nep-ino New Economics Papers
on Innovation
Issue of 2018‒07‒16
thirteen papers chosen by
Uwe Cantner
University of Jena

  1. Heterogeneity of technology-specific R&D investments. Evidence from top R&D investors worldwide By Petros Gkotsis; Antonio Vezzani
  2. R&D, Embodied Technological Change and Employment: Evidence from Spain By Pellegrino, Gabriele; Piva, Mariacristina; Vivarelli, Marco
  3. The Collaborative Innovation Bloc: A New Mission for Austrian Economics By Elert, Niklas; Henrekson, Magnus
  4. Skill, Innovation and Wage Inequality: Can Immigrants be the Trump Card? By Gouranga Gopal Das; Sugata Marjit
  5. Workers' Replacements and Firms' Innovation Dynamics: New Evidence from Italian Matched Longitudinal Data By Elena Grinza; Francesco Quatraro
  6. Financing innovative business investment in Poland By Antoine Goujard; Pierre Guérin
  7. Patents in the Long Run: Theory, History and Statistics. By Claude DIEBOLT; Karine PELLIER
  8. Spinning the Industrial Revolution By Jane Humphries; Benjamin Schneider
  9. Economics of Innovative Payment Models Compared with Single Pricing of Pharmaceuticals By Cole, A.; Towse, A.; Lorgelly, P.; Sullivan, R.
  10. Going Abroad to Innovate? The Role of Entrepreneurial Orientation in Foreign Business Expansion for Japanese Small and Medium-Sized Manufacturers By Yamamoto, Satoshi; Kan, Viktoriya; Bartnik, Roman
  11. Banking and Innovation: A Review By Lin, Chen; Liu, Sibo; Wei, Lai
  12. Intellectual Property Regimes and Firm Structure By Sourav Bhattacharya; Pavel Chakraborty; Chirantan Chatterjee
  13. Mapping the Evolution of the Robotics Industry: A cross country comparison. By Estolatan, Eric; Geuna, Aldo; Guerzoni, Marco; Massimiliano Nuccio,

  1. By: Petros Gkotsis (European Commission - JRC); Antonio Vezzani (European Commission - JRC)
    Abstract: In this work, we develop and apply a methodology to estimate technology-specific R&D investments at firm level and then use these to test some arguments that have become central in the innovation literature. In particular, we first combine R&D investments with patent data of the world top R&D investors worldwide and show that investment per patent varies greatly both across technologies and across firms developing the same technology. We then use the estimated firm-technology R&D investments to assess how these are related to the international and technological strategies of firms. The estimation strategy makes use of a multilevel framework that allows us to model heterogeneity both at the firm and industry level. In particular, we show that specific firms strategies requires different level of investments and that sector specificities matter in determining R&D per patent investments, economies of scale in knowledge production, and the cost of (further) specialization. Accounting for (un)observed heterogeneity may lead to better policy design and management decisions.
    Keywords: patents, R&D, technology, cost, heterogeneity, internationalization
    Date: 2018–06
  2. By: Pellegrino, Gabriele; Piva, Mariacristina; Vivarelli, Marco
    Abstract: In this work, we test the employment impact of distinct types of innovative investments using a representative sample of Spanish manufacturing firms over the period 2002-2013. Our GMM-SYS estimates generate various results, which are partially in contrast with the extant literature. Indeed, estimations carried out on the entire sample do not provide statistically significant evidence of the expected labor-friendly nature of innovation. More in detail, neither R&D nor investment in innovative machineries and equipment (the so-called embodied technological change, ETC) turn out to have any significant employment effect. However, the job-creation impact of R&D expenditures becomes highly significant when the focus is limited to the high-tech firms. On the other hand - and interestingly - ETC exhibits its labor-saving nature when SMEs are singled out.
