nep-ino New Economics Papers
on Innovation
Issue of 2018‒05‒14
sixteen papers chosen by
Uwe Cantner
University of Jena

  1. Why Has Economic Growth Slowed When Innovation Appears to be Accelerating? By Robert J. Gordon
  2. How Redeployable are Patent Assets? Evidence from Failed Startups By Carlos J. Serrano; Rosemarie Ziedonis
  3. China's trajectory from production to innovation: Insights from the photovoltaics sector By Gandenberger, Carsten
  4. Competition effect on innovation and productivity - The Portuguese case By Anabela Santos; Michele Cincera; Paulo Neto; Maria Manuel Serrano
  5. Innovation and Trade Policy in a Globalized World By Akcigit, Ufuk; Ates, Sina T.; Impullitti, Giammario
  6. Academic Inventors and the Antecedents of Green Technologies. A Regional Analysis of Italian Patent Data. By Quatraro, Francesco; Scandura, Alessandra
  7. Innovation, Finance, and Economic Growth : an agent-based model By Giorgio Fagiolo; Daniele Giachini; Andrea Roventini
  8. External search strategies: The role of innovation objectives and specialization By Iferd, Younes; Plötz, Patrick
  9. Does the Crowd Support Innovation? Innovation Claims and Success on Kickstarter By Yang, Cathy L.; Mukherjee, Anirban; Xiao, Ping; Chattopadhyay, Amitava
  10. Green Technologies and Smart Specialisation Strategies: A European Patent-Based Analysis of the Intertwining of Technological Relatedness and Key-Enabling-Technologies. By Sandro Montresor; Francesco Quatraro,
  11. The Locus of Knowledge Externalities and the Cost of Knowledge. By Antonelli, Cristiano; Colombelli, Alessandra
  12. Reconciling the Firm Size and Innovation Puzzle By Anne Marie Knott; Carl Vieregger
  13. The Patent-issuing Rules and Economic Growth: Are We in a "Wrong" Patent Regime? By Tetsugen Haruyama; Kaz Miyagiwa
  14. Integrated vs. add-on: A multidimensional conceptualisation of technology obsolescence By Amankwah-Amoah, Joseph
  15. Innovating not Only in Cities: Evidence from SMEs By François Deltour; Sébastien Le Gall; Virginie Lethiais
  16. Does the Utilization of Information Communication Technology Promote Entrepreneurship: Evidence from Rural China By William Barnett; Mingzhi Hu; Xue Wang

  1. By: Robert J. Gordon
    Abstract: Measured between quarters with identical unemployment rates, U. S. economic growth slowed by more than half from 3.2 percent per year during 1970-2006 to only 1.4 percent during 2006-16, and only half of this GDP growth slowdown is accounted for diminished productivity growth. The paper starts from the proposition that GDP growth matters, not just productivity growth, because slower GDP growth provides fewer resources to address the nation’s problems, including faltering education, aging infrastructure, and the looming shortfall in funding for Social Security and Medicare, and it also implies lower net investment and a reduced rate at which new capital can embody the latest technology. The paper documents the contribution to slower GDP growth of the separate components of demography -- fertility, mortality, life expectancy, and immigration. Particular emphasis is placed on the interaction between rising inequality and the slower secular rise of life expectancy in the U.S. compared to other developed countries, both in the form of a large gap in life expectancy between rich and poor, and the stagnation of life expectancy for the lowest income quintile. Further contributions to slowing growth are made by a decline in the population share of both legal and illegal immigration and a turnaround from rising to declining labor force participation. Rising inequality creates a gap between the growth of average real per-capita income relative to that of median real income, and alternative measures of the evolution of this gap are compared and assessed. Causes of declining productivity growth begin with the slowdown in the rate of increase of educational attainment resulting from the interplay of demand and supply factors, including the flattening of the college wage premium and the rising relative price of college education. Why did productivity growth decline after 2006 despite an increase in the rate at which new U.S. patents were issued in 2006-16 compared to earlier decades? Part of the slowdown is attributed to the maturity of the IT revolution, which also helps to explain the trajectory of the college wage premium. Aspects of the productivity growth slowdown include the declining productivity of research workers, diminishing returns to drug innovation, and the evolutionary rather than revolutionary impact of robots and artificial intelligence, which are replacing workers slowly and only in a minority of industrial sectors throughout the economy. Also considered are alternative explanations of slower productivity growth, including low investment and mismeasurement.
