nep-ino New Economics Papers
on Innovation
Issue of 2017‒03‒26
33 papers chosen by
Uwe Cantner
University of Jena

  1. Private versus Social Incentives for Pharmaceutical Innovation By Inés Macho-Stadler; David Pérez-Castrillo; Paula González
  2. Grenoble–GIANT Territorial Innovation Models By Laurent Scaringella; Jean-Jacques Chanaron
  3. Recent economic theorising on innovation: Lessons for analysing social innovation By Havas, Attila
  4. Entrepreneurship and growth: lessons from an intellectual journey By Philippe Aghion
  5. On the Failure of Scientific Research: An Analysis of SBIR Projects Funded by the U.S. National Institutes of Health By Andersen, Martin; Bray, Jeremy; Link, Albert
  6. The shaky start of the UK Small Business Research Initiative (SBRI) in Comparison to the US Small Business Innovation Research Programme (SBIR) By Emma Tredgett; Alex Coad
  7. Reconciling the Firm Size and Innovation Puzzle By ANNE MARIE KNOTT; CARL VIEREGGER
  8. Consumer Innovation Adoption Stages and Determinants By Sana Akbar Khan
  9. Technology Treaties and Climate Change By Hans Gersbach; Marie-Catherine Riekhof
  10. Solving a hold-up problem may harm all firms: downstream R&D and transport-price contracts By Kazuhiro Takauchi; Tomomichi Mizuno
  11. Philippe Aghion: recipient of the 2016 Global Award for Entrepreneurship Research By Zoltan J. Acs; Pontus Braunerhjelm; Charlie Karlsson
  12. Stagnation traps By Gianluca Benigno; Luca Fornaro
  13. New Perspectives on Patenting Activity in New Zealand 1860-1899 By Matthew Gibbons; Les Oxley
  14. Innovation and Regional Specialisation in Latin America By Belen Barroeta; Javier Gomez Prieto; Jonatan Paton; Manuel Palazuelos Martinez; Marcelino Cabrera Giraldez
  15. Rewarding Mediocrity? Optimal Regulation of R&D Markets with Reputation Concerns By Chia-Hui Chen; Junichiro Ishida
  16. Empirical Analysis: Technological character, type of function, and longevity of standardized knowledge By TAMURA Suguru
  17. Entrepreneurship policies and the development of regional innovation systems: theory, policy and practice By Helen Lawton Smith
  18. Inflation and Economic Growth in a Schumpeterian Model with Endogenous Entry of Heterogeneous Firms By Chu, Angus C.; Cozzi, Guido; Furukawa, Yuichi; Liao, Chih-Hsing
  19. Designing performance-based incentives for innovation intermediaries: Evidence from regional innovation poles By Margherita Russo; Annalisa Caloffi; Federica Rossi; Riccardo Righi
  20. The lost race against the machine: Automation, education and inequality in an R&D-based growth model By Prettner, Klaus; Strulik, Holger
  21. The Retreat of Public Research and its Adverse Consequences on Innovation By Daniele Archibugi; Andrea Filippetti
  22. Innovation in risky markets. Multinational and domestic firms in the UK regions By Luisa Gagliardi; Simona Iammarino
  23. R&Dsimulab: a micro-policy simulator for an ex-ante assessment of the effect of public R&D policies By Giovanni Cerulli; Federico Cecconi; Maria Augusta Miceli; Pierpaolo Angelini; Bianca Potì
  24. Promoting Innovation and Efficiencies through Changes to the Competition Bureau’s Merger Review Process By Brian Facey; Joshua Krane
  25. Science Fiction and Economic Cycles. A Dialogue on Technological Expectations By Daniele Archibugi; Bengt-Åke Lundvall; Edward Steinmueller
  26. Science, Innovation and Technology Transfer Pathways in Translational Research: A Study of Divergent Trajectories in the Healthcare Sector in Europe By Helen Lawton Smith; Sharmistha Bagchi-Sen; Laurel Edmunds
  27. Growth, Income Distribution, and the ‘Entrepreneurial State’ By Daniele Tavani; Luca Zamparelli
  28. Diverging Paths of Entrepreneurship in post-Transformation Countries. A comparative view By Bruno Dallago
  29. Academic Inventors: Collaboration and Proximity with Industry By Riccardo Crescenzi; Andrea Filippetti; Simona Iammarino
  30. The 2016 Survey on Industrial R&D Investment Trends By Alexander Tübke; Fernando Hervás Soriano; Nicola Grassano; Lesley Potters
  31. Experimenting in the unknown : lessons from the Manhattan project By Thomas Gillier; Sylvain Lenfle
  32. The Impact of Information Technology on the Diffusion of New Pharmaceuticals By Kenneth J. Arrow; Kamran Bilir; Alan T. Sorensen
  33. One tenth of new entrepreneurial activity in Finland is multicultural By Pajarinen, Mika; Rouvinen, Petri

  1. By: Inés Macho-Stadler; David Pérez-Castrillo; Paula González
    Abstract: We provide a theoretical framework to contribute to the current debate regarding the tendency of pharmaceutical companies to direct their R&D toward marketing products that are ?follow-on? drugs of already existing drugs, rather than toward the development of breakthrough drugs. We construct a model with a population of patients who can be treated with drugs that are horizontally and vertically differentiated. In addition to a pioneering drug, a new drug can be marketed as the result of an innovative process. We analyze physician prescription choices and the optimal pricing decision of an innovative ?firm. We also characterize the incentives of the innovative firm to conduct R&D activities, disentangling the quest for breakthrough drugs from the firm effort to develop follow-on drugs. Our results offer theoretical support for the conventional wisdom that pharmaceutical firms devote too many resources to conducting R&D activities that lead to incremental innovations.
