) indicators in principle could be useful in settings where the dominant mode of innovation is based on R&D activities. In practice, however, both R&D and non-R&D-based modes of innovation are fairly important. IUS, therefore, only provides a partial picture. Social innovations can certainly rely on R&D-based technological innovations. Their essence, however, tends to be organisational, managerial and behavioural changes. The IUS indicators do not capture these types of changes. Second, an assessment of the 81 indicators used to compile the Global Innovation Index reveals that it would neither be a fruitful effort to rely on those indicators to capture social innovations. Third, given the diversity among innovation systems, a poor performance signalled by a composite indicator does'nt automatically identify the area(s) necessitating the most urgent policy actions. Only tailored, thorough comparative analyses can do so. Fourth, analysts and policy-makers need to be aware of the differences between measuring (i) social innovation activities (efforts) themselves, (ii) the framework conditions (pre-requisites, available inputs, skills, norms, values, behavioural patterns, etc.) of being socially innovative, and (iii) the economic, societal or environmental impacts of social innovations.
    Keywords: Evolutionary economics of innovation; Business innovation; Social innovation; Measurement of innovation; Composite indicators; Scoreboards, league tables; Unit of analysis
    JEL: B52 C80 O31 O38 Y10
    Date: 2015–11
  4. By: Antoine Kornprobst
    Abstract: Innovation in the economy is an important engine of growth and no economy, whatever its complexity and degree of advancement, whether it is based on industry, agriculture, high tech or the providing of services, can be truly healthy without innovating actors within it. The aim of this work, done by an applied mathematician working in finance, not by an economist or a lawyer, isn't to provide an exhaustive view of the all the mechanisms in France and in Europe that aim at fostering innovation in the economy and to offer solutions for removing all the roadblocks that still hinder innovation; indeed such a study would go far beyond the scope of this study. What I modestly attempted to achieve in this study was firstly to draw a panorama of what is working and what needs to perfected as far as innovation is concerned in France and Europe, then secondly to offer some solutions and personal thoughts to boost innovation.
    Date: 2016–01
  5. By: María García-Vega; Patricia Hofmann; Richard Kneller
    Abstract: We consider theoretically and empirically how the location and organization of knowledge production evolve within domestic firms during the period of their acquisition by foreign multinationals. Acquisitions do not increase the risk of closure of the subsidiary’s research labs unless acquired by MNEs at the technological frontier. Conditional on keeping research in the subsidiary, there is a large decrease of innovation expenditures, transfer of knowledge and reorganization towards high-skilled workers. We show that innovations increase, which is a consequence of the complementarity between foreign technology transfers and skilled-workers in the subsidiary.
    Keywords: MNE, Knowledge Production Function, Acquisition FDI, Knowledge Complementarities, R&D innovation.
    Date: 2015
  6. By: Andrea Caggese
    Abstract: I provide new empirical evidence on a negative relation between financial frictions and productivity growth over firms’ life cycle. I show that a model of firm dynamics with incremental innovation cannot explain such evidence. However also including radical innovation, which is very risky but potentially very productive, allows for joint replication of several stylized facts about the dynamics of young and old firms and of the differences in productivity growth in industries with different degrees of financing frictions. These frictions matter because they act as a barrier to entry that reduces competition and the risk taking of young firms.
    Date: 2015–11
  7. By: Feldman , Maryann P. (Department of Public Policy, University of North Carolina at Chapel Hill, U.S.); Tavassoli , Sam (CIRCLE, Lund University)
    Abstract: Emerging industries have great potential for both entrepreneurship and regional transformation. The emergent earliest stage of the industry lifecycle is when there is the greatest potential and when local factors matter most however we typically can only identify new industries in retrospect. This chapter provides an overview of the transformative potential of emerging industries and considers the challenges associated with studying emerging industries in real time. The chapter considers the regional context for studying new industries and offers a set of regional factors that might promote the emergence of new industries.