    JEL: D24 E24
    Date: 2018–04
  2. By: Carlos J. Serrano; Rosemarie Ziedonis
    Abstract: Entrepreneurial firms are important sources of patented inventions. Yet little is known about what happens to patents “released” to the market when startups fail. This study provides a first look at the frequency and speed with which patents originating from failed startups are redeployed to new owners, and whether the value of patents is tied to the original venture and team. The evidence is based on 1,766 U.S. patents issued to 285 venture capital-backed startups that disband between 1988 and 2008 in three innovation-intensive sectors: medical devices, semiconductors, and software. At odds with the view that the resale market for patented inventions is illiquid, we find that most patents from these startups are sold, are sold quickly, and remain “alive” through renewal fee payment long after the startups are shuttered. The patents tend to be purchased by other operating companies in the same sector and retain value beyond the original venture and team. We do find, however, that the patents and people sometimes move jointly to a new organization following the dissolution of the original venture, and explore the conditions under which such co-movement is more likely. The study provides new evidence on a phenomenon—of active markets for buying and selling patents—underexplored in the literature and consequential for both entrepreneurial and established firms.
    JEL: G24 G33 L14 L26 O16 O3
    Date: 2018–04
  3. By: Gandenberger, Carsten
    Abstract: China's photovoltaics sector provides an interesting case to examine, if and how the country is aiming at innovation leadership after having established itself as the global manufacturing leader. Due to the dominance of Chinese companies in the global PV market, their innovation and production decisions have become crucially important for the global transition towards renewable energy. Another aspect of PV technology is that technological progress has driven the develop-ment of various types of PV cells, which can be categorised in three different technology generations. The functional analysis of the technological innovation system for PV in China conducted in this paper shows, that the government has indeed strengthened indigenous innovation efforts, which has resulted in a rapid rise of academic publications and to a lesser extent of patents for PV technology. A disaggregated analysis of transnational PV patents demonstrates that techno-logical catching-up of China picked up speed in the period between 2008 and 2010 and takes place in all three technology generations. However. technological catch-up has been most successful in the third generation of PV cells, which is still at an experimental stage and predominantly conducted at public research entities. Overall, China's PV sector seems to be still quite far from attaining global innovation leadership, which is mainly due to the relatively low engagement of the corporate sector. However, as the first generation of PV currently dominates the world market and is technologically mature, this will probably not threaten industrial leadership in the short to medium term.
    Keywords: Economic Catch-Up,Photovoltaics,Technological Innovation System,China
    Date: 2018
  4. By: Anabela Santos (Université Libre de Bruxelles, iCite); Michele Cincera (Université Libre de Bruxelles, iCite and ECARES); Paulo Neto (Universidade de Évora – Departamento de Economia, UMPP, CEFAGE-UÉ and CIEO-UALG); Maria Manuel Serrano (Universidade de Évora – Departamento de Sociologia, UMPP and SOCIUS-CSG/ISEG-UL)
    Abstract: The aim of the present paper is to assess the effect of competition on innovation (patent applications) and on productivity (Total Factor Productivity and Labour Productivity), using data from 654 Portuguese firms, according to 208 NACE 4-digits sectors, and over the period 2007 to 2015. For this purpose, two different methodological approaches were used, a Poisson regression model for the patent function and a log-log fixed effect model for the productivity function. The results reveal that, on average, competition has a negative, U-shaped form effect on innovation in the short term, and a positive effect in the medium-long term. Nevertheless, the model focusing only on manufacturing sectors shows some differences from the model considering all economic activities, namely a linear positive effect of competition on innovation. Concerning the effect of competition on productivity, a positive effect on Total Factor Productivity emerged from the analysis, while for labour productivity a negative one prevails.