    Keywords: Innovation,R&D,Embodied Technological Change,Employment,GMM-SYS
    JEL: O33
    Date: 2018
  3. By: Elert, Niklas (Research Institute of Industrial Economics (IFN)); Henrekson, Magnus (Research Institute of Industrial Economics (IFN))
    Abstract: We argue that scholars in the Austrian tradition of economics should incorporate the notion of a collaborative innovation bloc into their study of spontaneous market order. We demonstrate how successful entrepreneurship depends on an innovation bloc of this kind, a system of innovation that evolves and within which activity takes place through time. The innovation bloc consists of five pools of economic skills from which people are drawn or recruited to form part of a collaborative team, which is necessary if innovation-based venturing is to flourish. The five skills are entrepreneurs, early- and later-stage-financiers, key personnel, and customers. Through real-world examples, we show how the application of the collaborative innovation bloc perspective could help make Austrian economics more concrete, relevant and persuasive, especially in regard to policy prescriptions.
    Keywords: Austrian Economics; Entrepreneurship; Innovation; Institutions; Schumpeterian entrepreneurship; Spontaneous order
    JEL: B53 D20 G32 L23 L26 O33
    Date: 2018–06–20
  4. By: Gouranga Gopal Das; Sugata Marjit
    Abstract: With the ensuing immigration reform in the US, the paper shows that targeted skilled immigration into the R&D sector that helps low-skilled labor is conducive for controlling inequality and raising wage. Skilled talent-led innovation could have spillover benefits for the unskilled sector while immigration into the production sector will always reduce wage, aggravating wage inequality. In essence, we infer: (i) if R&D inputs contributes only to skilled sector, wage inequality increases in general; (ii) for wage gap to decrease, R&D sector must produce inputs that goes into unskilled manufacturing sector; (iii) even with two types of specific R&D inputs entering into the skilled and unskilled sectors separately, unskilled labor is not always benefited by high skilled migrants into R&D-sector. Rather, it depends on the importance of migrants’ skill in R&D activities and intensity of inputs. Inclusive immigration policy requires inter-sectoral diffusion of ideas embedded in talented immigrants targeted for innovation.
    Keywords: HIB, immigration, innovation, wage gap, skill, R&D, policy, RAISE Act
    JEL: F22 J31 O15
    Date: 2018
  5. By: Elena Grinza; Francesco Quatraro
    Abstract: In this paper, we explore the impact of a firm's workers' replacements on innovation performance, by using rich matched employer-employee panel data for the Veneto region of Italy. We take the well-known resource-based theory of the firm as our departure point, and develop a set of hypotheses which we test empirically with negative binomial regressions. Coherently with our theoretical framework, we find that workers' replacements significantly dampen innovation performance, because they generate losses in the tacit knowledge base of the firm. We also nd that workers' replacements are especially detrimental to large and young rms, because large companies have more hierarchical rigidities and innovative capabilities in young rms are mostly dependent on specific human capital. Finally, our results show that firms' localization in industrial districts significantly mitigates the negative impact of workers' replacements, and that a similar picture emerges when firms are more exposed to knowledge spillovers, particularly of related knowledge.
    Keywords: Workers' replacements, excess worker turnover, innovation performance, tacit knowledge, knowledge spillovers, employer-employee matched longitudinal data.
    JEL: J63 O30
    Date: 2018
  6. By: Antoine Goujard; Pierre Guérin
    Abstract: Poland’s productivity has grown strongly over the past two decades. However, the public and private capital stock is weak, and investment remains focused on the adoption of existing technologies, which weighs on future productivity gains and innovation. Many micro enterprises have low productivity, and structural bottlenecks reduce start-ups' growth and their chances of survival. The EU and the government are stepping up funding for business research and development, collaboration with the public sector, entrepreneurship and innovation. This is an opportunity to improve the management of public business support, and the large new programmes should be carefully discussed with stakeholders and regularly evaluated to avoid the risks of subsidising low-productivity firms and to strengthen the take up from the most productive small and medium-sized enterprises. The sustainability of this ambitious package of measures will also require significant public revenues and promoting alternative market-based financing instruments will be critical over the medium term. Ongoing improvements in insolvency procedures and efforts to reduce the regulatory burden are set to ease reallocation of resources through the economy. However, the level of state involvement would remain important, and ensuring the independence of the network industry regulators and the Competition Authority and a level playing field between alternative technologies, as well as easing labour mobility would be good moves.
