nep-ino New Economics Papers
on Innovation
Issue of 2018‒03‒26
fifteen papers chosen by
Uwe Cantner
University of Jena

  1. Does Host Market Regulation Induce Cross Border Environmental Innovation? By Giovanni Marin; Antonello Zanfei
  2. Mapping the Radical Innovations in Food Industry: A Text Mining Study By Ilya Kuzminov; Pavel Bakhtin; Elena Khabirova; Maxim Kotsemir; Alina Lavrynenko
  3. Firm-level Productivity Dispersion and Convergence By G. Cette; S. Corde; R. Lecat
  4. What Shapes Local Innovation Policies? Empirical Evidence from Japanese Cities By OKAMURO, Hiroyuki; NISHIMURA, Junichi
  5. R&D-Driven Medical Progress, Health Care Costs, and the Future of Human Longevity By Sebastian Böhm; Volker Grossmann; Holger Strulik
  6. Competition in the Venture Capital Market and the Success of Startup Companies: Theory and Evidence By Hong, Suting; Serfes, Konstantinos; Thiele, Veikko
  7. Entrepreneurship and Sustainability: The Need for Innovative and Institutional Solutions By BEN YOUSSEF, Adel; Boubaker, Sabri; Omri, Anis
  8. Opportunity versus Necessity Entrepreneurship: Two Components of Business Creation By Robert W. Fairlie; Frank M. Fossen
  9. Financial and Institutional Reforms for an Entrepreneurial Society By Economidou, Claire; Grillo, Luca; Henrekson, Magnus; Sanders, Mark
  10. The innovation theory of harm: an appraisal By Vincenzo Denicolò; Michele Polo
  12. Startup as a partner of cooperation for big company in the agri-food industry: Analysis of forms of cooperation on examples By Klimczuk-Kochańska, Magdalena
  13. Output and R&D subsidies in a mixed oligopoly By Lee, Sang-Ho; Tomaru, Yoshihiro
  14. Innovation and Inequality in a Monetary Schumpeterian Model with Heterogeneous Households and Firms By Chu, Angus C.; Cozzi, Guido; Fan, Haichao; Furukawa, Yuichi; Liao, Chih-Hsing
  15. Technology and employment. Twelve stylized facts for the digital age By Pianta, Mario

  1. By: Giovanni Marin (Università di Urbino 'Carlo Bo', Italy); Antonello Zanfei (Università di Urbino 'Carlo Bo', Italy)
    Abstract: This paper evaluates the effect of host-country environmental policy stringency on the offshoring of environmental patents for 2000 top world R&D performers. It is shown that a more stringent environmental regulation triggers both the extensive and intensive margin of patent offshoring in the field of environmental technologies. Results are robust to various different specifications, alternative definitions of regulation restrictions and to the consideration of possible endogeneity of regulation. It is suggested inter alia that R&D subsidies and non-market based instrument are more important than market-based instruments as drivers of cross-border environmental innovation.
    Keywords: MNE, environmental policy, patent data
    Date: 2018–03
  2. By: Ilya Kuzminov (National Research University Higher School of Economics); Pavel Bakhtin (National Research University Higher School of Economics); Elena Khabirova (National Research University Higher School of Economics); Maxim Kotsemir (National Research University Higher School of Economics); Alina Lavrynenko (National Research University Higher School of Economics)
    Abstract: The article presents the results of the study of radical innovations in the global food industry which were obtained through semantic analysis of heterogeneous unstructured text data sources by applying innovative big data text mining system. The approach used allows performing rapid, yet comprehensive aggregation of the whole polyphony of existing knowledge of the technology development in any sector for traditional foresight, future oriented technology analysis, and horizon scanning studies. The sources for the analysis include research papers, patent applications with both full-text data and additional structured metadata, analytical reports by main international organizations and national key players, various media and news resources, including all the major technology innovation, disruption and venture capital news websites. Their processing with an introduced approach for trend- and technology-mapping helps to identify ongoing and emerging technology-related trends, weak signals on possible scientific breakthroughs in the global food industry, including most promising startup strategies and food innovation controversies. This kind of analysis can be performed on a regular basis owing to constant accumulation of textual data and serve as a framework for constant science and technology (S&T) monitoring for early warning on changing technology landscape and its implications on agriculture and food markets
    Keywords: radical innovations, trends, weak signals, big data, text mining, food industry
    JEL: O1 O3
    Date: 2018
  3. By: G. Cette; S. Corde; R. Lecat
    Abstract: The productivity slowdown has been analysed as an effect of weaker technological progress, of the digital economy or of a less efficient reallocation process. Using data on firms operating in France, we highlight that, at the technological frontier, productivity has accelerated, especially over the recent period, which contradicts the hypothesis of a decline in innovation. The most productive firms in a given year do not, however, improve their relative advantage. The convergence of firms’ productivity does not seem to have slowed down in the 2000s, which does not confirm the hypothesis of a decrease in the dissemination of innovation. On the other hand, the dispersion of productivity between firms has increased, which suggests growing difficulties in reallocating production factors, labour and capital, between firms.