    Keywords: pharmaceuticals, R&D activities, me-too drugs, breakthrough drugs, incremental innovation, radical innovation
    JEL: I11 I18 O31 H51
    Date: 2015–12
  2. By: Laurent Scaringella (ESC Rennes School of Business - ESC Rennes School of Business); Jean-Jacques Chanaron (CNRS (French National Center for Scientific Research) - UCBL - Université Claude Bernard Lyon 1, GEM - Grenoble Ecole de Management - Grenoble École de Management (GEM))
    Abstract: Over the past decades, the EU heavily invested in Research Infrastructures (RI). What are the expected returns of such investments? In the present article we address the question of returns on public funds/public infrastructures. We consider the role of RI and universities from an economic, social, and entrepreneurial perspective from various Territorial Innovation Models (TIMs): Italian industrial districts, innovative milieus, regional innovation systems, new industrial spaces, and regional clusters. We conducted our empirical study on Grenoble Isère Alpes Nanotechnologies (GIANT), which is composed of large scientific instruments, universities, and engineering and management schools. Our microeconomic methodology measured the socioeconomic and entrepreneurial effects of GIANT with respect to budget, employment, and spin-off generation. We contribute to the existing body of knowledge on TIMs by comparing the long-term investments to the generation of wealth, the creation of employment, and the development of start-ups; adding new insights to the debate opposing positive and negative impacts empirical studies; and offering recommendations for the use of public resources. In our discussion, we compare the GIANT model as a very localized RI-university club to the Grenoble model as localized cluster.
    Keywords: Return on investment,Socioeconomic impact,Start-up,University,Research infrastructure,Territorial Innovation Models
    Date: 2016–05–26
  3. By: Havas, Attila
    Abstract: This paper reviews recent economic theorising on innovation from the angle of analysing social innovations (SI). It is structured as follows: Some of the basic notions used in innovation analyses are considered in section 2, focusing on the subject, objectives and levels of change. Section 3 reviews how innovation is understood in particular models of innovation and analysed by various schools of economics highlighting the types of actors and knowledge perceived as relevant in these various approaches. The notion of innovation systems (national, regional, sectoral, and technological ones) and its analytical and policy relevance is explored in section 4. Lessons relevant for analysing social innovation are drawn at the end of each sub-section, and the most important of those are reiterated in the concluding section.
    Keywords: Types of business innovations; Innovation in mainstream economics; Evolutionary economics of innovation; Linear, networked, and interactive learning models of innovation; Types of dynamics; Innovation systems (national, regional, sectoral, technological); Social innovation; The "dark side" of innovation
    JEL: B52 O30 O31 O33 O35 O38 O39
    Date: 2016–08
  4. By: Philippe Aghion
    Abstract: This lecture is the story of an intellectual journey, that of elaborating a new—Schumpeterian—theory of economic growth. A theory where (i) growth is generated by innovative entrepreneurs; (ii) entrepreneurial investments respond to incentives that are themselves shaped by economic policies and institutions; (iii) new innovations replace old technologies: in other words, growth involves creative destruction and therefore involves a permanent conflict between incumbents and new entrants. First, we motivate and then lay out the Schumpeterian paradigm and point to a set of empirical predictions which distinguish this paradigm from other growth models. Second, we raise four debates on which the Schumpeterian approach sheds new light: the middle income trap, secular stagnation, the recent rise in top income inequality, and firm dynamics. Third and last, we show how the paradigm can be used to think (or rethink) about growth policy design. (This article is based on the author’s presentation at the Global Award for Entrepreneurship Research ceremony in Stockholm, Sweden, May 10, 2016.)
