nep-ino New Economics Papers
on Innovation
Issue of 2020‒01‒27
seven papers chosen by
Uwe Cantner
University of Jena

  1. Knowledge Complementarities and Patenting: Do New Universities of Applied Sciences Foster Regional Innovation? By Patrick Lehnert; Curdin Pfister; Dietmar Harhoff; Uschi Backes-Gellner
  2. Schumpeter, the Banking System, and Innovation: Small versus Big Business By Lambert, Thomas; Velardo, Tristan
  3. Functional procurement for innovation, welfare and the environment: a mission-oriented approac By Edquist, Charles; Zabala-Iturriagagoitia, Jon Mikel
  4. Mining the Automotive Industry: A Network Analysis of Corporate Positioning and Technological Trends By Niklas Stoehr; Fabian Braesemann; Michael Frommelt; Shi Zhou
  5. International Trade Commission Exclusion Orders for the Infringement of Standard-Essential Patents By Sidak, Gregory; Library, Cornell
  6. A Human Capital Theory of Structural Transformation By Max Gillman
  7. Innovations in the Wind Energy Sector By Dali T. Laxton

  1. By: Patrick Lehnert; Curdin Pfister; Dietmar Harhoff; Uschi Backes-Gellner
    Abstract: This study analyzes how universities of applied sciences (UASs) - bachelor-granting three-year colleges teaching and conducting applied research - affect regional innovation. We particularly focus on regional complementarities between such applied research institutions and basic ones. We exploit variation in the location and timing of UAS establishments in Germany. To account for endogeneity, we apply fixed effects estimations and control for regional economic activity by implementing a proxy based on 30 years of satellite data. We find that UASs increase innovation with a substantially larger effect in regions where other (basic and applied) public research organizations coexist. This result indicates strong knowledge complementarities. In an additional analysis, we also find that UASs accelerate innovation in the regions belonging to the former German Democratic Republic.
    JEL: I23 O31 O38 R11
    Date: 2020–01
  2. By: Lambert, Thomas; Velardo, Tristan
    Abstract: Joseph Schumpeter’s writings on entrepreneurship and innovation have had a profound impact on economic theory and economic thought. Schumpeter initially saw the small entrepreneur as the source of innovation and economic growth within an economic system but later saw large corporations as the source of much innovation. Because large corporations, and in modern times many governments and universities as well, play such a large role in funding research and development and new innovations, much of the bank financing of innovation is done by smaller banks for small entrepreneurs and their ideas. Venture capitalists and self-financing are the other two major forms of small entrepreneur/small business financing. Meanwhile, the financial markets (stocks and bond markets) only indirectly play a role in funding the innovation of large corporations via changes in these firms’ stock prices. Changes in stock prices reflect an estimate of the large firms’ research and development efforts and their prospects for profitable, future innovation. Much corporate research and development is financed internally within the organization as an expense of doing business. Meanwhile, government and university funding through tax dollars and non-profit sources indirectly subsidize corporate innovation because governmental entities and universities take on risks that the private sector will often not tolerate. Yet, large corporations are often the beneficiaries of such governmental and university financing of research and development efforts. In today’s times, Schumpeter would be impressed with the success of large firms regarding innovation but probably would be disappointed about the marginalization of the small entrepreneurial firm and the banking system and their diminished roles in innovation. This paper summarizes Schumpeter’s views on how the banking system and financial markets could play a role in innovation and explains how a modern day monopoly capital system (Baran and Sweezy 1966) and its financial system have transformed entrepreneurship and innovation away from small business and innovation by the small entrepreneur. Baran, Paul A, and Paul M Sweezy. 1966. Monopoly Capital: An Essay on the American Economic and Social Order. New York: Monthly Review Press.
    Keywords: banking, innovation, small business, big business
    JEL: B26 B31 B51
    Date: 2019–12
  3. By: Edquist, Charles (CIRCLE, Lund University); Zabala-Iturriagagoitia, Jon Mikel (University of Deusto)
    Abstract: Public procurement represents a very large share of most economies worldwide. Besides its direct purchasing power, public procurement has an enormous potential to become one of the most important mission-oriented policy instruments in the context of the Sustainable Development Goals. The paper argues that the key to achieve more innovations when pursuing public procurement is to describe problems to be solved or functions to be fulfilled (functional procurement) instead of describing the products to be bought (product procurement). We contend that if products can be described in the procurement documents, it is because they exist, and hence, they cannot be regarded as innovations. Innovations cannot be described ex ante, simply because they do not exist. It is thus not accurate to talk about ‘innovation