    Keywords: total factor productivity, dissemination of innovation.
    JEL: E22 L11 O47
    Date: 2018
  4. By: OKAMURO, Hiroyuki; NISHIMURA, Junichi
    Abstract: Increasing attention has been paid to regional innovation systems. However, previous studies have so far only focused on (the regional impact of) national policies or specific regions. To date, no studies have been carried out on the implementation and variety of local research and development (R&D) subsidy programs at the municipality level. Our research fills this gap by using information on R&D subsidy programs from local authorities in Japan collected via websites and our original survey. Our research confirms 151 R&D subsidy programs conducted by 131 cities among all cities in 2015 and investigates the determinants of the implementation and design of local R&D subsidy programs at city level (length and upper limit of subsidies, and flexibility of subsidy conditions) considering both demand- and supply-side factors. The empirical results suggest that, after controlling for city type and population size, supply-side factors including local government conditions significantly affect the implementation of public R&D subsidy programs. In contrast, we find that demand-side factors matter more for the design of subsidy programs than supply-side factors.
    Keywords: local authority, innovation policy, R&D subsidy, policy design, city
    JEL: H71 O38 R58
    Date: 2018–03
  5. By: Sebastian Böhm; Volker Grossmann; Holger Strulik
    Abstract: In this paper we set up an overlapping generations model of gerontological founded human aging that takes the interaction between R&D-driven medical progress and access to health care into account. We use the model to explore potential futures of human health and longevity. For the baseline policy scenario of health care access, the calibrated model predicts substantial future increases in health and life expectancy, associated with rising shares of health expenditure in GDP. Freezing the expenditure share at the 2020 level by rationing access to health care severely reduces potential gains in health, longevity and welfare. These losses are greatest in the long run due to reduced incentives for medical R&D. For example, rationing is predicted to reduce potential gains of life-expectancy at age 65 by about 4 years in the year 2050. Generally, and perhaps surprisingly, young individuals (i.e. those who save the most health care contributions through rationing) are predicted to suffer the greatest losses in terms of life expectancy and welfare.
    Keywords: longevity, medical R&D, morbidity, health care, rationing
    JEL: H50 I10 C60 O11
    Date: 2018
  6. By: Hong, Suting (Shanghai Tech University); Serfes, Konstantinos (Drexel University); Thiele, Veikko (Queen's University)
    Abstract: We examine the effect of a competitive supply of venture capital (VC) on the success rates of VC-backed startup companies (e.g. IPOs). We first develop a matching model of the VC market with heterogeneous entrepreneurs and VC firms, and double-sided moral hazard. Our model identifies a non-monotone relationship between VC competition and successful exits: a more competitive VC market increases the likelihood of a successful exit for startups with low quality projects (backed by less experienced VC firms in the matching equilibrium), but it decreases the likelihood for startups with high quality projects (backed by more experienced VC firms). Despite this non-monotone effect on success rates, we find that VC competition leads to higher valuations of all VC-backed startups. We then test these predictions using VC data from Thomson One, and find robust empirical support. The differential effect of VC competition has a profound impact on entrepreneurship policies that promote VC investments.
