nep-ino New Economics Papers
on Innovation
Issue of 2019‒03‒18
thirteen papers chosen by
Uwe Cantner
University of Jena

  1. Environmental policy and innovation: a decade of research By David Popp
  2. Standard Setting Organizations, Information Flows and Business Strategies: An Empirical Investigation By Ray Lambert; Paul Temple
  3. Concordance and complementarity in IP instruments By Marco Grazzi; Chiara Piccardo; Cecilia Vergari
  4. Entrepreneurial and intrapreneurial growth in Central and Eastern European ventures driven by the fit between micro and macro level opportunity exploitation By Esin Yoruk
  5. Trajectories of Knowledge Economy in SSA and MENA countries By Simplice A. Asongu; Antonio R. Andrés
  6. Science Quality and the Value of Inventions By Felix Poege; Dietmar Harhoff; Fabian Gaessler; Stefano Baruffaldi
  7. Does deregulation drive innovation intensity? Lessons learned from the OECD telecommunications sector By Polemis, Michael; Tselekounius, Markos
  8. When innovation policy trumped protectionism: the Reagan years By Ufuk Akcigit; Sina T. Ates; Giammario Impullitti
  9. The German Mittelstand: Antithesis to the Silicon Valley entrepreneurship model? By Pahnke, André; Welter, Friederike
  10. Innovation and the Patterns of Trade: A Firm-Level Analysis By Santacreu, Ana Maria; Varela, Liliana
  11. Intellectual Property Enforcement, Exports and Productivity: Evidence from China By Huiwen Lai; Keith E. Maskus; Lei Yang
  12. On the Economics of Science Parks By Liang, Wen-Jung; Mai, Chao-Cheng; Thisse, Jacques-François; Wang, Ping
  13. A bridge over troubled water: Interdisciplinarity, Novelty, and Impact By Magda Fontana; Martina Iori; Fabio Montobbio; Roberta Sinatra

  1. By: David Popp
    Abstract: Encouraging innovation is an important part of environmental policy. A large literature in environmental economics examines the links between environmental policy and innovation. This paper reviews recent literature on green innovation. I highlight major trends in the literature, including an increased number of cross-country studies and a focus on the effect of different policy instruments on innovation. I include a discussion of the justifications and evidence for technology-specific policy incentives and present evidence on the effectiveness of government R&D spending. My review concludes with a discussion of three promising areas for new research on environmental innovation.
    Keywords: green innovation, induced innovation, pollution, climate change, renewable energy, energy efficiency, research and development, technology policy
    JEL: O31 O38 Q55
    Date: 2019
  2. By: Ray Lambert (Birbeck); Paul Temple (University of Surrey)
    Abstract: The paper investigates the link between standards, business strategy and innovation, based upon a factor analysis of the stated ‘context’ for innovation contained in the 2012-2014 UK Innovation Survey (UKIS). The analysis reveals a distinction between pro-active ‘entrepreneurial’ strategies and reactive and ‘defensive’ strategies, as well as firms, although regarded in the survey as innovation ‘active’ have no clear innovation based objective. We combine this classification with sectoral indicators of the significance of standards to investigate how firms deliver these strategies. We find that, in addition to the important role played by the type of innovation strategy, standards have a significant impact not only on the extensive margin of R&D expenditures, but also on the likelihood that firms will invest in related complementary investments, notably in training and design. We test these propositions with a specific UKIS question on the value that firms put on standards. The positive impact that standards have on the acquisition of innovation related assets suggest that, on balance, the impact of standards has significant pro-competitive effects on an innovation system.
    JEL: L21 O31 O32 O34
    Date: 2019–03
  3. By: Marco Grazzi (DISCE, Università Cattolica); Chiara Piccardo (Dipartimento di Scienze Economiche, Università di Verona); Cecilia Vergari (Dipartimento di Scienze Economiche, Università di Bologna)
    Abstract: This work investigates the relationship between proxies of innovation activities, such as patents and trademarks, and firm performance in terms of revenues and growth. By resorting to the virtual universe of Italian manufacturing firms we provide a rather complete picture of the innovation activities of Italian firms, in terms of patents and trademarks, and we study whether the two instruments for protecting Intellectual Property (IP) exhibit complementarity or substitutability. In addition, and to our knowledge novel, we propose a measure of concordance (or proximity) between the patents and trademarks owned by the same firm and we then investigate whether such concordance appears to exert any effect on performance.
