nep-ino New Economics Papers
on Innovation
Issue of 2022‒07‒18
fifteen papers chosen by
Uwe Cantner
University of Jena

  1. Internal Disagreement and Disruptive Technologies By Joshua S. Gans
  2. Technology Differentiation and Firm Performance By Samuel Arts; Bruno Cassiman; Jianan Hou
  3. Migrant inventors as agents of technological change By Ernest Miguelez; Andrea Morrison
  4. Artificial Intelligence and Firm-level Productivity By Dirk Czarnitzki; Gastón P Fernández; Christian Rammer
  5. Raising EU productivity through innovation- Lessons from improved micro data By Reinhilde Veugelers; Frederic Warzynski
  6. Remote Collaboration Fuses Fewer Breakthrough Ideas By Yiling Lin; Carl Benedikt Frey; Lingfei Wu
  7. A Theory of Visionary Disruption By Joshua S. Gans
  8. The North-South divide: sources of divergence, policies for convergence By Lucrezia Fanti; Marcelo C. Pereira; Maria Enrica Virgillito
  9. Farm innovation and technical efficiency of Dutch arable farms: An innovation index and DEA approach By Tensi, Annika Francesca; Ang, Frederic; Fels-Klerx, Ine van der
  10. The Evolution of Competitiveness across Economic, Innovation and Knowledge production activities By Aurelio Patelli; Lorenzo Napolitano; Giulio Cimini; Emanuele Pugliese; Andrea Gabrielli
  11. Productivity Dispersion, Entry, and Growth in U.S. Manufacturing Industries By Cindy Cunningham; Lucia Foster; Cheryl Grim; John Haltiwanger; Sabrina Wulff Pabilonia; Jay Stewart; Zoltan Wolf
  12. The roles of knowledge intermediaries in sustainability transitions and digitalization: Academia driven fostering of socio technical transitions? By Bäumle, Philipp; Hirschmann, Daniel; Feser, Daniel
  13. Strategic Innovation Through Outsourcing: A Theoretical Review By Marfri Gambal; Aleksandre Asatiani; Julia Kotlarsky
  14. Economic complexity and inequality at the national and regional level By Flavio L. Pinheiro; Dominik Hartmann
  15. Talent Flow Network, the Life Cycle of Firms, and Their Innovations By Mai, Nhat Chi

  1. By: Joshua S. Gans
    Abstract: This paper models the adoption by established firms of technologies that are internally disruptive in that different parts of an organization stand to lose or gain from adoption. When agents disagree with a decision they impose costs on the firm. The paper shows that any resistance to change this yields is necessarily accompanied by others aggrieved should change not occur. Thus, the firm cannot avoid disagreement costs regardless of whether they adopt the technology or not. In some cases, depending on their ability to impose costs, such firms may be more likely to adopt technologies as a result of internal disagreement.
    JEL: L21 O32
    Date: 2022–05
  2. By: Samuel Arts; Bruno Cassiman; Jianan Hou
    Abstract: Prior work has extensively studied how investing in R&D and building a technology portfolio relate to superior firm performance. However, the value of a firm’s technology portfolio should also be driven by the degree to which it is more unique and technologically differentiated from other firms. To study this research question, we develop a new method to characterize firm technology based on the semantic content of patent portfolios that allows us to map a firm’s competitive position in the technology space relative to all other firms and to measure the differentiation of a firm’s technology portfolio. Using a large panel of U.S. public firms from 1980 to 2015, we find that technology differentiation has a strong positive and long-lasting relation with firm performance. Moreover, differentiated firm technology is particularly valuable in industries with higher R&D intensity and with stronger product market competition. We provide open access to all code and data to measure the technology similarity and the technology differentiation of U.S. public firms.
    Date: 2022–01–21
  3. By: Ernest Miguelez (BSE - Bordeaux Sciences Economiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique); Andrea Morrison
    Abstract: How do regions enter new and distant technological fields? Who is triggering this process? This work addresses these compelling research questions by investigating the role of migrant inventors in the process of technological diversification. Immigrant inventors can indeed act as carriers of knowledge across borders and influence the direction of technological change. We test these latter propositions by using an original dataset of immigrant inventors in the context of European regions during the period 2003–201. Our findings show that: immigrant inventors generate positive local knowledge spillovers; they help their host regions to develop new technological specialisations; they trigger a process of unrelated diversification. Their contribution comes via two main mechanisms: immigrant inventors use their own personal knowledge (knowledge creation); they import knowledge from their home country to the host region (knowledge transfer). Their impact is maximised when their knowledge is not recombined with the local one (in mixed teams of inventors), but it is reused (in teams made by only migrant inventors). Our work contributes to the existing literature of regional diversification by providing fresh evidence of unrelated diversification for European regions and by identifying important agents of structural change. It also contributes to the literature of migration and innovation by adding fresh evidence on European regions and by unveiling some of the mechanisms of immigrants' knowledge transmission.
