nep-ino New Economics Papers
on Innovation
Issue of 2020‒04‒06
thirteen papers chosen by
Uwe Cantner
University of Jena

  1. User Innovation and Business Incubation By Carolin Eckinger; M.W.J.L. Sanders
  2. The Risk of Caution: Evidence from an R&D Experiment By Richard Carson; Joshua S. Graff Zivin; Jordan Louviere; Sally Sadoff; Jeffrey G. Shrader Jr
  3. STI-DUI innovation modes and firm performance in the Indian capital goods industry: Do small firms differ from large ones? By Mathew, Nanditha; Paily, George
  4. Induced Innovation: Evidence from China's Secondary Industry By Fleisher, Belton M.; McGuire, William H.; Wang, Xiaojun; Zhao, Min Qiang
  5. Can Direct Innovation Subsidies Relax SMEs' Credit Constraints? By Raphaël Chiappini; Samira Demaria; Benjamin Montmartin; Sophie Pommet
  6. The Value of Publicly Available, Textual and Non-textual Information for Startup Performance Prediction By Kaiser, Ulrich; Kuhn, Johan Moritz
  7. International Patent Protection and Trade: Transaction-Level Evidence By Gaetan de Rassenfosse; Marco Grazzi; Daniele Moschella; Gabriele Pellegrino
  8. Quantifying Sunk Costs and Learning Effects in R&D Persistence By Juan A. Máñez Castillejo; James H. Love
  9. Measuring the creation and adoption of new technologies using trade and patent data By Foster-McGregor, Neil; Nomaler, Onder; Verspagen, Bart
  10. Success factors of innovations By Sterenn Lucas; Louis-Georges Soler; Etienne Rouvin
  11. Industrial Policies, Patterns of Learning and Development: an Evolutionary Perspective By Mario Cimoli; Giovanni Dosi; Xiaodan Yu
  12. Potentials and role of peripheral or weakly structured regions in national innovation systems By Kroll, Henning; Koschatzky, Knut
  13. The economic impact of universities: evidence from across the globe By Valero, Anna; Van Reenen, John

  1. By: Carolin Eckinger; M.W.J.L. Sanders
    Abstract: This paper investigates user innovations in business incubation programs. User innovations are defined as innovations by users rather than suppliers of products, processes or services and have been identified as a potentially rich source of innovative ideas. Business incubators aim to help entrepreneurs find and develop ideas into viable businesses and have been shown to contribute to the success rate of start-ups. Current incubator acquisition strategies, however, are rather passive (founders need to apply) and selection into the incubation programs is geared towards attracting potentially profitable start-ups. User innovations often lack a dedicated founder team and the innovator typically has a lower ambition to build a venture and achieve profitability. In this paper we construct a measure based on existing literature to classify user innovations in a dataset of 296 start-ups that applied to one of two incubation programs between 2014 and 2017 in the Netherlands. Analysing this dataset, we found only 19 and find that incubator programs benefit user innovations as much as they do other ventures. Our data also suggests a negative self-selection bias of user innovations, shown by very few user innovations applying to incubation programs. At the same time only a few of the user innovations found have been selected for incubation, revealing an additional selection bias of incubator acquisition strategies towards user innovations
    Keywords: User Innovation, Business Incubation, Startups, Entrepreneurship
    Date: 2019–08
  2. By: Richard Carson; Joshua S. Graff Zivin; Jordan Louviere; Sally Sadoff; Jeffrey G. Shrader Jr
    Abstract: Innovation is important for firm performance and broader economic growth. But breakthrough innovations necessarily require greater risk-taking than more incremental approaches. To understand how managers respond to uncertainty when making research and development decisions, we conducted three experiments with master’s degree students in a program focused on the intersection of business and technology. Study participants were asked to choose whether to fund hypothetical research projects using a process that mirrors real-world research and development funding decisions. The experiments provided financial rewards that disproportionately encouraged the choice of higher-risk projects. Despite these incentives, most participants chose lower-risk projects at the expense of projects more likely to generate a large payoff. We also elicited participants’ personal risk preferences and found that decision-makers who are more tolerant of risk were more likely to fund breakthrough projects. The results suggest that the risk preferences of managers in charge of research investments may have an oversized effect on the rate of breakthrough innovation and the profitability of firms.
    JEL: D8 G11 O3
    Date: 2020–03
  3. By: Mathew, Nanditha (UNU-MERIT); Paily, George (Centre for Development Studies, Trivandrum)
    Abstract: This paper examines the effect of dfferent innovation strategies followed by small and large firms on their overall performance in the capital goods industry. Following the wider literature on national innovation systems, we categorise the innovation modes as formal Science, Technology and Innovation (STI) and informal learning by Doing, Using and Interacting (DUI) mode. We observe that, in the case of small firms the informal learning and experience based innovation mode is related to improved performance, while the formal STI mode does not have any effect. On the other hand, for large firms, both STI and DUI innovation modes are positively related to its sales growth. Our results indicate that building certain DUI capabilities may act as a pre-condition to enhance the strength of science and technology based innovation strategies.
