nep-ino New Economics Papers
on Innovation
Issue of 2019‒02‒18
seventeen papers chosen by
Uwe Cantner
University of Jena

  1. Assessing the innovation capability of EU companies in developing dual use technologies By Federico Caviggioli; Antonio De Marco; Giuseppe Scellato
  2. “Technological cooperation and R&D outsourcing at the firm level: The role of the regional context ” By Damián Tojeiro-Rivero; Rosina Moreno
  3. Discovery and Diffusion of Digital Innovations – An Analysis of Enterprise Social Networks and Data-Driven Business Models By Engelbrecht, Adrian
  4. Innovation in Brazil by technological intensity: cooperation and nationality of ownership By Milene Simone Tessarin; Wilson Suzigan, Joaquim Jose Martins Guilhoto
  5. Innovation, productivity, exports and the investment climate: A study based on Indian manufacturing firm-level data By Patrick Plane; Marie-Ange Veganzones-Varoudakis
  6. A multi-dimensional analysis on how different types of innovations impact SMEs business performance By Juan A. Sanchis-Llopis; Alfonso Expósito
  7. Analysis of two public-private collaborative R & D support schemes By Ch. BELLÉGO; V. DORTET-BERNADET; M. TÉPAUT
  8. Financial constraints of innovative firms and sectoral growth By Ch.-M. CHEVALIER
  9. Honey Bee Network in Africa: Co-creating a Grassroots Innovation Ecosystem in Africa By Gupta, Anil; Shinde, Chintan; Dey, Anamika; Patel, Ramesh; Patel, Chetan; Kumar, Vipin; Patel, Mahesh
  10. Product Innovation and Educational Diversity in Top and Middle Management Teams By Schubert, Torben; Tavassoli, Sam
  11. The Consequences of Invention Secrecy: Evidence from the USPTO Patent Secrecy Program in World War II By Daniel P. Gross
  12. The Hardware-Software Model: A New Conceptual Framework of Production, R&D, and Growth with AI By Jakub Growiec
  13. R&D cooperation, proximity and distribution of public funding between public and private research sectors By Marie-Laure Cabon-Dhersin; Romain Gibert
  14. Research funding and price negotiation for new drugs By Francesca Barigozzi; Izabela Jelovac
  15. Innovation as Part of European Development By Gavrilut, Darie
  16. “Green regions and local firms’ innovation” By Lorena M. D’Agostino; Rosina Moreno
  17. From boundary line to boundary space: The creation of hybrid organizations as a Triple Helix micro-foundation By Claire Champenois; Henry Etzkowitz

  1. By: Federico Caviggioli (Politecnico di Torino – Department of Management and Production Engineering); Antonio De Marco (Politecnico di Torino – Department of Management and Production Engineering); Giuseppe Scellato (Politecnico di Torino – Department of Management and Production Engineering)
    Abstract: This study proposes a framework to identify and analyse the European defence innovation ecosystem and to investigate the relevance of dual use inventions, extending previous empirical approaches. 63,714 defence inventions in the decade 2002-2012 were analysed by taking several dimensions into consideration: time, geography, technology, type of innovator. The main findings indicate an increasing trend of patented inventions covering a wide range of technological fields not only in the traditional defence areas, but also in Information and Communication Technology (ICT) and in instruments for measurement and control. The innovations seem to be quite concentrated: the twenty largest patent holders (firms and government agencies) account for 40% of total defence inventions. The largest geographical source of innovations is the USA, but South Korea has increased significantly in recent years. Dual use innovations, i.e. military patents subsequently cited by a civilian invention, are identified using a novel method employing patent citations. The proportion of dual use inventions in the whole dataset is 41%, but the value has been decreasing in recent years and shows heterogeneity across technological sectors and geographical areas (the USA reports the highest share, 63.9%). Analysis of knowledge flows suggests significant heterogeneity in the share of intra-border innovations: the European defence innovations are largely cited by US inventions, especially when considering dual use cases.
