nep-ino New Economics Papers
on Innovation
Issue of 2016‒07‒09
eighteen papers chosen by
Uwe Cantner
University of Jena

  1. Does Internal and External Research and Development Affect Innovation of Small and Medium-Sized Enterprises? Evidence from India and Pakistan By Rehman, Naqeeb Ur
  2. Incorporating innovation subsidies in the CDM framework: Empirical evidence from Belgium By Czarnitzki, Dirk; Delanote, Julie
  3. Entrepreneurial Experimentation: A key function in Entrepreneurial Systems of Innovation By Lindholm-Dahlstrand, Asa; Andersson, Martin; Carlsson, Bo
  4. From Fossil Fuels to Renewables: The Role of Electricity Storage. By Lazkano, Itziar; Nøstbakken, Linda; Pelli, Martino
  5. Firm-Level Evidence on the Cooperative Innovation Strategies in Russian Manufacturing By Vitaliy Roud; Valeriya Vlasova
  6. Creativity pays off. Innovation, innovation strategy, and internationalization By Tomasz Brodzicki; Dorota Ciolek
  7. Technological capabilities, technological dynamism and innovation offshoring By Schubert, Torben; Baier, Elisabeth; Rammer, Christian
  8. R&D Cooperatives and Market Collusion: A Global Dynamic Approach By Jeroen Hinloopen; Grega Smrkolj; Florian Wagener
  9. Firm Employment Growth, R&D Expenditures and Exports By Marco Di Cintio; Sucharita Ghosh; Emanuele Grassi
  10. Social Rate of Return to R&D on Various Energy Technologies: Where Should We Invest More? A Study of G7 Countries By Roula Inglesi-Lotz
  11. Directed Technical Change and Energy Intensity Dynamics: Structural Change vs. Energy Efficiency By Christian Haas; Karol Kempa
  12. What User-Innovators Do that Others Don’T: A Study of Daily Practices By Konstantin Fursov; Alena Nefedova; Thomas Thurner
  13. Agglomeration and Technological Spillovers: Firm-Level Evidence from China's Electric Apparatus Industry By He, Ming; Chen, Yang; Schramm, Ronald M.
  14. Religiosity and long-run productivity growth By Herzer, Dierk; Strulik, Holger
  15. Turning Rainy Day Oil into Clean Energy Gold: Funding Mission Innovation with a Strengthened Strategic Petroleum Reserve By Ross, Heather
  16. Towards design thinking as a management practice: a learning experiment in teaching innovation By Nunzia Coco; Monica Calcagno; Maria Lusiani
  17. North Africa - Working paper - The Role of Nascent Entrepreneurship in Driving Inclusive Economic Growth in North Africa By AfDB AfDB
  18. Short-run and Long-run Effects of Capital Taxation on Innovation and Economic Growth By Chen, Ping-ho; Chu, Angus C.; Chu, Hsun; Lai, Ching-Chong

  1. By: Rehman, Naqeeb Ur (Asian Development Bank Institute)
    Abstract: This study investigates the impact of internal and external research and development (R&D) on the innovation performance of small and medium-sized enterprises (SMEs) in India and Pakistan. Micro-level data was obtained for 3,492 Indian and 696 Pakistani SMEs from the World Bank’s Enterprise Survey, and bivariate probit estimation techniques were used. The results show that internal and external R&D positively affects product and process innovations. However, this effect is stronger for Indian SMEs. The negative relationship between firm size and innovation output implies that SMEs in both countries face resource constraints. Further, Indian SMEs are dominant in terms of undertaking internal R&D and generating product and process innovations relative to those in Pakistan. The complementary rel¬ationship between internal and external R&D has been examined for both countries. The study is unique in comparing Indian and Pakistani SMEs innovation activities using micro-level data. The results suggest that business managers can utilize a balanced combination of internal and external R&D to accelerate innovation output and increase absorptive capacity. Specifically, public support for innovation, such as R&D grants, subsidies, and tax credits, could encourage SMEs to undertake more radical innovations.