    Keywords: business environment, financial markets, financing, innovation, investment, Poland
    JEL: E22 G24 O16 O38 O44 O47
    Date: 2018–06–29
  7. By: Claude DIEBOLT; Karine PELLIER
    Abstract: This paper examines the structural and spatial dynamics of patents in France, Germany, Japan, the United Kingdom and the United States. The time series are extracted from an international, comparative and historical database on the long term evolution of patents in 40 countries from the 17th century to 1945 and in more than 150 countries from 1945 to present (Diebolt and Pellier, 2010). We found strong proof of infrequent large shocks resulting essentially from the major economic and political events formed by the two World Wars in the twentieth century. Our results question the autonomous process, i.e. the internal dynamic of the patent systems. Wars seem to push innovation and finally the economic growth process itself. We further investigated the role of innovation in economic growth through a causality analysis between patents and GDP per capita. Our major findings support the assumption that the accumulation of innovations was a driving force only for France, the United Kingdom and the United States during the post World War II period.
    Keywords: database, cliometrics, shock analysis, patents, causality, comparisons in time and space.
    JEL: C22 C82 N70 O34
    Date: 2018
  8. By: Jane Humphries; Benjamin Schneider
    Abstract: Abstract: The prevailing explanation for why the Industrial Revolution occurred first in Britain is Robert Allen’s (2009) ‘high†wage economy’ view, which claims that the high cost of labour relative to capital and fuel incentivized innovation and the adoption of new techniques. This paper presents new empirical evidence on hand spinning before the Industrial Revolution and demonstrates that there was no such ‘high†wage economy’ in spinning, a leading sector of industrialization. We quantify the working lives of frequently ignored female and child spinners who were crucial to the British textile industry in the Early Modern period with evidence of productivity and wages from the late sixteenth to the early nineteenth century. Our results show that spinning was a widespread, low†wage, low†productivity employment, in line with the Humphries (2013) view of the motivations for the factory system.
    Keywords: Hand spinning, Womenʹs wages, Industrial Revolution, Textiles, Great Divergence, High Wage Economy interpretation of invention and innovation
    JEL: J24 J31 J42 N13 N33 N63 O14 O31
    Date: 2016–06–16
  9. By: Cole, A.; Towse, A.; Lorgelly, P.; Sullivan, R.
    Abstract: The current system of a single price per medicine means that, for multi-indication medicines, the relationship between price and "value" can vary substantially. In this OHE Research paper, we consider - What are the economic implications of an alternative to single-price payments for pharmaceuticals? In particular, what are the implications for - payer budgets, patient access, and the incentives for innovation? Varying prices with the use of a drug offers the opportunity to better align payment with value, but the impact on patients, payers, and incentives for innovation are not clear cut. Two key papers offer competing perspectives. Bach (2014) described the potential for IBP to increase transparency and illustrated how IBP could lead to lower prices for lower value indications, while Chandra and Garthwaite (2017) argued that IBP would lead to higher prices overall. The key differences arose from assumptions as to where (single) prices are currently set, and the extent to which IBP could expand patient access by allowing further indications to be developed. In the short term theory suggests that indication-based pricing can improve overall welfare if it means greater patient access, but payers may face higher expenditure. However, the potential longer-term (dynamic) effects of IBP are sometimes neglected - optimising incentives for R&D means indications that can provide cost-effective treatment are likely to be developed, and there is the potential for increased price competition at the indication-level, which could lead to lower prices, so delivering better value to the health system. In order to explore the potential impact of competition, we identify two classes of cancer therapy - tyrosine-kinase inhibitors (TKIs) and PD-1/PD-L1 inhibitors and show how competing products and competing indications have developed over time. In the case of the PD-1/PD-L1 inhibitors additional indications are currently in development with more competing therapies expected to enter the market for several further cancer types. We illustrate how competition by indication in the PD-1/PD-L1 space could, in theory, reduce prices below the value-based price.