    Keywords: entrepreneurship; creative destruction; R&D; entry; exit; competition; technology frontier; firm dynamics
    JEL: O10 O11 O12 O30 O31 O33 O4 O47
    Date: 2017–01
  5. By: Andersen, Martin (University of North Carolina at Greensboro, Department of Economics); Bray, Jeremy (University of North Carolina at Greensboro, Department of Economics); Link, Albert (University of North Carolina at Greensboro, Department of Economics)
    Abstract: The Small Business Innovation Research (SBIR) program is the primary source of public funding in the United States for research by small firms on new technologies, and the National Institutes of Health (NIH) is a major contributor to that funding agenda. Although previous research has explored the determinants of research success for NIH SBIR projects, little is known about the determinants of project failure. This paper provides important, new evidence on the characteristics of NIH SBIR projects that fail. Specifically, we find that firms that have a founder with a business background are less likely to have their funded projects fail. We also find, after controlling for the endogenous nature of woman-owned firms, that such firms are also less likely to fail.
    Keywords: technology; innovation; R&D; small firms; SBIR; NIH
    JEL: O31 O32 O33 O38
    Date: 2017–03–15
  6. By: Emma Tredgett (Department of Management, Birkbeck College University of London); Alex Coad (SPRU, Freeman Centre, University of Sussex)
    Abstract: In this paper a comparison is made between data on the US Small Business Innovation Research programme (SBIR) and UK Small Business Research Initiative (SBRI) (Tredgett & Coad 2013). Quantitative data on the first three years of the UK SBRI (2009 – 2013) was compared to data on the first three years of the US SBIR (1983 – 1987) from the US Small Business Administration. The data includes numbers of competitions, applicants and money spent on research contracts. Some key differences in implementation of the two initiatives are identified and discussed in relation to the quantitative data. Quantitative data shows that while the US SBIR had steady growth, the UK SBRI has had a shaky start. Possible explanations for these results are suggested. Further work to strengthen the data and improve the validity of the evaluation is then outlined.
    Date: 2015–06
    Abstract: Since Schumpeter, there has been a lively debate regarding the optimal firm size for innovation. Empirical results have settled into a puzzle: R&D spending increasing with scale, while R&D productivity decreases with scale. Thus large firms appear irrational. We propose and test two alternative resolutions of the puzzle: 1) that it arises from measurement problems, and 2) that firm size endogenously drives R&D strategy, and that the returns to R&D strategies depend on scale. To test both propositions we use recently available NSF BRDIS survey data of firms R&D practices (strategies) as well as a broader measure of R&D productivity. Using the broader measure, we find that both R&D spending and R&D productivity increase with scale—thus offering one resolution to the puzzle. We further find that while large firms and small firms differ in the types of R&D they conduct, there is no type whose returns decrease in scale—there are merely types for which the small firm penalty is less severe. Thus Schumpeter appears to be correct--large firms are the major engine of growth, they both spend more in aggregate than small firms, and are more productive with that spending.
    Date: 2016–01
  8. By: Sana Akbar Khan (Dept. of Management, Università Ca' Foscari Venice)
    Abstract: Existing research on innovation adoption is divided into two main streams: organizational innovation adoption and individual (consumer) innovation adoption. Proponents of both perspectives approach the topic in a variety of ways. Contrary to the organizational adoption, research on the consumer adoption investigates the determinants of adoption/non-adoption without considering the innovation- decision as a process. Particularly, for high involvement innovations that require efforts in terms of cost, money, and resources to switch to a new routine and behavior, innovation adoption as a multi- stage process is most relevant. In line with Rogers' (2003) multi-stage individual adoption process, this study aims to first explore the existence of distinct stages of innovation adoption and then identify the different determinants of each stage of adoption. To address both research questions, an exploratory factor analysis (EFA) and a structural equation modeling (SEM) technique were used. Data was collected from individuals using two different online surveys on smartwatch and alternative engine cars (AECs). Data from the first survey was used to extract factors using EFA. The results confirmed the existence of five distinct stages: knowledge, persuasion, decision, implementation, and confirmation. Based on these results, data from the second online survey was used to identify the predictors of each stage. Different determinants in terms of perceived innovation characteristics of AECs were analyzed using a structural model. In line with temporal distance theories and loss aversion theory, the findings show that perceived benefits of an innovation explain variation in persuasion stage, while perceived losses impact implementation stage. Decision and confirmation stages on the other hand are less explained. The study contributes by confirming the existence of distinct stages of consumer adoption of high involvement innovations and developing a framework which not only determines the direction but also the strength of the relationships between different determinants and adoption stages.
    Keywords: Consumer innovation adoption stages, alternative engine cars, perceived innovation characteristics, diffusion of innovation.