    Keywords: India; Pakistan; SME; R&D; innovation; technology; firm; product innovation; process innovation; external R&D; internal R&D; absorptive capacity; innovative capacity; public support; incentives; output; bank loans; subsidies; tax credit
    JEL: D22 L25 O31 O32
    Date: 2016–06–24
  2. By: Czarnitzki, Dirk; Delanote, Julie
    Abstract: This paper integrates innovation input and output effects of R&D subsidies into a modified Crépon-Duguet-Mairesse (CDM) model. Our results largely confirm insights of the input additionality literature, i.e. public subsidies complement private R&D investment. In addition, results point to positive output effects of both purely privately funded and subsidy-induced R&D. Furthermore, we do not find evidence of a premium or discount of subsidy-induced R&D in terms of its marginal contribution on new product sales when compared to purely privately financed R&D.
    Keywords: CDM model,R&D,subsidies,innovation policy
    JEL: C14 C30 O38
    Date: 2016
  3. By: Lindholm-Dahlstrand, Asa (CIRCLE, Lund University); Andersson, Martin (CIRCLE, Lund University); Carlsson, Bo (CIRCLE, Lund University)
    Abstract: There is a need for a conceptual approach that, with reference to explicit micro-level mechanisms and processes of industrial dynamics, articulates the role and function of entrepreneurial experimentation in innovation systems. This paper develops the concept of ‘entrepreneurial systems of innovation’ to address this gap in the literature. We argue that entrepreneurial experimentation comprises both ‘technical’ and ‘market’ experimentation, and that entrepreneurship must be conceptualized in terms of its function in innovation systems rather than as an outcome. At the systems level, the central function of entrepreneurial experimentation is to foster creation, selection and scaling-up of innovations. Spinoffs and acquisitions are proposed as examples of micro-mechanisms that give rise to system-wide entrepreneurial experimentation. Interaction between established organizations and new innovative entrants, through spinoffs and acquisitions, is an important characteristic of vibrant entrepreneurial systems of innovation.
    Keywords: entrepreneurship; experimentation; innovation systems; new technology-based firms; entrepreneurial systems of innovation; scaling up; growth
    JEL: L22 L26 O31 O33
    Date: 2016–06–22
  4. By: Lazkano, Itziar (Dept. of Economics, Norwegian School of Economics and Business Administration); Nøstbakken, Linda (Dept. of Economics, Norwegian School of Economics and Business Administration); Pelli, Martino (Université de Sherbrooke)
    Abstract: We analyze the role of electricity storage for technological innovations in electricity generation. We propose a directed technological change model of the electricity sector, where innovative rms develop better electricity storage solutions, which a ect not only the relative competitiveness between renewable and nonrenewable electricity Sources but also the ease with which they can be substituted. Using a global rm-level data set of electricity patents from 1963 to 2011, we empirically analyze the determinants of innovation in electricity generation, and the role of storage in directing innovation. Our results show that electricity storage increases innovation not only in renewables but also in conventional technologies. This implies that efforts to increase innovation in storage can benefit conventional, fossil fuel- red electricity plants as well as increasing the use of renewable electricity.
    Keywords: Innovation; Directed technical change; Electricity storage; Electricity markets; Power generation
    JEL: O30 O40 O50 Q20 Q30 Q40 Q50
    Date: 2016–05–31
  5. By: Vitaliy Roud (National Research University Higher School of Economics); Valeriya Vlasova (National Research University Higher School of Economics)
    Abstract: This paper focuses on revealing the heterogeneous impact of firms’ specificities and the environment on the sophistication of the cooperative innovation strategies. We use the firm-level data on innovation strategies of over 1200 manufacturing enterprises in Russia to model the networking strategy as a simultaneous choice of the range of cooperative linkages (within and beyond the value chain and knowledge production sectors). The determinants comprise the internal factors (as absorptive capacity) and the external conditions (e.g. technological opportunities, appropriability and competition regimes). Revealed effects prove the initial heterogeneity hypothesis thus challenging the wide-spread simplified perception of ‘openness’ of the innovation strategy as a one-dimensional characteristic
    Keywords: Innovation cooperation; open innovation; firm-level; Russia; manufacturing; innovation strategy; multivariate probit.
