nep-ino New Economics Papers
on Innovation
Issue of 2019‒09‒02
nine papers chosen by
Uwe Cantner
University of Jena

  1. Non-R&D, interactive learning and economic performance: Revisiting innovation in small and medium enterprises By Thomä, Jörg; Zimmermann, Volker
  2. Innovation Activities and Integration through Vertical Acquisitions By Laurent Frésard; Gerard Hoberg; Gordon M. Phillips
  3. Synergizing Ventures By Akcigit, Ufuk; Dinlersoz, Emin; Greenwood, Jeremy; Penciakova, Veronika
  4. Building World-Class Universities : Some Insights & Predictions By Aithal, Sreeramana; Aithal, Shubhrajyotsna
  5. Chaebols and firm dynamics in Korea By Aghion, Philippe; Guriev, Sergei; Jo, Kangchul
  6. Will this time be different? A review of the literature on the Impact of Artificial Intelligence on Employment, Incomes and Growth By Bertin Martens; Songul Tolan
  7. Innovation spillover, licensing, and ex-post privatization in international duopoly By Liu, Yi; Tan, Yu; Fang, Yu
  8. Semi-endogenous growth models with domestic and foreign private and public R&D linked to VECMs By Ziesemer, Thomas
  9. The birth and development of the Italian automotive industry (1894-2015) and the Turin car cluster. By Enrietti, Aldo; Geuna, Aldo; Nava, Consuelo R.; Patrucco, Pier Paolo