    JEL: M40
    Date: 2017–03
  9. By: Hans Gersbach (ETH Zurich, Switzerland); Marie-Catherine Riekhof (ETH Zurich, Switzerland)
    Abstract: We introduce an international technology treaty that couples the funding of research for a more advanced abatement technology with an international emissions permit market. Under the treaty, each country decides on the amount of permits for its domestic industries, but a fraction of these permits is auctioned on the permit market, and the revenues are used to scale up license revenues for the innovators of abatement technologies. We discuss the conditions under which such a technology treaty can slow down climate change through technological innovations and whether it creates complementary incentives for countries to tighten permit issuance. Finally, we discuss how participation in Tech Treaties can be fostered and how such treaties might be implemented.
    Keywords: Climate change mitigation, Technology promotion, International permit markets, International treaty, Externalities
    JEL: H23 Q54 O31
    Date: 2017–03
  10. By: Kazuhiro Takauchi (Faculty of Business and Commerce, Kansai University); Tomomichi Mizuno (Graduate School of Economics, Kobe University)
    Abstract: In vertical relations, by raising input price after downstream research and development (R&D) investment, upstream rms can extract the R&D bene t and have an incentive to set higher input price. As downstream rms underinvest for fear of this hold-up by upstream rms, outputs and input-demand shrink, and all rms become worse off. Previous literature emphasizes that a xed-price contract in which upstream rms rst commit themselves to input prices and downstream rms subsequently invest can resolve the hold-up problem and make all rms better off. By contrast, we show that in a vertical relation between rm-speci c carriers and exporters, the xed-price contract of transport price can make all rms worse off because an efficiency improvement in exporters intensi es inter-regional competition. We also discuss the robustness of the result.
    Keywords: Transport-price contracts; Downstream R&D; Firm-specific carrier; Hold-up problem
    JEL: L13 F12 O31 R40
    Date: 2017–03
  11. By: Zoltan J. Acs; Pontus Braunerhjelm; Charlie Karlsson
    Abstract: Professor Philippe Aghion is the 2016 recipient of the Global Award for Entrepreneurship Research, consisting of 100,000 Euros and a statuette designed by the internationally renowned Swedish sculptor Carl Milles. He is one of the most influential researchers worldwide in economics in the last couple of decades. His research has advanced our understanding of the relationship between firm-level innovation, entry and exit on the one hand, and productivity and growth on the other. Aghion has thus accomplished to bridge theoretical macroeconomic growth models with a more complete and consistent microeconomic setting. He is one of the founding fathers of the pioneering and original contribution referred to as Schumpeterian growth theory. Philippe Aghion has not only contributed with more sophisticated theoretical models, but also provided empirical evidence regarding the importance of entrepreneurial endeavours for societal prosperity, thereby initiating a more nuanced policy discussion concerning the interdependencies between entrepreneurship, competition, wealth and growth.
    Keywords: global award; entrepreneurship; economic growth; innovation; firm entry; finance; regulation
    JEL: D02 D86 G30 L20 L50 O30 O40
    Date: 2017–01
  12. By: Gianluca Benigno; Luca Fornaro
    Abstract: We provide a Keynesian growth theory in which pessimistic expectations can lead to very persistent, or even permanent, slumps characterized by unemployment and weak growth. We refer to these episodes as stagnation traps, because they consist in the joint occurrence of a liquidity and a growth trap. In a stagnation trap, the central bank is unable to restore full employment because weak growth depresses aggregate demand and pushes the interest rate against the zero lower bound, while growth is weak because low aggregate demand results in low profits, limiting firms’ investment in innovation. Policies aiming at restoring growth can successfully lead the economy out of a stagnation trap, thus rationalizing the notion of job creating growth.
    Keywords: Secular Stagnation, Liquidity Traps, Growth Traps, Endogenous Growth, Multiple Equilibria
    JEL: E32 E43 E52 O42
    Date: 2017–03
  13. By: Matthew Gibbons (University of Waikato); Les Oxley (University of Waikato)
    Abstract: Existing research suggests that New Zealand was, on a per capita basis, the wealthiest and most prolific patenting nation during the late nineteenth century. By quantifying lapsed applications, patent renewals, and expenditure on patent fees, rather than just patent applications, we consider the real level of innovative activity. Our results show that while reductions in patent fees and required advertising in the early 1880s led to a sharp increase in applications by people living in New Zealand, overseas patent applications and total expenditure on New Zealand patents showed relatively steady growth between 1860 and 1899. Lower fees succeeded in increasing patenting by skilled New Zealand trades workers (although engineers still dominated), however, patenting by unskilled workers, such as labourers, remained low. People living in New Zealand made over sixty per cent of patent applications, but overseas patentees paid over half of patent fees because relatively fewer of their applications lapsed or were not renewed. Although women made greater use of the patent system over time, even in 1899 they accounted for only 2.5 per cent of patent applications.
