nep-ino New Economics Papers
on Innovation
Issue of 2021‒04‒26
nine papers chosen by
Uwe Cantner
University of Jena

  1. Innovation and human capital policy By John Van Reenen
  2. R&D Internationalization Strategies of the World’s Top Corporate R&D Investors By Heike Belitz; Anna Lejpras
  3. May AI revolution be labour-friendly? Some micro evidence from the supply side By Damioli, G.; Van Roy, V.; Vertesy, D.; Vivarelli, M.
  4. Opening up military innovation: causal effects of 'bottom-up' reforms to U.S. defense research By Sabrina T. Howell; Jason Rathje; John Van Reenen; Jun Wong
  5. Medicare and the Rise of American Medical Patenting: The Economics of User-Driven Innovation By Jeffrey P. Clemens; Morten Olsen
  6. The global network of embodied R&D flows By Fabrizio Fusillo; Sandro Montresor; Giuseppe Vittucci Marzetti
  7. Sustainable innovation and intellectual property rights: friends, foes or perfect strangers? By Carolina Castaldi
  8. Innovation in Malmö after the Öresund Bridge By Ejermo, Olof; Hussinger, Katrin; Kalash, Basheer; Schubert, Torben
  9. Competition, Mergers, and R&D Diversity By Gilbert, RJ

