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on Innovation |
| By: | Julien Jacob; Marc Hubert-Depret; Cornel Oros |
| Abstract: | We consider the case of a firm selling a product which can cause damage to consumers (e.g. a product containing hazardous chemicals which can cause diseases). The firm has the possibility to make an effort in R&D in order to discover a new substitution product. This R&D could lead to a new but more dangerous product than the historical product (situation of “regrettable substitution”). We compare four policy regimes (two forms of ex ante approval, civil liability, and a combination of approval and civil liability) according to their impact on the firm’s decisions (R&D, and technological choice) and their consequences on social welfare. We find that the ranking between policy regimes mainly depends on the public regulator’s expertise (for approval), the type of the risk which is under consideration and/or the potential impact of R&D on the degree of dangerousness. |
| Keywords: | public regulation, innovation, technical choice, (health) hazard. |
| JEL: | D21 D62 L51 K13 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2016-36&r=ino |
| By: | Joel Peress (INSEAD); jim goldman (insead) |
| Abstract: | Entrepreneurs innovate more when financiers are better informed about their projects because they expect to receive more funding should their projects be successful. Conversely, financiers collect more information about projects when entrepreneurs innovate more because the opportunity cost of misinvesting, i.e. of missing out on successful projects, is higher. Thus, technological knowledge and knowledge about technologies are mutually reinforcing. We report evidence consistent with this interaction using two quasi-natural experiments that changed, respectively, the innovation incentives and the information environment for U.S. listed firms. A calibration suggests that its contribution to income growth represents more than one third of the total contributions of information collection and innovation. We also estimate that a policy designed to stimulate innovation has an indirect effect through investors’ learning incentives that accounts for a third of the total effect of the policy on firms’ innovation incentives. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed016:531&r=ino |
| By: | Carlos Ballestero; Carlos E. Posada |
| Abstract: | We use the Aguion and Howitt (2009) theoretical model of endogenous economic growth to explain the declining economic growth in developed economies in the period 1981-2009. Aguion and Howitt theoretical framework combines Solownian and Schumpeterian elements in a single scenario, so that labor-augmenting technological progress and capital accumulation per efficiency unit of labor are both caused not only by exogenous changes in the investment rate but also by shocks to the degree of efficiency in the Research and Development (R&D) expenditure process. Empirical results revealed that per worker output growth rates and capital stock per efficiency unit of labor growth rates both have a common panel unit root. Since the panel cointegration tests and estimates revealed a statistical significant negative long-run relationship between per worker output growth rate and capital stock per efficiency unit of labor, the interpretation of the econometric results analized from the Aguion and Howitt ?s theoretical perspective is that labor-augmenting technological progress is endogenously falling over time mainly because of an exogenous deterioration of the environment conditions for the transformation of the investment rate and R&D expenditures in technological progress. |
| Keywords: | Economic growth, Solownian and Schumpeterian models of growth, investment rate, R&D expenditures, Capital stock per efficient unit of labor |
| JEL: | O11 O31 O33 O41 O47 O57 |
| Date: | 2016–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:col:000122:015012&r=ino |
| By: | Hsu, Po-Hsuan; Huang, Sterling; Massa, Massimo; Zhang, Hong |
| Abstract: | This paper examines the incentives for family firms to innovate. We argue that, due to the wealth concentration of major shareholders, family firms are incentivized to diversify their risk through innovation. In particular, family firms use innovation to explore new (as opposed to existing) fields of business. Using a comprehensive sample of U.S. family-owned public firms and patents for the period from 1998 to 2010, we confirm that family ownership is positively (negatively) related to exploratory (exploitative) innovation. Tests based on instrumental variables regression (divorce laws of family firms' headquarter states or neighboring states) and regulatory shocks in inheritance taxes further offer a causal interpretation. Market prices, however, respond negatively to family firms' exploratory innovation, suggesting that such innovation may benefit major shareholders of family firms at the cost of minority shareholders. Our results suggest that risk-mitigation incentives play an important role in affecting innovation strategies, which may have subtle implications for investors in financial markets. |
| Keywords: | family firms; innovation; innovation strategies; under-diversification |
| JEL: | G32 O32 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11472&r=ino |
| By: | Chen, Yongmin; Sappington, david |
| Abstract: | We analyze the optimal design of damages for patent infringement in settings where the patent of an initial innovator may be infringed by a follow-on innovator. We consider damage rules that are linear combinations of the popular "lost profit" (LP) and "unjust enrichment" (UE) rules, coupled with a lump-sum transfer between the innovators. We identify conditions under which a linear rule can induce the socially optimal levels of sequential innovation and the optimal allocation of industry output. We also show that, despite its simplicity, the optimal linear rule achieves the highest welfare among all rules that ensure a balanced budget for the industry, and often secures substantially more welfare than either the LP rule or the UE rule. |