    Keywords: bubbles; New Zealand patents; Granger causality; patent expenditure
    JEL: O31 N17 N37
    Date: 2017–03–15
  14. By: Belen Barroeta; Javier Gomez Prieto (European Commission - JRC); Jonatan Paton; Manuel Palazuelos Martinez (European Commission - JRC); Marcelino Cabrera Giraldez (European Commission - JRC)
    Abstract: The Smart Specialisation concept, currently implemented in the European Union, is being widely considered by several countries and regions of Latin-America. The interest towards this approach, highly based on the enhancement of regional innovation capacities, is motivating territorial dialogues, participatory processes and collective vision related to the innovation perspectives of Latin-American regions. This article highlights how policy makers of Mexico, Brazil, Colombia, Peru, Chile and Argentina are considering the smart specialisation concept as an inspirational driver of regional innovation and specialisation. Understanding the socio-economic and contextual differences between EU and Latin-America, this working paper does not seek to elaborate value judgements on the way in which smart specialisation is being (or should be) adapted beyond the EU. Instead, the analysis seeks to emphasise the common tendencies of the concept implementation as a way to frame cooperation between regions of the EU and Latin-America.
    Keywords: Smart Specialisation, Regional Innovation, Cooperation, European Union, Latin America
    Date: 2017–03
  15. By: Chia-Hui Chen; Junichiro Ishida
    Abstract: In this paper, we consider a dynamic signaling model of an R&D market in which a researcher can choose either a safe project (exploitation) or a risky project (exploration) at each instance. We argue that there are substantial efficiency gains from rewarding minor innovations above their social value and further that it is indeed superior to rewarding major innovations directly, even when those minor innovations are intrinsically valueless in themselves. When only major innovations are rewarded, the R&D market eventually shuts down due to a version of the lemons problem. Rewarding minor innovations is actually conducive to major innovations as it induces self-sorting among researchers, which is essential in providing time and resources necessary for more productive ones to take riskier but more ambitious approaches. This result draws clear contrast to the static counterpart where such a scheme can never be optimal. Our model also exhibits reputation dynamics which capture a pervasive view in academia that “no publications are better than a few mediocre publications” at an early stage of one's career.
    Date: 2017–03
  16. By: TAMURA Suguru
    Abstract: This study determines the validity of the current de jure standards management system. The de jure standard is an important tool for innovation policy, and also forms part of the social infrastructure. However, its management system, following standards formation, has not been well investigated. Its review interval has been fixed in the management system and maintained without empirical examinations. The validity of a fixed review interval is examined in this study. For this purpose, the factors that could potentially influence the longevity of standards are examined, and ways to improve the management system of de jure standards are discussed. The de jure standard is used in both developing and developed countries; hence, the policy implications are applicable across the world. This study finds through the empirical analysis that the type (or function) of de jure standards (e.g., design and mark standards) influences longevity. The influence of designs on innovation is an emerging research area that is currently studied through the analysis of design patent data. However, the design and mark standards have not been well studied from an economic perspective. In sum, this study has the following contributions: 1) Technological categories have significantly different effects on longevity, and the longevity of some technological sectors is longer than others, which indicates a need for a more flexible interval system, 2) The results indicate that the longevity of the design and mark standard is longer than that of other types of standards, and 3) Longevity is not significant in the information technology category. This result could support the argument that information technology becomes a General Purpose Technology (GPT).
    Date: 2017–03
  17. By: Helen Lawton Smith (Birkbeck, University of London. Oxfordshire Economic Observatory, Oxford University)
    Date: 2017–02
  18. By: Chu, Angus C.; Cozzi, Guido; Furukawa, Yuichi; Liao, Chih-Hsing
    Abstract: This study develops a Schumpeterian growth model with endogenous entry of heterogeneous firms to analyze the effects of monetary policy on economic growth via a cash-in-advance constraint on R&D investment. Our results can be summarized as follows. In the special case of a zero entry cost, an increase in the nominal interest rate decreases R&D, the arrival rate of innovations and economic growth as in previous studies. However, in the general case of a positive entry cost, an increase in the nominal interest rate affects the distribution of innovations that are implemented and would have an inverted-U effect on economic growth if the entry cost is sufficiently large. We also calibrate the model to aggregate data of the US economy and find that the growth-maximizing inflation rate is about 3%, which is consistent with recent empirical estimates.
    Keywords: monetary policy, inflation, economic growth, heterogeneous firms
    JEL: E41 O3 O4
    Date: 2017–03
  19. By: Margherita Russo (University of Modena and Reggio Emilia); Annalisa Caloffi (University of Padua); Federica Rossi (Birkbeck College, University of London); Riccardo Righi (University of Modena and Reggio Emilia)
    Date: 2016–11
  20. By: Prettner, Klaus; Strulik, Holger
    Abstract: We analyze the effect of automation on economic growth and inequality in an R&D-based growth model with two types of labor: highskilled labor that is complementary to machines and low-skilled labor that is a substitute for machines. The model predicts that innovationdriven growth leads to increasing automation, an increasing skill premium, an increasing population share of graduates, increasing income and wealth inequality, a declining labor share, and (in an extension of the basic model) increasing unemployment. In contrast to Piketty's famous claim that faster economic growth reduces inequality, our theory predicts that faster economic growth promotes inequality.
