nep-ino New Economics Papers
on Innovation
Issue of 2021‒01‒11
ten papers chosen by
Uwe Cantner
University of Jena

  1. More R&D, less growth? China's decreasing research productivity in international comparison By Boeing, Philipp; Hünermund, Paul
  2. Do Stronger Patents Lead to Faster Innovation? The Effect of Duplicative Search By Kaustav Das; Nicolas Klein
  3. Which Innovations for a Circular Business Model? A Product Life-Cycle Approach By Chioatto, Elisa; Zecca, Emy; D’Amato, Alessio
  4. LOCATION DETERMINANTS OF ECOINNOVATIVE FIRMS IN FRANCE By Eva Coll-Martinez; Malia Kedjar; Patricia Renou-Maissant
  5. Cooperative R&D with Differentiated Products in Vertically Related Industries By Gamal Atallah; Parisa Pourkarimi
  6. Scientific Publications at U.S. Federal Research Laboratories By Link, Albert; Scott, John
  7. Transformation towards sustainable development goals: Role of innovation ecosystems for inclusive, disruptive advances in five Asian case studies By Iizuka, Michiko; Hane, Gerald
  8. The Missing 15 Percent of Patent Citations By Cyril Verluise; Gabriele Cristelli; Kyle Higham; Gaetan de Rassenfosse
  9. The impact of Covid-19 on productivity By Bloom, Nicholas; Bunn, Philip; Mizen, Paul; Smietanka, Pawel; Thwaites, Gregory
  10. The Color of Money: Federal vs. Industry Funding of University Research By Tania Babina; Alex Xi He; Sabrina T. Howell; Elisabeth Ruth Perlman; Joseph Staudt

  1. By: Boeing, Philipp; Hünermund, Paul
    Abstract: Innovation is widely considered the primary driver of growth in high-income economies. The efficiency by which an economy is able to transform research & development (R&D) inputs into output growth is captured by the measure of research productivity. In a recent study we were able to show that research productivity is declining over time, not just in the U.S., which has been shown before, but also in China and Germany. This implies that new ideas and innovations are universally harder to find. In Germany, business R&D spending has increased by an average of approximately 3.3% per year during the last three decades. At the same time, research productivity has fallen on average by 5.2% per year, which is very similar to the estimates obtained for the U.S. In China, we observe a substantial expansion of research activities during the first and second decade of this century, indicated by a growth rate of 21.9% in research spending. The resulting output growth, however, is not proportional to such inputs, which is reflected by a 23.8% decrease in estimated research productivity, or a reduction by half in only three years. We argue that China's substantial decrease in research productivity is related to diminishing returns to technological catching-up as well as mission-driven policy targeting technological self-sufficiency and national security.
    Date: 2020
  2. By: Kaustav Das; Nicolas Klein
    Abstract: We analyse a model of two firms that are engaged in a patent race. Firms have to choose in continuous time between a traditional and an innovative method of pursuing the decisive breakthrough. They share a common belief about the likelihood of the innovative method being good. The unique Markov perfect equilibrium coincides with the cartel solution if and only if firms are symmetric in their abilities of leveraging a good innovative method or there is no patent protection. Otherwise, equilibrium will entail excessive duplication of efforts in the innovative method, as compared to the cartel benchmark, for any level of patent protection. We show that the expected time to a breakthrough is minimised at an interior level of patent protection, providing a possible explanation for the decrease in R&D productivity sometimes associated with stronger patent protections.
    Keywords: R&D competition, Duplication, Two-armed Bandit, Learning
    JEL: C73 D83 O31
    Date: 2020–03
  3. By: Chioatto, Elisa; Zecca, Emy; D’Amato, Alessio
    Abstract: The Circular Economy concept has emerged to face current unsustainable economic trends. Circularity requires to go beyond mainstream linear business models in favour of new design strategies and production processes able to support an efficient use and a continuous flow of resources. Clarifying and promoting tools for embedding circularity in firms’ business models is becoming crucial to increase resource productivity and achieve competitive advantages. Notwithstanding eco-innovation has been recognized as a fundamental link to connect circular economy with business models restructuring, still little consensus exists on the boundaries and interlinkages among the concepts of Eco-Innovation, Circular Economy and Circular Business Models. This research contributes to the intersection of these different streams of the literature, and aims to understand which innovations can favour the transition from linear to closed-loop processes, and then to identify circular business models. Relying on a review of circular-oriented innovations, we recognize three main groups of innovations that are expected to change firms’ way of doing business in accordance with circularity, leading to the identification of an original Product Life-Cycle Archetype. Finally, relying on survey data in Emilia Romagna region, we check for the reliability of our theoretical framework in practice, analysing firms’ business strategies from a practical perspective and assessing the current implementation of an innovative path in accordance with circular priorities. The analysis reveals a positive engagement amongst the analysed firms in Emilia Romagna, in terms of cleaner production strategies. By contrast, any business innovation linked to the circular use of products has been found to be implemented.
