nep-ino New Economics Papers
on Innovation
Issue of 2021‒08‒23
six papers chosen by
Uwe Cantner
University of Jena

  1. Big pharma and monopoly capitalism: A long-term view By Giovanni Dosi; Luigi Marengo; Jacopo Staccioli; Maria Enrica Virgillito
  2. Does Offshoring Production Reduce Innovation: Firm-Level Evidence from Taiwan By Lee G. Branstetter; Jong-Rong Chen; Britta Glennon; Nikolas Zolas
  3. Exploration and Exploitation in US Technological Change By Carvalho, Vasco M.; Draca, Mirko; Kuhlen, Nikolas
  5. Public Sector Entrepreneurship, Politics, and Innovation By Link, Albert; Gicheva, Dora
  6. The Past and Future of Economic Growth: A Semi-Endogenous Perspective By Charles I. Jones

  1. By: Giovanni Dosi; Luigi Marengo; Jacopo Staccioli; Maria Enrica Virgillito
    Abstract: Are IPRs institutions meant to foster innovative activities or conversely to secure appropriation and profitability? Taking stock of a long-term empirical evidence on the pharmaceutical sector in the US, we can hardly support IPRs intended as an innovation rewarding institution. According to our analysis, pharma patents have constituted legal barriers to protect intellectual monopolies rather than an incentive and a reward to innovative efforts. Patenting strategies appear to be quite aggressive in extending knowledge borders and enlarging the space protected from the possibility of infringements. This is also witnessed by the fact that patent applications are very skewed in the covered trade names and patent thickness expands over time. Conversely, the number of patents protecting new drugs approved by the FDA which draw upon government-sponsored research - as such a mark for quality - falls. Firm-level analysis on profitability confirms strong correlation, restricted to listed pharmaceutical firms, between patent portfolio and profit margins.
    Keywords: Intellectual property rights; patents; pharmaceutical industry.
    Date: 2021–08–11
  2. By: Lee G. Branstetter; Jong-Rong Chen; Britta Glennon; Nikolas Zolas
    Abstract: Does the offshoring of production degrade or enhance the innovative capabilities of manufacturing firms? We contribute to this debate by exploiting a policy shock that differentially affected the ability of Taiwanese firms to offshore some products to China. We find causal evidence that offshoring impacts both the level and nature of innovation. In the technologies directly related to product categories that could be offshored more easily after the policy shock, overall innovation levels decline and innovative effort shifts away from product innovation and towards process innovation. However, we also find evidence of a second-order positive effect of offshoring on the levels of innovation—particularly product innovation—in other parts of the firm’s portfolio. These results are consistent with the notion that offshoring production induces a complex reallocation of innovation effort within the firm, both across and within technology categories. Our paper examines this reallocation in the context of Taiwanese electronics firms, and introduces new methods that could be used to study post-offshoring reallocations of innovative effort in other contexts.
    JEL: F2 F6 O3 O4
    Date: 2021–08
  3. By: Carvalho, Vasco M. (University of Cambridge); Draca, Mirko (University of Warwick and CAGE Research Centre); Kuhlen, Nikolas (University of Cambridge and The Alan Turing Institute)
    Abstract: How do firms and inventors move through ‘knowledge space’ as they develop their innovations? We propose a method for tracking patterns of ‘exploration and exploitation’ in patenting behaviour in the US for the period since 1920. Our exploration measure is constructed from the text of patents find involves the use of ‘Bayesian Surprise’ to measure how different current patent-based innovations are from existing portfolios. Our results indicate that there are distinct ‘life-cycle’ patterns to firm and inventor exploration. Furthermore, exploration activity is more geographically concentrated than general patenting, but this concentration is centred outside the main hubs of patenting.
    Date: 2021
  4. By: Marie-Alix Deval (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique); Sophie Hooge (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique); Benoit Weil (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The paper studies the institutionalization of a new domain of expertise dedicated to the exploration of the unknown in two established French technological firms with strong organizations of experts. The research is built in a comparative qualitative longitudinal research partnership with Renault (global car manufacturer) and SNCF (national railway company). This research highlights 4 main results: firstly, experts of radical innovation management are experts at managing the unknown in industrial contexts and breakthrough innovation strategic issues, wielding tools, and methods for breakthrough exploration. Secondly, experts of the exploration of the unknown support the other experts to explore the unknown. In this way (third result) this domain emergence highlights a new kind of interaction between innovation and expertise that (last result) cements breakthrough exploration capability as a strategic field.
    Date: 2021–06–17
  5. By: Link, Albert (University of North Carolina at Greensboro, Department of Economics); Gicheva, Dora (University of North Carolina at Greensboro, Department of Economics)
    Abstract: We suggest that a political leader or a political administration can be described in terms of a public sector entrepreneurship framework. To illustrate, we define the actions of U.S. President Donald Trump’s Administration to refocus the emphasis of the Environmental Protection Agency (EPA) as an innovative public policy initiative. And, we explore empirically the social consequences of those actions in terms of changes in the number of STEM employees at the EPA and the number of attendant innovative scientific publications.
    Keywords: Public sector entrepreneurship; Environmental Protection Agency; Trump Administration; STEM employees; Scientific publications;
    JEL: H11 O38 Q51
    Date: 2021–08–11
  6. By: Charles I. Jones
    Abstract: The nonrivalry of ideas gives rise to increasing returns, a fact celebrated in Paul Romer's recent Nobel Prize. An implication is that the long-run rate of economic growth is the product of the degree of increasing returns and the growth rate of research effort; this is the essence of semi-endogenous growth theory. This paper interprets past and future growth from a semi-endogenous perspective. For 50+ years, U.S. growth has substantially exceeded its long-run rate because of rising educational attainment, declining misallocation, and rising (global) research intensity, implying that frontier growth could slow markedly in the future. Other forces push in the opposite direction. First is the prospect of "finding new Einsteins": how many talented researchers have we missed historically because of the underdevelopment of China and India and because of barriers that discouraged women inventors? Second is the longer-term prospect that artificial intelligence could augment or even replace people as researchers. Throughout, the paper highlights many opportunities for further research.
    JEL: E0 O4
    Date: 2021–08

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