    Keywords: Automation,R&D-Based Growth,Inequality,Wealth Concentration
    JEL: E23 E25 O31 O33 O40
    Date: 2017
  21. By: Daniele Archibugi (National Research Council, Italy. Birkbeck, University of London); Andrea Filippetti (National Research Council, Italy. London School of Economics and Political Science. Birkbeck, University of London)
    Date: 2016–03
  22. By: Luisa Gagliardi (London School of Economics and Political Science); Simona Iammarino (London School of Economics and Political Science)
    Date: 2017–03
  23. By: Giovanni Cerulli; Federico Cecconi; Maria Augusta Miceli; Pierpaolo Angelini; Bianca Potì
    Abstract: R&Dsimulab is a micro-policy simulator for an ex-ante assessment of public Research & Development (R&D) policy effect on companies’ R&D activity. It is an agent-based computational model based on the interaction between a public agency, entitled to manage a direct (or grant-based) R&D policy, and a given set of companies eligible for receiving a monetary support to increase their actual level of R&D activity. On the part of policymakers, such model can be used to build and compare ex-ante evaluation scenarios related to alternative policies aimed at fostering the R&D activity of companies undergoing a given public R&D support. R&Dsimulab can be run either using a pre-defined set of parameters, thus exploring outcomes’ sensitivity to parameters’ changes, or by a calibration based on empirical evidence. R&Dsimulab assumes that agents (the public agency and the companies) maximize an objective function under reasonable constraints, and assumes that companies doing R&D are placed within a network of firms where possible positive or negative externality effects can arise. To our knowledge, no previous models of this type have been proposed so far in the literature. Therefore, R&Dsimulab constitutes a first attempt to build a policy simulator for an ex-ante assessment of R&D policy effects, whose scientific and policy-oriented scope can be worth exploring. R&Dsimulab is an agent-based simulative model. The agents constituting the model are: one public agency, which provides public funds to support private R&D companies, and a set of eligible-for-fund private companies. Both types of agents take decisions by maximizing an objective function under reasonable constraints. In particular, the model run under these assumptions: a.Agency behaviour It is assumed that the direct objective of the public agency is that of maximizing the total level of R&D (i.e., the sum of all companies’ R&D spending, that we indicate by R) using a given amount of monetary support S which has to be optimally allocated within firms. The agency knows the company ability to do R&D and its centrality within the network, but it has only an imperfect knowledge of all firms’ R&D network relationships. As objective, the agency wants to determine two things: (i) which companies are worth to support and which are not (i.e., selection-process); (ii) which share of S has the agency to provide to each firm selected for support. Thus, the agency comes up with two optimal solutions: (i) the N1 (out of N) selected companies; the optimal allocation of the subsidy S within the N1 selected companies. b. Companies’ behaviour Companies choose the level of R that maximizes the profit. Thus, the optimal R is the one equalizing the marginal rate of return and the marginal capital cost of doing R&D. The optimal level of R&D is in turn a function of the R&D support that a firm might potentially receive. We assume that each company owns an optimal level of the subsidy, thus making the R&D optimal equation as a concave function of the public support (a parabola, for instance). Finally, we also assume that R&D spillovers among firms may take place, due to companies’ relationships within an R&D Network, where the R&D flows from one company to another according to the strength of the relationship between firms. Therefore, each company R&D includes both an idiosyncratic component and an “additional” component due to the presence of R&D externalities. c. Externality or network effect As companies are located within an R&D network, different network topologies can produce different policy effects. The network impacts on R in two ways: (i) on the one hand, the more a company is central in the network, the more a lower barrier to do R&D is assumed (thus reducing the fixed costs of doing R&D); (ii) on the other hand, different network topologies could provide different R&D performance. Therefore, running a series of simulations under different policy scenarios can provide some guidance to detect the emerging properties in the R&D effect’s pattern, especially when one considers specific model’s parameterizations. R&Dsimulab uses Monte Carlo methods to provide sound conclusions about simulation results. Are specific configurations of the network more likely to produce larger R&D effect than other types of settings? In order to answer questions like this, we run a number of R&Dsimulab simulation exercises. For example, one could be interested in identifying whether, ceteris paribus, a quasi-random network is or is not more conducive to higher levels of R&D than, for instance, networks characterized by the emergence of specific nodes playing as hubs. It may thus be interesting to assess whether the policy effect on R will show an increasing or decreasing pattern as a function of the network’s “hubness”. Other experiments could also include the assessment of policy effect when other significant network parameters are changed or when one considers different network topologies, such as “scale-free” or “small-world” networks. Moreover, once a measure of the actual companies’ network is available and an empirical calibration of the model’s parameters achieved, one may also provide an assessment of the impact of the R&D support policy on a real study context, thus using R&Dsimulab as a tool for an effective ex-ante evaluation of the R&D policy considered.
