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on Innovation |
| By: | Athreye, Suma (Essex Business School); Fassio, Claudio (CIRCLE, Lund University); Roper, Stephen (Warwick Business School) |
| Abstract: | In order to observe a patent application at the firm level two conditions need to be met: new products need to be of patentable quality, which depends both on the degree of novelty of innovations and on the total number (portfolio) of innovations; and the benefits of patents need to be higher than the costs of owning them. Analyzing the patent propensity of small and large UK firms using a novel innovation-level survey (the SIPU survey) linked to Community Innovation Survey data we find that when we consider the whole innovation portfolio smaller firms do patent less than larger firms. However, using data on individual innovations, we find that smaller firms are no less likely to patent any specific innovation than larger firms. We argue that size differences in the probability to patent relate primarily to the ‘portfolio effect’, i.e. larger firms generate more innovations than smaller firms and therefore are more likely to create one or more which are patentable. As for the decision to patent a patentable innovation, we find that cost barriers, more than issues of innovation quality or enforceability, deter small firms from patenting specific innovations. Measures to address the costs of patenting for smaller firms – perhaps by considering patents as eligible costs for R&D tax credits – and/or subsidizing SMEs’ participation in IP litigation schemes may both encourage patent use by smaller firms. |
| Keywords: | Patenting; SME; small firms; UK |
| JEL: | O32 O34 O38 |
| Date: | 2020–02–26 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2020_002&r=all |
| By: | Joshua Graff Zivin; Elizabeth Lyons |
| Abstract: | Successful innovation is essential for the survival and growth of organizations but how best to incentivize innovation is poorly understood. We compare how two common incentive schemes affect innovative performance in a field experiment run in partnership with a large life sciences company. We find that a winner-takes-all compensation scheme generates significantly more novel innovation relative to a compensation scheme that offers the same total compensation, but shared across the ten best innovations. Moreover, we find that the elasticity of creativity with respect to compensation schemes is much larger for teams than individual innovators. |
| JEL: | J24 M54 O32 |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26737&r=all |
| By: | Pehr-Johan Norbäck; Charlotta Olofsson; Lars Persson |
| Abstract: | Within the policy debate, there is a fear that large incumbent firms buy small firms’ inventions to ensure that they are not used in the market. We show that such “acquisitions for sleep” can occur if and only if the quality of a process invention is small; otherwise, the entry profit will be higher than the entry-deterring value. We then show that the incentive for acquiring for the purpose of putting a patent to sleep decreases when the intellectual property law is stricter because the profit for the entrant then increases more than the entry-deterring value does. |
| Keywords: | acquisitions, innovation, sleeping patents, IP law, ownership |
| JEL: | G24 L10 L20 M13 O30 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8095&r=all |
| By: | Bryan Harcy; Can Sever |
| Abstract: | Financial crises are accompanied by permanent drops in economic growth and output. Technological progress and innovation are important drivers of economic growth. This paper studies how financial crises affect innovative activities. Using cross-country panel data on patenting at the industry-level, we identify a financial channel whereby disruptions in financial markets impact patenting activity. Specifically, we find that patenting decreases more following banking crises for industries that are more dependent on external finance. This financial channel is not at play during currency crises, sovereign debt crises, or recessions more generally, suggesting that disruption in banking activity matters for investment in innovative activities. The effect on patenting is economically large and long-lasting, resulting in less patenting, in terms of both total quantity and quality, for 10 years or longer after a banking crisis. The average patent quality, however, does not appear to decline. We show the results are not likely to be driven by reverse causality or omitted variables. These findings provide a link between banking crises and the observed patterns of lower long-term growth. Liquidity support in the aftermath of banking crises appears to help reduce the effects through the financial channel over the short term. |
| Keywords: | innovation, financial crises, banking crises, patents, growth |
| JEL: | E44 F30 G15 G21 O31 |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:846&r=all |
| By: | Aghion, Philippe; Bergeaud, Antonin; Blundell, Richard; Griffith, Rachel |
| Abstract: | Matched employee-employer data from the UK are used to analyze the wage premium to working in an innovative firm. We find that firms that are more R&D intensive pay higher wages on average, and this is particularly true for workers in some low-skilled occupations. We propose a model in which a firm’s innovativeness is reflected in the degree of complementarity between workers in low-skill and highskilled occupations, and in which non-verifiable soft skills are an important determinant of the wages of workers in low-skilled occupations. The model yields additional predictions on training, tenure and outsourcing which we also find support for in data. |