| Keywords: | Patents, sequential innovation, infringement damages, linear rules for patent damages. |
| JEL: | D4 K2 O3 |
| Date: | 2016–08–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:73438&r=ino |
| By: | Susan Helper; Jennifer Kuan |
| Abstract: | The questions addressed in this volume are motivated by the recognition that engineers play an important role in generating innovation and economic growth. In this chapter, we seek to offer some description of engineering work by looking in detail at a specific manufacturing industry—firms that supply automakers—to gain insight into how engineers create innovation. Autos account for 5% of US GDP and in 2011, 70% of auto suppliers contributed design effort, a task typically performed by engineers, making the auto supply chain an important context in which to study engineering and innovation. Some highlights from our original survey data include a wide range in terms of size and strategies of supply chain companies; a majority was small- to medium-sized, often family-owned. We observed barriers to patenting for manufacturing firms developing process rather than product innovations. And interviews revealed the importance of customers for the innovative efforts of supplier firms. Certain Japanese customers were preferred because they shared expertise and helped suppliers improve, while other, American, customers were viewed as having unreasonable demands for regular, incremental price reductions and did not offer technical or organizational support. |
| JEL: | D2 L23 L62 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22552&r=ino |
| By: | David Popp |
| Abstract: | Using an original data set of both scientific articles and patents pertaining to alternative energy technologies, this paper provides new evidence on the flows of knowledge between university, private sector, and government research. Better understanding of the value of knowledge from these institutions can help decision makers target R&D funds where they are most likely to be successful. I use citation data from both scientific articles and patents to answer two questions. First, what information is most useful to the development of new technology? Does high quality science lead to commercial success? I find that this is the case, as those articles most highly cited by other scientific articles are also more likely to be cited by future patents. Second, which institutions produce the most valuable research? Are there differences across technologies? Research performed at government institutions appears to play an important translational role linking basic and applied research, as government articles are more likely to be cited by patents than any other institution, including universities. Universities play a less important role in wind research than for solar and biofuels, suggesting that wind energy research is at a more applied stage where commercialization and final product development is more important than basic research. |
| JEL: | O38 Q42 Q48 Q55 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22573&r=ino |
| By: | Lindner, Ralf; Daimer, Stephanie; Beckert, Bernd; Heyen, Nils; Koehler, Jonathan; Teufel, Benjamin; Warnke, Philine; Wydra, Sven |
| Abstract: | [Introduction] Since about 15 years, science, technology and innovation (STI) policies are increasingly geared towards addressing objectives reaching beyond an immediate economic focus on growth and competitiveness. This "normative turn" (Daimer et al. 2012) is expressed in the strategic reorientation of national and supranational STI policies to address the so-called ‘grand challenges’ (Kallerud et al. 2013). Well known examples for this ongoing paradigm shift are the European Union's Europe 2020 strategy, the US Strategy for American Innovation or Germany's Hightech Strategy. What is more, the quest to address ‘grand challenges’ such as health, demographic change, wellbeing and sustainability by the means of research and innovation is complemented by and propelled forward by the emerging discourse on responsible (research and) innovation. In essence, RRI aims at improving the alignment of the impacts of technology and innovation with societal demands and values as far as possible. The concept is inherently characterised by a high degree of normativity in order to provide necessary guidance as to what constitutes desired or ‘responsible’ research and innovation (Randles et al. 2014; Lindner and Kuhlmann 2016). The prominent position of RRI in the European Union's research and innovation programme 'Horizon 2020' and the endorsement of the "Rome Declaration on RRI in Europe" by the European Council in 2014 indicate that RRI is increasingly developing relevance for policy, research funding and scientific communities. [...] |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fisidp:52&r=ino |
| By: | Mili Naskar (Indira Gandhi Institute of Development Research); Rupayan Pal (Indira Gandhi Institute of Development Research) |
| Abstract: | This paper examines the implication of the nature of competition in a market with network externalities on strategic investment in process R&D by firms. It shows that network externalities have a positive effect on process R&D, regardless of the nature of product market competition; but, that effect is larger under Bertrand competition than under Cournot competition. If network externalities are sufficiently strong, regardless of the degree of product differentiation, Bertrand firms have a stronger incentive for process R&D than Cournot firms. Otherwise, if network externalities are not sufficiently strong, the higher the degree of product differentiation, the greater is the possibility of Bertrand R&D to be higher than Cournot R&D. |