    JEL: L2 O3
    Date: 2016
  6. By: Tomasz Brodzicki (University of Gdansk, Faculty of Economics; Institute for Development, Sopot); Dorota Ciolek (University of Gdansk, Faculty of Management, Department of Econometrics, Sopot, Poland; Institute for Development, Sopot, Poland;)
    Abstract: A lot of recent empirical research points to the superior performance of exporting firms in comparison to non-exporters. Exporters on average are found to be larger, more productive, more capital and skilled-intensive than non-exporters At the same time, innovation and exporting seem to be inextricably linked at firm-level. Apart from several recent studies, the literature on it for Poland is scarce. This paper analyses the relationship between innovation behaviour, declared innovation strategy and internationalization in a panel of firms from Poland from an extensive survey conducted by the Institute for Development. The results support the idea that the superior performance of the exporters is linked to a large extent to their superior innovation performance. Exporters prove to be more focused on innovations, are more aware of the need to implement changes, and are better prepared to introduce them in reality. They are more probable to be creative and are more likely to behave in a more strategic manner assuming the position of a market leader. We positively identify critical linkages between the declared innovation strategy and export states of Polish companies. Utilizing the classification of Hobday, Rush & Bessant (2004) and controlling for the significance of innovation (firm or market) level, we show that innovatively passive firms have, ceteris paribus, a significantly lower probability of obtaining exporter status. The introduction of innovations at ad hoc manner has a positive however statistically insignificant effect. Only permanent innovators or creative firms enjoy a clear and robust increase in their exporting probability potential. It simply pays off to be innovative. At the same time, our results support the postulates by Altomonte et al. (2013), on the close connection between innovation and internationalization extents.
    Keywords: Innovation, Innovation strategy; Internationalization; Trade; Firms survey; Logit modelling
    JEL: F14 C83 C21 D22 L25
    Date: 2016–06
  7. By: Schubert, Torben; Baier, Elisabeth; Rammer, Christian
    Abstract: In this paper we analyze the conditions under which firms decide to offshore innovation. We consider the role of internal technological capabilities and technological dynamism in the firm environment, distinguishing speed and uncertainty of technological change. Using unique data from the German Innovation Survey we find that while high speed of technological change tends to drive innovation offshoring, high uncertainty about future technology developments results in more innovation offshoring only for firms with low internal technological capabilities. Firms with high technological capabilities instead are less likely to offshore innovation when uncertainty is high. We argue that these differences in offshoring behaviour reflect differing strategic objectives. We show that for firms with low technological capabilities asset augmentation is more important while for firms with high technological capabilities asset exploitation is more important. When faced by high technological uncertainty firms with low technological capabilities offshore innovation strategically in order to reduce uncertainty by augmenting their asset base. For firms with high technological capabilities asset augmentation is less important. When faced by high technological uncertainty they prefer to innovate onshore in order to keep stronger control of their key assets.
    JEL: O32 F21 F23 L22
    Date: 2016
  8. By: Jeroen Hinloopen (Utrecht University, The Netherlands); Grega Smrkolj (Newcastle University, United Kingdom); Florian Wagener (University of Amsterdam, The Netherlands)
    Abstract: We present a continuous-time generalization of the seminal R&D model of d’Aspremont and Jacquemin (American Economic Review, 1988) to examine the trade-off between the benefits of allowing firms to cooperate in R&D and the corresponding increased potential for product market collusion. We consider all trajectories that are candidates for an optimal solution as well as initial marginal cost levels that exceed the choke price. Firms that collude develop further a wider range of initial technologies, pursue innovations more quickly, and are less likely to abandon a technology. Product market collusion could thus yield higher total surplus.
    Keywords: Antitrust policy; Bifurcations; Collusion; R&D cooperatives; Spillovers
    JEL: D43 D92 L13 L41 O31 O38
    Date: 2016–06–28
  9. By: Marco Di Cintio (Department of Economics, Management, Mathematics and Statistics, University of Salento); Sucharita Ghosh (Department of Economics, The University of Akron); Emanuele Grassi (Department of Economics, Management, Mathematics and Statistics, University of Salento)
    Abstract: This paper studies firms’ decisions to export and invest in R&D and their effects on employment growth and labor flows for a sample of Italian SMEs operating in the manufacturing industry. After accounting for the under-reporting of R&D in SMEs, our quantile regressions reveal that (i) R&D is associated with higher employment growth rates, higher hiring rates and lower separation rates; (ii) R&D-induced exports are negatively related to employment growth and accessions and positively related to separations; and (iii) pure exports are not a driver of employment growth and labor flows.