    Keywords: entrepreneurship; venture capital; matching; double-sided moral hazard; exit; IPO
    JEL: C78 D86 G24 L26 M13
    Date: 2018–02–01
  7. By: BEN YOUSSEF, Adel; Boubaker, Sabri; Omri, Anis
    Abstract: The role of innovation and institutional quality for achieving sustainability are important issues tackled by current sustainable development debates, particularly in developing countries. Using a modified environmental Kuznets curve model, the present study improves our understanding of the critical roles of innovation, institutional quality, and entrepreneurship in structural change toward a sustainable future for Africa. Our empirical results show that formal and informal entrepreneurship are conducive to reduced environmental quality and sustainability in 17 African countries however informal entrepreneurship contributes more than formal entrepreneurship to this environmental degradation. The relationship between entrepreneurship and sustainable development turns strongly positive in the presence of high levels of innovation and institutional quality. This study contributes to this emerging research strand by clarifying the conditions that allow African countries to move toward more sustainable economies. Our results highlight the important roles played by innovation and institutions for achieving sustainability in Africa.
    Keywords: Entrepreneurship; Sustainability; Innovation; Institutional quality.
    JEL: M21 O31 Q56
    Date: 2017–12–01
  8. By: Robert W. Fairlie; Frank M. Fossen
    Abstract: A common finding in the entrepreneurship literature is that business creation increases in recessions. This counter-cyclical pattern is examined by separating business creation into two components: “opportunity” and “necessity” entrepreneurship. Although there is general agreement in the previous literature on the conceptual distinction between these two factors driving entrepreneurship, there are many challenges to creating a definition that is both objective and empirically feasible. We propose an operational definition of opportunity versus necessity entrepreneurship using readily available nationally representative data. We create a distinction between the two types of entrepreneurship based on the entrepreneur’s prior work status that is consistent with the standard theoretical economic model of entrepreneurship. Using this definition we document that “opportunity” entrepreneurship is pro-cyclical and “necessity” entrepreneurship is counter-cyclical. We also find that “opportunity” vs. “necessity” entrepreneurship is associated with the creation of more growth-oriented businesses. The operational distinction proposed here may be useful for future research in entrepreneurship.
    Date: 2017
  9. By: Economidou, Claire (University of Piraeus); Grillo, Luca (Politecnico di Milano); Henrekson, Magnus (Research Institute of Industrial Economics (IFN)); Sanders, Mark (Utrecht University School of Economics)
    Abstract: In this paper, we introduce a special issue of Small Business Economics on Financial and Institutional Reforms for an Entrepreneurial Society in Europe. There are many reasons for Europe to want to make the transition to a more entrepreneurial society. And for decades now, policy makers are trying to bring that transition about with variations on the “educate, deregulate and finance”- approach to entrepreneurship. We argue that more fundamental reforms are required to improve the entrepreneurial ecosystem and bring about this transition. We then discuss the twelve contributions that pertain to five different facets of the entrepreneurial ecosystem. The first two papers address the most fundamental institutional foundations of the ecosystem. The next three papers discuss the (lack of) access to knowledge and incentives to start innovative entrepreneurial ventures. That is followed by three papers that focus on the institutions that (fail to) channel financial resources to such ventures and two papers that analyze the relevance of labor market institutions. The special issue concludes with two papers investigating how the interplay of institutions and productive entrepreneurship results in economic growth.
    Keywords: Entrepreneurship; Institutions; Reform; European Union; Innovation
    JEL: D02 L26 O38 O43 P11
    Date: 2018–03–16
  10. By: Vincenzo Denicolò; Michele Polo
    Abstract: In its recent decision on the Dow-DuPont case, the European Commission has adopted an innovation theory of harm (IToH), which holds that even horizontal mergers whose static effects are benign may be regarded as anticompetitive in a dynamic perspective, as mergers generally stifle innovation. This paper critically assesses the IToH, arguing that its theoretical foundations are too fragile to be the basis for radical policy changes. Antitrust authorities and the courts should continue to consider the impact of horizontal mergers on innovation, bearing in mind that the effect can go either way.
