nep-ino New Economics Papers
on Innovation
Issue of 2020‒08‒10
thirteen papers chosen by
Uwe Cantner
University of Jena

  1. Innovation catalysts: how multinationals reshape the global geography of innovation By Crescenzi, Riccardo; Dyevre, Arnaud; Neffke, Frank
  2. Impact of knowledge search practices on the originality of inventions: a study in the oil & gas industry By Quentin Plantec; Pascal Le Masson; Benoit Weil
  3. The impact of offshoring on innovation and productivity: Evidence from Swedish manufacturing firms By Christopher F. Baum; Hans Lööf; Andreas Stephan; Ingrid Viklund-Ros
  4. Automating Labor: Evidence from Firm-level Patent Data By Dechezleprêtre, Antoine; Hémous, David; olsen, morten; Zanella, carlo
  5. Acquisition for Sleep By Norbäck, Pehr-Johan; Olofsson, Charlotta; Persson, Lars
  6. The Intellectual Spoils of War? Defense R&D, Productivity and International Spillovers By Moretti, Enrico; Steinwender, Claudia; Van Reenen, John
  7. The Wrong Kind of AI? Artificial Intelligence and the Future of Labor Demand By Acemoglu, Daron; Restrepo, Pascual
  8. DOES PERSISTENCE IN USING R&D TAX CREDITS HELP TO ACHIEVE PRODUCT INNOVATIONS? By José M. Labeaga; Juan A. Ester Martínez-Ros; Amparo Sanchis-Llopis; Juan A. Sanchis-Llopis
  9. Determinants and success factors of student entrepreneurship: Evidence from the University of Padova By Silvia Blasi; Silvia Rita Sedita
  10. Opportunities of frugality in the post-Corona era By Herstatt, Cornelius; Tiwari, Rajnish
  11. Regulations and technology gap in Europe: the role of firm dynamics By Sara Amoroso; Roberto Martino
  12. Industrial pattern and robot adoption in European regions By Massimiliano Nuccio; Marco Guerzoni; Riccardo Cappelli; Aldo Geuna
  13. Place-based innovation for sustainability By Philip McCann; Luc Soete

  1. By: Crescenzi, Riccardo; Dyevre, Arnaud; Neffke, Frank
    Abstract: We study whether and when Research and Development (R&D) activities by foreign multinationals help in the formation and development of new innovation clusters. Combining information on nearly four decades worth of patents with socio-economic data for regions that cover virtually the entire globe, we use matched difference-in-differences estimation to show that R&D activities by foreign multinationals have a positive causal effect on local innovation rates. This effect is sizeable: foreign research activities help a region climb 14 percentiles in the global innovation ranks within five years. This effect materializes through a combination of knowledge spillovers to domestic firms and the attraction of new foreign firms to the region. However, not all multinationals generate equal benefits. In spite of their advanced technological capabilities, technology leaders generate fewer spillovers than technologically less advanced multinationals. A closer inspection reveals that technology leaders also engage in fewer technological alliances and exchange fewer workers in local labor markets abroad than less advanced firms. Moreover, technology leaders tend to set up their foreign R&D activities in regions with relatively low absorptive capacity. We attribute these differences to that fact that the trade-off between costs and benefits of local spillovers a multinational faces depends on the multinational’s technological sophistication. This illustrates the importance of understanding corporate strategy when analyzing innovation clusters.
    Keywords: innovation; regions; Foreign Direct Investment; patenting; cluster emergence
    JEL: O32 O33 R11 R12
    Date: 2020–07
  2. By: Quentin Plantec (CGS i3 - Centre de Gestion Scientifique i3 - CNRS - Centre National de la Recherche Scientifique - PSL - PSL Research University - MINES ParisTech - École nationale supérieure des mines de Paris, Institut National de la Propriété Industrielle (INPI)); Pascal Le Masson (CGS i3 - Centre de Gestion Scientifique i3 - CNRS - Centre National de la Recherche Scientifique - PSL - PSL Research University - MINES ParisTech - École nationale supérieure des mines de Paris); Benoit Weil (CGS i3 - Centre de Gestion Scientifique i3 - CNRS - Centre National de la Recherche Scientifique - PSL - PSL Research University - MINES ParisTech - École nationale supérieure des mines de Paris)
    Abstract: The paper suggests a new taxonomy of knowledge search modes to describe the creative process of new invention design, in particular how firms combine knowledge components from their own knowledge base-taking into account both the components and the structures of knowledge bases-with those from newly acquired or newly internally developed. Using network theory techniques, we defined four knowledge search modes: (1) refinement, (2) clustering, (3) absorption and (4) recomposition. We conducted an exploratory study on the oil & gas industry, reviewing 50,776 utility patents filed by 16 major firms between 1989 and 2016. The results showed, first, that firms relied to varying extents on different knowledge search modes in their invention design processes. Second, reviewing the technological originality of the designed inventions showed that simply absorbing new knowledge components, without major changes in knowledge base structure, was associated with low technological originality, but constituted one of the main knowledge search modes used by the analyzed firms. In contrast, major changes in knowledge base structure favored technological originality, with or without new knowledge components, but were nevertheless the least used mode. Understanding organizational learning practices associated with the phenomena described here can foster innovation performance in firms.