    Keywords: emerging industries; geography of innovation; market-pull; science-push; local economic development
    JEL: N90 O18 O33 R12
    Date: 2015–12–30
  8. By: Kadri Männasoo; Jaanika Meriküll
    Abstract: This paper studies financing constraints on R&D over the most recent boom and bust episode in Central and Eastern Europe (CEE). Given that financial and venture capital markets in CEE are thin in comparison to those in high-income economies and that many of CEE countries experienced a credit crunch during the last recession, it is proposed that financing constraints have a significant adverse effect on R&D activity in these countries. The paper uses two complementary firm-level data-sources from ten CEE countries. We find that financing constraints have a substantial effect on R&D expenditures, as the probability of credit constrained firms undertaking R&D activities is around 70% lower than for other firms and firms’ R&D expenditure sensitivity to cash flow is very high. Despite the severity of the crisis, the adverse effect of financing constraints for R&D did not increase during the financial crisis. We also find that, conditional on credit constraints, firms’ R&D activity is higher during a recession
    Keywords: R&D financing constraints, credit constraints, business cycle, Central and Eastern Europe
    JEL: O16 O32 O52 E32 P23
    Date: 2015–12–30
  9. By: Michael Fritsch (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Sandra Kublina (School of Economics and Business Administration, Friedrich-Schiller-University Jena)
    Abstract: We investigate persistence and change of the levels of regional new business formation in West Germany over a period of thirty years. Our indicator is the position of a region in the national ranking. As indicated by previous studies, we generally find a rather high level of persistence and confirm the role of several sources of this persistence, namely, persistence in regional determinants of new business formation, distinct regional cultures of entrepreneurship, and path dependence in new business formation activity. There are, however, also a number of regions that have moved up or down in the national ranking by a considerable number of positions. We find that main factors that are related to such rank changes are R&D activities, industry diversity, and regional wage levels.
    Keywords: Entrepreneurship, new business formation, economic development, regional growth regimes
    JEL: L26 R11 O11
    Date: 2016–01–04
  10. By: Liu , Ju (CIRCLE, Lund University); Lema , Rasmus (Department of Business and Management, Aalborg University)
    Abstract: This paper is a comparative case study investigating the roles of TFDIs in the learning processes for innovation in two leading Chinese wind turbine companies. It develops a dynamic and contextual analytical framework from a learning-based view to understand the firms’ learning processes for innovation. Based on the analysis and a comparison of the learning dynamics and learning contexts of the two case firms’ learning processes for innovation, the paper contextually theorises the different roles of the case firms’ TFDIs in their learning processes for innovation. The paper identifies two different roles of the TFDIs – the accelerator and the starter – in different contexts of the learning processes. We argue that for developing countries that have the ambition of tapping into the global knowledge and technology pool, domestic industrial capability-building should not be overlooked.
    Keywords: Foreign direct investment; Emerging multinational companies; Technology; Innovation; Wind energy; China; Europe
    JEL: D22 F23 O32
    Date: 2015–12–30
  11. By: Kang, Byeongwoo
    Abstract: This paper compares three knowledge carriers—trade, foreign direct investment (FDI), and inventors—as knowledge mediums, and investigates their effects on knowledge flow in East Asia from 1996 to 2010. Using patent citations as a proxy for knowledge flow, this paper shows that FDI and inventor mobility have positive effects on increasing patent citations in East Asia when the technological portfolios of two countries are less similar. While trade shows statistical significance, the effect is inconsistent according to the regression models.
    Keywords: East Asia, Technology transfer, Technology trade, Human resources, Foreign investments, International trade, Foreign direct investment, Knowledge flow, Personnel mobility, Trade
    JEL: F4 J6 O3
    Date: 2015–10
  12. By: David Comerford (Division of Economics, University of Stirling); Ian Lange (Division of Economics and Business, Colorado School of Mines); Mirko Moro (Division of Economics, University of Stirling)
    Abstract: We build on research documenting demand-side consequences of energy-efficiency labels for buildings by testing for a supply-side response. We exploit a natural experiment to test whether the introduction of mandatory energy labels for residential homes influenced investment in home energy efficiency. From 2008, vendors and lettors in the UK were required to publish a property's energy performance certificate (EPC). The EPC evaluates home energy efficiency overlaying a color-coded letter grade (from a green A to red G, respectively) on a pre-existent 0-100 point scale, the Standard Assessment Procedure (SAP) score. We hypothesize that the salient color letter grades will serve as targets when home owners are deciding the scale of investment to make in home energy efficiency. Consistent with this hypothesis, we find fewer homes just below, and more homes just above, the D grade threshold in the treatment years relative to the control years. This clustering is higher for homes that were traded after the EPC requirement was in effect. We conclude that there is a supply-side response to energy-efficiency labels.