    Keywords: Exports, R&D, Firm Growth, Quantile Regression
    JEL: J63 M51 O31 F14
    Date: 2016–06
  10. By: Roula Inglesi-Lotz (Department of Economics, University of Pretoria)
    Abstract: The severity of investment in Research and Development (R&D) in the energy sector is undisputable especially considering the benefits of new technologies to sustainability, security and environmental protection. However, the nature and potential of various energy technologies that are capable to improve the energy and environmental conditions globally is a challenging task for governments and policy makers that have to make decisions on the allocation of funds in R&D. To do so, the optimal resource allocation to R&D should be determined by estimating the social rate of return for R&D investments. This paper aims to estimate the social rate of return of R&D on various energy applications and technologies such as energy efficiency, fossil fuels, renewable energy sources, and nuclear for the G7 countries. The results show that primarily R&D investment on Energy Efficiency technologies and Nuclear are the ones that yield high social benefits for all G7 countries while exactly the opposite holds for Fossil fuels.
    Keywords: R&D, Energy, Energy fuels, return
    Date: 2016–06
  11. By: Christian Haas (University of Giessen); Karol Kempa (Frankfurt School of Finance and Management)
    Abstract: This paper uses a theoretical model with Directed Technical Change to analyse the observed heterogeneous energy intensity developments. Based on the empirical evidence on the underlying drivers of energy intensity developments, we decompose changes in aggregate energy intensity into structural changes in the economy (Sector Effect) and within-sector energy efficiency improvements (Efficiency Effect). We analyse how energy price growth and the relative productivity of both sectors affect the direction of research and hence the relative importance of the aforementioned two effects. The relative importance of these effects is determined by energy price growth and relative sector productivity that drive the direction of research. In economies that are relatively more advanced in sectors with low energy intensities, the Sector Effect dominates energy intensity dynamics given no or moderate energy price growth. In contrast, the Efficiency Effect dominates energy intensity developments in economies with a high relative technological level within their energy-intensive industries if moderate energy price growth is above a certain threshold. We further show that temporal energy price shocks might induce a permanent redirection of innovation activities towards sectors with low-energy intensities.
    Keywords: directed technical change, energy efficiency, energy intensity, structural change
    JEL: O33 Q43 Q55
    Date: 2016
  12. By: Konstantin Fursov (National Research University Higher School of Economics); Alena Nefedova (National Research University Higher School of Economics); Thomas Thurner (National Research University Higher School of Economics)
    Abstract: This paper argues that innovation behavior roots in specific socio-psychological set-ups that crystallize in daily practices and routines. The latter are easy to observe and have great potential for the identification of user-innovation behavior. We study the practices and routines of Russian user-innovators around media consumption, internet and technology-usage, consumer preferences and civic engagement in comparison with a sample of mere users. The derived model correctly classified 73% of the original grouped cases of user-innovators. We conclude that a set of practices relative to the economic, social and cultural background explains user-innovation engagement and how support could be provided. Although some of our findings are probably specific to Russia, the results are encouraging for further research into the importance of practices and routines in identifying user-innovators.
