nep-ino New Economics Papers
on Innovation
Issue of 2018‒10‒22
nineteen papers chosen by
Uwe Cantner
University of Jena

  1. Related variety, unrelated variety and the novelty content of firm innovation in urban and non-urban locations By Marte C.W. Solheim; Ron Boschma; Sverre Herstad
  2. ICT, R&D and Organizational Innovation: Exploring Complementarities in Investment and Production By Pierre Mohnen; Michael Polder; George van Leeuwen
  3. Imported input varieties and product innovation : evidence from five developing countries By Marijke J.D. Bos; Gonzague Vannoorenberghe
  4. The pecking order of innovation finance By Andrea Mina; Henry Lahr
  5. Fiscal Decentralization and Public R&D Policy: A Country Panel Analysis By Daniel Gama e Colombo; Jorge Martinez-Vazque
  6. Subjective Performance of Patent Examiners, Implicit Contracts and Self-Funded Patent Offices By Langinier, Corinne; Marcoul, Philippe
  7. Simultaneous Innovation and the Cyclicality of R&D By Miroslav Gabrovski
  8. Green Technology and Patents in the Presence of Green Consumers By Langinier, Corinne; Ray Chaudhuri, Amrita
  9. Food Value Chain Coordination in Practice: European and Australian Case Studies of the Creation of Chain Good Innovations By Euan Fleming; Garry Griffith; Stuart Mounter; Monika Hartmann; Johannes Simons
  10. Sunflower oil innovation, claim assessment and consumer’ motivations to accept this food By Franco Rosa; Federico Nassivera; Luca Iseppi
  11. Return migrants’ self-selection: Evidence for Indian inventors By Stefano BRESCHI; Francesco LISSONI; Ernest MIGUELEZ
  12. Enhancing dynamism in SMEs and entrepreneurship in Korea By Randall S. Jones; Jae Wan Lee
  13. Export innovation of SMEs through the extensive margin in Latin America By Park, Hyunju; Mulder, Nanno; Park, Yuri
  14. Migration and invention in the age of mass migration By Andrea Morrison; Sergio Petralia; Dario Diodato
  15. Technological Coherence and the Adaptive Resilience of Regional Economies By Silvia Rocchetta; Andrea Mina
  16. Creativity Under Fire: The Effects of Competition on Creative Production By Daniel P. Gross
  17. Technological Diversification in European Regions: The Role of E-skills By Fulvio Castellacci; Davide Consoli; Artur Santoalha
  18. Superstar Economists: Coauthorship networks and research output By Hsieh, Chih-Sheng; Konig, Michael D.; Liu, Xiaodong; Zimmermann, Christian
  19. Prediction Based on Entrepreneurship-Prone Personality Profiles: Sometimes Worse Than the Toss of a Coin By Alexander Konon; Alexander Kritikos

  1. By: Marte C.W. Solheim; Ron Boschma; Sverre Herstad
    Abstract: In this paper, we investigate whether the composition of experience-based knowledge accumulated by firms in urban and rural locations is reflected in the novelty content of their innovations. Looking at the manufacturing industry, and using Norwegian Linked Employer- Employee register data (LEED) merged with Community Innovation Survey (CIS) data, we find that unrelated experience variety within firms increases the probability of radical innovation, independently of firms' location, whereas related variety increases the probability of incremental innovation in large-city regions. These results demonstrate that innovation capacity cannot be understood from the single perspective of R&D efforts and strategy as it also depends on experiences accumulated in 'entire organizations' and the locations in which accumulation occurs. Moreover, they suggest that for manufacturing firms, urban locations are not hot spot for radical change. Instead, they support incremental innovative activities by facilitating effective sharing of knowledge between related sectors.