    Keywords: Economics of innovation; Judging value for money and improving decision making
    JEL: I1
    Date: 2018–07–01
  10. By: Yamamoto, Satoshi; Kan, Viktoriya; Bartnik, Roman
    Abstract: This paper explores why a specific group of highly specialized Japanese toolmakers have chosen to expand their limited customer base to include Germany, despite strong cultural and geographical differences. Analyzing the phenomenon through the theoretical lens of International Entrepreneurship research, we find that compared to existing Japanese customers, Japanese SMEs perceived the German customers as less hierarchically dominant and more open and appreciative of their products. Japanese SMEs cited a highly interactive learning relationship with their German customers as a strong potential source for product and process innovation. In sum, we find that this the aspiration for innovativeness is a key motivator for these specialized Japanese SMEs to expand their business to Germany.
    Keywords: Innovativeness, Internationalization, IEO, Japanese manufacturers, German Customers
    Date: 2018–06
  11. By: Lin, Chen (Asian Development Bank Institute); Liu, Sibo (Asian Development Bank Institute); Wei, Lai (Asian Development Bank Institute)
    Abstract: We summarize the major findings of empirical studies that examine the effect of banking development on innovation and highlight their relative contributions to our understanding of the various roles the banking sector plays in determining innovation. We reassess the effect of banking development and innovation, extending the scope of analysis to more granular dimensions of innovation and to Asian economies where financial markets are less developed. We find that while theoretical implications are generally indefinite about the effect of banking development on innovation, empirical findings are less ambiguous given their distinct focus of sample firms and the underlying channels investigated. The development conditions of financial markets also matter in drawing implications for the effect of financial institutions on innovation. Specifically, when the stock market is relatively less developed, as in most Asian economies, banks play a significant role in financing and promoting innovation. Therefore, it seems plausible for policy makers in these regions to strengthen the development of the banking sector and to improve the depth of the credit market. In this survey, we will summarize the major findings of the empirical studies that examine the effect of banking development on innovation and highlight their relative contributions to our understanding about the various roles that the banking sector plays in determining innovation. Then, we will reassess the effect of banking development and innovation.
    Keywords: banking development; innovation; financial markets
    JEL: G02
    Date: 2018–03–05
  12. By: Sourav Bhattacharya; Pavel Chakraborty; Chirantan Chatterjee
    Abstract: We use The Patents (Amendment) Act, 2002 in India as a quasi-natural experiment to identify the causal e¤ect of higher incentives for innovation on firm organizational features. We find that stronger intellectual property (IP) protection has a sharper impact on technologically advanced firms, i.e., firms that were a-priori above the industry median in terms of technology adoption. While there is an overall increase in managers' share of compensation, this increase is about 1.6-1.7% more for high-tech firms. This difference can be attributed to a larger increase in performance pay for high-tech firms. The reform also leads to a significant increase in number of managerial layers and number of divisions for high-tech firms relative to low-tech firms, but only the latter effect is correlated with the differential change in managerial compensation. Broadly, we demonstrate that stronger IP protection leads to an increase in both within-firm and between-firm wage inequality, with more robust evidence for between-firm inequality.
    Keywords: Intellectual Property Regimes, High-tech and Low-tech firms, Managerial Com- pensation, Span of Control
    JEL: D21 D23 L23 O34
    Date: 2018
  13. By: Estolatan, Eric; Geuna, Aldo; Guerzoni, Marco; Massimiliano Nuccio, (University of Turin)
    Abstract: Industry 4.0 may be regarded as an emerging approach to the adoption of next-generation robotics for industrial applications. Our study sheds light on the current state of robotics, with a particular focus on robots for industrial applications. The research combines publicly-available information from company press releases, news articles, peer-reviewed journals and trade and industry reports. The paper is organized in four sections. Section 1 discusses some definitions of robotics and robotics subclasses, and various robotics classifications. Sections 2 and 3 provide a snapshot of demand and supply of robotics, and offers some insights into select regional markets and global technological trends. Section 4 describes the challenges and opportunities surrounding robotics and Industry 4.0, and the future impact of these technologies.
    Date: 2018–07

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