nep-ino New Economics Papers
on Innovation
Issue of 2016‒02‒17
twenty-one papers chosen by
Uwe Cantner
University of Jena

  1. Joint R&D subsidies, related variety, and regional innovation By Broekel, Tom; Brachert, Matthias; Duschl, Matthias; Brenner, Thomas
  2. Firm R&D Investment and Export Market Exposure By Vuong, Van Anh; Peters, Bettina; Roberts, Mark
  3. Innovation and Employment Growth in Japan: An empirical analysis based on micro data of the Basic Survey of Business Structure and Activity (Japanese) By YoungGak KIM; IKEUCHI Kenta; KWON Hyeog Ug; FUKAO Kyoji
  4. Corporate Taxes and Strategic Patent Location within Multinational Firms By Riedel, Nadine; Böhm, Tobias; Karkinsky, Tom; Knoll, Bodo
  5. Cross-Border M&As and Innovative Activity of Acquiring and Target Firms By Stiebale, Joel
  6. Science, Innovation and National Growth By Brenner, Thomas
  7. Direct and Cross-Scheme Effects in a Research and Development Subsidy Program By Hottenrott, Hanna Leontine; Lopes-Bento, Cindy; Veugelers, Reinhilde
  8. Is Offshoring Beneficial or Detrimental to Innovation in Developed Countries? By Fritsch, Ursula
  9. International Knowledge Spillovers: The Benefits from Employing Immigrants By Hiller, Sanne; Bitzer, Jürgen; Gören, Erkan
  10. Beat the gun - protection against zero-profit imitation By Schubert, Stefanie; Jost, Peter-J.
  11. Estimating the Local Average Treatment Effect of R&D Subsidies in a Virtual Common Pot By Hünermund, Paul; Czarnitzki, Dirk
  12. Evolution of the electricity market in Germany: Identifying policy implications by an agent-based model By Herrmann, Johannes; Savin, Ivan
  13. Research Joint Ventures and Technological Proximity By Müller, Aranja; Zaby, Alexandra
  14. Structural change and regional employment development By Blien, Uwe; Sanner, Helge
  15. Competitividade industrial, complexidade e intensidade tecnológica em Portugal By Gustavo Britto; João Prates Romero; Elton Freitas; Marcelo Tonne; Clara Coelho
  16. Personality Traits and the Evaluation of Start-Up Subsidies By Caliendo, Marco; Künn, Steffen; Weißenberger, Martin
  17. The strong Porter Hypothesis in an endegenous growth model with satisficing managers By Dominique Bianco; Evens Salies
  18. The Support Paradox in Community Enterprise Experiments in The Netherlands By Kleinhans, Reinout; van Ham, Maarten
  19. Identity-driven cooperation versus competition By Snower, Dennis J.; Bosworth, Steven
  20. A Two Sector Endogenous Growth Model with Two Accumulating Factors- Implementing Trade By Kirschbaum, Birgit
  21. Personality traits, subjective learning, and entrepreneurial decision making By Konon, Alexander

  1. By: Broekel, Tom; Brachert, Matthias; Duschl, Matthias; Brenner, Thomas
    Abstract: Subsidies for R&D are an important tool of public R&D policy, which motivates extensive scientific analyses and evaluations. The paper adds to this literature by arguing that the effects of R&D subsidies go beyond the extension of organizations monetary resources invested into R&D. It is argued that collaboration induced by subsidized joint R&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&D subsidies impact regions innovation growth when providing access to related variety and embedding regions into central positions in cross- regional knowledge networks.
    JEL: L14 O31 R12
    Date: 2015
  2. By: Vuong, Van Anh; Peters, Bettina; Roberts, Mark
    Abstract: In this paper, we estimate a dynamic structural model of a rm s decision to invest in R&D and use it to measure the expected long-run bene t from R&D investment. We apply the model to German rms in ve high-tech manufacturing industries and distinguish rms by whether they sell in just the domestic market or also export some of their production. We nd that R&D investment leads to a higher rate of product and process innovation among exporting rms and these innovations have a larger impact on productivity improvement in export market sales. As a result, exporting rms have a higher payo from R&D investment, invest in R&D more frequently than rms that only sell in the domestic market, and, subsequently, have higher rates of productivity growth. The endogenous investment in R&D is an important mechanism that leads to a divergence in the long-run performance of rms that di er in their export market exposure.