    Keywords: Italy, Agent-based modeling, Agent-based modeling
    Date: 2015–07–01
  24. By: Brian Facey; Joshua Krane
    Keywords: Industry Regulation and Competition Policy
    JEL: L1 L4
  25. By: Daniele Archibugi (Italian National Research Council, Rome, and Department of Management, Birkbeck, University of London); Bengt-Åke Lundvall (Department of Business and Management, University of Aalborg); Edward Steinmueller (Science Policy Research Unit, Business and Management, School of Business, Management and Economics, University of Sussex)
    Abstract: Was the 2007-8 financial and economic crisis brought about by the exhaustion of the current techno-economic paradigm, and will a new paradigm will lead to eventual recovery? Lundvall and Steinmueller respond to Archibugi’s Blade Runner economics. Lundvall argues that whilst it is useful to think in terms of techno-economic paradigms to understand the uneven process of technological and social advancement, the main reason for the crisis and the main requirement for a new upswing are both socio-political rather than technological in nature. There is a link between the neoliberal deregulation regime that led to the crisis and ICTs. This regime might actually slow down the formation of a new techno-economic paradigm based around genetic engineering, artificial intelligence and nanotechnology. Steinmueller discusses what role science fiction might play in developing insights about possible futures. Might the present day equivalent for techno-economic paradigm change be more about the innovations necessary to rebuild or retrofit our existing technologies than about producing new growth sectors? Taking on board these insights, Archibugi contends that we need to understand why the economic crisis has been so long, so deep and so wide. An innovation-based recovery will need to take advantage of technological opportunities. Pro-active public intervention in science and technology will additionally be required, combined with new social imagination.
    Date: 2016–11
  26. By: Helen Lawton Smith (Birkbeck, University of London); Sharmistha Bagchi-Sen (University at Buffalo–State University of New York); Laurel Edmunds (Radcliffe Department of Medicine, University of Oxford)
    Date: 2016–08
  27. By: Daniele Tavani (Department of Economics, Colorado State University); Luca Zamparelli (Department of Social Sciences and Economics, Sapienza University of Rome)
    Abstract: In this paper, we introduce a twofold role for the public sector in the Goodwin (1967) model of the growth cycle. The government collects income taxes in order to: (a) invest in infrastructure capital, which directly affects the production possibilities of the economy; (b) finance publicly funded research and development (R&D), which augments the growth rate of labor productivity. We study two versions of the model: with and without induced technical change, that is with or without a feedback from the labor share to labor productivity growth. In both cases we show that: (i) provided that the output-elasticity of infrastructure is greater than the elasticity of labor productivity growth to public R&D, there exists a tax rate that maximizes the long-run labor share, and it is smaller than the growth-maximizing tax rate; (ii) the longrun share of labor is always increasing in the share of public spending in infrastructure; (iii) different taxation schemes have an impact on the stability of growth cycles.
    Keywords: Public R&D, Goodwin growth cycle, fiscal policy
    JEL: D33 E11 O38
    Date: 2017–03
  28. By: Bruno Dallago (Dipartimento di Economia e Management, University of Trento)
    Abstract: This paper considers the findings of academic studies and research on entrepreneurship and looks at what explains the evolution of entrepreneurship in post-transformation countries. Posttransformation countries include Central and Eastern Europe (CEE), the Commonwealth of Independent States (CIS) and other former socialist countries in Europe and former Soviet Asia. The paper shows that there are differences between these countries, even those integrated in the European Union (EU), and the most developed countries of Western Europe and North America. Perhaps less obvious, differences are significant and growing between the countries that are now integrated in the European Union and those that follow a different path. The paper shows that these differences are only in part of policy nature and tend to acquire systemic nature and have great influence over the features and role of entrepreneurship. The paper stresses the importance of entrepreneurship for former transformation countries and shows that the features and role of entrepreneurship and the entrepreneur are not invariant to the context where they arise and act. This is true in general, but is particularly so in the case of systemic change and is largely dependent on the quality of institutions. The study of entrepreneurship is important to highlight similarities and assess and explain differences and divergence among countries.