    Keywords: Knowledge search,Patent,Oil & gas,technological originality,knowledge base
    Date: 2020–08–11
  3. By: Christopher F. Baum (Boston College; DIW Berlin; CESIS, KTH Royal Institute of Technology); Hans Lööf (CESIS, KTH Royal Institute of Technology); Andreas Stephan (Jönköping International Business School; DIW Berlin); Ingrid Viklund-Ros (CESIS, KTH Royal Institute of Technology)
    Abstract: We examine the impact of offshoring on patenting and total factor productivity as a measure on technical change using a panel of 7,000 mainly small Swedish manufacturing firms over the period 2001-2014. We apply the United Nations Broad Economic Categories (BEC) system to identify offshoring-related intermediate imports. The empirical analysis shows that a positive link between offshoring and innovation exists. However, the effects are much weaker and less significant when self-selection and reverse causality from innovation to offshoring are considered.
    Keywords: offshoring, patent, trademark, innovation, productivity, panel data
    JEL: C23 F23 O47 O33 O52
    Date: 2020–07–31
  4. By: Dechezleprêtre, Antoine; Hémous, David; olsen, morten; Zanella, carlo
    Abstract: Do higher wages lead to more automation innovation? To answer this question, we first introduce a new measure of automation by using the frequency of certain keywords in patent text to identify automation innovations in machinery. We validate our measure by showing that it is correlated with a reduction in routine tasks in a cross-sectoral analysis in the US. Then we build a firm-level panel dataset on automation patents. We combine macroeconomic data from 41 countries and information on geographical patent history to build firm-specific measures of low-skill and high-skill wages. We find that an increase in low-skill wages leads to more automation innovation with an elasticity between 2 and 4. An increase in high-skill wages tends to reduce automation innovation. Placebo regressions show that the effect is specific to automation innovations. Finally, we use the Hartz labor market reforms in Germany for an event study and find that they are associated with a relative reduction in automation innovations.
    Keywords: automation; Income inequality; Innovation; patents
    JEL: J20 O31 O33
    Date: 2019–12
  5. By: Norbäck, Pehr-Johan; Olofsson, Charlotta; Persson, Lars
    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; IP law; ownership; Sleeping patents
    JEL: G24 L1 L2 M13 O3
    Date: 2019–12
  6. By: Moretti, Enrico; Steinwender, Claudia; Van Reenen, John
    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; Innovation; productivity; R&D
    Date: 2019–12
  7. By: Acemoglu, Daron; Restrepo, Pascual
    Abstract: Artificial Intelligence is set to influence every aspect of our lives, not least the way production is organized. AI, as a technology platform, can automate tasks previously performed by labor or create new tasks and activities in which humans can be productively employed. Recent technological change has been biased towards automation, with insufficient focus on creating new tasks where labor can be productively employed. The consequences of this choice have been stagnating labor demand, declining labor share in national income, rising inequality and lower productivity growth. The current tendency is to develop AI in the direction of further automation, but this might mean missing out on the promise of the "right" kind of AI with better economic and social outcomes.