| Keywords: | innovation; skill-based technological change; wage; complementarity |
| JEL: | O33 L23 J31 |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:103452&r=all |
| By: | Van Reenen, John; Moretti, Enrico; Steinwender, Claudia |
| Abstract: | In the US and many other OECD countries, expenditures for defense-related R&D represent a key policy channel through which governments shape innovation, and dwarf all other public subsidies for innovation. We examine the impact of government funding for R&D - and defense-related R&D in particular - on privately conducted R&D, and its ultimate effect on productivity growth. We estimate models that relate privately funded R&D to lagged government-funded R&D using industry-country level data from OECD countries and firm level data from France. To deal with the potentially endogenous allocation of government R&D funds we use changes in predicted defense R&D as an instrumental variable. In both datasets, we uncover evidence of “crowding in” rather than “crowding out,” as increases in government-funded R&D for an industry or a firm result in significant increases in private sector R&D in that industry or firm. A 10% increase in government-financed R&D generates 4.3% additional privately funded R&D. An analysis of wages and employment suggests that the increase in private R&D expenditure reflects actual increases in R&D employment, not just higher labor costs. Our estimates imply that some of the existing cross-country differences in private R&D investment are due to cross-country differences in defense R&D expenditures. We also find evidence of international spillovers, as increases in government-funded R&D in a particular industry and country raise private R&D in the same industry in other countries. Finally, we find that increases in private R&D induced by increases in defense R&D result in significant productivity gains. |
| Keywords: | defense; R&D; productivity |
| JEL: | R14 J01 J1 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:103449&r=all |
| By: | Marques, Pedro (Universitat Politècnica de Valencia); Morgan, Kevin (Cardiff University) |
| Abstract: | This paper argues that the development of regional innovation concepts drawing primarily on the experiences of advanced regions, has meant that the dominant narratives about regional development are not adequate to explain the experiences of less developed regions (LDRs). Drawing on the extensive experience of the authors doing research in LDRs, the paper develops three main arguments: first, the emphasis put on networks and systems means that not enough attention is paid to the internal capabilities of organisations, including those of firms, Universities and the public sector. These capabilities shape the strategies of these organisations regarding innovation and collaboration, and therefore influence the nature and content of innovation systems. Second, the paper argues that too much attention has been paid to the importance of informal institutions, rather than analysing the dynamic interaction between formal and informal institutions. The latter approach allows us to avoid culturally deterministic interpretations of under-development and to think about ways in which formal policies could help to improve innovation environments. Third, the paper argues that innovation at the firm level does not always lead to improvement in productivity and economic growth at the aggregate scale. This is partly due to the effects of the dynamics discussed in the two previous points, but is also because advanced regions benefit from a socio-economic ecosystem which supports the translation of new ideas into economic activity. This means that though innovation is fundamental for long-term economic growth, it is not sufficient without mechanisms that ensure its dissemination through the entirety of the economic system. |
| Keywords: | Less developed regions; Innovation; Productivity; Organisational capabilities; Institutions; Regional Development |
| JEL: | O31 O43 P48 R11 |
| Date: | 2020–02–26 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2020_003&r=all |
| By: | Holl, Adelheid; Peters, Bettina; Rammer, Christian |
| Abstract: | Recent empirical evidence has shown that firm's innovation behavior exhibits high persistency but not much is known about potential contingencies affecting the degree of persistence. This paper focuses on the role of the local knowledge environment and asks how local knowledge spillovers affect firms' innovation persistence. The empirical analysis draws upon a representative panel data set of firms in Germany from 2002-2016, complemented by detailed geographic information of patent activity over discrete distances to proxy local knowledge spillovers. Based on correlated random effects probit models that control for state dependence, unobserved individual heterogeneity and endogenous initial conditions, our results corroborate former evidence that persistency in innovation is driven by true state dependence. More importantly, we find that the local patenting activity positively moderates firms' degree of persistency in innovation behavior. This is a novel firm-level mechanism that can explain the widening of spatial disparities in innovation performance. Estimations with different distance bands show that the strength of knowledge spillovers that contribute to innovation persistence via true state dependence declines rather rapidly with increasing distance. |