    Keywords: immigration, Diversity, Innovation, Related Variety, Unrelated Variety, Urban, Rural
    JEL: O31 P25 O15 O14 J24
    Date: 2018–10
  2. By: Pierre Mohnen; Michael Polder; George van Leeuwen
    Abstract: This paper examines whether there are complementarities between investments in ICT, R&D and organizational innovation, and the effects of different investment profiles on total factor productivity growth on Dutch firm-level data. We estimate an integrated model of investment profile adoption and total factor productivity growth. We find that the three investment decisions are complementary, in the sense that investing in one increases the probability of investing in another one because joint investments lead to higher TFP growth than individual investments. ICT earns on average an expected rate of return of 9.7%, followed by 6% to 7% on organizational innovation and a modest 1.4% to 1.8% on R&D in services and manufacturing respectively.
    JEL: L25 O30 O33
    Date: 2018–09
  3. By: Marijke J.D. Bos (Ministry of Economic Affairs, The Hague, Netherlands); Gonzague Vannoorenberghe (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: We examine how access to imported intermediate inputs affects firm-level product innovation in five developing counties. We combine trade data with survey data on innovation and develop a method to determine whether new inputs were essential for the product innovation. We find evidence that the number of newly imported varieties has a significant impact on product innovations that rely on new inputs and provide suggestive evidence that this effect comes from access to better quality imports. We extend our analysis to assess the consequences of the increase in the number of Chinese exporting firms on product innovation in developing countries.
    Keywords: product innovation, trade, new intermediate inputs
    JEL: F1
    Date: 2018–09
  4. By: Andrea Mina; Henry Lahr
    Abstract: This paper examines the relationship between firms' innovation activities and the hierarchy of financing behaviours. We analyse the role of innovation inputs (R&D), intermediate outputs (patents) and outcomes (product and process innovations) as sources of information asymmetry in financing decisions. Our focus on mainly unlisted companies allows us to study the effects of information asymmetries in the context where they are most severe, that is, among small and medium-sized firms. We identify the effect of innovation, alongside the size of the firm, its age and its human capital, on the order of directly observed external capital allocations. Our results show that innovation is strongly associated with a pecking order characterised by increasing agency costs, and that the more uncertain the innovation signal, the stronger its effect on the pecking order. In further robustness tests, this relationship and associated hierarchy of external financing emerge from the data without imposing an a-priori pecking order.
    Keywords: R&D, innovation, information asymmetries, capital structure, pecking order
    Date: 2018–10–17
  5. By: Daniel Gama e Colombo (National Institute of Educational Studies and Research Anísio Teixeira, Brazil); Jorge Martinez-Vazque (International Center for Public Policy, Georgia State University, USA)
    Abstract: This paper examines the impact of fiscal decentralization on both public investment in innovation (measured as the share of research and development - R&D - spending in total government budget) and on the intensity of basic research within the public R&D bundle. We present a theoretical model where a ‘benevolent government’ invests in R&D aiming at maximizing net income available in the country (central government) or in the respective region (subnational government), where states compete to attract capital investment, and where R&D results are subject to interregional knowledge spillovers. The model predicts that decentralization leads to a lower level of public spending on innovation, and to a lower share of basic research in government R&D budget. The implications of the model are empirically tested utilizing country aggregate data. We find evidence that expenditure decentralization leads to lower intensity of basic research within public R&D, and that both revenue and expenditure decentralization negatively affect the size of innovation spending. The findings suggest that fiscal decentralization policy, expected to be beneficial in many other dimensions, should be accompanied by measures to compensate for the otherwise decrease in innovation spending, and that the assignment of expenditure responsibilities should have central government play a greater role in financing and carrying out basic research.
    Date: 2018–09
  6. By: Langinier, Corinne (University of Alberta, Department of Economics); Marcoul, Philippe (University of Alberta)
    Abstract: Self-funded patent offices should be concerned with patent quality (patents should be granted to only deserving innovations) and quantity (as revenues come from fees paid by applicants). In this context, we investigate what is the impact of the self-funded constraint on different bonus contracts, and how these contracts affect the examiners incentive to prosecute patent applications. We consider contracts in which a patent office offers bonuses on quantity quotas (explicit contract) and on quality outcome (either an implicit contract or an explicit contract based on a quality proxy). We find that a self-funded constrained agency should make different organization choices of incentives. For a low quality proxy precision, an agency facing a tight budget operates well with implicit contracts. However, by only relaxing moderately the budget constraint, the agency might be worse off simply because this will preclude implicit contracts. Only very large patenting fees might allow the agency to compensate for the loss of implicit contracts.