    Keywords: artiÂ?cial intelligence; automation; inequality; Innovation; jobs; labor demand; productivity; Tasks; technology; wages
    JEL: J23 J24
    Date: 2019–12
  8. By: José M. Labeaga (UNED); Juan A. Ester Martínez-Ros (Universidad Carlos III de Madrid); Amparo Sanchis-Llopis (University of Valencia and ERICES); Juan A. Sanchis-Llopis (University of Valencia and ERICES)
    Abstract: Despite the generosity of its tax system, Spain is far from EU neighbouring countries in terms of R&D spending, and in innovation outcomes. A policy instrument commonly used to foster firms’ investment in R&D are tax incentives. The use of this instrument is not generalized in firms spending on R&D, and only a fraction of firms are regular claimants. In this paper we investigate whether persistence in using tax credits is positively related to the achievement of product innovations, beyond R&D investments. We consider that firms investing in qualified R&D spending and making a regular use of tax credits are likely to be firms aiming at innovating. By contrast, occasional tax credit users are probably firms seeking to reduce their corporate tax burden, and not prioritizing the achievement innovations. Using a sample of Spanish manufacturing firms spanning 2001-2014, we first estimate persistence using a duration model accounting for firm observed and unobserved heterogeneity. Our results are consistent with negative duration dependence, indicating that the probability of ceasing in claiming tax credits decreases with the passage of time. Second, we estimate a count-data model and find that the number of product innovations positively depends on tax credit persistence only for SMEs.
    Keywords: tax credits; persistence; duration dependence; count-data
    JEL: C41 H25 H32
    Date: 2020–07
  9. By: Silvia Blasi (Department of Economics and Management, University of Padova); Silvia Rita Sedita (Department of Economics and Management, University of Padova)
    Abstract: “Student entrepreneurship" is an innovative way of looking at the impact of universities on the territory, and represents an alternative (and numerically more relevant) model to that of academic spin-offs. The study of the entrepreneurial activities of the 119,347 graduates of the University of Padua between 2000 and 2010 offers useful food for thought on the profile of the student who is oriented towards business creation and on the determinants of the success of entrepreneurial action. Some implications on the orientation of the courses of study and possible actions to support the entrepreneurship of new graduates are illustrated.
    Date: 2020–07
  10. By: Herstatt, Cornelius; Tiwari, Rajnish
    Abstract: Objective of this discussion paper is twofold: First, we assess the likely impact of the Corona crisis on the economic and societal choices of people, especially in relation to voluntary simplicity. Second, we contextualize the impact of those choices in the field of innovation management. Taking a normative-conceptual perspective we seek to understand in how far frugality, and inter alia, frugal innovations can play a role in better managing the after-effects of the Corona crisis and what implications arise out of this for the relevant societal stakeholders, especially for corporates, policy makers and consumers. Taking note of historical discussions of the role of frugality as a "virtuell", we propose that the currently ongoing fourth renaissance of frugality needs to - and is likely to - emerge as a megatrend that may shape a frugal "AGE" resulting in "affordable green excellence" as the dominant innovation paradigm. To realize this potential, however, it is necessary to move away from the unidimensional focus on monetary affordability of frugal solutions. There is a need for developing a more comprehensive and multidimensional understanding of affordability that is targeted at ensuring financial, societal, infrastructural and ecological affordability of frugal products, services, technologies and business models. Frugal innovators and entrepreneurs should not merely target "significant cost reduction" in relation to existing substitute products but rather aim at ensuring "high affordability" that will open up new business arenas with means of breakthrough innovations and technological excellence. This paradigm shift requires action from all relevant stakeholders including policymakers.
    Keywords: Corona Crisis,Covid-19 Pandemic,Frugality 4.0,Frugal Innovation,Affordable Green Excellence,Circular Economy,Voluntary Simplicity
    Date: 2020
  11. By: Sara Amoroso (European Commission - JRC); Roberto Martino (European Commission - RTD)
    Abstract: In this paper, we develop a new firm-level measure of distance to the productivity frontier that accounts for international technology spillovers stemming from the use of imported intermediate goods. The trade-weighted technological distance to frontier is matched with sector- and country-level data on regulation and firm dynamics (entry and exit rates) of 16 European countries. Using our measure of trade-adjusted technology gap, we investigate the role of labour, capital, and product market regulatory frameworks in the technology catch-up process, gauging the effect of firms' dynamics in mediating and moderating the impact of regulation on the technology gap. Our study offers a novel perspective and insights to the analysis of the link between framework conditions and technological distance to frontier. While most scholars argue that less regulation always favours productivity growth and the diffusion of technology, our results provide a more nuanced picture. Deregulation is not a one-size-fits-all solution that leads to faster technology diffusion, instead heterogeneity in business dynamism and countries' regulatory structures need to be considered.