    JEL: L60 O31 O33
    Date: 2015
  3. By: YoungGak KIM; IKEUCHI Kenta; KWON Hyeog Ug; FUKAO Kyoji
    Abstract: Using firm level panel data taken from the Basic Survey of Japanese Business Structure and Activities between 1991 and 2010, we examine the relationship between innovation, excessive labor, and employment growth in Japan. The main results of this paper are as follows: (1) There are relatively many firms holding excessive labor. (2) The degree of the excessive labor is serious for large firms. (3)Firms do not adjust employment instantly. If excessive labor for the current term exists, firms gradually reduce employment. This result is consistent with theoretical model considering adjustment cost. (4) Other things being equal, as firms invest aggressively in research and development (R&D), they increase employment. (5) The negative correlation between total factor productivity (TFP) growth and employment growth is observed, whereas TFP growth by R&D has a positive impact on employment. (6) The product innovation that is proxied by R&D positively affects employment in the manufacturing sector. On the other, in the non-manufacturing sector, the process innovation that is proxied by capital formation increases employment.
    Date: 2016–01
  4. By: Riedel, Nadine; Böhm, Tobias; Karkinsky, Tom; Knoll, Bodo
    Abstract: This paper complements a small but growing literature on the effect of corporate taxes on R&D investment and patent holdings. We provide evidence that patent strategies are exploited as a device to shift income to low-tax countries. Using data on the population of corporate patent applications to the European Patent Office, we show that the location of R&D investment and patent ownership is geographically separated in a non-negligble number of cases. We find that countries which levy low patent income taxes attract ownership of foreign-invented patents, especially those patents that have a high earnings potential. Moreover, our results suggest that the probability for a patent to be owned by a party in a tax haven country significantly decreases if the inventor country has implemented controlled foreign company laws.
    JEL: H26 H25 H30
    Date: 2015
  5. By: Stiebale, Joel
    Abstract: This paper analyzes the effects of cross-border mergers and acquisitions (M&As) on the innovation of European firms. The results indicate a considerable increase in post-acquisition innovation in the merged entity. This is mainly driven by inventors based in the acquirer's country, while innovation in the target's country tends to decline. The asymmetry of effects between acquiring and target firms increases with pre-acquisition differences in knowledge stocks, indicating a relocation of innovative activities towards more efficient usage within multinational firms. Instrumental variable techniques as well as a propensity-score matching approach indicate that the effect of cross-border M&As on innovation is causal.
    JEL: F23 D22 G34
    Date: 2015
  6. By: Brenner, Thomas
    Abstract: This paper studies the effects of public research (publications) and innovation output (patents) on national economic growth with the help of a GMM panel regression including 114 countries. Effects on productivity growth and capital and labor inputs are distinguished. Furthermore, different time lags are examined for the various analyzed effects and two time periods as well as less and more developed countries are studied separately. The results confirm the effect of innovation output on productivity for more developed countries. Simultaneously, innovation output is found to have negative impacts on capital and labor inputs, while public research is found to have positive impacts on labor inputs.
    JEL: O11 O31 C23
    Date: 2015
  7. By: Hottenrott, Hanna Leontine; Lopes-Bento, Cindy; Veugelers, Reinhilde
    Abstract: This study investigates the effects of an R&D subsidy scheme on participating firms net R&D investment. Making use of a specific policy design in Belgium that explicitly distinguishes between research and development grants, we estimate direct and cross-scheme effects on research versus development intensities in recipients firms. We find positive direct effects from research (development) subsidies on net research (development) spending. This direct effect is larger for research grants than for development grants. We also find cross-scheme effects that may arise due to complementarity between research and development activities. Finally, we find that the magnitude of the treatment effects depends on firm size and age and that there is a minimum effective grant size, especially for research projects. The results support the view that public subsidies induce higher additional investment particularly in research where market failures are larger, even when the subsidies are targeting development.