| Keywords: | Process R&D, Network Externalities, Cournot, Bertrand, Product Differentiation |
| JEL: | L13 D43 O31 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:ind:igiwpp:2016-020&r=ino |
| By: | Alex Bara; Gift Mugano; Pierre Le Roux |
| Abstract: | The study empirically establishes the causal relationship between financial innovation and economic growth in SADC. Using an Autoregressive Distributed Lag (ARDL) Model, estimated by Pooled Mean Group and Dynamic Fixed Effects, the study finds that financial innovation has a positive relationship to economic growth in long run for SADC. The long run estimations, however, show existence of a weak relationship. Introducing a direct measure of financial innovation buttresses the role of financial innovation in growth in SADC. Panel Granger causality tests establish that there is no causality, in any direction, between financial innovation and growth both in the short and long run. |
| Keywords: | : Innovation, financial innovation, economic growth, SADC, Autoregressive Distributed Lag (ARDL) |
| JEL: | G21 G28 O31 O33 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:627&r=ino |
| By: | Giovanni Favero (Dept. of Management, Università Ca' Foscari Venice); Vladi Finotto (Dept. of Management, Università Ca' Foscari Venice); Anna Moretti (Dept. of Management, Università Ca' Foscari Venice) |
| Abstract: | Literature in strategy and entrepreneurship resorted to the concept of imprinting to explain the resilience of firmsÕ traits. Nonetheless, it assumed such a process is at work rather than aiming at its explanation. This article advances a conceptual framework based on three main building blocks - cognitive frame, resource mobilization, and resisting entrepreneurs - combined in a historical perspective, overcoming the existing generalized confusion about "what to study" and "how to study" in the investigation of entrepreneurial imprinting. We offer an original definition of the imprints and a dynamic view based on resistance investigating the replication, substitution, and re-negotiation of imprints in time. The contribution of the present work is twofold: on the one side, it contributes to the ongoing debate on entrepreneurial imprinting by closing some of the gaps that characterized previous literature on the subject, and offering an innovative bridging between imprinting and resistance; on the other side, it answers to the recent call for a deeper integration between historical approaches and entrepreneurship literature. |
| Keywords: | Entrepreneurial imprinting, Cognitive frames, Resistance, Historical approach, Interpretive process |
| JEL: | L26 N01 M14 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:vnm:wpdman:121&r=ino |
| By: | Patrick Legros; Andrew F. Newman; Eugenio Proto |
| Abstract: | We model technological progress as an external effect of organizational design, fo- cusing on how factories, based on labor division, could spawn the industrial revolution. Dividing labor, as Adam Smith argued, facilitates invention by observers of production processes. However, entrepreneurs cannot internalize this benefit and choose labor di- vision to facilitate monitoring. Equilibrium with few entrepreneurs features low wage shares, high specialization, but a limited market for innovations. Conversely, with many entrepreneurs there is a large market for innovation, but little specialization be- cause of high wage shares. Technological progress therefore occurs with a moderate scarcity of entrepreneurs. Institutional improvements affect growth ambiguously. |
| Keywords: | factory system, industrial revolution, technological change, contracts |
| URL: | http://d.repec.org/n?u=RePEc:bos:wpaper:wp2013-014&r=ino |
| By: | Simplice Asongu (Yaoundé/Cameroun); Jacinta C. Nwachukwu (Coventry University, UK) |
| Abstract: | The contribution of African researchers to knowledge by means of scientific publications is low compared to other regions of the world. This paper presents an argument in favour of PhD by Publication as a tool for innovation and technology transfer. Building on the literature on the key role of a knowledge economy in 21st century development and catch-up processes, we argue that: (i) in order for PhD dissertations to be more useful to society, they should be harmonised with scientific publications which centre on improving the design and quality of existing and new products in developing countries. (ii) Obtaining a doctorate degree should not simply be reduced to a change in candidate’s title as is often the case with a traditional thesis. (iii) The PhD by Publication is a more effective route to ensuring that the contribution to knowledge is widely disseminated. The conceptual framework consists primarily of the clarification of the models of PhD by Publication and the linkages between the doctoral education, innovation, technology transfer and development catch-up. Implications for scientific research policies in the light of contemporary challenges to African development are discussed. |
| Keywords: | Doctoral education; PhD by Publication; technology transfer; innovation; development |
| JEL: | A20 F42 O10 O30 O34 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:16/030&r=ino |
| By: | Rahul RK Kapoor; Nicolas van Zeebroeck |
| Keywords: | Patent Litigation; Opposition; Patent System; Patent Value; Patent Strategy; European Patent Office |
| Date: | 2016–08–24 |