    Keywords: Dual use, innovation, patents, defence, technology
    Date: 2018–12
  2. By: Damián Tojeiro-Rivero (AQR-IREA Research Group, University of Barcelona. Department of Econometrics, Statistics and Applied Economics. Av. Diagonal 690, 08034 Barcelona, Spain. Tel.(+34) 934 021 412.); Rosina Moreno (AQR-IREA Research Group, University of Barcelona. Av. Diagonal 690 - 08034 Barcelona (Spain). Tel. +34934021823 - Fax +34934021821.)
    Abstract: Much has been said about the role that technological networking activities play on the innovative performance of firms, but little is known about the relevance of the context where the firm is locate shaping the efficiency of such networking activities. In this article we hypothesize that the transformation of firms' networking activities into innovation may vary depending on the regional environment in which the firm is located. For Spanish manufactures in the period 2000-12 and through the use of a multilevel framework, we obtain that after controlling for the firm's characteristics, the regional context has not only a direct effect on firms' innovation performance, but it also conditions the returns to firms' networking activities, although differently in the case of cooperation and outsourcing. Cooperating in innovation activities is more beneficial for those firms located in a knowledge intensive region, whereas R&D outsourcing seems to be more profitable for firms in regions with a low knowledge pool.
    Keywords: Technological cooperation, R&D Outsourcing, Local Knowledge Spillovers; Multilevel; Panel data; Spanish Firms, Manufactures. JEL classification: D21, D22, O31, R10, R15
    Date: 2019–02
  3. By: Engelbrecht, Adrian
    Abstract: Digital technologies radically transform today’s organizations as they permeate both innovation processes and outcomes. While the potential of digital innovations is tremendous, many companies hardly realize the extensive benefits of digital technologies so far. Furthermore, the theoretical understanding of digital innovations is limited since scholars started to challenge the assumptions made in traditional innovation research due to digital technologies’ affordances. Therefore, this thesis seeks to improve the knowledge about digital innovations by analyzing their discovery and diffusion. The discovery of innovations relates to the development of ideas, which can result in new products, processes, or business models. It is essential to investigate companies’ innovation discovery as they often struggle to create innovative ideas and existing theory rarely incorporates the increasing diversity of employees involved in these processes. Papers A and B of this thesis address these issues by examining how Enterprise Social Networks (ESNs) facilitate employees’ innovation discovery. According to Communication Visibility Theory (CVT), the consideration of ESNs is crucial in this regard as they make employees’ everyday communication permanently visible, which provides a basis for acquiring new knowledge. Paper A validates and extends the newly developed CVT. By incorporating individuals employed in diverse contexts, it empirically supports the theory’s external validity. Therefore, different companies can draw on ESNs to foster their innovation discovery, which is made possible through improvements in employees’ meta-knowledge. Besides, the paper reveals that meta-knowledge is not merely formed in the long-run, as indicated by previous research, but in the short-run as well. Interestingly, it also shows that managers can gain more meta-knowledge using ESNs compared to non-managers, which is in contrast with prior literature’s findings. Paper B investigates when employees disclose information in ESNs, which is essential to attain high communication visibility and, in this way, to facilitate the discovery of innovations. To that end, the paper transfers theory on Online Social Networks (OSNs) to the ESN context. It finds that employees’ trusting and risk beliefs are associated with their information disclosure. Additionally, the paper reveals that a company’s group and development culture influence these beliefs, with error aversion culture transmitting the effect of development culture. Innovation diffusion relates to the distribution of a novel product, process, or business model across a group of target users. It is important to better understand the diffusion of digital innovations as companies often lack knowledge about why new offerings are rejected, which limits their chances of counteracting the underlying issues. Furthermore, digital technologies impact the innovation diffusion by blurring industry boundaries and facilitating competition. Papers C and D of this thesis investigate the diffusion of digital innovations in the context of data-driven business models. This context is especially affected by new competition arising across previous boundaries and, thus, necessary to analyze as diverse organizations have high incentives to utilize their data in new ways. Paper C analyzes which dimensions substantially differentiate between distinct data-driven business models. For this purpose, it leverages practitioners’ perceptions of business models obtained from a start-up database. Based on three identified dimensions, the paper creates a taxonomy that classifies the business models into eight ideal-typical categories. The number of business models present in each category provides insights into their diffusion. By offering basic knowledge about the nature of data-driven business models, the paper can be used as a foundation for future research that seeks to dig deeper into this new field and for companies that aim at developing data-driven business models. Paper D investigates how individuals evaluate data-driven services that are offered by highly diverse companies. Based on a qualitative study, the paper shows that individuals’ perception of fit between a service and its provider is crucial for their evaluations. It also reveals the dimensions that influence this perception. Additionally, it explores the consequences that come with a perception of fit. Using these results, the paper offers a new perspective on individuals’ service evaluations, which is vital to the diffusion of the services as well as the associated business models and helps organizations in developing and promoting data-driven services.
