nep-ino New Economics Papers
on Innovation
Issue of 2019‒11‒25
sixteen papers chosen by
Uwe Cantner
University of Jena

  1. Start-up Subsidies: Does the Policy Instrument Matter? By Hanna Hottenrott; Robert Richstein
  2. Innovation modes in SMEs: Mechanisms integrating STI-processes into DUI-mode learning and the role of regional innovation policy By Alhusen, Harm; Bennat, Tatjana
  3. Market Value of Patents: Evidence from the US, 1976-2017 By Jihong Lee; Hyunkyeong Lim
  4. Trademarks as an indicator of regional innovation: Evidence from Japanese prefectures By Joern Block; Christian Fisch; Kenta Ikeuchi; Masatoshi Kato
  5. Technology, profits and wages By Andrea Coveri; Mario Pianta
  6. Global Recession Impact on the Market Value of Intangible Assets By Antanina Garanasvili
  7. The Effects of Public R&D Subsidies on Private R&D Activities in Mexico By Emmanuel Chavez
  8. Explaining the past, predicting the future: the influence of regional trajectories on innovation networks of new industries in emerging economies By Plechero, Monica; Mandar, Kulkarni; Chaminade, Cristina; Balaji, Parthasarathy
  9. Mining the Automotive Industry: A Network Analysis of Corporate Positioning and Technological Trends By Stoehr, Niklas; Braesemann, Fabian; Zhou, Shi
  10. Accelerating the Arrival of Fusion Energy within a Quintuple Helix Innovation Ecosystem to Address Climate Change By Draper, John
  11. Digital technologies, employment and skills By Jelena Reljic; Rinaldo Evangelista; Mario Pianta
  12. Decentralising the Patent System By de Rassenfosse, Gaetan; Higham, Kyle
  13. Quid Pro Quo, Knowledge Spillover and Industrial Upgrading By Jie Bai; Panle Barwick; Shengmao Cao; Shanjun Li
  14. Does long-term proactive agency matter for regional development? By Grillitsch, Markus; Asheim, Bjørn; Nielsen, Hjalti
  15. What Motivates Innovative Entrepreneurs? Evidence from Three Field Experiments By Guzman, Jorge; Oh, Jean Joohyun; Sen, Ananya
  16. The Silicon Valley Syndrome By Sorenson, Olav; Kwon, Doris

  1. By: Hanna Hottenrott (aTUM School of Management, Technical University of Munich, Arcisstraße 21, 80333 Munich, Germany, bZEW – Leibniz Centre for European Economic Research, L7, 1, Mannheim, Germany.); Robert Richstein (cManchot Graduate School, Heinrich Heine University Düsseldorf, Universitätsstraße 1, 40225 Düsseldorf, Germany)
    Abstract: New knowledge-intensive firms contribute to innovation, competition, and employment growth, but externalities like knowledge spillovers can prevent entrepreneurs from appropriating the full returns from their investments. In addition, uncertainty and information asymmetry pose challenges for financing. Public policy programs therefore aim to support start-ups. This study evaluates the effects of participation in such programs on the performance of start-ups in high-tech and knowledge-intensive sectors that were founded in Germany between 2005 and 2012. Distinguishing between grants and subsidized loans and after matching recipients and non-recipients based on a broad set of founder and company characteristics, we find that both grants and subsidized loans facilitate tangible investment, employment and revenue growth. Grants are, however, better suited to increasing R&D investments than loans are. Combined with grants, subsidized loans facilitate turning research results into marketable products by means of investments in tangible assets. Start-ups that participate in both types of programs outperform grant-only recipients in terms of innovation performance, employment and future revenues. Finally, program participation does not crowd out private venture capital.
    Keywords: financing constraints, subsidies, R&D, high-tech start-ups, innovation policy
    JEL: G32 H25 O38
    Date: 2019–11
  2. By: Alhusen, Harm; Bennat, Tatjana
    Abstract: Innovation processes consist of interactive learning mechanisms that combine different knowledge sources. Using a set of 72 exploratory interviews with small- and medium-sized enterprises (SMEs) and regional innovation consultants, this paper analyzes the combination of STI (science-technology -innovation) and DUI (innovation based on learning-by-doing, -using and -interacting) modes of innovation. We show that SMEs integrate STI-based knowledge into DUI-routines through mechanisms with varying levels of complexity. The mechanisms we describe differ with respect to a) effects on innovativeness, b) the absorptive capacities required and c) incurred costs. Based on these mechanisms, d) cognitive, organizational and financial barriers to combinatorial innovation modes are derived. We find that e) regional innovation consultancies play an important role in fostering combinatorial innovation modes. We therefore explore the role of regional innovation policy and its effects on firms' combination of innovation modes. Our findings point out innovation drivers that facilitate SMEs' capacity to absorb STI-based knowledge. Based on our empirical findings, we derive implications for innovation policy with regards to absorptive capacities in SMEs.