    Keywords: User innovation; consumer innovation; community innovation; innovation behavior; daily practices; Russia
    JEL: A14 L2 O31
    Date: 2016
  13. By: He, Ming (Division of Economics, Xi'an Jiaotong-Liverpool University); Chen, Yang (Division of Economics, Xi'an Jiaotong-Liverpool University); Schramm, Ronald M. (Division of Economics, Xi'an Jiaotong-Liverpool University)
    Abstract: We use a spatial autoregressive model to study the determinants of firm-level productivity growth using longitudinal data on China's electric apparatus industry over the period of 1999-2007. Factors considered include technological spillover, R&D and export behavior, agglomeration economies, and public expenditure. We propose modifications to Kelejian and Prucha's (1998) FE-2SLS procedure and Mutl and Pfaffermayr's (2011) RE-FG2SLS procedure to cope with the technical difficulties with our unbalanced panel. Statistical evidence strongly favors the fixed effects model over the random effects model. According to our estimates, there are large and signiffcant technological spillovers among firms. Individually, firms benefit from their own R&D and export activities. Market competition and public expenditure in the local and neighboring jurisdictions are found to be important determinants to productivity. Our model also provides direct evidence that the technological spillover effects attenuate rapidly in spatial distance. Finally, the inter-regional spillover effects are found to be more pronounced and more significant on urban districts or jurisdictions with smaller geographical areas. Geographic proximity to neighbors and special administrative role jointly contribute to this observation.
    Date: 2016–03–03
  14. By: Herzer, Dierk; Strulik, Holger
    Abstract: In this paper, we show, using a panel of developed countries, that there is a long-run negative association between church attendance and total factor productivity (TFP) with predictive causality running from declining church attendance to increasing factor productivity. According to our preferred estimate, about 18% of the increase in TFP from 1950 to 1990 is caused by declining religiosity. In order to explain this phenomenon, we integrate into standard R&D-based growth theory a micro-foundation of individual cognitive style, which is either intuitive-believing or reflective-analytical. Under the assumption that R&D productivity is positively influenced by a reflectiveanalytical cognitive style, we find that secularization leads to an increasing labor share in R&D and gradually increasing productivity growth. We use these insights to reflect on trends in religiosity and R&D-based growth in the very long run, from Enlightenment to the present day.
    Keywords: religiosity,church attendance,factor productivity,cognitive style,R&D-based growth
    JEL: N30 O11 C23
    Date: 2016
  15. By: Ross, Heather (Resources for the Future)
    Abstract: Establishing a public-private agency to operate the US Strategic Petroleum Reserve, a common arrangement in other member nations of the International Energy Agency (IEA), can improve the reserve’s performance as an oil shock buffer in a systemically volatile market by strengthening its coordination with other government and commercial stockholdings and transportation infrastructure. Requiring oil companies to purchase and maintain oil in the reserve sufficient, in concert with other stocks, to meet the IEA’s 90-day strategic stockholding standard can protect the reserve from loss of functionality as a result of future federal budget–driven drawdowns or inadequate operating funds. The fee paid on oil production and imports to purchase the oil in the reserve will introduce an essential price corrective in the domestic oil market. Most important, it will release the large store of value locked in the little-used reserve to combat, through essential clean energy R&D, a monumentally bigger energy threat — climate change.
    Keywords: Oil, Climate, Clean Energy R&D, Mission Innovation, Strategic Petroleum Reserve
    Date: 2016–04–15
  16. By: Nunzia Coco (Dept. of Management, Università Ca' Foscari Venice); Monica Calcagno (Dept. of Management, Università Ca' Foscari Venice); Maria Lusiani (Dept. of Management, Università Ca' Foscari Venice)
    Abstract: .
    Keywords: .
    JEL: M40
    Date: 2016–08
  17. By: AfDB AfDB
    Date: 2016–06–23
  18. By: Chen, Ping-ho; Chu, Angus C.; Chu, Hsun; Lai, Ching-Chong
    Abstract: In this note, we examine the effects of capital taxation on innovation and economic growth. We find that capital taxation has drastically different effects in the short run and in the long run. An increase in the capital income tax rate has both a consumption effect and a tax-shifting effect on the equilibrium growth rates of technology and output. In the long run, the tax-shifting effect dominates the consumption effect yielding an overall positive effect of capital taxation on steady-state economic growth. However, in the short run, the consumption effect becomes the dominant force causing an initial negative effect of capital taxation on the equilibrium growth rates. These contrasting effects of capital taxation at different time horizons may provide a plausible explanation for the mixed evidence in the empirical literature on capital taxation and economic growth.
    Keywords: Capital taxation; economic growth; R&D; transition dynamics
    JEL: H2 O3 O4
    Date: 2016–05

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