    Keywords: Competition, Innovation, Productivity.
    JEL: L10 O31 D24
    Date: 2018–05
  5. By: Akcigit, Ufuk; Ates, Sina T.; Impullitti, Giammario
    Abstract: How do import tariffs and R&D subsidies help domestic firms compete globally? How do these policies affect aggregate growth and economic welfare? To answer these questions, we build a dynamic general equilibrium growth model where firm innovation endogenously determines the dynamics of technology, and, therefore, market leadership and trade flows, in a world with two large open economies at different stages of development. Firms' R&D decisions are driven by (i) the defensive innovation motive, (ii) the expansionary innovation motive, and (iii) technology spillovers. The theoretical investigation illustrates that, statically, globalization (defined as reduced trade barriers) has ambiguous effects on welfare, while, dynamically, intensified globalization boosts domestic innovation through induced international competition. Accounting for transitional dynamics, we use our model for policy evaluation and compute optimal policies over different time horizons. The model suggests that the introduction of the Research and Experimentation Tax Credit in 1981 proves to be an effective policy response to foreign competition, generating substantial welfare gains in the long run. A counterfactual exercise shows that increasing tariffs as an alternative policy response improves domestic welfare only when the policymaker cares about the very short run, and only when introduced unilaterally. Tariffs generate large welfare losses in the medium and long run, or when there is retaliation by the foreign economy. Protectionist measures generate large dynamic losses by distorting the impact of openness on innovation incentives and productivity growth. Finally, our model predicts that a more globalized world entails less government intervention, thanks to innovation-stimulating effects of intensified international competition.
    Keywords: Competition; Economic Growth; foreign technological catching-up; innovation policy; short- and long-run gains from globalization; trade policy
    JEL: F13 F43 O40
    Date: 2018–04
  6. By: Quatraro, Francesco; Scandura, Alessandra (University of Turin)
    Abstract: This work investigates the generation of green technologies (GTs) in Italian NUTS 3 regions across time, by focusing on the knowledge generation mechanisms underlying the creation of green patents. Firstly, we hypothesize that inventions in non-green technological domains positively influence the generation of GTs, because the latter occur as the outcome of a recombination process among a wide array of technological domains. Secondly, we hypothesise that the involvement of academic inventors in patenting activity bears positive effects on the generation of GTs, because they are able to manage the recombination across different technological domains. Thirdly, we explore the interaction effect between academic inventors’ involvement and non-green technologies to investigate whether the former are especially relevant in presence of higher or lower levels of the latter. We estimate zero-inflated negative binomial, spatial durbin and logistic regressions on a dataset of 103 Italian NUTS 3 regions for which we collected patent and regional data for the time span 1998-2009. The results suggest that both academic inventors and spillovers from polluting technologies bear positive direct effects on the generation of GTs; moreover, we find that academic inventors compensate for low levels of spillovers.