    Keywords: Patents; Examiners; Explicit and Implicit Contracts; Self-funded Agency
    JEL: D23 D86 O34
    Date: 2018–10–18
  7. By: Miroslav Gabrovski (University of Hawaii at Manoa Ministry of Strategy and Finance, Republic of Korea)
    Abstract: There is ample evidence that R&D investment is mildly pro-cyclical. Whereas the existing literature can explain the positive correlation between investment in R&D and output, the moderate strength of the relationship remains under-explored. This paper develops a stochastic expanding-variety endogenous growth model that accounts for the observed mild pro-cyclicality of R&D. In the model, several firms may simultaneously make the same innovation. Research projects innovated by many firms simultaneously are of higher quality, on average, and contribute relatively more to the expansion of the knowledge stock in the economy. This delivers an endogenous mechanism that breaks the otherwise perfect correlation between R&D and output. A calibration of our model closely matches the cyclical properties of R&D.
    Keywords: Simultaneous Innovation, Research and Development, Medium-Term Cycles, Macroeconomic Fluctuations, Endogenous Cycles
    JEL: O30 O40 E32
    Date: 2018–10
  8. By: Langinier, Corinne (University of Alberta, Department of Economics); Ray Chaudhuri, Amrita (University of Winnipeg)
    Abstract: We develop a theoretical framework to investigate the impact of patent policies and emission taxes on green innovation that reduces the emission output ratio, and on the emission level. In the absence of green consumers, the introduction of patents results in a paradox whereby increasing emission tax beyond a certain threshold leads to a discrete increase in the emission level, which may be avoided by reducing the patenting cost. In the presence of green consumers, this paradox is restricted to an intermediate range of tax rates, and at sufficiently high tax rates, reducing the patenting cost may increase the emission level. Also, higher emission taxes increase green investment only if the fraction of green consumers is sufficiently small, and the magnitude of this effect decreases as this fraction increases. Moreover, a stricter patentability requirement is only effective at reducing emissions if the fraction of green consumers is sufficiently small.
    Keywords: Patent; Clean Technologies; Environmentally Friendly Consumers; Rebound Effect
    JEL: L13 O34 Q50
    Date: 2018–10–18
  9. By: Euan Fleming; Garry Griffith; Stuart Mounter; Monika Hartmann; Johannes Simons
    Abstract: Food value chain businesses form alliances with horizontal and/or vertical partners to take collective action to either overcome or ameliorate chain failure, or to take advantage of new opportunities available due to innovations in products or processes. The desired outcomes from the collective action would not be possible to achieve if these businesses acted independently. While such alliances may take many forms, depending on degree of commitment and infrastructure linkages, they can often be considered to be clubs. Four such types of clubs can be identified (1) horizontal clubs comprising businesses that take collective action across a single cross-section or an aggregate of multiple cross-sections in the value chain; (2) vertical clubs, which consist of businesses that form a strategic alliance for collective action along a single value chain within a network of chains; (3) clubs that specialise in a single product or multiple products in the value chain; or (4) clubs focusing on a single input/activity or multiple inputs/activities. Thus the path to collective action chosen by clubs may vary according to existing capabilities and the scope for collaboration, particularly in relation to the potential for value-creating innovation. The result of the collective action is the provision of a chain good or service which usually leads to greater and more valuable chain coordination. By collectively identifying, funding and acting to capture positive externalities associated with innovation, businesses in many parts of a food value chain can widen opportunities to increase whole-of-chain surplus as well as increase private profits. In this paper four mini-case studies are presented which demonstrate the breadth of past collective actions that have been undertaken by a substantial proportion of businesses in food value chains, two in Europe and two in Australia. These are (1) the Euro Pool System, (2) Global Standards certification in Europe and globally, (3) Meat Standards Australia, and (4) the OBE Beef organic producer alliance in Australia. Each case study yields insights into the rationale of how businesses in different food value chains in different countries have acted as a club to use their joint resources to internalise positive innovation and coordination externalities that would not have been possible to achieve were these businesses to act independently.