    Keywords: Resource /Energy Economics and Policy
    Date: 2020–12–22
  4. By: Eva Coll-Martinez (Sciences Po, Toulose); Malia Kedjar (Normandie University); Patricia Renou-Maissant (EconomiX, CNRS, University of Paris Nanterre))
    Abstract: This paper analyses the location determinants of eco-innovative firms in France. The analysis is based on a dataset obtained after merging firm-level microdata on the location of new firms from DIANE Mercantil Register (Bureau van Dijk) and patents information from the OECD REGPAT (2018) database for the period 2003 and 2013. This paper departs from previous contributions on the location determinants of eco-innovation in three main ways. First, it analyses the effects of the regional technological knowledge base and its composition focusing on environmental-based innovations. Second, it introduces spatial econometrics techniques to capture any potential spatial spillovers arising from the location of eco-innovative firms. And third, it focuses on the French case which is of special interest in view of the relevance of regional eco-innovation policies. Main results show that unrelated knowledge variety for environmental technologies and the political support in terms of investments for the protection of the environment are the main factors explaining the location of eco-innovative firms. Indeed, by applying spatial econometrics we found that there is a clear spatial dependence on the creation. However, our results also show that the impact of the knowledge composition is quite local. These results may have many implications for French departments’ environmental performance and sustainable growth.
    Keywords: eco-innovative firms’ entry, industrial location, knowledge spillovers, environmental technologies, France
    JEL: L
    Date: 2020
  5. By: Gamal Atallah (Department of Economics, University of Ottawa, Ottawa, ON); Parisa Pourkarimi (Department of Economics, Carleton University)
    Abstract: This paper studies the impact of cooperative R&D on innovation, welfare, and profitability in vertically related industries where products are differentiated. The model incorporates two vertically related industries, with horizontal spillovers within each industry and vertical spillovers between the two industries. Upstream firms produce a homogeneous intermediate good, while downstream firms provide differentiated products. Three types of R&D cooperation are studied: no cooperation, horizontal cooperation, and vertical cooperation. The comparison of cooperation settings in terms of R&D and of profitability shows that although vertical cooperation yields higher innovation and welfare, it may lead firms to over–invest in R&D.
    Keywords: Vertical spillovers, Horizontal spillovers, Product differentiation, R&D Cooperation.
    Date: 2020
  6. By: Link, Albert (University of North Carolina at Greensboro, Department of Economics); Scott, John (University of North Carolina at Greensboro, Department of Economics)
    Abstract: In this paper, we focus on scientific publications as an innovative output from the research efforts at U.S. federal laboratories. The data used relate to Federally Funded Research and Development Centers (FFRDCs). The relationship between R&D expenditures at these federal laboratories and their peer-reviewed scientific publications allows us to make inferences about the return to public-sector R&D. We examine two complementary statistical models. From the first model, we find that a 10 percent increase in constant dollar public-sector R&D is associated with between a 15.5 and 21.5 percent increase in scientific publications. From the second model, we find that the annual rate of return generated by an additional $1 million of R&D-based knowledge stock varies across the FFRDCs, averaging about 93 additional scientific publications, with the statistically significant values ranging from about 1 to as many as about 400 additional scientific publications.
    Keywords: Scientific publications; Federal laboratory; R&D; Evaluation; Return on investment;
    JEL: H42 O33 O38
    Date: 2020–12–23
  7. By: Iizuka, Michiko (UNU-MERIT, and National Graduate Institute for Policy Studies (GRIPS)); Hane, Gerald (National Graduate Institute for Policy Studies (GRIPS), and Hitachi Ltd.)