    Date: 2018–04
  7. By: Giorgio Fagiolo (Laboratory of Economics and Management (LEM)); Daniele Giachini (Scuola Superiore Sant'Anna); Andrea Roventini (Laboratory of Economics and Management (LEM))
    Abstract: This paper extends the endogenous-growth agent-based model in Fagiolo and Dosi (2003) to study the financegrowth nexus. We explore industries where firms produce a homogeneous good using existing technologies, perform R&D activities to introduce new techniques, and imitate the most productive practices. Unlike the original model, we assume that both exploration and imitation require resources provided by banks, which pool agent savings and finance new projects via loans. We find that banking activity has a positive impact on growth. However, excessive financialization can hamper growth. In- deed, we find a significant and robust inverted-U shaped relation between financial depth and growth. Overall, our results stress the fundamental (and still poorly understood) role played by innovation in the finance-growth nexu
    Keywords: Agent based model; Innovation; Exploration vs exploitation; Endogenous Growth; Banking sector; Finance Growth Nexus
    JEL: C63 G21 O30 O31
    Date: 2017–11
  8. By: Iferd, Younes; Plötz, Patrick
    Abstract: Firms are increasingly competing in an open innovation environment. Search strategies for external knowledge therefore become decisive for firms' success. Existing research distinguishes between breadth (diversity) and depth (intensity) with which firms deal with external knowledge sources. However, relatively little is known about how mangers can selectively strengthen one of these dimensions. We argue conceptually that the effect of breadth and depth of a research strategy on the innovation performance depends on (1) the type of innovation objectives (explorative vs. exploitative innovation objectives) and (2) the nature of the firm's orientation in drawing on external knowledge (science-based or market-based orientation). We test these hypotheses empirically for a sample of 1,434 manufacturing firms in Germany. Our results show that explorative innovation objectives strengthen the effect of breadth on innovation performance while exploitive objectives increase the depth. Moreover, we find that market-driven strategy favours breadth while science-driven strategy is more prevalent for depth search strategy.
    Keywords: open innovation,exploitative/explorative search strategies,market/science-driven strategies
    Date: 2018
  9. By: Yang, Cathy L.; Mukherjee, Anirban; Xiao, Ping; Chattopadhyay, Amitava
    Abstract: Online crowdfunding is a popular new tool for raising capital to commercialize product innovation. Product innovation must be both novel and useful (1-4). Therefore, we study the role of novelty and usefulness claims on Kickstarter. Startlingly, we find that a single claim of novelty increases project funding by about 200%, a single claim of usefulness increases project funding by about 1200%, and the co-occurrence of novelty and usefulness claims lowers funding by about 26%. Our findings are encouraging because they suggest the crowd strongly supports novelty and usefulness. However, our findings are disappointing because the premise of crowdfunding is to support projects that are innovative, i.e. that are both novel and useful, rather than projects that are only novel or only useful.
    Keywords: Crowdfunding; Entrepreneurship; Innovation
    JEL: L26 M13 O30
    Date: 2017–07–01
  10. By: Sandro Montresor; Francesco Quatraro, (University of Turin)
    Abstract: This paper investigates the move of regions towards sustainable growth through their specialisation in new green technologies. In particular, we analyse the role that smart specialisation strategies (S3) can have in this respect by addressing two research questions. First of all, we investigate whether the environmental diversification of regional technologies is, according to the S3 logic, driven by their “relatedness” to existing knowledge of green and non-green nature. Second, we analyse the role of the Key Enabling Technologies (KETs) that S3 policies recommend regions to prioritise, not only in fostering the adoption of environmental technologies, but also in affecting its dependence on the pre-existing knowledge-base. Combining regional patent and economic data for a 34-year panel (1980-2013) of 180 European regions, we find that the relatedness to the existing technological-base of the region actually makes the acquisition of a new green-tech specialisation more probable. This holds true with respect to both the green and non-green extant knowledge, pointing to a regional diversification that also benefits from the “hybridisation” of non-environmental technologies. The latter however requires a higher degree of relatedness than a “pure” green branching process. Regional KETs also help the transition towards sustainable technologies. What is more, they negatively moderate the green impact of the relatedness to pre-existing technologies, of both green and non-green nature, and thus attenuate the boundaries the latter could pose to regions in their environmental specialisation. These results confirm that S3 policies can actually boost the intertwining of a smart and sustainable kind of growth, and that the KETs inclusion within S3 can amplify the virtuous interaction between these two objectives.