    Keywords: Innovation diffusion, Framework conditions, Business dynamics, Technological frontier
    JEL: L16 L50 M21 O33
    Date: 2020–07
  12. By: Massimiliano Nuccio (BLISS – Digital Impact Lab, Department of Management, Università Ca' Foscari Venice); Marco Guerzoni (DESPINA Big Data Lab, Department of Economics and Statistics Cognetti De Martiis, University of Torino); Riccardo Cappelli (Department of Economics and Social Sciences, Polytechnic University of Marche); Aldo Geuna (Department of Culture, Politics and Society, University of Torino)
    Abstract: Recent literature on the diffusion of robots mostly ignores the regional dimension. The contribution of this paper at the debate on Industry 4.0 is twofold. First, IFR (2017) data on acquisitions of industrial robots in the five largest European economies are rescaled at regional levels to draw a first picture of winners and losers in the European race for advanced manufacturing. Second, using an unsupervised machine learning approach to classify regions based on their composition of industries. The paper provides novel evidence of the relationship between industry mix and the regional capability of adopting robots in the industrial processes.
    Keywords: Robots, Industry 4.0., Innovation, Industry Mix, Self-Organizing Maps
    JEL: E32 O33 R11 R12
    Date: 2020–07
  13. By: Philip McCann; Luc Soete (University of Sheffield Management School)
    Abstract: The new Commission has made "sustainable development", together with the digital agenda, the core element of its overall growth strategy for the present decade. From a global perspective the European Green Deal (European Commission 2020a,b) represents on the one hand the EU's contribution to the Sustainable Development Goals (SDGs) – Europe's Moonshot mission of the 21st Century – and on the other hand the EU's "smart specialization strategy" – Europe's attempt to develop at world level a leading position in sustainable development. The Paris Convention provides from this perspective the overall European framework for national, regional and local city commitments with the EC designing and organizing the accompanying financial and regulatory incentive schemes (such as the climate pact, the Green Deal investment plan and the Just Transition fund, the necessary reforms in the European semester, etc.). Viewing the European Green Deal as a combination between a European 21st Century "Moonshot mission" and an internal, "smart specialization strategy" raises though also many, new challenges as to the respective governance responsibilities of the different actors. In this short paper, we present some first reflections on the way insights from science, technology and innovation studies on the one hand and regional studies on the other could help in the design of "green deal" policies at European, national and regional/urban level and pulled together provide an intellectual framework for multi-level governance. Such "science for policy" reflections can serve as basis for more in depth discussions between EU policy makers as well as research scholars in the academic community. In a first section, we first review some of the arguments as to why the European Green Deal represents today primarily an innovation-led development strategy for Europe. We describe how historically the new EGD strategy represents a re-arranging of priorities, making sustainable development as the overriding strategic priority: the opportunity for Europe to position itself globally and locally as green specialisation area through innovation. Second and more specifically at the governance level, the new EGD strategy raises several crucial multi-level governance challenges. Players who were not really at the centre of the European integration process such as regions; or totally absent, such as cities and communities are now likely to play a crucial role. We claim that an effective innovation-driven policy with a directionality requires a proper division of tasks between the EC, national and regional/local governance levels. Third, we focus on how to detect and overcome possible trade-offs involved in prioritizing such a green development strategy compared to the more traditional objective of smart growth as put forward in the previous EU strategies. Through a more explicit recognition and analysis of these trade-offs, we believe a better framework can be sketched for the real, new growth opportunities linked to the Green Deal. In the second section of the paper, we discuss in more detail each of the relevant challenges and trade-offs facing different types of regions in their movements towards the goals of the Green Deal and the issues which will need to be explicitly considered in the appropriate design of regional policy schemes. Second, we address the particular role cities might play in this process. Contrary to many other regions in the world, Europe's population is heavily urbanized with cities accounting for the majority of carbon production and consumption-related emissions. This observation provides again greater opportunities for targeted interventions aimed at enhancing sustainability. For the Green Deal to be embraced locally throughout Europe it will be essential to engage all cities and regions across the EU. We argue that the accumulated experience of smart specialization strategies is very valuable in this context, but that these will need to take the next step embracing transformative innovation for systemic transitions, reaping the opportunities and alleviate the threats of the global ecological and digital transitions. We make some concrete proposals, what we call "learning modules" on how this could be done. In a third section, we address the need for a continuous "science for policy" approach, particularly in case of a radically new strategic policy framework such as the European Green Deal. The implementation and design of the European Green Deal would benefit, we argue from a Science for Policy Platform on Place-based innovation for Sustainability. This platform could both support local actors and channel findings on local innovation barriers or early trade-off alerts to the EU and national policy making.
    Keywords: sustainability, innovation
    Date: 2020–07

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