| Keywords: | innovation,persistence,location,knowledge spillovers |
| JEL: | O31 R1 D22 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:20005&r=all |
| By: | Horbach, Jens; Rammer, Christian |
| Abstract: | Skilled labor is a key input to the innovation process. A shortage in supply of skilled labor may hence impede innovation activities, resulting in lower productivity gains. While governments are concerned about these likely negative impacts, there is only limited empirical evidence whether and to what extent labor shortage affects innovation activities. The paper addresses this question using panel data from three waves (2017 to 2019) of the German innovation survey. We measure labor shortage by job openings that could not be filled at all, not with the required skills or only with significant delay, distinguishing different skill levels. We analyze whether labor shortage resulted in stopping or abandoning of innovation projects. Endogeneity issues are tackled by instrumental variable estimation techniques. Our results show that innovative firms are more likely to be subject to skill shortage, whereas skill shortage induces the cancelation of innovation projects. Effects are stronger for labor shortage related to professional occupations and less for academic qualifications. |
| Keywords: | community Innovation Survey,labor shortage,innovation,probit instrumental variable estimation |
| JEL: | J23 J24 O31 C26 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:20009&r=all |
| By: | Giuseppe Berlingieri (OECD); Sara Calligaris (OECD); Chiara Criscuolo (OECD); Rudy Verlhac (OECD) |
| Abstract: | This paper provides new evidence on the main characteristics of laggard firms - firms in the bottom 40% of the productivity distribution - and their potential for productivity growth. It finds that laggards are on average younger and smaller than more productive firms, and matter for aggregate resource reallocation. Moreover, younger laggards converge faster toward the productivity frontier, suggesting that the composition of the laggard group matters for future productivity. Yet this report finds that laggards converge at a slower rate in highly digital- and skill-intensive industries, suggesting that there are barriers to technology and knowledge diffusion. This could help explain the much-debated productivity slowdown and the increased productivity dispersion. This report also finds that policies aimed at improving workers’ skills, alleviating financial constraints to investments and increasing firms' absorptive capacity through direct R&D support can accelerate the diffusion of knowledge and technology, and help laggard firms to catch up. |
| Keywords: | Catch-up, Laggards, Productivity |
| JEL: | D2 D4 L2 O57 |
| Date: | 2020–03–05 |
| URL: | http://d.repec.org/n?u=RePEc:oec:stiaac:86-en&r=all |
| By: | Davide Consoli (INGENIO (CSIC-UPV)); Giovanni Marin (Department of Economic, Society and Politics, University of Urbino Carlo Bo, Italy); Francesco Rentocchini (Department of Economics, Management and Quantitative Methods, University of Milan, Italy, and Southampton Business School, University of Southampton, UK); Francesco Vona (Sciences Po, OFCE and SKEMA Business School, Université Côte d'Azur) |
| Abstract: | This study contributes to the literature on routinization and employment by capturing within- occupation task changes over the period 1980-2010. The main contribution is the measurement of such changes combining two data sources on occupational task content for the United States: the Dictionary of Occupational Titles and the Occupational Information Network. We show that within-occupation task change: i) accounts for 1/3 of the decline in routine-task use; ii) accelerates in the 1990s, decelerates in the 2000s but with significant catching-up; iii) is associated with educational upgrading in several dimensions and iv) allows escaping the employment decline conditional on initial routine-task intensity. |
| Keywords: | Tasks, routinization, technological change, employment dynamics, race between technology and education |
| JEL: | J23 J24 O33 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:fce:doctra:1908&r=all |
| By: | Biancalani, Francesco; Czarnitzki, Dirk; Riccaboni, Massimo |
| Abstract: | This paper analyses the impact of the Italian Startup Act which entered into force in December 2012. This public policy provides a unique bundle of benefits, such as tax incentives, public loan guarantees, and a more flexible labor law, for firms registered as "innovative startups" in Italy. This legislation has been implemented by the Italian government to increase innovativeness of small and young enterprises by facilitating improved access to (external) capital and (highskilled) labor. Consequently, the goal of our evaluation is to assess the impact of the policy on equity, debt and employment. Using various conditional difference-in-difference models, we find that the Italian startup policy has met its primary objectives. The econometric results strongly suggest that firms operating under this program are more successful in obtaining equity and debt capital and they also hire more employees because of the program participation. |
| Keywords: | start up,innovation policy,firm subsidies,small firms |
| JEL: | M13 O38 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:20006&r=all |