    Keywords: Agribusiness, Agricultural and Food Policy, Agricultural Finance
    Date: 2018–10–01
  10. By: Franco Rosa; Federico Nassivera; Luca Iseppi
    Abstract: The food product innovation is advancing under pressure of: the growing request of innovations in foods products and processing challenging new consumers’ needs; 2.nd, the advance in nutrigenomics and its contribution to increase knowledge about the relation between nutrition and food, iii) biotechnologies contribution to create customized food products to satisfy a variety of customers’ needs (Hobbs, 2002). An emerging food product category is the nutraceutic food, contributing to satisfy ‘nutrients’ and ‘medical needs; beside it is easier with genomic techniques the original food composition to challenge the customers’ needs it must be considered the consumers’ adverse reaction for any technique used to change the food product composition. Purpose of this research is to suggest a modification of the sunflower oil composition obtained with genomic technique to change the product from bulk commodity to enhanced specialty food with health claims. The traditional bulk commodity market is based on uniform quality standard, higher volume of production priced at the minimum marginal cost. The specialty market segment demands products with distinctive attributes of higher quality and safety standards, more varieties and sustainability, supported by marketing mix strategies to set up higher prices and better margins according with customers’ preferences. A growing importance in consumers’ preferences are the combination of nutritional, health and environmental attributes that must be properly communicated with ad hoc messages describing the product’s claim. To test the consumers’ awareness about healthy claim and willingness to accept these enhanced food products, an explorative SEM analysis is conducted with a questionnaire. The results suggest that the consumer is in favor of the health and environmental care, nevertheless it is opportune to examine in deeper the causes (health claim, technology and environmental impact, communication, culture and others) to convince the consumers to adopt these functional product. The first part of the research is dedicated to analyze the innovations and demonstrate the scientific evidence of the health claims of the modified sunflower oil, describing the role of PUFA (Poly-unsaturated fatty acids). It is discussed the metabolic pathway of the eico-esanoid EPA and DHA generated from modified sunflower oil, responsible of benefic effects on the human metabolism. The second part is dedicated to the inference about the consumers’ acceptance of this functional sunflower oil using SEM model. It is our conviction that this procedure will open new perspectives of food innovation in creation of nutrition and healthy food to satisfy the growing population in the world.
    Keywords: Agribusiness, Agricultural and Food Policy, Agricultural Finance
    Date: 2018–10–01
  11. By: Stefano BRESCHI; Francesco LISSONI; Ernest MIGUELEZ
    Abstract: Based on an original dataset linking patent data and biographical information for a large sample of US immigrant inventors with Indian names and surnames, specialized in ICT technologies, we investigate the rate and determinants of return migration. For each individual in the dataset, we both estimate the year of entry in the United States, the likely entry channel (work or education), and the permanence spell up to either the return to India or right truncation. By means of survival analysis, we then provide exploratory estimates of the probability of return migration as a function of the conditions at migration (age, education, patenting record, migration motives, and migration cohort) as well as of some activities undertaken while abroad (education and patenting). We find both evidence of negative self-selection with respect to educational achievements in the US and of positive self-selection with respect to patenting propensity. Based on the analysis of time-dependence of the return hazard ratios, return work migrants appear to be negatively self-selected with respect to unobservable skills acquired abroad, while evidence for education migrants is less conclusive.