procurement’. Accordingly, the only way to achieve an innovation by means of procurement is by describing the functions it shall fulfill or the problems it shall solve. For public procurement to become an effective policy instrument supporting innovation, product procurement should thus be transformed into functional procurement. Hence, contracting authorities need to identify the problems to be addressed by policy. The new products (innovations) solving the problems are to be designed by the potential innovators/suppliers, not by public procurers. Hence, the societal needs and problems must be translated and transformed into functional requirements. Functional procurement is allowed in EU regulations, and hence, there are no legal obstacles to use it for innovation policy purposes. Above and beyond, the European directives recommend using functional requirements “as widely as possible”. Besides, it leads to increased competition, not only among potential suppliers of similar products, but also among different products that solve the same problem. Functional procurement thus not only supports innovation but also serves as a powerful instrument of competition policy.
    Keywords: innovation policy; public procurement; product procurement; functional procurement; functional requirements; competition policy
    JEL: L50 O32 O33 O39
    Date: 2020–01–21
  4. By: Niklas Stoehr; Fabian Braesemann; Michael Frommelt; Shi Zhou
    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 construct 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 and environment or autonomous driving, and investigate their relevance in the network. 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 maintains the web content's hierarchical structure imposed by the web page networks. It, thus, presents a method to reveal hierarchical structures of unstructured text content obtained from web scraping. It is highly transparent, reproducible and data driven, and could be used to gain complementary insights into innovative strategies of firms and competitive landscapes, which would not be detectable by the analysis of web content alone.
    Date: 2019–12
  5. By: Sidak, Gregory; Library, Cornell
    Abstract: In the United States, a patent holder can pursue several remedies against a patent infringer. Section 284 of the Patent Act provides that, upon a finding of infringement, “the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty . . . .” In addition, § 283 provides that a court “may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent.” Section 337 of the Tariff Act of 1930 also allows a patent holder to petition the U.S. International Trade Commission (ITC)—a federal agency that investigates matters of international trade and advises on international trade policy— to issue an exclusion order against an infringer, a remedy that denies the importation and sale in the United States of products that infringe a valid and enforceable U.S. patent.3 In a case of patent infringement, a patent holder may thus seek damages for the infringement, an injunction, and an exclusion order.
    Date: 2018–03–18
  6. By: Max Gillman
    Abstract: The paper presents a human capital based theory of the sectoral transformation along the balanced growth path equilibrium. Allowing a small upward trend in the productivity of the human capital sector, combined with di§erential human capital intensity and constant productivity across sectors, output gradually shifts over time from relatively less human capital intensive sectors towards more human capital intensive sectors. Sectors intensive in the factor that is becoming relatively more plentiful find their relative prices falling, their "effective productivities" rising at di§erential rates inversely to their relative price decline, and their relative outputs expanding. Adding more sectors of greater human capital intensity causes labor time to decrease across existing sectors, and by relatively more in the least human capital sectors. literature.
    Keywords: human capital intensity; sectoral allocation; labor shares; productivity; technological change; neoclassical; optimal growth model
    JEL: E13 J24 O11 O14 O33 O41
    Date: 2019–12
  7. By: Dali T. Laxton
    Abstract: When technological innovations are implemented in the wind energy sector, we should observe reductions in the production cost of electricity. However, the accuracy of inferring the rate of innovation from production cost reductions is open to challenge when those costs change due to factors not attributable to technological innovation. This study applies an engineering model to generate time-series of wind energy production cost data as the measure of innovation. This approach enables us to exclude factors which are not attributable to technological innovation. In order to illustrate the importance of our measure of innovation, we conduct a learning curve analysis which measures the correlation between deployment of wind energy technology and cost reductions in electricity production. Our data delivers an improved fit of the learning curve in wind energy technology relative to alternative measures of innovation from the literature.
    Keywords: innovation; levelized engineering cost of energy; wind turbine vintages; learning curve;
    JEL: O31 O32 Q28 D83
    Date: 2019–12

This nep-ino issue is ©2020 by Uwe Cantner. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.