    Keywords: energy efficiency, bunching, labels, thresholds
    JEL: Q48 L15 Q58 H23
    Date: 2016–01
  13. By: Dongnyok Shim (College of Engineering, Seoul National University); Jin Gyo Kim (Graduate school of Business, Seoul National University); Jorn Altmann (College of Engineering, Seoul National University)
    Abstract: This study seeks to describe the dynamic effects of innovation characteristics and consumer innovativeness as conditioned by consumer decision making in the Korean E-book reader market. Dedicated Korean E-book readers have received little research attention over the last few years, as consumers’ interest in E-book readers has not been as high as was expected. This study identifies the barriers and bottlenecks impacting Korean consumers’ adoption of dedicated E-book readers based on the theories of innovation adoption and consumer behavior. Our estimation results indicate that complexity was the main bottleneck blocking the adoption of dedicated E-book readers in every decision-making stage (cognitive-affective-behavioral), whereas observability was the driver stimulating adoption in every stage. Moreover, the relative advantage of dedicated E-book readers is significant only in the affective stage, while compatibility is meaningful only in the behavioral stage. The results of this study provide useful guidelines to help marketers and engineers design dedicated e-book readers and promote them in Korea.
    Keywords: : Innovation Adoption Theory, Hierarchy of Effects Model, Innovativeness, Multivariate Probit Model, E-Book Reader, South Korea.
    JEL: C11 C31 C83 D12 D85 O32 O33 M31 M37
    Date: 2016–01
  14. By: Bakker, Gerben (London School of Economics); Crafts, Nicholas (Department of Economics University of Warwick); Woltjer, Pieter (Wageningen University)
    Abstract: We develop new aggregate and sectoral Total Factor Productivity (TFP) estimates for the United States between 1899 and 1941 through better coverage of sectors and better measured labor quality, and show TFP-growth was lower than previously thought, broadly based across sectors, strongly variant intertemporally, and consistent with many diverse sources of innovation. We then test and reject three prominent claims. First, the 1930s did not have the highest TFP-growth of the twentieth century. Second, TFP-growth was not predominantly caused by four leading sectors. Third, TFP-growth was not caused by a ‘yeast process’ originating in a dominant technology such as electricity.
    Keywords: Harberger diagram ; mushrooms ; productivity growth ; total factor productivity ; yeast
    JEL: N11 N12 O47 O51
    Date: 2015
  15. By: Bahar Baziki, Selva (Central Bank of the Republic of Turkey); Ginja, Rita (Uppsala Center for Labor Studies); Borota Milicevic, Teodora (Uppsala Center for Labor Studies)
    Abstract: This paper studies the changes in labor allocation across firms and industries in response to changes in technology (captured by the adoption of information and communication technologies, ICT) and import competition, due to increased exposure to trade competition from China. We use detailed matched worker-firm data from the Swedish manufacturing sector. We provide new evidence on the mobility of heterogeneous workers across firms and document increased assortative matching of workers in ICT intensive industries. However, the sorting patterns are not uniform across industries within this group. The adoption of ICT along with stronger Chinese import competition results in a significant skill upgrade within high-wage firms. Incontrast,intheabsence of strong pressures in importcompetition, sorting occurs at the low end of the worker-firm distribution, i.e. low-skill workers allocate to low-wage firms. Industries with low ICT intensity do not exhibit any of these sorting patterns. We rationalize our empirical findings through a labor market matching model which is able to explain the increased assortative matching in ICT intensive industries through an increase in the relative demand for qualified workers.