    Keywords: STI, DUI, Modes of innovation, Capabilities accumulation, Corporate performance, capital goods industry, India
    JEL: O32 O33 L20
    Date: 2020–02–11
  4. By: Fleisher, Belton M. (Ohio State University); McGuire, William H. (University of Washington Tacoma); Wang, Xiaojun (University of Hawaii at Manoa); Zhao, Min Qiang (Xiamen University)
    Abstract: We investigate the effect of rising labor costs on induced technological change in China's secondary industry. While previous studies have focused primarily on induced technology change in agriculture and in energy production/environmental protection, there has been little evidence relating to China's adjustments as rising labor costs affect its global competitiveness in the manufacturing sector. Building on insights developed in a rich literature, we propose a model linking changes in labor productivity to changes in labor costs, and the availability of physical capital. Importantly, we derive testable hypotheses to distinguish induced innovation from standard substitution of capital for labor under fixed technology. These hypotheses are tested using both firm- and provincial-level data. Our empirical results support the hypothesis that rising wages have induced labor-saving innovation in China, at least in the decade of the 1990s, but less so or not at all after the middle of the next decade.
    Keywords: induced innovation, labor productivity growth, China
    JEL: O30 D22 D24 D33
    Date: 2020–03
  5. By: Raphaël Chiappini (Université de Bordeaux; LAREFI); Samira Demaria (Université Côte d'Azur, France; GREDEG CNRS); Benjamin Montmartin (SKEMA Business School; Université Côte d'Azur, France); Sophie Pommet (Université Côte d'Azur, France; GREDEG CNRS)
    Abstract: Credit constraints hamper the ability of SMEs to undertake innovative activities. Promoting access to external funding for SMEs represents therefore an important challenge for policymakers. This paper investigates whether innovation subsidies provided by the French public investment bank to SMEs have translated into better access to bank and other external financing through an indirect certification effect. We exploit a unique database covering the period 2000-2010 to construct a quasi-natural experiment and evaluate the causal impact of these subsidies on SMEs' financial constraints. If we find a significant improvement in the access to bank financing for subsidized firms, the effect is heterogeneous and mainly concentrated on small firms operating in high-tech sectors. Moreover, such public support does not seem to improve the access to other external sources of financing which can be explained by the low development risk-capital markets in France.
    Keywords: Credit constraints, innovation policy, certification effect, Mahalanobis distance matching, difference-in difference
    JEL: O33 O38
    Date: 2020–03
  6. By: Kaiser, Ulrich (University of Zurich); Kuhn, Johan Moritz (EPAC)
    Abstract: Can publicly available, web-scraped data be used to identify promising business startups at an early stage? To answer this question, we use such textual and non-textual information about the names of Danish firms and their addresses as well as their business purpose statements (BPSs) supplemented by core accounting information along with founder and initial startup characteristics to forecast the performance of newly started enterprises over a five years' time horizon. The performance outcomes we consider are involuntary exit, above–average employment growth, a return on assets of above 20 percent, new patent applications and participation in an innovation subsidy program. Our first key finding is that our models predict startup performance with either high or very high accuracy with the exception of high returns on assets where predictive power remains poor. Our second key finding is that the data requirements for predicting performance outcomes with such accuracy are low. To forecast the two innovation-related performance outcomes well, we only need to include a set of variables derived from the BPS texts while an accurate prediction of startup survival and high employment growth needs the combination of (i) information derived from the names of the startups, (ii) data on elementary founder-related characteristics and (iii) either variables describing the initial characteristics of the startup (to predict startup survival) or business purpose statement information (to predict high employment growth). These sets of variables are easily obtainable since the underlying information is mandatory to report upon business registration. The substantial accuracy of our predictions for survival, employment growth, new patents and participation in innovation subsidy programs indicates ample scope for algorithmic scoring models as an additional pillar of funding and innovation support decisions.
    Keywords: startup, performance, prediction, text as data
    JEL: L26 C53
    Date: 2020–03
  7. By: Gaetan de Rassenfosse; Marco Grazzi; Daniele Moschella; Gabriele Pellegrino
    Abstract: This paper investigates the extent to which international trade hinges on patents. We analyze the export and patenting activities of the universe of French exporting firms over the period 2002-2011. The noticeable feature of our study is that we observe export and patenting activities worldwide and at the product level. We exploit how heterogeneity of patent coverageacross (and within) product-country relates to exports. We find a patent premium of at least 10 percent, which is mainly associated with a quantity effect. A modest price effect emerges in specific sectors, notably pharmaceuticals.
    Keywords: Export; Patents; Products; Intellectual property rights; Innovation.