| URL: | http://d.repec.org/n?u=RePEc:ict:wpaper:2013/235144&r=ino |
| By: | Ruben Gaetani (Northwestern University); Matthias Doepke (Northwestern University) |
| Abstract: | Since the 1980s, the United States economy has experienced a sharp rise in education premia in the labor market, with the college premium going up by more than 30 percent. In contrast, most European economies witnessed a much smaller rise in the return to education, and in Germany, Italy, and Spain the college premium actually fell. In this paper, we argue that differences in employment protection can account for a substantial part of these diverging trends. We consider an environment where firms can invest in technologies that are complementary to experienced workers with long tenure, and workers can make corresponding investments in firm-specific skills. The incentive to undertake such investments interact with employment protection. Incentives are particularly strong if employment protection favors older workers and workers with long tenure, as is the case in the European countries where the college premium fell. We use a calibrated dynamic model that allows for different education levels, labor-market search, and investment in relationship-specific capital and skills to quantify the ability of this affect to account for diverging inequality trend in the United States and Europe. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed016:539&r=ino |
| By: | Elena Verdolini (CMCC and FEEM); Laura Diaz Anadón (John F. Kennedy School of Government, Harvard University and University College London); Erin Baker (University of Massachusetts Amherst); Valentina Bosetti (CMCC, FEEM and Bocconi University); Lara Aleluia Reis (CMCC and FEEM) |
| Abstract: | Expert elicitation is a process for eliciting subjective probability distributions from experts about items of interest to decision makers. These methods have been increasingly applied in the energy domain to collect information on the future cost and performance of specific energy technologies and the associated uncertainty. This article reviews the existing expert elicitations on energy technologies with three main objectives: (1) to provide insights on expert elicitation methods and how they compare/complement other approaches to inform public energy decision making; (2) to review all recent elicitation exercises about future technology costs; and (3) to discuss the main results from these expert elicitations, in terms of implied rates of cost reduction and the role of R&D investments in shaping these reductions, and compare it with insights from backward looking approaches. We argue that the emergence of data on future energy costs through expert elicitations provides the opportunity for more transparent and robust analyses incorporating technical uncertainty to assess energy and climate change mitigation policies. |
| Keywords: | Energy Technologies, R&D Investments, Expert Elicitations, Uncertainty |
| JEL: | Q5 Q55 |
| Date: | 2016–07 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2016.47&r=ino |
| By: | Eckert, Andrew (University of Alberta, Department of Economics); Klumpp, Tilman (University of Alberta, Department of Economics); Su, Xuejuan (University of Alberta, Department of Economics) |
| Abstract: | We develop a duopoly model in which firms compete for the market (e.g., investing in process innovation or product development) as well as in the market (e.g., setting quantities or prices). Competition for the market generates multiple equilibria that differ in the firms' investment levels, relative size, and profi tability. We show that monopolization that affects competition in the market can act as an equilibrium selection device in competition for the market. In particular, it eliminates equilibria that are undesirable for the monopolizing rm, while not generating new equilibria. This result complicates the task of determining whether a rm's dominance in a given market is the result of fair competition or unlawful monopolization. We discuss a number of implications for antitrust policy and litigation, and illustrate these by means of two well-known antitrust cases. |
| Keywords: | Monopolization; antitrust; multiple equilibria; indeterminacy; firm behavior |
| JEL: | D40 K20 L40 |
| Date: | 2016–08–29 |
| URL: | http://d.repec.org/n?u=RePEc:ris:albaec:2016_013&r=ino |
| By: | Valero, Anna; Van Reenen, John |
| Abstract: | We develop a new dataset using UNESCO source materials on the location of nearly 15,000 universities in about 1,500 regions across 78 countries, some dating back to the 11th Century. We estimate fixed effects models at the sub-national level between 1950 and 2010 and find that increases in the number of universities are positively associated with future growth of GDP per capita (and this relationship is robust to controlling for a host of observables, as well as unobserved regional trends). Our estimates imply that doubling the number of universities per capita is associated with 4% higher future GDP per capita. Furthermore, there appear to be positive spillover effects from universities to geographically close neighboring regions. We show that the relationship between growth and universities is not simply driven by the direct expenditures of the university, its staff and students. Part of the effect of universities on growth is mediated through an increased supply of human capital and greater innovation (although the magnitudes are not large). We find that within countries, higher historical university presence is associated with stronger pro-democratic attitudes. |
| Keywords: | growth; Human Capital; innovation; Universities |
| JEL: | I23 I25 J24 O10 O31 |
| Date: | 2016–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11462&r=ino |