    Keywords: Wage Inequality; Employment Dynamics; Assortative Matching; Import Competition; Technological Change
    JEL: E24 F16 J31 J63 O33
    Date: 2015–12–26
  16. By: A. Arrighetti; F. Landini; L. Caricati; N. Monacelli
    Abstract: The aim of the work is to investigate the impact of a prolonged economic recession on the entrepreneurial intentions of young people (university students) distinguishing between propensity to start a new business (i.e. degree of interest in entrepreneurship) and perceived likelihood of becoming an entrepreneur (i.e. probability to succeed). Furthermore we verify if the recession strengthens the orientation to exploit new market opportunities, or simply supports self-employment objectives.Design/methodology/approach–Entrepreneurial intent and feasibility and psycho-social and economic variables concerning a sample of 3684 Italian university students enrolled in 12 different faculties. Information was gathered through questionnaires distributed in both electronic and paper-and-pencil form. Findings–Firstly, we found that while the perceived strength of the economic crisis does not impact on the propensity towards entrepreneurship, it has a negative and highly significant impact on the likelihood to start a business. Secondly, when we distinguished between opportunity-based and necessity-based types, we found that while for the latter the crisis impacts only on the perceived likelihood to become an entrepreneur, for the former it affects both dimensions of entrepreneurship, i.e., both propensity and perceived likelihood. Moreover, neither family support nor economic institutions are perceived as relevant in sustaining entrepreneurial intentions. On the contrary, the university is considered as a key support entity. Originality/value–The present paper is one of the few studies concerning the influence of rapid worsening of external economic context (severe recession) on the entrepreneurial intent. Research limitations–Reliance on cross-sectional questionnaires instead of an experimental design imposes caution about the causal relationships between predictors and entrepreneurial intent
    Keywords: entrepreneurial intention; university students; Italy; economic crisis; opportunity; necessity
    Date: 2015
  17. By: Timothy J. Garrett
    Abstract: Long-range climate forecasts use integrated assessment models to link the global economy to greenhouse gas emissions. This paper evaluates an alternative economic framework outlined in part 1 of this study (Garrett, 2014) that approaches the global economy using purely physical principles rather than explicitly resolved societal dynamics. If this model is initialized with economic data from the 1950s, it yields hindcasts for how fast global economic production and energy consumption grew between 2000 and 2010 with skill scores > 90 % relative to a model of persistence in trends. The model appears to attain high skill partly because there was a strong impulse of discovery of fossil fuel energy reserves in the mid-twentieth century that helped civilization to grow rapidly as a deterministic physical response. Forecasting the coming century may prove more of a challenge because the effect of the energy impulse appears to have nearly run its course. Nonetheless, an understanding of the external forces that drive civilization may help development of constrained futures for the coupled evolution of civilization and climate during the Anthropocene.
    Date: 2016–01
  18. By: Carlo Borzaga; Silvia Sacchetti
    Abstract: The study of multi-stakeholdership (and multi-stakeholder social enterprises in particular) is only at the start. Entrepreneurial choices which have emerged spontaneously, as well as the first legal frameworks approved in this direction, lack an adequate theoretical support. The debate itself is underdeveloped, as the existing understanding of organisations and their aims resist an inclusive, public interest view of enterprise. Our contribution aims at enriching the thin theoretical reflections on multi-stakeholdership, in a context where they are already established, i.e. that of social and personal services. The aim is to provide an economic justification on why the governance structure and decisionmaking praxis of the firm needs to account for multiple stakeholders. In particular with our analysis we want: a) to consider production and the role of firms in the context of the “public interest” which may or may not coincide with the non-profit objective; b) to ground the explanation of firm governance and processes upon the nature of production and the interconnections between demand and supply side; c) to explain that the costs associated with multi-stakeholder governance and deliberation in decision-making can increase internal efficiency and be “productive” since they lower internal costs and utilise resources that otherwise would go astray. The key insight of this work is that, differently from major interpretations, property costs should be compared with a more comprehensive range of costs, such as the social costs that emerge when the supply of social and personal services is insufficient or when the identification of aims and means is not shared amongst stakeholders. Our model highlights that when social costs derived from exclusion are high, even an enterprise with costly decisional processes, such as the multistakeholder, can be the most efficient solution amongst other possible alternatives.
    Keywords: Social Value Chain; Governance; Multistakeholdership; Deliberation; Externalities; Impacts; Social Enterprise; Social Innovation; Social Services
    JEL: I14 I31 L21 L23 L31
    Date: 2015
  19. By: Jan Abrell (ETH Zurich, Switzerland); Sebastian Rausch (ETH Zurich, Switzerland); Hagen Schwerin (ETH Zurich, Switzerland)
    Abstract: We develop a theory of vintage capital and energy use in businesses and households to measure the response of energy use to energy- saving technological change. Calibration of the model's balanced growth path to U.S. post-WWII data shows that energy efficiency increased on average by about three percent per year. Higher energy efficiency increased rather than reduced energy use as equipment- specific technological progress enhanced energy use by more than higher energy prices reduced it. The energy rebound in response to technological progress (higher energy prices) was 125 percent of (reduced energy use by 30 percent below) hypothetical energy savings.
    JEL: D13 E23 O30 O41 Q43
    Date: 2016–01

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