    Abstract: The transformation of sociotechnical systems is considered necessary for achieving the Sustainable Development Goals(SDGs). However, this transformation process is inhibited by institutional inertia of the public sector, vested interests of the private sector, routine habits of individuals, and increased complexity of globalised activities. While policies to stimulate the transition exist, these policies and pathways are still considered insufficient. Meanwhile, there are many individual private initiatives taking place to advance the societal agenda. Although these are still isolated actions of new actors, they have the potential to become broader movements bringing disruptive advances through innovation. This study explores the potential of innovation ecosystem to understand the emerging private sector initiatives to meet social agenda through innovations that are disruptive and inclusive. Four types of businesses are examined: venture capital, an incubator, venture start-ups, and a social impact fund. A common feature underlying these cases are the creation of tailored innovation ecosystems that effectively utilises complementary assets. Currently these activities are self-generated without much government support. However, by aligning with public policy impact can be accelerated towards achieving the SDGs. Examining cases as 'signals' provide hints for how policy can be formulated to scaled-up and transform currently isolated private initiatives.
    Keywords: Innovation Ecosystems, SDGs, Emerging business, Complementary assets, Transformative change, Asia
    JEL: O32 O35 O38 M13
    Date: 2021–01–05
  8. By: Cyril Verluise (Collège de France); Gabriele Cristelli (Ecole polytechnique federale de Lausanne); Kyle Higham (Hitotsubashi University); Gaetan de Rassenfosse (Ecole polytechnique federale de Lausanne)
    Abstract: Patent citations are one of the most commonly-used metrics in the innovation literature. Leading uses of patent-to-patent citations are associated with the quantification of inventions’ quality and the measurement of knowledge flows. Due to their widespread availability, scholars have exploited citations listed on the front-page of patent documents. Citations appearing in the full-text of patent documents have been neglected. We apply modern machine learning methods to extract these citations from the text of USPTO patent documents. Overall, we are able to recover an additional 15 percent of patent citations that could not be found using only front-page data. We show that in-text citations bring a different type of information compared to front-page citations. They exhibit higher text-similarity to the citing patents and alter the ranking of patent importance. The dataset is available at (CC-BY-4).
    Keywords: Citation; Patent; Open data
    JEL: C81 O30
    Date: 2020–12
  9. By: Bloom, Nicholas (Stanford University); Bunn, Philip (Bank of England); Mizen, Paul (University of Nottingham); Smietanka, Pawel (Bank of England); Thwaites, Gregory (University of Nottingham)
    Abstract: We analyse the impact of Covid-19 on productivity in the United Kingdom using data derived from a large monthly firm panel survey. Our estimates suggest that Covid-19 will reduce TFP in the private sector by up to 5% in 2020 Q4, falling back to a 1% reduction in the medium term. Firms anticipate a large reduction in ‘within-firm’ productivity, primarily because measures to contain Covid-19 are expected to increase intermediate costs. The negative ‘within-firm’ effect is partially offset by a positive ‘between-firm’ effect as low productivity sectors, and the least productive firms among them, are disproportionately affected by Covid-19 and consequently make a smaller contribution to the economy. In the longer run, productivity growth is likely to be reduced by diminished R&D expenditure and diverted CEOs’ time spent on dealing with the pandemic.
    Keywords: Productivity; reallocation; Covid-19; growth
    JEL: O32 O33
    Date: 2020–12–21
  10. By: Tania Babina; Alex Xi He; Sabrina T. Howell; Elisabeth Ruth Perlman; Joseph Staudt
    Abstract: U.S. universities have experienced a shift in research funding away from federal and towards private industry sources. This paper evaluates whether the source of funding – federal or private industry – is relevant for commercialization of research outputs. We link person-level grant data from 22 universities to patent and career outcomes (including IRS W-2 records). To identify a causal effect, we exploit individual-level variation in exposure to narrow federal R&D programs stemming from pre-existing field specialization. We instrument for the researcher’s funding sources with aggregate supply shocks to federal funding within these narrow fields. The results show that a higher share of federal funding reduces patenting and the chances of joining an incumbent firm, while increasing the chances of high- tech entrepreneurship and of remaining employed in academia. A decline in the federal share of funding is offset by an increase in the private share of funding, which has opposite effects. We conclude that the incentives of private funders to appropriate research outputs have important implications for the trajectory of university researcher careers and intellectual property.
    JEL: G18 G38 I2 O3
    Date: 2020–12

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