    Date: 2019
  4. By: Milene Simone Tessarin; Wilson Suzigan, Joaquim Jose Martins Guilhoto
    Abstract: This article analyze the innovative effort of the manufacturing companies that cooperated to innovate from those that innovated without cooperation, segmented by technological categories and origin of controlling capital. Special data with information’s from Pintec/IBGE has been used. The contribution is contrasting companies that innovated with and without cooperation, since this comparison has not yet been studied. Results showed that cooperation is decisive to differentiate innovative efforts, regardless of the technological category. The origin of controlling capital did not represent a distinctive factor. The cooperation was mainly made with customers and suppliers, and another group company overseas to foreign firms, despite the literature focus on cooperation with universities and research institutes. It is concluded that innovating with cooperation generates better innovative efforts, thus, stimulate companies to cooperate can increase Brazilian innovation
    Keywords: Innovation; Cooperation to innovate; Manufacturing; Technological intensity; Industrial development.
    JEL: O32 P13 L10
    Date: 2019–02–06
  5. By: Patrick Plane (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique); Marie-Ange Veganzones-Varoudakis (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We study the interactions between firm-level innovation, productivity and exports in the case of the Indian manufacturing sector. To differentiate the incentives to innovate from the ability to innovate, we distinguish the inputs of innovation (R&D and training), from the outputs. Our findings highlight a virtuous circle between the three components of innovation, as well as between firm-level R&D, innovation and exports. The results suggest a positive effect of R&D on innovation (product innovation in particular), of innovation on exports (product and marketing innovation especially), and of exports on R&D. Furthermore, it seems that training and R&D reinforce each other in the Indian firm-level innovation process: doing R&D incites firms to train their workforce, and training stimulates R&D in return. Productivity of the Indian manufacturing firms seems to benefit from that dynamics, as exporting and innovating would improve firm-level TFP. As for the investment climate, our results suggest that the differences in the Indian firm-level environment participate in the firms' performance gaps. These results are all the more important in the context of the Make in India campaign and the business environment deficiencies.
    Keywords: Innovation,Productivity,Exports,Investment climate,Manufacturing,Firm-level data.
    Date: 2019–01–23
  6. By: Juan A. Sanchis-Llopis (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).); Alfonso Expósito (Department of Economic Analysis and Political Economy, University of Seville, Calle San Fernando 4, 41004 Sevilla (Spain).)
    Abstract: This paper examines the impact of innovation decisions on business performance for small and medium-sized enterprises based on a multi-dimensional analytical approach. With this aim, the impact of the firm’s innovation decisions (in terms of the introduction of product, process, and/or organisational innovation) on four alternative performance indicators (two financial indicators: sales increase and cost reduction; and two operational indicators: increase of productive capacity and improvement in quality) is analysed. Additionally, an array of potential moderating determinants (such as firm and entrepreneur characteristics) are controlled for. Our findings highlight the existence of positive impacts of innovation decisions on both dimensions of business performance (financial and operational), but these impacts significantly differ depending on the type of innovation and the performance indicator considered. Thus, in order to study the multifaceted effects of innovation decisions made by the firm, results point out that the relationship between innovation (product, process, or organisational) and business performance should be analysed from a multi-dimensional approach. These findings imply significant implications for the design and implementation of innovation strategies in SMEs, since these should be tailored according to the business performance sought by the firm.