    Keywords: immigration, innovation, inventor data, patent data
    JEL: F22 O15 O31
    Date: 2018
  12. By: Randall S. Jones; Jae Wan Lee
    Abstract: Making SMEs and start-ups a driver of growth and job creation requires a number of policies to improve the performance of SMEs, whose labour productivity in the manufacturing sector has fallen to less than a third of that in large companies. The large-scale support for SMEs should shift from supporting the survival of firms to raising productivity. Measures to accelerate SMEs' take-up of new technology and increase their participation in international trade would boost productivity and inclusive growth. Given the chronic labour shortages facing SMEs, reforming the education system to reduce labour market mismatch is a priority. Relaxing the regulatory burden and government control would allow innovative SMEs to create new products and services. Entrepreneurship is lagging, reflecting a higher fear of failure and a lack of skills in Korea. Upgrading entrepreneurship education and lowering the personal costs faced by entrepreneurs who fail would be beneficial. A greater role for venture capital, in part by activating the M&A market to allow investors to recuperate their funds, would encourage firm creation. This Working Paper relates to the 2018 OECD Economic Survey of Korea ( y-korea.htm)
    Keywords: business angels, digitalisation, ecosystem, entrepreneurship, incubators, innovation, insolvency regime, Korea, productivity, public procurement, regulatory reform, small and medium-sized enterprises, SMEs, start-ups, subcontractors, R&D, venture capital
    JEL: L26 M13 O3
    Date: 2018–10–10
  13. By: Park, Hyunju; Mulder, Nanno; Park, Yuri
    Abstract: In Latin America and the Caribbean, there is little direct evidence on export innovation of small and medium-sized enterprises in (SMEs). This type of innovation refers to the adaptation of products and business processes to technical standards, tastes and other customer requirements in the target markets. The successful fulfillment of these requirements by a firm can be measured indirectly through the sale of a new product to an existing market, the entry of an existing product to a new destination, or both. These movements can be measured using firm-level customs data, as is done in this study for Chile, Colombia, Costa Rica, and Mexico for the period 2000 to 2015. The results confirm the well-known fact that a high share of SMEs enter and leave the universe of exporting firms each year. Among the four countries, exporting SMEs in Costa Rica had the lowest entry and exit rates and the highest survival rates. On average, SMEs in Costa Rica and Mexico incorporated more new products into their export basket than those in Chile and Colombia. This is because SMEs in the latter two countries exported mostly natural resources concentrated in few products, while SMEs in the former two countries were selling a relatively more diversified basket of manufactures. Within the sample, Costa Rica was the country where exporting SMEs added more destinations to their export basket each year. In contrast, Mexico was the one where SMEs added the smallest number of new destinations (less than one) on average, due to their great dependence on the United States as an export market. Export innovation is also analyzed with respect to the three dimensions (firms, products, and markets) simultaneously. For this purpose, the change in export value of each firm during this period is broken down into two parts. The first is the intensive margin, which refers to the change in export value of the same firms selling the same products to the same destinations. The second is the extensive margin, which has two components: (i) the extensive margin of entry (which reveals export innovation), including new combinations of companies, products and target markets, and (ii) the extensive margin of exit, referring to combinations of companies, products and destination markets that cease to exist. In all countries except Costa Rica, the extensive margin contributed proportionately more to the growth of exports of SMEs than to that of large companies. In Chile and Colombia, export innovation was concentrated in selling existing products to new markets. In contrast, in Costa Rica and Mexico the export of new products to established destinations was the predominant type of export innovation.
    Date: 2018–10–02
  14. By: Andrea Morrison; Sergio Petralia; Dario Diodato
    Abstract: More than 30 million people migrated to the US between the 1850s and 1920s. In the order of thousands became inventors and patentees. Drawing on an original dataset of immigrant inventors to the US, we assess the city-level impact of immigrants patenting and their potential crowding out effects on US native inventors. Our study contributes to the different strands of literature in economics, innovation studies and economic geography on the role of immigrants as carriers of knowledge. Our results show that immigrants? patenting is positively associated with total patenting. We find also that immigrant inventors crowd-in US inventors. The growth in US inventors? productivity can be explained also in terms of knowledge spill-overs generate by immigrants. Our findings are robust to several checks and to the implementation of an instrumental variable strategy.