    JEL: O38 O32 C14
    Date: 2015
  8. By: Fritsch, Ursula
    Abstract: This paper empirically investigates the effects of offshoring on innovation in a sample of 18 developed countries. Offshoring of services relates positively to innovation whereas offshoring of manufacturing depicts a negative relation with innovation. Solely offshoring manufacturing to high-income countries is found to be detrimental to domestic innovation, but not offshoring of manufacturing to emerging countries. These results are robust to an instrumental variables approach. Labor market dynamics can mitigate or even reverse these negative effects of offshoring of manufacturing if skill upgrading takes place simultaneously. This paper documents that innovation effects differ from the positive productivity effects found in earlier research and suggests that policy makers should take these different effects into account when designing a regulatory framework for further trade integration.
    JEL: F14 F16 O30
    Date: 2015
  9. By: Hiller, Sanne; Bitzer, Jürgen; Gören, Erkan
    Abstract: This paper explores the role of immigrant employees for a firm's capability to absorb international knowledge. Using matched employer-employee data from Denmark for the years 1999 to 2009, we are able to show that non-Danish employees from technological advanced countries contribute significantly to firm's economic output through their ability to access international knowledge. The empirical results suggest that the immigrants' impact increases if they come from technological advanced countries, have a high educational level, and are employed in high-skilled positions. However, the latter does not hold for immigrant managers.
    JEL: D20 J82 L20
    Date: 2015
  10. By: Schubert, Stefanie; Jost, Peter-J.
    Abstract: The recent development of 3D printing raises the issue of how to protect manufacturing firms from product piracy. In this paper, we are interested in potential regulatory requirements to protect firms from falling victim of product piracy and associated quality choices. We employ a game-theoretic model of duopoly competition. One firm offers a high-quality product facing quality-related costs. An imitator views the product and produces an imitation using a low-cost production method as 3D printing. Our results indicate that copy protection by the high-quality firm yields a higher quality than under patent protection. However, the chosen quality level of the high-quality firm is highest in duopoly without protection. Optimal patent protection crucially depends on the underlying objective function. It is only socially optimal if the regulatory authority maximises GDP.
    JEL: L13 L51 O31
    Date: 2015
  11. By: Hünermund, Paul; Czarnitzki, Dirk
    Abstract: We investigate the additionality effects of Eurostars, Europe's largest multilateral subsidy program for R&D-performing small and medium sized enterprises. A specific budget allocation rule serves as an instrument and allows us to identify the local average treatment effect of public R&D grants. This rule, referred to as Virtual Common Pot (VCP), is designed to avoid cross-subsidization between participating countries. We compare the program's effect under a VCP with the counterfactual situation under a Real Common Pot (RCP), where project authorities allocate a single budget according to uniform project evaluation criteria. Our estimates suggest a large positive impact on job creation whereas there is no treatment effect on patenting. In addition, we find a relative inefficiency of 19.4% more jobs which could be created by the program under a RCP.
    JEL: O38 H25 C31
    Date: 2015
  12. By: Herrmann, Johannes; Savin, Ivan
    Abstract: The diffusion of renewable electricity generating technologies is widely consid- ered as crucial for establishing a sustainable energy system in the future. However, currently the required transition is unlikely to be achieved by market forces alone. For this reason, many countries implement various policy instruments to support this process, also by re-distributing costs related to the policy instruments applied among all electricity consumers. This paper presents a novel history-friendly agent-based study aiming to explore efficiency of different mixes of policy instruments by means of a differential evolution algorithm. Special emphasis of the model is devoted to possibility of small scale renewable electricity generation without any further inputs, but also to storage of this electricity using small scale facilities being actively developed over the last decade. Both combined pose an important instrument to be used by electricity consumers to achieve partial or full autarky from the electricity grid, particularly after accounting for decreasing costs and increasing efficiency of both due to continuous innovation. Another distinct feature of this study is attention to stability of the electricity grid since more consumers becoming autarkic make, on the one hand, electricity in the grid more expansive, while on the other hand, supply of the electricity more vulnerable.