    Keywords: Innovation modes,DUI,Regional Innovation System,R&D cooperation,Knowledge bases,Regional innovation policy
    JEL: D23 D83 L10 L22 O31 O33 O38
    Date: 2019
  3. By: Jihong Lee; Hyunkyeong Lim
    Abstract: Since the 1980s, the US has experienced a surge in patenting and R&D. To better understand the phenomena, we explore the evolution of the mar- ket value of knowledge capital with a novel firm-level dataset. While the importance of R&D has steadily declined, the market value of patents made a large and sustained gain in the new millennium. An additional patent per million dollars of R&D improves firm value by 11% in the latest decade compared to 3% three decades ago. The increased patent rents are driven largely by young firms, suggesting a positive role of the US patent system.
    Keywords: Innovation; ?rm value; patent; R&D
    JEL: O31 O34 O38 G30
    Date: 2019–01
  4. By: Joern Block (Faculty of Management, Trier University / Erasmus School of Economics (ESE) and Erasmus Institute of Management (ERIM), Erasmus University Rotterdam); Christian Fisch (Faculty of Management, Trier University / Erasmus School of Economics (ESE) and Erasmus Institute of Management (ERIM), Erasmus University Rotterdam); Kenta Ikeuchi (Research Institute of Economy, and Trade and Industry (RIETI)); Masatoshi Kato (School of Economics, Kwansei Gakuin University)
    Abstract: Regional science has long been concerned with measuring the spatial distribution of innovation activity. While patents are frequently used as an indicator of regional innovation, we introduce trademarks as an additional indicator. Specifically, we explore the spatial distribution of trademark applications using a detailed and comprehensive dataset of 47 Japanese prefectures from 1999 to 2012. In addition to mapping differences in trademarks across regions, we identify correlates at the regional level that provide initial insights into potential determinants of regional innovation. For example, regional trademark activity is positively associated with regional entrepreneurship and with strong private service and finance sectors. Overall, our results reveal associations unique to trademarks that patent-based measures of innovation cannot uncover. With these results, we contribute to research in regional science and to the evolving literature on trademarks of this discipline.
    Keywords: Trademarks; regional innovation; Japan; prefectures; spatial distribution; patents.
    JEL: L80 O34 O53 R12
    Date: 2019–11
  5. By: Andrea Coveri; Mario Pianta
    Abstract: Building on a Post-Keynesian theoretical framework, integrated with an analysis of technology, this article investigates the structural determinants of income distribution. We develop a simultaneous model on wage and profit dynamics identifying as key determinants productivity growth, capital-labour conflict, the relevance of trade unions and different strategies of technological change and offshoring. We perform an industry-level analysis on 38 manufacturing and service sectors for six major European countries from 1994 to 2014. Wage and profit dynamics is shown to be rooted in structural change, productivity growth and capital-labour conflict, with profits driven by product innovation and offshoring, and wages rising faster where new products are relevant and trade unions have a greater role.
    Keywords: Income distribution; innovation; offshoring; Europe; industries.
    Date: 2019–11–13
  6. By: Antanina Garanasvili
    Abstract: Aim of this analysis is to study whether the global recession of 2008 had a significant effect on how stock markets value firmsâ investments in knowledge and branding as well as complementary investments in patents and trademarks. Building on data from European Intellectual Property Office (EUIPO) and European Patent Office (EPO) we construct a firm panel covering R&D, marketing and IP investments over the period 2005-2012. In addition, we estimate market value equations for the years 2005-2008 and 2009-2012. Empirical findings suggest that there are interesting differences in which investments contributed to market value before and after 2008. First, investments in R&D contribute far more significantly to the market value after the crisis than before. Second, it becomes apparent that after the crisis patent quality arises as a significant factor which increases value of the companies. At the same time patent quantity ceases to be an influencing factor in the market value equation after 2008.
    JEL: G32 E32 O32 O34
    Date: 2019–11–05
  7. By: Emmanuel Chavez (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper analyses the impact of a public research and development (R&D) subsidy to private firms in Mexico. My estimates suggest that the subsidy has a positive impact on personnel allocated to innovation activities, but it does not have an effect on stronger measures of R&D performance, such as research personnel, patents or private R&D spending. I argue that awarded firms would have performed their planned R&D projects in case they were not granted the public funds. Additional public funds seem to be invested to allocate more personnel on already planned projects, but not to carry out additional ones. Specifically, I analyse the Programa de Estimulos a la Innovacion (PEI) subsidy. The program's rules set a grade threshold below which no R&D projects get the grants and above which some projects are granted. This granting process allows to use a fuzzy regression discontinuity approach to identify causal inference.