    Date: 2018–04
  11. By: Antonelli, Cristiano; Colombelli, Alessandra (University of Turin)
    Abstract: This paper provides an extended CDM approach to analyse jointly the simultaneous effects of knowledge spillovers in the knowledge generation function and in the technology production function. It introduces the distinction between imitation and knowledge externalities and articulates the hypothesis that spillovers yield their effects via three well distinct mechanisms: i) knowledge externalities that exert positive and direct effects on the knowledge production function, and ii) indirect effects on the technology production function via their effects on the cost of knowledge; iii) imitation externalities exert direct and positive effects on productivity in the technology production function. We test our hypotheses on a large panel of Italian companies distributed in the NUTS2 regions for the period 2005 – 2009. The econometric analysis consists in a model comprising a system of equations that test the simultaneous role of spillovers in the knowledge generation function and the technology production function with the inclusion of endogenous knowledge costs. The results confirm that the access to external knowledge – as an input in the knowledge generation function – plays a key role in increasing the knowledge output and – as an input in the technology production function – has positive indirect and direct effects on the productivity of firms.
    Date: 2017–06
  12. By: Anne Marie Knott; Carl Vieregger
    Abstract: There is a prevailing view in both the academic literature and the popular press that firms need to behave more entrepreneurially. This view is reinforced by a stylized fact in the innovation literature that R&D productivity decreases with size. However, there is a second stylized fact in the innovation literature that R&D investment increases with size. Taken together, these stylized facts create a puzzle of seemingly irrational behavior by large firms—they are increasing spending despite decreasing returns. This paper is an effort to resolve that puzzle. We propose and test two alternative resolutions: 1) that it arises from mismeasurement of R&D productivity, and 2) that firm size endogenously drives R&D strategy, and that the returns to R&D strategies depend on scale. We are able to resolve the puzzle under the first tack--using a recent measure of R&D productivity, RQ, we find that both R&D spending and R&D productivity increase with scale. We had less success with the second tack--while firm size affects R&D strategy in the manners expected by theory, there is no strategy whose returns decrease in scale. Taken together, our results are consistent with the Schumpeter view that large firms are the major engine of growth, they both spend more in aggregate than small firms, and are more productive with that spending. Moreover the prescription that firms should behave more entrepreneurially, should be treated with caution--one small firm strategy has lower returns to scale than its large firm counterpart.
    Date: 2018–04
  13. By: Tetsugen Haruyama (The Graduate School of Economics, Kobe University); Kaz Miyagiwa (Department of Economics, Florida International University)
    Abstract: Probably, yes.
    Date: 2018–05
  14. By: Amankwah-Amoah, Joseph
    Abstract: In the past two decades, technology obsolescence has become an increasingly common feature of the global economy, often precipitated by new technological breakthroughs and innovations. Although a number of companies persist with obsolete technologies until disaster strikes, our understanding of the dynamics of technology obsolescence and why some firms persist with obsolete technologies remains largely underexplored. This conceptual paper seeks to fills these gaps in our understanding by developing a four-domain framework to explicate the dynamics of technologies’ obsolescence, which takes into account the components in determining different types of obsolescence. The framework articulates two types of life-cycle match and two types of life-cycle mismatch. The article also contributes to the literature by delineating an integrated framework of firm-specific and market-based factors which account for some firms’ persistence with obsolete technologies. Amassing and utilising the latest information to update their technologies can help firms enhance their competitiveness. The wider implications of the analysis for public policy and directions for future research are examined.