    JEL: C63 Q42 Q48
    Date: 2015
  13. By: Müller, Aranja; Zaby, Alexandra
    Abstract: We study research joint ventures (RJV) given that knowledge spillovers depend positively on the technological proximity between rms. Possible scenarios differ in the intensity of collaboration, i.e., the (non)coordination of research activities and the extent of knowledge sharing. The investigation of bilateral RJVs in an oligopolistic market allows to distinguish e ects for insider and outsider rms. Our central ndings are (i) RJVs do not generally outperform competitive research with respect to innovative output, and social welfare. (ii) Technological proximity and the intensity of cooperation play a decisive role for the private and social favorability of a RJV. (iii) Joint research combined with complete knowledge sharing outperforms less intensive cooperation forms.
    JEL: D43 L13 O31
    Date: 2015
  14. By: Blien, Uwe; Sanner, Helge
    Abstract: An examination of regional unemployment rates reveals that there are vast differences which cannot be explained by different institutional. Our paper traces these differences in the regions labour market performance back to the regions specialisation in products that are more or less advanced in their product cycle. The model we develop shows how profit maximisation and its interaction with individual preferences endogenously lead to initially increasing and then decreasing employment in the presence of process innovation. We show how processes of structural change develop in time and how they are linked to technological progress.
    JEL: O41 J23 R23
    Date: 2015
  15. By: Gustavo Britto (Cedeplar-UFMG); João Prates Romero (n/a); Elton Freitas (Cedeplar-UFMG); Marcelo Tonne (Cedeplar-UFMG); Clara Coelho (Cedeplar-UFMG)
    Abstract: This paper expands the methodology developed by Hidalgo et al. (2007), Hausman et al. (2007) and Hidalgo and Hausman (2009) to analyse the relationship between structural change, economic complexity and technological intensity in Portugal. To this end, product space networks as well as indicators of revealed relative (dis)advantages are built and analysed from 1980 to 2010. The results show that in spite of a loss in terms of competitiveness in high-technology goods, Portugal’s long term trend is promising, giving the improvement of the network in terms of goods of intermediate technological intensity and the reduction of the share of primary and primary based goods in total exports. This trend reflects the systematic improvement of the sophistication index of the Portuguese trade after the establishment of the European Union.
    Keywords: Economic Complexity; Capabilities; Product Space, Brazil; South Korea
    JEL: O14 O19 O57 F14
    Date: 2015–11
  16. By: Caliendo, Marco (University of Potsdam); Künn, Steffen (Maastricht University); Weißenberger, Martin (University of Potsdam)
    Abstract: Many countries support business start-ups to spur economic growth and reduce unemployment with different programmes. Evaluation studies of such programmes commonly rely on the conditional independence assumption (CIA), allowing a causal interpretation of the results only if all relevant variables affecting participation and success are accounted for. While the entrepreneurship literature has emphasised the important role of personality traits as predictors for start-up decisions and business success, these variables were neglected in evaluation studies so far due to data limitations. In this paper, we evaluate a new start-up subsidy for unemployed individuals in Germany using propensity score matching under the CIA. Having access to rich administrative-survey data allows us to incorporate usually unobserved personality measures in the evaluation and investigate their impact on the estimated effects. We find strong positive effects on labour market reintegration and earned income for the new programme. Most importantly, results including and excluding individuals' personalities do not differ significantly, implying that concerns about potential overestimation of programme effects in absence of personality measures might be less justified if the set of other control variables is rich enough.