    Keywords: Public Policy,Regression Discontinuity,Innovation,Research and Development,Impact Evaluation
    Date: 2019–11
  8. By: Plechero, Monica (University of Florence); Mandar, Kulkarni (International Institute of Information Technology); Chaminade, Cristina (Lund University); Balaji, Parthasarathy (International Institute of Information Technology)
    Abstract: Economic geographers have recently made important contributions to the relationship between regional transformation, industrial specialisation and innovation networks in the emergence of new industries. However, most contemporary research has focused on the influence of networks on regional trajectories, paying lip service to how regional trajectories also influence network configurations. Furthermore, international comparative research on how specific regional innovation system (RIS) trajectories may shape innovation networks in new industrial sectors is underdeveloped. The paper investigates how the trajectories of Bangalore and Beijing RISs influence the objectives and geographical configuration of innovation networks in the new media industry. The coevolution of the different elements of the RIS trajectory points to the unfolding of politically and institutionally driven trajectory in Beijing and cognitively driven trajectory in Bangalore. These trajectories lead to specific barriers and opportunities for the development of innovation networks in new industries.
    Keywords: RIS trajectories; Innovation networks; New media industry; Beijing; Bangalore
    JEL: O19 O30 R50
    Date: 2019–11–13
  9. By: Stoehr, Niklas; Braesemann, Fabian; Zhou, Shi
    Abstract: The digital transformation is driving revolutionary innovations and new market entrants threaten established sectors of the economy such as the automotive industry. Following the need for monitoring shifting industries, we present a network-centred analysis of car manufacturer web pages. Solely exploiting publicly-available information, we con- struct large networks from web pages and hyperlinks. The network properties disclose the internal corporate positioning of the three largest automotive manufacturers, Toyota, Volkswagen and Hyundai with respect to innovative trends and their international outlook. We tag web pages concerned with topics like e-mobility & environment or autonomous driving, and investigate their relevance in the network. Toyota and Hyundai are concerned with e-mobility throughout large parts of their web page network; Volkswagen devotes more specialized sections to it, but reveals a strong focus on autonomous driving. Sentiment analysis on individual web pages uncovers a relationship between page linking and use of positive language, particularly with respect to innovative trends. Web pages of the same country domain form clusters of different size in the network that reveal strong correlations with sales market orientation. Our approach is highly transparent, reproducible and data driven, and could be used to gain complementary insights into innovative strategies of firms and competitive landscapes.
    Date: 2019–10–09
  10. By: Draper, John
    Abstract: In July 2019, the IEA established an independent Global Commission for Urgent Action on Energy Efficiency. In the world of fusion, in November 2018, a U.S. National Academies’ report on US fusion research recommended a national ‘burning plasma’ fusion energy facility but also emphasized the private sector’s role in fusion innovation. In the same month, the Fusion Industry Association publicly announced its launch, indicating a level of private-sector maturity. Multiple FIA members boldly aim to accelerate fusion’s commercial deployment to approximately one decade, yet none are fully funded. Nonetheless, introducing fusion as a new primary energy source in this timeframe could replace fossil fuels within this century and thereby contribute significantly to addressing the global warming ‘super wicked problem’. This article applies the Quadruple and Quintuple Innovation Helix inter-disciplinary and trans-disciplinary analytical frameworks to this issue. We apply these frameworks to consider how Global South funding for entrepreneurship and innovation, via petrostates’ sovereign wealth funds, can accelerate the development and commercialization of fusion, through funding continuous operations. We thus promote a multi-modal and multi-lateral approach to accelerate fusion innovation, increase quality of democracy, and protect the natural environment, via a managed co-opetive global solution like the IEA’s energy efficiency approach.
    Date: 2019–09–04
  11. By: Jelena Reljic; Rinaldo Evangelista; Mario Pianta
    Abstract: The diffusion of digital technologies and their impact on employment and skills is investigated in this article considering six major European countries (Germany, France, Spain, Italy, the Netherlands and the United Kingdom) and 42 manufacturing and service industries over the 2009-2014 period. We analyse two key dimensions of digitalisation - industries' consumption of intermediate inputs from digital-intensive sectors and investment in ICT tangible and intangible assets per employee. We first investigate their effect on total employment finding that job creation in industries is supported by high digital consumption and reduced by high digital investment. We then explore how these variables have shaped the evolution of four professional groups - Managers, Clerks, Craft and Manual workers, defined on the basis of ISCO classes - and the increasingly polarised skill structure of European economies.