  1. By: John Van Reenen
    Abstract: If innovation is to be subsidized, a natural place to start is to increase the quantity and quality of human capital. Innovation, after all, begins with people. Simply stimulating the "demand side" through R&D subsidies and tax breaks may only drive up the price, rather than the volume of research activity. By contrast, increasing the supply of potential inventors can both directly increase innovation and reduce its cost. This paper examines the evidence on human capital policies for stimulating innovation such as expanding the home-grown workforce, fostering immigration, boosting universities and reducing barriers to entry into inventor careers, especially for under-represented groups. The evidence suggests targeting high ability but disadvantaged potential inventors at an early age is likely to have the largest long-run effects on growth.
    Keywords: innovation, R&D, intellectual property, tax, competition
    JEL: O31 O32
    Date: 2021–04
  2. By: Heike Belitz; Anna Lejpras
    Abstract: This paper contributes to the debate on the internationalization of the R&D activity of multinational enterprises (MNEs). Specifically, we examine the following research questions: (1) What are the determinants of the MNEs’ R&D internationalization level? (2) What types of internationalization strategies—home-base-augmenting (HBA), home-base-exploiting (HBE), technology-seeking (TS), and/or market-seeking (MS)—do the MNE employ? and (3) What are the typical patterns in pursuing different strategy mixes by MNEs? To this end, we merge data on 2,000 global research leaders from the 2012-2014 period with the EPO Worldwide Patent Statistical Database PATSTAT. Based on the final dataset, covering about 1,700 world’s top corporate R&D investors and their patenting activity, we find that about one-fifth focus their patent-relevant R&D activity in their home country only. Our study confirms former results of the literature that R&D offshoring is used by leading R&D performers predominantly to acquire complementary technological knowledge (HBA strategy) and to use their home-based technological advantages to expand their market penetration (HBE strategy). With patent data from the late 2010s, we find a further increase in the proportion of HBA strategies compared to the 2000s. This indicates the growing importance of international knowledge exchange between technologically similarly oriented locations. Hence, the increased attraction of foreign R&D locations is no reason for concern regarding the perceived hollowing-out of the national innovation systems. Indeed, since the advantages built at home are at the core of both the HBA and HBE strategies, the national system of innovation in the home country should support the technological advantages of firms, thereby enabling them to succeed in their R&D activity abroad.
    Keywords: R&D, patents, innovation, internationalization, multinational firms, global firms
    JEL: F23 O19 O31 O32
    Date: 2021
  3. By: Damioli, G.; Van Roy, V.; Vertesy, D.; Vivarelli, M.
    Abstract: This study investigates the possible job-creation impact of AI technologies, focusing on the supply side, namely the providers of the new knowledge base. The empirical analysis is based on a worldwide longitudinal dataset of 3,500 front-runner companies that patented the relevant technologies over the period 2000-2016. Obtained from GMM-SYS estimates, our results show a positive and significant impact of AI patent families on employment, supporting the labourfriendly nature of product innovation in the AI supply industries. However, this effect is small in magnitude and limited to service sectors and younger firms, which are the leading actors of the AI revolution. Finally, some evidence of increasing returns seems to emerge; indeed, the innovative companies which are more focused on AI technologies are those obtaining the larger impacts in terms of job creation.
    Keywords: Innovation,technological change,patents,employment,job-creation
    JEL: O33
    Date: 2021
  4. By: Sabrina T. Howell; Jason Rathje; John Van Reenen; Jun Wong
    Abstract: When investing in research and development (R&D), institutions must decide whether to take a top-down approach - soliciting a particular technology - or a bottom-up approach in which innovators suggest ideas. This paper examines a reform to the U.S. Air Force Small Business Innovation Research (SBIR) program that transitioned from "Conventional topics," which solicit specific technologies, to "Open topics," which invite firms to suggest any new technology that may be useful to the Air Force. The reform seeks to address challenges facing military R&D, in particular a less innovative defense industrial base. We show that the Open program attracts new entrants, defined as younger firms and those without previous defense SBIR awards. In a regression discontinuity design that offers the first causal evaluation of a defense R&D program, we show that winning an Open award increases future venture capital investment, non-SBIR defense contracting, and patenting. Conventional awards have no effect on these outcomes but do increase the chances of future defense SBIR contracts, fostering incumbency. The bottom-up approach appears to be a mechanism behind Open's success. For example, winning has a positive effect on innovation even in less specific Conventional topics. The results suggest that government (and perhaps private sector) innovation could benefit from more bottom-up, decentralized approaches that reduce barriers to entry, minimize lock-in advantages for incumbents, and attract a wider range of new entrants.
    Keywords: innovation, defense, R&D, procurement
    JEL: O31 O32 O38 H56 H57
    Date: 2021–04
  5. By: Jeffrey P. Clemens; Morten Olsen
    Abstract: Innovation is part idea generation and part development. We build a model of “innovating-by-doing,” whereby ideas come to practitioners. Successful innovation requires that practitioners’ ideas be developed through costly effort. Our model nests existing theories of laboratory research and learning-by-doing. Empirically, we analyze the effect of the U.S. Medicare program on medical equipment innovation. Our model’s structure allows us to infer the Medicare program’s aggregate effects. We estimate that Medicare’s introduction led to a 20 to 30 percent increase in medical equipment patenting across the United States, of which roughly half is due to the innovating-by-doing channel.
    Keywords: innovation and invention, medical innovation, health care, health insurance
    JEL: I13 O38 O31 H51
    Date: 2021
  6. By: Fabrizio Fusillo (Università di Torino); Sandro Montresor (Gran Sasso Science Institute); Giuseppe Vittucci Marzetti (Università di Milano-Bicocca)
    Abstract: We combine the World Input-Output Dataset (WIOD) with OECD data on Analytical Business Enterprise R&D (ANBERD) and build up the network that emerges by mapping the sectoral R&D expenditure that flows in an embodied way among 690 industry-country nodes (23 industries of 30 countries), from 2009 to 2013. Drawing on frontier network analysis techniques, we examine the distribution of the relational properties of the country-industry nodes, identify the most central of them, and detect the clusters that they form. Our analysis reveals that, while the diffusion of embodied R&D is highly pervasive on a global scale, the linkages it creates across sectors tend to be highly asymmetric and polarised. Furthermore, except for transportation and ICT related industries, embodied R&D flows determine communities largely confined within national borders. Despite being based on structural inputoutput relationships, the position and role of country-industry nodes in the global network of embodied R&D knowledge show a certain variability both over time and across network dimensions.
    Keywords: R&D flows, input-output, global innovation network, network analysis
    JEL: O33 R15 O57
    Date: 2021–04
  7. By: Carolina Castaldi
    Abstract: As sustainable innovation becomes a strategy for companies to gain competitive advantage, the question of how to profit from sustainable innovation becomes central. Surprisingly, little research exists on the appropriation strategies of companies engaged in sustainable innovation and the few studies are poorly connected. This chapter focuses on intellectual property rights (IPR), the formal tools available to companies to protect their intangible assets. I link the three main types of IPRs to common archetypes of sustainable innovation and I discuss the motives why companies might file patents, trademarks or design rights or instead choose not to. I conclude by discussing how IPRs might act as incentives, barriers or be simply neglected by sustainable innovators and I offer directions for further research.
    Keywords: Sustainability; innovation; intellectual property rights.
    Date: 2021–04–08
  8. By: Ejermo, Olof (Lund University); Hussinger, Katrin (University of Luxembourg); Kalash, Basheer (SciencesPo OFCE); Schubert, Torben (CIRCLE, Lund University)
    Abstract: We analyse the effect of the Öresund Bridge, a combined railway and motorway bridge between Swedish Malmö and the Danish capital Copenhagen, on inventive activity in the region of Malmö. Applying difference-in-difference estimation on individual level data, our findings suggest that the Öresund Bridge has led to a significant increase in the number of patents per individual with a background prone to patenting in the Malmö region as compared to the Gothenburg and Stockholm regions. Further, we show that the dominating mechanism is the attraction of highly qualified workers to the Malmö region following the construction of the bridge.
    Keywords: transport infrastructure; innovation; Öresund Bridge; cross-border regions; patents; inventors; agglomeration effects
    JEL: L91 O31 O33 R11
    Date: 2021–04–22
  9. By: Gilbert, RJ
    Abstract: This paper describes a model of research and development (R&D) investment in which firms can choose any number of R&D projects that have independent and identical probabilities of success. The measure of R&D diversity is the number of projects that are undertaken by the industry. Absent spillovers or profits at risk from innovation, mergers often—but not always—decrease R&D diversity; however, the incremental effects decline rapidly with the number of industry rivals. Mergers can have significant adverse effects if the merging firms have large profits that are at risk from an innovation. A merger can promote investment in R&D and increase expected consumer surplus if discoveries have sufficiently large information spillovers.
    Keywords: Competition, Innovation, Oligopoly, Mergers, Research and development, Economics, Applied Economics
    Date: 2019–05–15

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