    Keywords: start-up subsidies, evaluation, self-employment, personality, treatment effects
    JEL: C14 L26 H43 J68
    Date: 2016–01
  17. By: Dominique Bianco (Université de Bologne, LEDI (CNRS)); Evens Salies (OFCE-SciencesPo)
    Abstract: Few endogenous growth models have focused attention on the strong Porter hypothesis, that stricter environmental policies induce innovations, the benefits ofwhich exceed the costs. A key assumption in this hypothesis is that policy strictness pushes rms to overcome some obstacles to profit maximization. We model this hypothesis by incorporating pollution and taxation in the Aghion and Grifith (2005) analysis of growth with satisficing managers. Our theoretical results predict the strong Porter hypothesis. Moreover, they suggest that the stringency of environmental policy should adjust to changes in the level of potential competition in the intermediate inputs sector
    Keywords: Strong Porter Hypothesis, Environmental Policy, Endogenous Growth
    JEL: D43 O31 O41 O44
    Date: 2016–01
  18. By: Kleinhans, Reinout (Delft University of Technology); van Ham, Maarten (Delft University of Technology)
    Abstract: In many European countries, community entrepreneurship is increasingly considered as a means to initiate small-scale urban regeneration. However, residents in deprived communities are often viewed to lack key entrepreneurial attributes and skills. This paper reports a unique experiment in the Netherlands with nascent community enterprises which received start-up support from a private foundation. This paper investigates how active citizens perceive the benefits and drawbacks of this support. In depth analysis of transcriptions of repeated semi-structured interviews (panel design with the same respondents) with representatives of established community enterprises and resident groups were analysed. While we find positive feedback on provided support, our research provides strong evidence for a 'support paradox': the support that was intended to overcome a number of entry barriers and difficulties on the road to community entrepreneurship has in fact significantly hampered progress among several of the studied CEs.
    Keywords: community enterprises, community entrepreneurship, active citizenship, support, urban regeneration, self-organisation, The Netherlands
    JEL: D71 L26 L31 R23
    Date: 2016–01
  19. By: Snower, Dennis J.; Bosworth, Steven
    Abstract: This paper seeks to extend the domain of identity economics by exploring motivational foundations of in-group cooperation and out-group competition. On this basis, we explore the reflexive interaction between individual economic decisions and social identities in response to technological change in market economies. Our analysis explores how technological change falling on marketable goods and services, rather than non-market caring relationships, leads to a restructuring of identities, which increases the scope of individualism and promotes positional competition at the expense of caring activities. Since positional competition generates negative externalities while caring activities create positive ones, these developments have important welfare implications.
    Keywords: motivation,reflexivity,cooperation,identity,technological progress,bowling alone
    JEL: A13 D03 D62 D71 I31 O10
    Date: 2015
  20. By: Kirschbaum, Birgit
    Abstract: This paper is about trade in an endogenous growth model with accumulation of physical and human capital. The convergence to the ray of steady states is proved for two different development stages of similar small countries. Free trade benefits the education sector of a relatively less developed country and thus stimulates the human capital accumulation. Whereas a technological more developed country declines in favour of the world market.\\ Only if the small country is relatively less developed then there is a convergence to the balanced growth path of the world market and the country improves its situation. Without any trade policy a less developed country will lose necessary factors of production. A more developed country deals with stagnation or even fluctuation of its development stage.
    JEL: O11 F19 D51
    Date: 2015
  21. By: Konon, Alexander
    Abstract: We present a dynamic occupational choice model with a learning algorithm simultaneously capable to explain entrepreneurial entry, exit, and survival. According to our model, those individuals decide to become entrepreneurs who expect their productivity to be highest when managed by themselves. As we further assume that individuals have incomplete information about their own non-cognitive skills, which are relevant for entrepreneurial processes, entrepreneurial entry in our model is driven by overconfidence in the own skills---in line with earlier empirical findings. After entry, entrepreneurs receive noisy feedback from the market. Depending on a set of traits different from those driving the entry process into the market, entrepreneurs decide to either stay or leave the market. Our learning-based model generates survival rates decreasing at decreasing rates and captures findings on the earnings puzzle according to which median entrepreneurs do not earn more than median wage workers.
    JEL: D83 L26 L22
    Date: 2015

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