    Keywords: Trademarks, Patents, Innovation, Intellectual Property, Complementarity, Concordance, Technological proximity, Firm performance, Firm growth
    JEL: O31 O34 L25
    Date: 2019–01
  4. By: Esin Yoruk
    Abstract: Based on theories from entrepreneurship and intrapreneurship literatures, this paper investigates how the fit between micro level entrepreneurial opportunity exploitation and macro level entrepreneurial influence sales and employment growth in the Central and Eastern European (CEE) firms. A multiple case study analysis contrasts young entrepreneurial and established intrapreneurial firms to the established conservative firms. Our findings for entrepreneurial and intrapreneurial ventures are in stark contrast to those of conservative firms. Not only entrepreneurial but also intrapreneurial firms are better at exploiting micro-level opportunities in the technology and market domains empowered by their intra-organisational competences. Moreover, they may purposefully select what macro-level opportunity to exploit, a process which contributes to their higher sales and employment growth. In other words, they are able to create the fit between micro and macro environments to generate high growth in stark contrast to conservative firms.
    Date: 2019–03
  5. By: Simplice A. Asongu (Yaoundé/Cameroon); Antonio R. Andrés (Ostrava, Czech Republic)
    Abstract: In the first critical assessment of knowledge economy dynamic paths in Africa and the Middle East, but for a few exceptions, we find overwhelming support for diminishing cross-country disparities in knowledge-based economy dimensions. The paper employs all the four components of the World Bank’s Knowledge Economy Index (KEI): economic incentives, innovation, education, and information infrastructure. The main finding suggests that sub-Saharan African (SSA) and the Middle East and North African (MENA) countries with low levels of KE dynamics and catching-up their counterparts of higher KE levels. We provide the speeds of integration and time necessary to achieve full (100%) integration. Policy implications are also discussed.
    Keywords: Knowledge economy; Principal component analysis; Panel data; Convergence; Development
    JEL: F42 O10 O38 O57 P00
    Date: 2019–01
  6. By: Felix Poege; Dietmar Harhoff; Fabian Gaessler; Stefano Baruffaldi
    Abstract: Despite decades of research, the relationship between the quality of science and the value of inventions has remained unclear. We present the result of a large-scale matching exercise between the universes of 4.8 million patent families and 43 million publication records. We find a strong positive relationship between quality of scientific contributions referenced in patents and the value of the respective inventions. We rank patents by the quality of the science they are linked to. Strikingly, patents in the top decile are twice as valuable as patents in the bottom decile, which in turn are about as valuable as patents with no direct science link. We show this core result for various measures of science quality and patent value. The effect of science quality on patent value remains relevant even when science is linked indirectly, i.e., through other patents. Our findings imply that what is considered "excellent" within the science sector also leads to outstanding outcomes in the technological or commercial realm.
    Date: 2019–03
  7. By: Polemis, Michael; Tselekounius, Markos
    Abstract: The channel between innovation and industry regulation constitutes a non-lasting debate among the economists and researchers within the recent years. Despite the significant contributions on this field, mostly made from the empirical standpoint, the existing literature is still incomplete. This might be attributed to the fact that existing studies fail to combine a strong theoretical framework with the empirical scrutiny in order to exemplify and decompose the relationship between regulation intensity and innovation activity. We attempt to shed light on this limitation by theoretically modeling the telecommunications sector, in which access regulation impacts the non-separable activity in process and product innovation. We then empirically test our model by deploying an efficient panel threshold technique along the lines of Hansen (1999). Our balanced panel dataset comprises of 32 OECD countries over the period 1995-2012. The empirical results unveil a non-monotonic relationship of an “inverted V-shaped” form between regulation and innovation. We argue that beyond certain thresholds increasing the regulatory stringency further results in decreasing sector innovation. Our findings survive robustness checks after the inclusion of two alternative threshold variables (market structure and entry regulation) incurring significant implications for the policy makers and government officials.
    Keywords: Innovation; Regulation; Telecommunications, Market structure; Panel threshold model.
    JEL: C24 D43 L51 L80 L96
    Date: 2019–03–15
  8. By: Ufuk Akcigit; Sina T. Ates; Giammario Impullitti
    Abstract: Giammario Impullitti and colleagues show that it was the Reagan administration's innovation policy - not a retreat from globalisation - that promoted US growth.
    Keywords: innovation, protectionism
    Date: 2019–03
  9. By: Pahnke, André; Welter, Friederike
    Abstract: Whilst internationally, the Mittelstand in Germany is admired and many countries try to emulate it, the current debate in Germany praises the Silicon Valley model of entrepreneurship, contrasting the Mittelstand as low-growth, low-tech and non-innovative - in short: as a hindrance to Germany's economic future. We therefore ask whether the Mittelstand actually is the antithesis to the Silicon Valley entrepreneurship model. We show that Mittelstand is more than a small and medium enterprise size, identifying its distinctive features (identity of ownership and management, sense of belonging). In this regard, we also discuss the influence of historical paths and current institutional settings on the Mittelstand model. Asking to what extent the Mittelstand is distinctive, we address its diverse contributions to economy and society. We suggest that the Mittelstand is an excellent example of everyday entrepreneurship and a vibrant segment of economy which is also competitive, innovative, and growth orientated; albeit in different ways compared to Silicon Valley entrepreneurship. In concluding, we outline ideas for future research and implications for policymakers. In our view, future research and policies should stand back from dichotomies such as "Mittelstand versus Silicon Valley entrepreneurship" and acknowledge the diversity and heterogeneity of entrepreneurship.