    Keywords: Digital technology; Innovation; Employment; Skills; European industries.
    Date: 2019–11–13
  12. By: de Rassenfosse, Gaetan; Higham, Kyle
    Abstract: This paper proposes a substantive re-think of the modern patent system. The patent system has come under intensive criticism in the past, and many scholars have proposed ways to improve it. Ideas for improvement include, e.g., prior-art bounties, contracting out examination and dynamic fee setting. However, many of these ideas have gone unheeded due to the cost of administering them and the rigidity of the patent system. We explore how distributed ledger technologies enable these major changes.
    Date: 2019–09–04
  13. By: Jie Bai (Center for International Development at Harvard University); Panle Barwick; Shengmao Cao; Shanjun Li
    Abstract: Are quid pro quo (technology for market access) policies effective in facilitating knowledge spillover to developing countries? We study this question in the context of the Chinese automobile industry where foreign firms are required to set up joint ventures with domestic firms in return for market access. Using a unique dataset of detailed quality measures along multiple dimensions of vehicle performance, we document empirical patterns consistent with knowledge spillovers through both ownership affiliation and geographical proximity: joint ventures and Chinese domestic firms with ownership or location linkage tend to specialize in similar quality dimensions. The identification primarily relies on within-product variation across quality dimensions and the results are robust to a variety of specifications. The pattern is not driven by endogenous joint-venture network formation, overlapping customer base, or learning by doing considerations. Leveraging additional micro datasets on part suppliers and worker flow, we document that supplier network and labor mobility are important channels in mediating knowledge spillovers. However, these channels are not tied to ownership affiliations. Finally, we calibrate a simple learning model and conduct policy counterfactuals to examine the role of quid pro quo. Our findings show that ownership affiliation facilitates learning but quality improvement is primarily driven by the other mechanisms.
    Keywords: Knowledge spillover
    Date: 2019–11
  14. By: Grillitsch, Markus (Lund University); Asheim, Bjørn (University of Stavanger); Nielsen, Hjalti (Lund University)
    Abstract: Agency is concerned with the ways and the extent to which individuals, groups of individuals and organisations shape regional development within and beyond the corset of historically developed pathways. Linking the time horizon of agency to the exploration-exploitation trade-off in regional development and the recent literature on industrial path development, we argue that agency becomes more powerful with a long-term perspective. In the long-run knowledge, networks, and institutions can be moulded in a strategic manner, whereas in the short-term these are highly rigid. We illustrate our arguments with an in-depth case study of a labour market in Western Norway, which, over the past 20 years, was subject to two crises and one remarkable growth phase. We show that long-term agency with a focus on innovation shaped the development opportunities and identity of the region. Conversely, short-term agency was mainly about exploiting existing opportunities, often associated with entrepreneurship. The unintended consequence of short-term agency was an increasing vulnerability of the regional economy to changes in demand. This has far-reaching policy implications because short-term pressures and policy cycles often undermine long-term perspectives.
    Keywords: Change agency; exploration exploitation; new industrial path development; regional development; innovation
    JEL: O18 O30 P48 R11 R58
    Date: 2019–11–13
  15. By: Guzman, Jorge; Oh, Jean Joohyun; Sen, Ananya
    Abstract: Entrepreneurial motivation is central for the process of economic growth. However, evidence on the motivations of innovative entrepreneurs, and how those motivations differ across fundamental characteristics, remains scant. We conduct three field experiments with the MIT Inclusive Innovation Challenge to study how innovative entrepreneurs respond to messages of money and social impact, and how this varies across gender and culture. We find consistent evidence that women and individuals located in more altruistic cultures are more motivated by social impact messages than money, while men and those in less altruistic cultures are more motivated by money than social impact. The estimates are not driven by differences in the type of company, its size, or other observable characteristics, but instead appear to come from differences in the underlying motivations of innovative entrepreneurs themselves.
    Date: 2019–10–10
  16. By: Sorenson, Olav; Kwon, Doris
    Abstract: How does expansion in the high-tech sector influence the broader economy of a region? We demonstrate that an infusion of venture capital in a region appears associated with: (i) a decline in entrepreneurship, employment, and average incomes in other industries in the tradable sector; (ii) an increase in entrepreneurship and employment in the non-tradable sector; and (iii) an increase in income inequality in the non-tradable sector. An expansion in the high-tech sector therefore appears to lead to a less diverse tradable sector and to increasing inequality in the region.
    Date: 2019–10–17

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