    Keywords: Mergers, Innovation
    JEL: L13 L40 K21 O31
    Date: 2018
  11. By: Mário Alexandre Patrício Martins da Silva (Faculdade de Economia da Universidade do Porto)
    Abstract: In this paper, the commitment to a policy of know-how trading by the participants in an industry is explained by the firms’ attempt to induce the equilibrium of a single industry-wide cooperative research joint venture. In a repeated game framework, we show that pre-commitments by non-cooperative firms to disclose their own know-how to the industry can be effective in inducing cooperative R&D investments by the participants.
    Keywords: Cooperative R&D, Know-how trading, Policy
    JEL: L13 O31 O33
    Date: 2018–01
  12. By: Klimczuk-Kochańska, Magdalena
    Abstract: Currently obtaining and maintaining a competitive advantage require implementation of innovation in companies. This trend is mainly caused by the rapid development cycle of technologies. Thus, there is a question of adaptability especially regarding introducing innovation. It can be assumed that cooperation between entities at various stages of the business development is increasingly important and large enterprises from the agri-food industry are willing to interact with startups. This interaction may allow startups to overcome the difficulties that are emerging at the early stage of the development such as the problem of delivering the reliable proof of concept. The goal of this paper is an analysis of cooperation and use of the synergies between large enterprises and startups especially in order to address needs of innovation in the economy. The cooperation can take various forms, and this paper will discuss selected types of collaboration between large enterprises and startups, which are related to business acceleration activities, co-development, co-branding, acquisitions, and acqui-hire.
    Keywords: acqui-hire, acquisition, agri-food industry, co-branding, co-development, forms of cooperation, startups
    JEL: C71 L66 O16 P12 Q13 Q18
    Date: 2017
  13. By: Lee, Sang-Ho; Tomaru, Yoshihiro
    Abstract: We analyze an oligopoly where public and private firms compete in quantity and R&D. Using general functions, we show that an output subsidy and an R&D tax can achieve the first-best allocation. Moreover, the degree of privatization does not influence the optimal output subsidy but does influence the optimal R&D tax.
    Keywords: R&D subsidy; Output subsidy; Mixed oligopoly; Partial privatization
    JEL: H2 L3
    Date: 2017–03–01
  14. By: Chu, Angus C.; Cozzi, Guido; Fan, Haichao; Furukawa, Yuichi; Liao, Chih-Hsing
    Abstract: This study develops a Schumpeterian growth model with heterogeneous households and heterogeneous firms to explore the effects of monetary policy on innovation and income inequality. Household heterogeneity arises from an unequal distribution of wealth. Firm heterogeneity arises from random quality improvements and a cost of entry. We find that under endogenous firm entry, inflation has inverted-U effects on economic growth and income inequality. We also calibrate the model for a quantitative analysis and find that the model is able to match the growth-maximizing inflation rate and the inequality-maximizing inflation rate that we estimate using cross-country panel data.
    Keywords: inflation, income inequality, economic growth, heterogeneity
    JEL: D3 E41 O3 O4
    Date: 2018–02
  15. By: Pianta, Mario
    Abstract: Twelve stylized facts on the relationship between technology and employment are proposed in this paper as a summary of current trends, conceptual issues, methodological approaches and research results. They include the following: 1. Technology is shaped by social relations; 2. Technology saves human labour; technological unemployment is a serious concern; 3. In the digital age the nature and boundaries of work are changing; 4. Different technological strategies have contrasting employment effects; 5. Industries differ in their employment dynamics and role of technology; 6. We can see the employment impact of technology at the firm, industry and macroeconomic levels; 7. Technological change is a disequilibrium process; demand and structural change matter; 8. Business cycles affect technological change and its employment impact; 9. The impact of technology is different across occupations and skills; 10. Labour market conditions are relevant, but employment outcomes are not determined in labour markets alone; 11. In emerging countries employment outcomes are jointly affected by technology and catching up; 12. Technology is an engine of inequality; profits benefit more than wages, wage disparities increase. They have important policy implications in several areas of public action.
    Keywords: Technology Employment Skills
    JEL: J31 O3
    Date: 2017–12

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