    Keywords: immigration, innovation, knowledge spill-over, patent, age of mass migration, US
    JEL: F22 J61 O31 R3
    Date: 2018–10
  15. By: Silvia Rocchetta; Andrea Mina
    Abstract: This paper explores the effect of different regional technological profiles on the resilience of regional economies to exogenous shocks. It presents an empirical examination of the determinants of resilience through panel analyses of UK NUTS III level data for the 2004-2012 period. The results indicate that regions endowed with technologically coherent -- and not simply diversified-- knowledge bases are better prepared to face an unforeseen downturn and display adaptive resilience. Moreover, local economies tend to be more adaptable if they innovate in sectors with the strongest growth opportunities, even though firms' net entry does not appear to contribute significantly towards resilience.
    Keywords: resilience, adaptation, innovation, technological variety, financial crisis
    Date: 2018–10–17
  16. By: Daniel P. Gross
    Abstract: Though fundamental to innovation and essential to many industries and occupations, individual creativity has received limited attention as an economic behavior and has historically proven difficult to study. This paper studies the incentive effects of competition on individuals' creative production. Using a sample of commercial logo design competitions, and a novel, content-based measure of originality, I find that intensifying competition induces agents to produce original, untested ideas over tweaking their earlier work, but heavy competition drives them to stop investing altogether. The results yield lessons for the management of creative workers and for the implementation of competitive procurement mechanisms for innovation.
    JEL: D81 M52 M55 O31 O32
    Date: 2018–09
  17. By: Fulvio Castellacci (TIK Centre, University of Oslo); Davide Consoli (TIK Centre and INGENIO, Valencia); Artur Santoalha (TIK Centre, University of Oslo)
    Abstract: This paper argues that e-skills, namely capabilities associated with the use and development of digital technologies, enhance regions’ ability to imitate existing knowledge and to create new industrial paths. The empirical analysis focuses on the relationship between e-skills and technological diversification for a panel of European regions for the period 2001-2012. We construct novel indices of regional e-skill endowment distinguishing between basic users, professional users and expert developers of ICTs. The econometric results show that e-skills foster technological diversification dynamics in European regions, and that this effect is particularly strong for less developed regions.
    Date: 2018–10
  18. By: Hsieh, Chih-Sheng (Chinese University of Hong Kong); Konig, Michael D. (Centre for Economic Policy Research; Swiss Economic Institute; VU Amsterdam); Liu, Xiaodong (University of Colorado Boulder); Zimmermann, Christian (Federal Reserve Bank of St. Louis)
    Abstract: We study the impact of research collaborations in coauthorship networks on research output and how optimal funding can maximize it. Through the links in the collaboration network, researchers create spillovers not only to their direct coauthors but also to researchers indirectly linked to them. We characterize the equilibrium when agents collaborate in multiple and possibly overlapping projects. We bring our model to the data by analyzing the coauthorship network of economists registered in the RePEc Author Service. We rank the authors and research institutions according to their contribution to the aggregate research output and thus provide a novel ranking measure that explicitly takes into account the spillover effect generated in the coauthorship network. Moreover, we analyze funding instruments for individual researchers as well as research institutions and compare them with the economics funding program of the National Science Foundation. Our results indicate that, because current funding schemes do not take into account the availability of coauthorship network data, they are ill-designed to take advantage of the spillover effects generated in scientific knowledge production networks.
    Keywords: coauthor networks; scientific collaboration; spillovers; key player; research funding; economics of science
    JEL: C72 D43 D85 L14 Z13
    Date: 2018–10–09
  19. By: Alexander Konon; Alexander Kritikos
    Abstract: The human personality predicts a wide range of activities and occupational choices—from musical sophistication to entrepreneurial careers. However, which method should be applied if information on personality traits is used for prediction and advice? In psychological research, group profiles are widely employed. In this contribution, we examine the performance of profiles using the example of career prediction and advice, involving a comparison of average trait scores of successful entrepreneurs with the traits of potential entrepreneurs. Based on a simple theoretical model estimated with GSOEP data and analyzed with Monte Carlo methods, we show, for the first time, that the choice of the comparison method matters substantially. We reveal that under certain conditions the performance of average profiles is inferior to the tossing of a coin. Alternative methods, such as directly estimating success probabilities, deliver better performance and are more robust.
    Keywords: Advice, personality, entrepreneurship, profiles
    JEL: C15 D81 L26
    Date: 2018

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