    Keywords: technological obsolescence; company strategies; obsolete technologies; products
    JEL: L00 L1 L10 L2 M0 M00
    Date: 2017
  15. By: François Deltour (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - UN - Université de Nantes, SSG - Sciences sociales et de gestion - IMT Atlantique - IMT Atlantique Bretagne-Pays de la Loire); Sébastien Le Gall (LEGO - Laboratoire d'Economie et de Gestion de l'Ouest - UBS - Université de Bretagne Sud - UBO - Université de Brest - Institut Mines-Télécom [Paris] - UBL - Université Bretagne Loire - IMT Atlantique - IMT Atlantique Bretagne-Pays de la Loire, MARSOUIN - Môle Armoricain de Recherche sur la SOciété de l'information et des usages d'INternet - UR1 - Université de Rennes 1 - UBS - Université de Bretagne Sud - UBO - Université de Brest - Ecole Nationale de la Statistique et de Analyse de l'Information - Rennes - Institut Mines-Télécom [Paris] - UR2 - Université de Rennes 2 - UNIV-RENNES - Université de Rennes - UBL - Université Bretagne Loire - IMT Atlantique - IMT Atlantique Bretagne-Pays de la Loire); Virginie Lethiais (LEGO - Laboratoire d'Economie et de Gestion de l'Ouest - UBS - Université de Bretagne Sud - UBO - Université de Brest - Institut Mines-Télécom [Paris] - UBL - Université Bretagne Loire - IMT Atlantique - IMT Atlantique Bretagne-Pays de la Loire, MARSOUIN - Môle Armoricain de Recherche sur la SOciété de l'information et des usages d'INternet - UR1 - Université de Rennes 1 - UBS - Université de Bretagne Sud - UBO - Université de Brest - Ecole Nationale de la Statistique et de Analyse de l'Information - Rennes - Institut Mines-Télécom [Paris] - UR2 - Université de Rennes 2 - UNIV-RENNES - Université de Rennes - UBL - Université Bretagne Loire - IMT Atlantique - IMT Atlantique Bretagne-Pays de la Loire)
    Abstract: This article discusses the role played by location of small and medium-sized firms on their propensity to innovate. The research adopts a broad definition of innovation and sets the hypothesis that SMEs' propensity to innovate is not higher in large urban areas than in rural ones. Moreover, reducing SMEs' location to their head office tends to overestimate urban areas' innovativeness. Following the administration of an original regional survey, econometric tests are run on a representative sample of 1,253 SMEs in the French Brittany region, completed by location data proposed by the French National Institute of Statistics (Insee). The results confirm that firms located in the largest urban areas of the region are not more innovative that those located in the most isolated areas. They also partially validate the hypothesis that measuring the firms' location using the location of the head offices leads to overestimate the innovativeness of largest urban areas compared to less urbanized one.
    Keywords: Innovation,Localisation,Petites et moyennes entreprises
    Date: 2017–12
  16. By: William Barnett (Department of Economics, The University of Kansas; Center for Financial Stability, New York City; IC2 Institute, University of Texas at Austin); Mingzhi Hu (Department of Investment, School of Public Economics and Administration, Shanghai University of Finance and Economics,Shanghai, China;); Xue Wang (Department of Finance; College of Economics, Jinan University, Guangzhou, China;)
    Abstract: Impacts on the probability of transition to entrepreneurship in rural China associated with the utilization of information communication technology (ICT) are estimated using longitudinal data from the China Family Panel Studies (CFPS) survey. We identify cell phone ownership and internet use as proxy variables for ICT utilization and find that cell phone ownership and internet use have positive impacts on entrepreneurship. After controlling for observables and time and regional fixed effects, cell phone users (internet users) are 2.0 (6.4) percentage points more likely to engage in entrepreneurship than the others. Considering that the average entrepreneurship rate for rural households is only 9.5% in the sample, the influence of cell phone ownership and internet use are very strong in the economic sense. Our results are robust to unobservable individual characteristics, model misspecification, and reverse causality of entrepreneurship to ICT utilization. Evidence also suggests that social network and information and knowledge acquisition play the mediating roles in the impact of ICT utilization on entrepreneurship.
    Keywords: ICT; social network; information acquisition; entrepreneurship
    JEL: D10 M51 Q55
    Date: 2018–02

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