    Keywords: entrepreneur, entrepreneurship, institutions, post-transformation, transformation, Central and Eastern Europe, Commonwealth of Independent States Selection Bias, Russia
    Date: 2017–03
  29. By: Riccardo Crescenzi (London School of Economics and Political Science); Andrea Filippetti (National Research Council, Italy. London School of Economics and Political Science. Birkbeck College, University of London, UK); Simona Iammarino (London School of Economics and Political Science)
    Date: 2016–02
  30. By: Alexander Tübke (European Commission - JRC); Fernando Hervás Soriano (European Commission - JRC); Nicola Grassano (European Commission - JRC); Lesley Potters (European Commission - JRC)
    Abstract: This eleventh survey on industrial R&D investment trends is based on 157 responses of mainly large firms from a subsample of the 1000 EU-based companies in the 2015 EU Industrial R&D Investment Scoreboard. These 157 companies are responsible for €59.3 billion R&D investment, constituting one third of the total R&D investment by the 1000 EU Scoreboard companies. The responding companies expect to increase their nominal R&D investment by 1.4% per year during 2016–17. This is only half of our previous survey (3.0%) and mainly due to the lack of R&D investment growth expectations of a few very large companies in the automobiles & parts sector. Without this, the expected R&D investment growth of the sample would be 3.8% and thus slightly higher than in the previous survey. Very similar to last year’s survey, the EU-based companies in the sample carry out one-fourth of their R&D outside the EU. The responding companies’ expectations for R&D investment for the next three years show the ongoing participation of European companies in the global economy. While maintaining the focus of their R&D investment in the EU, they reap opportunities for growth in emerging economies.
    Keywords: R&D investment, business, survey, innovation
    Date: 2017–03
  31. By: Thomas Gillier (MTS - Management Technologique et Strategique - Grenoble École de Management (GEM)); Sylvain Lenfle (i3-CRG - Centre de recherche en gestion i3 - Polytechnique - X - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Experimentation is of paramount importance in innovation. On this topic, the seminal book of Prof. Thomke entitled “experimentation matters” has received a warm welcome from innovation scholars and practitioners. Unfortunately, the companies still have major difficulties to organize experimentations in situation of high uncertainty. This research aims at verifying the validity of Thomke’s principles in such situation. For doing this, this research studies the exemplary experimentations carried out by the Manhattan Project to create the first implosion type fission bomb. Our findings show that the Thomke’s organizational principles by are ill adapted to manage experiment in the unknown. In particular, the lack of theoretical knowledge, the crisis of the scientific instruments and the absence of pre-established organizations are critical aspects. Finally, research avenues for experimenting in the unknown are formulated.
    Abstract: L’expérimentation joue un rôle fondamental dans le processus d’innovation. En la matière l’ouvrage de S. Thomke, Experimentation matters (2003) constitue une référence incontournable. Cette recherche étudie la validité des principes proposés par Thomke en situation de grande incertitude. Pour ce faire ce travail analyse le cas du projet Manhattan qui, pendant la seconde guerre mondiale, abouti à la conception des premières bombes atomiques. L’exemple de la conception de la bombe implosion nous permet de montrer les limites des principes de Thomke en situation d’expérimentation dans l’inconnu. Le manque de connaissances théoriques sur les processus à l’œuvre, l’absence de moyens d’expérimentation et d’organisation pré-existante nous amène à questionner le modèle de Thomke et à proposer des pistes de recherches pour l’expérimentation dans l’inconnu.
    Keywords: radical innovation,exploration,project,unknown,expérimentation, innovation radicale, exploration, inconnu.
    Date: 2015–11
  32. By: Kenneth J. Arrow; Kamran Bilir; Alan T. Sorensen
    Abstract: How does information affect the diffusion of innovations? This paper evaluates the influence of physicians' access to detailed drug information on their decisions about which products to prescribe. Combining data on prescriptions and use of a point-of-care electronic drug reference database for over 125,000 individual U.S. physicians, we find that those using the reference prescribe a significantly more diverse set of products, are faster to begin prescribing new generic drugs, and also have a greater propensity to prescribe generics in general. Notably, physicians using the reference database are not faster to prescribe new branded drugs. Given that a new generic drug resembles its branded equivalent clinically, these results are consistent with database users responding primarily to the increased accessibility of non-clinical information such as drug price and insurance formulary data; the results also suggest improvements to physician information access could have important implications for the costs and efficiency of medical care. We address possible selection effects in physician types by relying on within-doctor variation and an instrument for adoption timing that is based on the marketing strategy of the drug reference firm.
    JEL: I10 O33
    Date: 2017–03
  33. By: Pajarinen, Mika; Rouvinen, Petri
    Abstract: In this brief, we study the cultural dimension of new entrepreneurial activity in Finland. One in ten nascent entrepreneurs in Finland consider themselves to possess (also) a non-Finnish background. The ventures of these multicultural entrepreneurs are more networked and more likely to locate within the Helsinki metropolitan region than other, non-multicultural, ventures. In terms of firm survival and growth, these two groups of ventures are largely similar.
    Date: 2017–03–17

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