    Keywords: Mittelstand,context,everyday entrepreneurship
    JEL: L26 M13
    Date: 2019
  10. By: Santacreu, Ana Maria (Federal Reserve Bank of St. Louis); Varela, Liliana (University of Warwick, CEPR and CAGE)
    Abstract: This paper studies the impact of increased import penetration on a country’s long-term patterns of trade. It shows that foreign competition induces firms to increase their R&D efforts in order to differentiate their products and escape competition. Quality improvements translate into increases in firms’ exports. This effect, however, is heterogeneous across sectors and is driven by sectors’ in which the country has a comparative advantage. On the aggregate, the impact of import competition on innovation and a country’s patterns of trade depends crucially on the distribution of sectoral comparative advantage. We provide evidence of this mechanism using firm-level data on trade and innovation for France and import competition driven by China’s WTO entry.
    Keywords: quality upgrading, import competition, patterns of trade, comparative advantage JEL Classification: F12, F14, O30, O41
    Date: 2019
  11. By: Huiwen Lai; Keith E. Maskus; Lei Yang
    Abstract: We study how provincial-level enforcement of intellectual property rights (IPRs) affects Chinese firms’ decisions regarding exit, export, and the channels through which to receive technology transfer. Our findings provide insights into how variations in IPRs enforcement alter productivity. Our model combines the standard theory of heterogeneous firms with the endogenous choices of those firms concerning how they absorb international technologies through imitation or licensing. We show that, in this setting, the exit and export cutoff productivities differ from those in the standard environment, leading to a different sorting mechanism. We also predict that stronger IPRs change the decisions firms make concerning their mode of technology transfer, further altering their productivity and export possibilities. Empirical tests based on a comprehensive dataset of Chinese firms from 2000 to 2006 support the model predictions.
    Keywords: Intellectual Property Enforcement, Exports, Firm Heterogeneity
    JEL: D23 F13 F14 O34
    Date: 2018–07
  12. By: Liang, Wen-Jung; Mai, Chao-Cheng; Thisse, Jacques-François; Wang, Ping
    Abstract: Science parks play a growing in knowledge-based economies by accommodating high-tech firms and providing an environment that fosters location-dependent knowledge spillovers and promote R&D investments by firms. Yet, not much is known about the economic conditions under which such entities may form in equilibrium without government interventions. This paper develops a spatial equilibrium model with a competitive final sector and a monopolistic competitive intermediate sector, which allows us to determine necessary and sufficient conditions for a science park to emerge as an equilibrium outcome. We show that strong localized knowledge spillovers, high startup costs, skilled labor abundance, or low commuting costs make intermediate firms more likely to cluster and a science park more likely to form. We also show that the productivity of the final sector is highest when intermediate firms cluster. As the decay penalty, firms' startup and workers' commuting costs become lower, science parks will eventually be fragmented
    Keywords: intermediate inputs; Knowledge Spillovers; Land use; research & development; science parks
    JEL: D51 L22 O33 R13
    Date: 2019–03
  13. By: Magda Fontana (Despina Big Data Lab, and Dept. of Economics and Statistics, University of Turin); Martina Iori (Dept. of Economics and Statistics, University of Turin); Fabio Montobbio (DISCE, Università Cattolica - BRICK, Collegio Carlo Alberto, Turin - ICRIOS, Bocconi University, Milan); Roberta Sinatra (Dept. of Network & Data Science, and Dept. of Mathematics, Central European University, Budapest, Hungary - Center for Complex Network Research, Northeastern University, Boston, USA - Complexity Science Hub, Vienna, Austria)
    Abstract: This paper analyses the relationship between novelty, interdisciplinarity and impact of scientific research. We discuss the limitations of the established indicators of novelty and interdisciplinarity (Variety, Disparity and Balance) and how they overlap. We correct the biases with normalized indicators that exploit a Configuration Null Model and we propose a protocol to verify the reliability of the indicators and standardize the measurement. The proposed methodology and new indicators are illustrated exploiting 231450 articles in Physics, their references and citations, from 8 Journals of the American Physical Society (APS) from 1985 to 2015. We show that Novelty à la Uzzi et al. (2013) is highly correlated with Disparity and Novelty à la Wang et al. (2017) is deeply affected by the properties of the articles’ citation network. We show the importance of taking into account the specific definition of the knowledge space and considering separately the different dimensions of interdisciplinarity. Using the new unbiased indicators we show that Variety has a positive effect on the articles’ Impact while Disparity and Balance have a negative effect. Previous results tend to underestimate the negative Impact of Disparity and overestimate the positive effects of Novelty.
    Keywords: measurement of interdisciplinarity, detection of novelty, impact, normalization of measures, Physics
    JEL: I23 O31 O33 O38
    Date: 2018–09

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