    Keywords: innovation, business performance, SMEs, Spain
    JEL: M21 L25 O30
    Date: 2019–02
  7. By: Ch. BELLÉGO (Insee, Crest); V. DORTET-BERNADET (Insee); M. TÉPAUT (Direction générale des entreprises)
    Abstract: In 2005, two mechanisms were set up to support collaborative research and development (R & D) between companies and research organizations. One carried by the National Research Agency (ANR) subsidizes projects that are more oriented towards basic research. The other supported by the Interministerial Fund (FUI) supports R & D activities that are more applied. This study presents a first exploitation of a database concerning these two schemes over the 2007-2014 period. This analysis allows to describe the selected projects, to examine the determinant of the participation of companies, and to investigate the decision of the two organizations to finance or not a project. This work confirms that the ANR and FUI mechanisms pursued different objectives: on average, the projects supported by the ANR are smaller than those supported by the FUI, they involve relatively more public research organizations, and R & D spending per partner is almost three times lower. In addition, in line with the policy of the competitiveness clusters (‘‘Pôles de Compétitivité’’), the FUI program seems to have favored more projects involving partners of the same territory whereas the ANR has more financed distant collaborations and projects with partners located in Ile-de-France. However, the selection process decreases the difference between the two devices: the ANR selects rather large projects, while the FUI rather retains those granting more to research organizations. In addition, the two schemes are aimed at the same very specific population of companies: companies that are already innovative, that carry out more R & D than others, that are more frequently members of a competitiveness cluster, and that have a better knowledge of the public support system for innovation. This last point raises the question of the redundancy of the other devices supporting collaborative R & D created in 2010, which are addressed in principle to the same population of companies.
    Keywords: R&D, Innovation, Collaborative R&D, public subsidizes
    JEL: D31 L38 O31 O38
    Date: 2018
  8. By: Ch.-M. CHEVALIER (Insee)
    Abstract: Innovation policies can consist in measures aimed at directly alleviating financial constraints of innovative firms, beyond more traditional fiscal incentives to foster private R&D spendings. To explore the interaction between innovation and financial constraints at the sector level, and evaluate stylized policy scenarios, this paper brings together two analytical frameworks from the endogenous growth and corporate finance literatures. Within this dynamic model, firms innovate and compete for products through destructive creation and accumulate internal funds in relation to financial hindrances occurring when they enter, develop or exit. Including notably asymmetric information between investors and managers of firms with respect to uncertain cash flows, this model is first consistent with the fact that firms tend to spend more on R&D when their internal funds are higher. It then allows for experi­ments addressing growth and overall liquidity holdings for various sectoral contexts. In this specific framework, easing access to initial funding, as fiscal incentives, can have substantial effects. More­over, while a stylized high-tech sector is asso­ciated with higher growth and overall liqui­dity holdings, both variables depend to a large extent on many sectoral characteristics, such as R&D efficiency, entry costs, and cash flow mean and volatility.
    Keywords: endogenous growth, liquidity management, product innovation, firm distribution, dynamic contracts
    JEL: C61 D21 E22 G32 L11 O31
    Date: 2018
  9. By: Gupta, Anil; Shinde, Chintan; Dey, Anamika; Patel, Ramesh; Patel, Chetan; Kumar, Vipin; Patel, Mahesh
    Abstract: This paper presents a case study of the Honey Bee Network’s decentralized model for collecting, verifying and disseminating grassroots innovations and provides a roadmap for its replication in Africa. The Honey Bee Network brings together governmental and non‐governmental institutions, members of academia, scholars and a large number of volunteers. Through the Network’s activities, locally-designed solutions and traditional knowledge with the potential to be refined and scaled up are scouted and members of the Network work with the innovators to help their ideas reach their commercial or non‐commercial potential. The Network has been involved in the sharing of grassroots technology developed in India with Kenya, notably a food processing machine, seed sowing device, and a small tractor. Through these pilot programs, actors at the grassroots had a chance to collaborate and co‐design solutions adapted to the Kenyan context. This experience revealed a willingness in Kenya to further invest in grassroots innovation initiatives, and Network members identified many conditions that would make Kenya the right choice for an African network hub, such as a rich traditional knowledge system and institutional willingness and recognition of the dynamism of the informal sector. Lessons from the Network’s experience in Kenya and its technology transfer program are collected and turned into recommendations for the development of a sister Network in Africa.