    Date: 2020–03–30
  8. By: Juan A. Máñez Castillejo (University of Valencia and ERICES); James H. Love (Unviersity of Leeds)
    Abstract: This paper analyzes and quantifies the fundamental factors that are likely to cause persistence in performing R&D activities: the existence of sunk costs associated with R&D activities and the process of learning that characterizes this type of activity. We estimate our model with Spanish manufacturing firms for the period 1991-2014. By decomposing the effects of sunk costs and learning effects, we find that both are important determinants of R&D persistence, and that failing to allow for learning systematically overestimates sunk cost effects. Both large firms and SMEs benefit from direct and indirect (via productivity) effects of R&D experience, but in large firms this is more likely to be manifest through productivity improvements while in smaller firms the effect is more skewed towards a direct effect on R&D likelihood. Further, our results suggest that whereas the impact of sunk costs in R&D persistence is greater for large firms than for SMEs, the scope for direct learning from continuous R&D engagement is greater for SMEs than for larger firms.
    Keywords: R&D persistence, sunk costs; learning effects
    JEL: O32 L60
    Date: 2019–12
  9. By: Foster-McGregor, Neil (UNU-MERIT); Nomaler, Onder (UNU-MERIT); Verspagen, Bart (UNU-MERIT, and SBE, Maastricht University)
    Abstract: Emerging technologies are thought to be shaping the new industrial landscape, potentially creating opportunities for developing countries to industrialise through increased productivity, but also the risk that they may be excluded from the benefits of these technologies through reshoring and by eroding the competitive advantage of developing countries. In this paper we look to identify trade (i.e. imports and exports) and inventions (patents) in 4IR technologies, as a means of identifying the development, production and use of such technologies globally. The paper provides information on those countries which are leading the technology race, those which are not leading but still following, and those which are being left behind. To achieve this, the paper uses detailed patent data to identify the technology leaders in the fourth industrial revolution, and trade data to identify the producers and users of these technologies. The paper subsequently relates the use of these technologies to indicators of the level of industrial development.
    Keywords: Technological Change, Emerging Technologies, Fourth Industrial Revolution, Industrialisation, Patents, Imports, Exports
    JEL: O14 O33
    Date: 2019–12–31
  10. By: Sterenn Lucas; Louis-Georges Soler; Etienne Rouvin
    Abstract: The French seafood sector is currently confronted with increasing competition from imported products, price fluctuations and new challenges such as environmental issues. In the face of these issues, producers may not be able to meet consumer expectations, and new products intended to boost growth in the seafood sector may not succeed. To clarify the drivers of competitiveness in the seafood sector, a greater understanding of the success factors behind seafood innovation is needed. We use an original database obtained from the merger of two databases. We combine Mintel’s Global New Products Database, which identifies new products launched in France in 2010, 2011 and 2012, with consumption data spanning 2010 to 2014 from a household panel (Kantar). The data allow us to track the quantities of 246 new products purchased in the year after their launch. We run an ordered logit model to measure the impact of product, marketing and market variables on the probability of a product becoming successful. We identify three possibilities: success, i.e., the product is still on the market one year after its launch with an increased quantity; stagnation, i.e., the product is still on the market one year after its launch with a decreased quantity; and failure, i.e., the product is no longer on the market at all a year after its launch. We also run a Cox proportional hazards model with the products’ time on the market as the dependent variable. The model estimates the time that elapses before the product disappears. The results show that three kinds of factors influence competitiveness: firm characteristics (size, specialization), market economic situation and, to a lesser extent, the marketing process.
    Keywords: Innovation, measurement of success, seafood sector, ordered logit model, Cox model
    JEL: L1 Q31 L66 C25
    Date: 2020
  11. By: Mario Cimoli; Giovanni Dosi; Xiaodan Yu
    Abstract: This work discusses the role of industrial policies within an evolutionary view of innovation and learning as drivers of economic development. Building on the notions of technological paradigms and trajectories, it links the processes of catching-up with the dynamics of capability accumulation within and across firms. In turn such processes are embedded in broader national systems of innovation wherein industrial policies play a pivotal role.
    Keywords: Technological paradigms; Catching up; Theory of production; Absolute and Comparative Advantages; National systems of innovation; Industrial Policies; Economic Evolution and Development.
    Date: 2020–03–30
  12. By: Kroll, Henning; Koschatzky, Knut
    Abstract: It is the objective of this paper to analyse the role innovation policy could play in the promotion of regional change, using Germany as a case study, and to develop a typology of structurally weak regions for tailored and regionally specific policy interventions.
    Date: 2020
  13. By: Valero, Anna; Van Reenen, John
    Abstract: We develop a new dataset using UNESCO source materials on the location of nearly 15,000 universities in about 1,500 regions across 78 countries, some dating back to the 11th Century. We estimate fixed effects models at the sub-national level between 1950 and 2010 and find that increases in the number of universities are positively associated with future growth of GDP per capita (and this relationship is robust to controlling for a host of observables, as well as unobserved regional trends). Our estimates imply that a 10% increase in a region's number of universities per capita is associated with 0.4% higher future GDP per capita in that region. Furthermore, there appear to be positive spillover effects from universities to geographically close neighbouring regions. We show that the relationship between GDP per capital and universities is not simply driven by the direct expenditures of the university, its staff and students. Part of the effect of universities on growth is mediated through an increased s
    Keywords: universities; growth; human capital; innovation; ES/M010341/1
    JEL: I23 J24 O10 O31
    Date: 2018–09–14

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