nep-ino New Economics Papers
on Innovation
Issue of 2021‒05‒31
ten papers chosen by
Uwe Cantner
University of Jena

  1. Mission-Oriented Policies and the "Entrepreneurial State" at Work: An Agent-Based Exploration By Giovanni Dosi; Francesco Lamperti; Mariana Mazzucato; Mauro Napoletano; Andrea Roventini
  2. More than an Ivory Tower: The Impact of Research Institutions on the Quantity and Quality of Entrepreneurship By Valentina Tartari; Scott Stern
  3. Do scientific capabilities in specific domains matter for technological diversification in European regions? By Pierre-Alexandre Balland; Ron Boschma;
  4. On Immigration and Native Entrepreneurship By Duleep, Harriet; Jaeger, David A.; McHenry, Peter
  5. Space policy drives innovation through technological procurement: evidence from Italy By Paolo Castelnuovo; Stefano Clo; Massimo Florio
  6. Some policy lessons from medical/therapeutic responses to the COVID-19 Crisis: A rich research system for knowledge generation and dysfunctional institutions for its exploitation By Giovanni Dosi
  7. Killer Acquisitions and Beyond: Policy Effects on Innovation Strategies By Letina, Igor; Schmutzler, Armin; Seibel, Regina
  8. Board Reforms and Innovation By Muhammad Farooq Ahmad; Oskar Kowalewski
  9. How is COVID Changing the Geography of Entrepreneurship? Evidence from the Startup Cartography Project By Catherine E. Fazio; Jorge Guzman; Yupeng Liu; Scott Stern
  10. Names, diversity and innovation By Kremer, Anna