    Keywords: Research and Development/Tech Change/Emerging Technologies
    Date: 2019–02–11
  10. By: Schubert, Torben (CIRCLE, Lund University); Tavassoli, Sam (RMIT University)
    Abstract: The effects of diversity in management teams on firm innovation have become an important topic in strategic management. With a few exceptions, however, the literature has focused on diversity in Top Management Teams (TMTs), while the role of lower management levels, particularly in Middle Management Teams (MMTs), has usually been neglected. In this paper, we intend to fill this gap by explicitly differentiating between the effects of diversity in TMTs and MMTs. By matching various firm-level and individual-level datasets, we compiled a linked employer-employee panel dataset for Sweden for the period 2004–2012. Focusing on measures of educational diversity, we find that the effects differ considerably between MMTs and TMTs. TMTs diversity determines whether firms engage in innovation activities at all (strategic decision), while MMTs diversity affects the actual outcome of innovation processes (successful product innovations and their degree of market novelty).
    Keywords: Product innovation; diversity; middle management; top management; firm performance
    JEL: M12 M14 O30
    Date: 2019–02–12
  11. By: Daniel P. Gross
    Abstract: This paper studies the effects of the USPTO's patent secrecy program in World War II, under which approximately 11,200 U.S. patent applications were issued secrecy orders which halted examination and prohibited inventors from disclosing their inventions or filing in foreign countries. Secrecy orders were issued most heavily in areas important to the war effort — such as radar, electronics, and synthetic materials — and nearly all rescinded en masse at the end of the war. I find that compulsory invention secrecy was effective at keeping affected technology out of the public domain, but it appears to have reduced and delayed follow-on invention, reduced entry into patenting, and restricted commercialization. The results shed light on the consequences of invention secrecy, which is widely used by inventors to protect and appropriate the returns to innovation, and yield lessons for ongoing policy debates over potential measures to protect U.S. invention against the growing incidence of foreign IP theft today.
    JEL: N42 N72 O31 O32 O34 O38
    Date: 2019–02
  12. By: Jakub Growiec
    Abstract: The article proposes a new conceptual framework for capturing production, R&D, and economic growth in aggregative models which extend their horizon into the digital era. Two key factors of production are considered: hardware, including physical labor, traditional physical capital and programmable hardware, and software, encompassing human cognitive work, pre-programmed software, and artificial intelligence (AI). Hardware and software are complementary in production whereas their constituent components are mutually substitutable. The framework generalizes, among others, the standard model of production with capital and labor, models with capital–skill complementarity and skill-biased technical change, and unified growth theories embracing also the pre-industrial period. It offers a clear conceptual distinction between mechanization and automation as well as between robotization and the development of AI. It delivers sharp, economically intuitive predictions for long-run growth, the evolution of factor shares, and the direction of technical change
    Keywords: production function, R&D equation, technological progress, complementarity, automation, artificial intelligence.
    JEL: O30 O40 O41
    Date: 2019–02
  13. By: Marie-Laure Cabon-Dhersin (CREAM - Centre de Recherche en Economie Appliquée à la Mondialisation - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université - IRIHS - Institut de Recherche Interdisciplinaire Homme et Société - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université); Romain Gibert (CREAM - Centre de Recherche en Economie Appliquée à la Mondialisation - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université - IRIHS - Institut de Recherche Interdisciplinaire Homme et Société - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université)
    Abstract: In this paper, we compare the distributions of socially optimal public funding between private and public research sectors in cooperative and non-cooperative R&D settings in the presence of externalities. We show that the proportion of public funding allocated to the private sector research always increases with the level of inter-firm spillovers but decreases with the concentration of the industry. This share is smaller (larger) when firms cooperate in R&D than when they do not for high (low) spillovers. Moreover, increases in public knowledge externalities to the private sector due to a closer proximity between the two research sectors increase the share allocated to the public sector regardless of whether firms cooperate or not in R&D.