  1. By: Thomä, Jörg; Zimmermann, Volker
    Abstract: In the present paper, various groups of innovating German SMEs are empirically identified according to their use (or non-use) of in-house R&D, their reliance on external sources of knowledge, and the degree of internal interactive learning that they employ.In order to account for non-R&D innovation activities, we apply the STI/DUI concept as a theoretical starting point. This distinguishes between (1) the science, technology, innovation (STI) mode with its strong emphasis on formal processes of in-house R&D and (2) the doing, using, interacting (DUI) mode with its focus on experience-based knowledge and interactive learning. On this basis, the empirical results indicate that three groups associated with different modes of learning and innovation exist within the German SME sector: the supplier-dependent DUI group, the customer-oriented DUI group and the STI/DUI group. The corresponding findings confirm that SMEs innovate differently depending on the specificities of their knowledge environments. In order to evaluate this in terms of innovation policy, we examine how these learning modes among innovating SMEs relate to overall company performance. Our main observation is that each learning mode is likely to positively affect performance, at least to some degree. There isno differ-ence in economic performance between the three learning modes as long as non-high-growth SMEs are considered. Hence, in large parts of the SME sector, it is economically rational to choose a non-R&D-oriented mode of learning and innovation. The paper con-cludes with some policy implications of these findings.
    Keywords: Modes of learning,R&D,Non-R&D innovation,Interactive learning,SMEs
    JEL: M21 O32 O38
    Date: 2019
  2. By: Laurent Frésard (Universita della Svizzera italiana (USI Lugano); Swiss Finance Institute); Gerard Hoberg (University of Southern California - Marshall School of Business - Finance and Business Economics Department); Gordon M. Phillips (Dartmouth College - Tuck School of Business; National Bureau of Economic Research (NBER))
    Abstract: We examine the determinants of vertical acquisitions using product text linked to product vocabulary from the input-output tables. We find that the stage of innovation is important in understanding vertical integration. R\&D-intensive firms are less likely to become targets in vertical acquisitions. In contrast, firms with patented innovation are more likely to sell to vertically-related buyers. Firms' R&D intensity is a more important deterrent to their vertical acquisitions when the provision of innovation incentives by potential acquirers is more difficult. The role of patents in fostering vertical acquisitions is more prevalent when potential buyers face a higher risk of hold-up.
    Keywords: Mergers and Acquisitions, Vertical Mergers, Vertical Integration
    JEL: G34
    Date: 2019–07
  3. By: Akcigit, Ufuk; Dinlersoz, Emin; Greenwood, Jeremy; Penciakova, Veronika
    Abstract: Venture capital (VC) and growth are examined both empirically and theoretically. Empirically, VC-backed startups have higher early growth rates and initial patent quality than non-VC-backed ones. VC-backing increases a startup's likelihood of reaching the right tails of the firm size and innovation distributions. Furthermore, outcomes are better for startups matched with more experienced venture capitalists. An endogenous growth model, where venture capitalists provide both expertise and financing for business startups, is constructed to match these facts. The presence of venture capital, the degree of assortative matching between startups and financiers, and the taxation of VC-backed startups matter significantly for growth.
    Keywords: Endogenous Growth; mergers and acquisitions; R&D; venture capital
    Date: 2019–08
  4. By: Aithal, Sreeramana; Aithal, Shubhrajyotsna
    Abstract: Innovations in higher education model are finding importance than ever before due to enhanced higher education institutions and the advancement in technology adopted mass education opportunities. After privatization of higher education, there is an enhanced competition between universities to attract students globally. Universities are competing with each other in terms of their physical and intellectual assets. It is postulated that the six essential assets to be developed by a university based on our predictive analysis for the growth and prosper as world-class university are (1) Physical infrastructure, (2) Digital infrastructure, (3) Innovative academic & training Infrastructure for confidence building, (4) Intellectual property infrastructure, (5) Emotional infrastructure, and (6) Networked infrastructure. In this paper, we have determined the primary focus of these infrastructures along with their essential objectives in detail. We have also discussed the various generic strategies to be followed to develop such infrastructures along the lifecycle of the university including Survival, Sustainability, Differentiation, and Growth & prosperity are analysed. The necessary and sufficient conditions of developing such infrastructures using all the above strategies towards building World-class universities are identified. It is estimated that Physical, Digital, and Innovative Academic infrastructures are necessary conditions and Intellectual Property, Emotional, and Network infrastructures are sufficient conditions respectively.
    Keywords: World-class universities, Essential assets, Physical infrastructure, Digital infrastructure, Academic & training Infrastructure, Intellectual property infrastructure, Emotional infrastructure, Networked infrastructure.
    JEL: I21 I23 M19
    Date: 2019–07–01
  5. By: Aghion, Philippe; Guriev, Sergei; Jo, Kangchul
    Abstract: We study firm dynamics in Korea before and after the 1997-98 Asian crisis and pro-competitive reforms that reduced the dominance of chaebols. We find that in industries that were dominated by chaebols before the crisis, labor productivity and TFP of non-chaebol firms increased markedly after the reforms (relative to other industries). Furthermore, entry of non-chaebol firms increased significantly in all industries after the reform. Finally, after the crisis, the non-chaebol firms also significantly increased their patenting activity (relative to non-chaebol firms). These results are in line with a neo-Schumpeterian view of transition from a growth model based on investment in existing technologies to an innovation-based model.
    Keywords: Asian crisis; chaebols; Schumpeterian Growth
    JEL: L25 O43
    Date: 2019–06
  6. By: Bertin Martens (European Commission – JRC); Songul Tolan (European Commission – JRC)
    Abstract: There is a long-standing economic research literature on the impact of technological innovation and automation in general on employment and economic growth. Traditional economic models trade off a negative displacement or substitution effect against a positive complementarity effect on employment. Economic history since the industrial revolution as strongly supports the view that the net effect on employment and incomes is positive though recent evidence points to a declining labour share in total income. There are concerns that with artificial intelligence (AI) "this time may be different". The state-of-the-art task-based model creates an environment where humans and machines compete for the completion of tasks. It emphasizes the labour substitution effects of automation. This has been tested on robots data, with mixed results. However, the economic characteristics of rival robots are not comparable with non-rival and scalable AI algorithms that may constitute a general purpose technology and may accelerate the pace of innovation in itself. These characteristics give a hint that this time might indeed be different. However, there is as yet very little empirical evidence that relates AI or Machine Learning (ML) to employment and incomes. General growth models can only present a wide range of highly diverging and hypothetical scenarios, from growth implosion to an optimistic future with growth acceleration. Even extreme scenarios of displacement of men by machines offer hope for an overall wealthier economic future. The literature is clearer on the negative implications that automation may have for income equality. Redistributive policies to counteract this trend will have to incorporate behavioural responses to such policies. We conclude that that there are some elements that suggest that the nature of AI/ML is different from previous technological change but there is no empirical evidence yet to underpin this view.
    Keywords: labour markets, employment, technological change, task-based model, artificial intelligence, income distribution
    JEL: J62 O33
    Date: 2018–08
  7. By: Liu, Yi; Tan, Yu; Fang, Yu
    Abstract: This paper studies the impact of innovation spillover and licensing on optimal ex-post privatization policies by involving an exogenous R&D activity in a partial-equilibrium international duopoly setting. By assuming a domestic public firm is relatively inefficient compared to its foreign private rival, we characterize and discuss optimal privatization policies under both foreign private and domestic public innovation. The theoretical results suggest that foreign private (domestic public) innovation, including both spillover and licensing, reduces (increases) the optimal degree of ex-post privatization. In addition, innovation spillover and licensing have the same impact direction on privatization policies. The numerical evidence supports these theoretical findings.
    Keywords: Spillover, Licensing, Ex-post Privatization, International Duopoly
    JEL: F13 H4 L13 L24 L33
    Date: 2019–08–09
  8. By: Ziesemer, Thomas (UNU-MERIT)
    Abstract: We present semi-endogenous growth models with total-factor productivity as functions of domestic and foreign private and public R&D. In a small country case with a Cobb-Douglas TFP production function, foreign R&D drives steady-state growth and the production function can be a long-term relation in a vector-error-correction model. Marginal productivity conditions can be long-term relations for a vector-error-correction model if the functional form is of a Cobb-Douglas type or a CES function generalised to a VES function. In case of a VES function, steady states exist only for special cases of parameter restrictions.
    Keywords: Productivity, endogenous (un)balanced growth, public R&D expenditure, foreign spillover
    JEL: O38 O40 O41 H54 H87
    Date: 2019–08–02
  9. By: Enrietti, Aldo; Geuna, Aldo; Nava, Consuelo R.; Patrucco, Pier Paolo (University of Turin)
    Abstract: By discussing the relation between the traditional Marshallian/Jacobian approach and Klepper’s concept of spinoffs and their role, this paper tries to explain the early genesis and later evolution of the Italian automotive industry, based on the for mation of the Torino’s car cluster from the late nineteenth century. Historical analysis and econometric models are integrated to identify key factors that enabled the creation and success of the automotive industry in Turin. Specifically, we investigate agglomeration economies, the role of spinoffs and institutional factors such as the level and importance of local education. Based on original archival research, we built a new database of all Italian automobile companies. Replication of Klepper’s (2007) and Boschma and Wenting’s (2007) models shows no particular influence of the Turin cluster and no early entry advantages. Our model, which integrates and extends previous contributions, confirms the existence of a spinoffs effect, and in particular the positive effect of inherited technical skills embedded in pilots. We find support also, for positive agglomeration effects at the regional level and inter industry externalities from aeronautics, a metropolitan cluster effect and the significance of metropolitan education.
    Date: 2019–04

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