  1. By: Giovanni Dosi; Francesco Lamperti; Mariana Mazzucato; Mauro Napoletano; Andrea Roventini
    Abstract: We study the impact of alternative innovation policies on the short- and long-run performance of the economy, as well as on public finances, extending the Schumpeter meeting Keynes agent- based model (Dosi et al., 2010). In particular, we consider market-based innovation policies such as R&D subsidies to firms, tax discount on investment, and direct policies akin to the "Entrepreneurial State" (Mazzucato, 2013), involving the creation of public research-oriented firms diffusing technologies along specific trajectories, and funding a Public Research Lab conducting basic research to achieve radical innovations that enlarge the technological opportunities of the economy. Simulation results show that all policies improve productivity and GDP growth, but the best outcomes are achieved by active discretionary State policies, which are also able to crowd-in private investment and have positive hysteresis effects on growth dynamics. For the same size of public resources allocated to market-based interventions, "Mission" innovation policies deliver significantly better aggregate performance if the government is patient enough and willing to bear the intrinsic risks related to innovative activities.
    Keywords: Innovation policy; mission-oriented R&D; entrepreneurial state; agent-based modelling.
    Date: 2021–05–24
  2. By: Valentina Tartari; Scott Stern
    Abstract: This paper provides systematic empirical evidence for the distinctive role of universities on local entrepreneurial ecosystems. Assessing the impact of research institutions on entrepreneurship is challenging, given that these institutions are often located in economic and innovation environments conducive to growth-oriented entrepreneurial activity, are themselves a source of local demand, and produce knowledge, which might serve as the foundation for new ventures. To overcome this inference challenge, we first combine comprehensive business registration records with a predictive analytics approach to measure both the quantity and quality-adjusted quantity of entrepreneurship at the zip-code level on an annual basis. We then link each location to the presence or absence of research-oriented universities or national laboratories. Finally, we exploit significant changes over time in Federal commitments to both universities and national laboratories. Our key finding is that changes in Federal research commitments to universities are uniquely linked to positively correlated changes in the quality-adjusted quantity of entrepreneurship. In contrast, increases in non-research funding to universities and funding to national laboratories is associated with either a neutral or negative impact on the quality-adjusted quantity of entrepreneurship. Research funding to universities seems to play a unique role in promoting the acceleration of local entrepreneurial ecosystems.
    JEL: L26 O3 R12
    Date: 2021–05
  3. By: Pierre-Alexandre Balland; Ron Boschma;
    Abstract: Do scientific capabilities in regions translate into technological leadership? This is one of the most pressing questions in academic and policy circles. This paper analyzes the matching of scientific and technological capabilities of 285 European regions. We build on patent and publication records to identify regions that lie both at the scientific and technological frontiers (strongholds), that are pure scientific leaders, pure technological leaders, or just followers in 18 domains. Our regional diversification model shows that local scientific capabilities in a domain are a strong predictor of the development of new technologies in that domain in regions. This finding is particularly relevant for the Smart Specialization policy because it implies that the analysis of domain-specific scientific knowledge can be a powerful tool to identify new diversification opportunities in regions.
    Keywords: science-technology link, regional diversification, relatedness, strongholds, scientific capabilities, technological capabilities, Smart Specialization policy
    JEL: B52 O33 R11
    Date: 2021–05
  4. By: Duleep, Harriet; Jaeger, David A.; McHenry, Peter
    Abstract: We present a novel theory that immigrants facilitate innovation and entrepreneurship by being willing and able to invest in new skills. Immigrants whose human capital is not immediately transferable to the host country face lower opportunity costs of investing in new skills or methods and will be more exible in their human capital investments than observationally equivalent natives. Areas with large numbers of immigrants may therefore lead to more entrepreneurship and innovation, even among natives. We provide empirical evidence from the United States that is consistent with the theory's predictions.
    Keywords: immigration,innovation,entrepreneurship,human capital
    JEL: J15 J24 J39 J61 L26
    Date: 2021
  5. By: Paolo Castelnuovo; Stefano Clo; Massimo Florio
    Abstract: To what extent public procurement for mission-oriented policies drives innovation? Space policy is a particularly interesting case study, and we investigate the impact of technological procurement of the Italian Space Agency (ASI) on suppliers’ innovation output. We have built an empirical model that takes advantage of unique data on ASI orders merged with patent and company data of more than 460 firms involved in a procurement relationship with ASI over the period 2004-2018. We combine matching techniques with a diff-in-diff approach with heterogeneous timing in treatment to assess whether becoming a space agency technological supplier has an impact on the extent and quality of firms’ patenting activity. Our findings, that are novel for space policy studies, suggest a statistically significant effect of space agency procurement. The effect is stronger for high-tech suppliers. These results are robust to several alternative specifications and estimation methods and provide evidence about the importance of space policy in enhancing firms’ innovation capacity through the procurement pathway.
    Keywords: Public procurement, space industry, space policy, innovation.
    JEL: C25 H57 O32 O38
    Date: 2021
  6. By: Giovanni Dosi
    Abstract: This note discusses the medical/therapeutical responses to the COVID-19 pandemic and their "political economy" context. First, the very quick development of several vaccines highlights the richness of the basic knowledge waiting for therapeutical exploitation. Such knowledge has largely originated in public or non-profit institutions. Second, symmetrically, there is longer-term evidence that the private sector (essentially Big Pharma) has decreased its investment in basic research in general, and has long been uninterested in vaccines in particular. Only when flooded with an enormous amount of public money it became eager to undertake applied research, production scale-up and testing. Third, the "political economy" of the underlying public-private relationship reveals a profound dysfunctionality with the public being unable to determine the rates and direction of innovation, but at the same time confined to the role of payer of first and last resort, with dire consequences for both advanced, and more so, developing countries. Fourth, on normative grounds, measures like ad hoc patent waivers are certainly welcome, but this will not address the fundamental challenge, involving a deep reform of the Intellectual Property Rights regimes and their international protection (TRIPS Agreements).
    Keywords: Covid-19 pandemic; vaccines; Intellectual property rights; TRPS; innovation; public goods.
    Date: 2021–05–25
  7. By: Letina, Igor; Schmutzler, Armin; Seibel, Regina
    Abstract: This paper provides a theory of strategic innovation project choice by incumbents and start-ups. We show that prohibiting killer acquisitions strictly reduces the variety of innovation projects. By contrast, we find that prohibiting other acquisitions only has a weakly negative innovation effect, and we provide conditions under which the effect is zero. Furthermore, for both killer and other acquisitions, we identify market conditions under which the innovation effect is small, so that prohibiting acquisitions to enhance competition would be justified.
    Keywords: Innovation; killer acquisitions; Merger Policy; Potential competition; start-ups
    JEL: G34 L41 O31
    Date: 2020–08
  8. By: Muhammad Farooq Ahmad (SKEMA Business School – University Cote d’Azur, Avenue Willy Brandt - 59777, Lille, France); Oskar Kowalewski (IESEG School of Management, LEM-CNRS 9221)
    Abstract: We study the effect of board reforms on firms’ research and development (R&D) investments utilizing a sample of 40 countries. Using a difference-in-differences analysis, we find that firmsinvest more in R&D following corporate governance reforms. Of these, two reforms–havingan independent audit committee and board independence–have a greater impact on R&Dinvestment. Additionally, we show that reforms have the largest impact on R&D investmentin hi-tech industries and the health sector.
    Keywords: Corporate Governance, Board Reforms, Innovation, Research and Development
    JEL: G3 O30 O32
    Date: 2021–05
  9. By: Catherine E. Fazio; Jorge Guzman; Yupeng Liu; Scott Stern
    Abstract: Leveraging data from eight U.S. states from the Startup Cartography Project, this paper provides new insight into the changing nature and geography of entrepreneurship in the wake of the COVID pandemic. Consistent with other data sources, following an initial decline, the overall level of state-level business registrations not only rebounds but increases across all eight states. We focus here on the significant heterogeneity in this dynamic pattern of new firm formation across and within states. Specifically, there are significant differences in the dynamics of new business registrants across neighborhoods in terms of race and socioeconomic status. Areas including a higher proportion of Black residents, and more specifically higher median income Black neighborhoods, are associated with higher growth in startup formation rates between 2019 and 2020. Moreover, these dynamics are reflected in the passage of the major Federal relief packages. Even though legislation such as the CARES Act did not directly support new business formation, the passage and implementation of relief packages was followed by a relative increase in start-up formation rates, particularly in neighborhoods with higher median incomes and a higher proportion of Black residents.
    JEL: L26 R12 R23
    Date: 2021–05
  10. By: Kremer, Anna
    Abstract: Diversity of a country is often measured by the amount and spread of nationalities that live there. But also within a country, regions vary in their traditions and culture. Cultural homogeneity within communities is mixed up by (internal) migration, that, like international migration, increases diversity of a place. In a novel approach I therefore look at diversity in German municipality associations measured by different family names and investigate the effect it has on the number of generated patents. I show that cultural diversity and openness of a place affect its economic performance positively in terms of innovation also when referring to intra-country differences.
    Keywords: cultural diversity,innovation,openness,phonebook,patents,local level,Germany,kulturelle Diversität,Innovation,Offenheit,Telefonbuch,Patente,lokal,Deutschland
    JEL: O31 R12 Z10 J61 O1
    Date: 2021

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