    Keywords: Oligopoly,R&D Cooperation,Spillovers,Knowledge public exter-nalities,public and private research,proximity,Public policy
    Date: 2019–02–04
  14. By: Francesca Barigozzi (University of Bologna, Italy); Izabela Jelovac (Univ Lyon, CNRS, GATE L-SE UMR 5824, F-69131 Ecully, France)
    Abstract: Pharmaceutical innovations result from the successful achievement of basic research, produced by an upstream lab, and applied research, produced by a downstream lab. We focus on the negotiation process to finance basic research by setting public and private grants and to agree on the final price of a new drug. We show that exclusive funding of basic research is desirable. To increase consumers’ surplus and reduce negotiated prices for new drugs, basic and applied research should be integrated if the lab producing applied research has a relatively large bargaining power. When instead the health authority has the larger bargaining power, integration with the producer of basic research increases negotiated prices for new drugs and should be avoided, unless the gain in bargaining power after the integration is extremely high.
    Keywords: Pharmaceutical innovation, drug prices, negotiation, basic research, applied research
    JEL: D8
    Date: 2019
  15. By: Gavrilut, Darie
    Abstract: Abstract: The importance and the long term added value of innovation are vital to the success and maturing of each region, country and union. The purpose of this paper is to present several topics related to innovation and to assess the differences, if any, between different European regions as regards their innovation output. It is worth stating the obvious: not all innovation is equally important and not all translates into economic and social wellbeing. Even so, a constant flow of research output is vital for the general socio-economic enhancement. The overall efforts are concentrated in the following areas: renewable energy, education, fin-tech, bio-tech and security. How can regions tap and increase their innovative and creative output are elements that shall be dealt with through this paper.
    Keywords: innovation; regional development; knowledge; open source
    JEL: O31 Q56 R11
    Date: 2018–12–17
  16. By: Lorena M. D’Agostino (Department of Economics and Management. University of Trento); Rosina Moreno (AQR-IREA Research Group.)
    Abstract: Technological innovation is essential to achieve simultaneously economic, environmental and social goals (i.e. the green growth). Indeed, many studies found that environmental innovation spurs overall innovation. However, this topic has not been investigated by taking into account the geographical context. Therefore, our paper seeks to investigate whether ‘green regions’, with an increased public and private commitment in environmental issues, are related to innovation of local firms. Using data on Spanish manufacturing firms and regions, we find that environmental technologies (especially in green energy), environmental investments, and environmental management at the level of regions are positively associated to local firms’ innovation.
    Keywords: innovation; region; firm; green patents; environment JEL classification: R11; O31; O44
    Date: 2019–01
  17. By: Claire Champenois (Audencia Recherche - Audencia Business School); Henry Etzkowitz (University of London [London])
    Abstract: In a Triple Helix framework, independent hybrid organizations can be created at the intersection of overlapping yet separate institutional spheres to address innovation blockages. However, the formation process of these organizations, which incorporate and combine elements from the Triple Helix spheres, has seldom been investigated. We address this gap by proposing a model that conceptualizes the creation process of these organizations. We argue that their creation opens up a "boundary space" that differs from a boundary line. By comparing empirical results of three cases, we identify a three-step creation process (recognizing a gap; bringing Triple Helix representatives together and creating a consensus; and designing an ad hoc contingent solution). We highlight the individual role of a boundary spanner in these dynamics. The results provide new insights on the micro-foundations of the Triple Helix. They also suggest an extension of the "boundary spanner" concept.
    Keywords: Venture Creation,Innovation Organizer,Boundary Spanner,Triple Helix,New Venture,Entrepreneurship
    Date: 2018

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