    Keywords: Patents,Migration,Technological diversification,Relatedness,Europe
    Date: 2022–05
  4. By: Dirk Czarnitzki; Gastón P Fernández; Christian Rammer
    Abstract: Artificial Intelligence (AI) is often regarded as the next general-purpose technology with a rapid, penetrating, and far-reaching use over a broad number of industrial sectors. A main feature of new general-purpose technology is to enable new ways of production that may increase productivity. So far, however, only very few studies investigated likely productivity effects of AI at the firm-level; presumably because of lacking data. We exploit unique survey data on firms’ adoption of AI technology and estimate its productivity effects with a sample of German firms. We employ both a cross-sectional dataset and a panel database. To address the potential endogeneity of AI adoption, we also implement IV estimators. We find positive and significant effects of the use of AI on firm productivity. This finding holds for different measures of AI usage, i.e., an indicator variable of AI adoption, and the intensity with which firms use AI methods in their business processes.
    Keywords: Artificial Intelligence, Productivity, CIS data
    Date: 2022–02–17
  5. By: Reinhilde Veugelers; Frederic Warzynski
    Abstract: This Working Paper is an output from the MICROPROD project, which received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement no. 822390. Research and development is seen as a key contributor to growth because it generates knowledge, leading to new or improved products through product innovation, and makes firms more efficient at producing goods through process innovation. Firm level studies generally find evidence of strong positive...
    Date: 2022–06
  6. By: Yiling Lin; Carl Benedikt Frey; Lingfei Wu
    Abstract: Scientists and inventors around the world are more plentiful and interconnected today than ever before. But while there are more people making discoveries, and more ideas that can be reconfigured in novel ways, research suggests that new ideas are getting harder to find-contradicting recombinant growth theory. In this paper, we shed new light on this apparent puzzle. Analyzing 20 million research articles and 4 million patent applications across the globe over the past half-century, we begin by documenting the rise of remote collaboration across locations, underlining the growing interconnectedness of scientists and inventors globally. However, we also show that for all fields, periods, and team sizes, researchers in these distributed teams are consistently less likely to make breakthrough discoveries relative to their onsite counterparts. Using a novel dataset that allows us to explore the division of labor within each team, we find that distributed team members tend to collaborate in technical tasks-like collecting and analyzing data-but are less likely to join forces in conceptual tasks, such as conceiving new ideas and designing research. Hence, while remote teams collaborate in theory, actual cooperation centers on late-stage, technical project tasks, involving more codified knowledge. We conclude that despite striking improvements in remote work technology in recent years, remote teams are less likely to integrate existing knowledge to produce new, disruptive ideas. This also provides an explanation for why new ideas are getting harder to find.
    Date: 2022–06
  7. By: Joshua S. Gans
    Abstract: Exploitation of disruptive technologies often requires resource deployment that creates conflict if there are divergent beliefs regarding the efficacy of a new technology. This arises when a visionary agent has more optimistic beliefs about a technological opportunity. Exploration in the form of experiments can be persuasive when beliefs differ by mitigating disagreement and its costs. This paper examines experimental choice when experiments need to persuade as well as inform. It is shown that, due to resource constraints, persuasion factors more highly for entrepreneurial than incumbent firms. However, incumbent firms, despite being able to redeploy resources using authority, are constrained in adoption as exploration cannot mitigate the costs of disagreement
    JEL: L26 M1 O32
    Date: 2022–05
  8. By: Lucrezia Fanti (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore, Milano, Italia); Marcelo C. Pereira (Institute of Economics, University of Campinas, Campinas, Brazil); Maria Enrica Virgillito (Institute of Economics, Scuola Superiore Sant’Anna, Pisa, Italia – Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore, Milano, Italia)
    Abstract: Building on the labour-augmented K+S framework (Dosi et al., 2010, 2017, 2020), we address the analysis of North-South divide by means of an agent-based model (ABM) endogenously reproducing the divergence between two artificial macro-regions. The latter are characterized by identical initial conditions in terms of productive and innovation structures, but different labour market organizations. We identify the role played by different labour markets functioning on the possible divergence across the two regions, by finding that divergences in labour market reverberate into asymmetric productive performance due to negative reinforcing feedback loop dynamics. We then compare alternative policies by showing that investment schemes aimed at increasing machine renewal and higher substitutionary investment are the most effective in fostering the convergence.
    Keywords: Agent-Based Models; Technology Gap; Labour Market
    JEL: C63 J3 E24 O1
    Date: 2022–05
  9. By: Tensi, Annika Francesca; Ang, Frederic; Fels-Klerx, Ine van der
    Abstract: In this article, we analysed the relationship between farm innovation and farm efficiency. We computed an innovation index based on Dutch Innovation Monitor data and ratings from an expert elicitation. The innovation index is an adaptation and extension of an existing innovation index for Irish dairy farms. We computed technical efficiency scores with a Data Envelopment Analysis (DEA). The DEA scores are computed with Farm Accountancy Data Network (FADN) data. We investigated the relationship with pre-registered ordinary least square (OLS) regression analyses in quadratic form and additional Chi-square tests. Unanimously, we reject the first hypothesis that farm innovation and farm efficiency can be described by an inverse parabolic relationship. Early adopters and innovators are not necessarily less efficient than the early and late majority of innovation adopters. We also reject the second hypothesis that innovation front-runners become more efficient. These are preliminary findings.
    Keywords: Farm Management, Research and Development/Tech Change/Emerging Technologies
    Date: 2022–04
  10. By: Aurelio Patelli; Lorenzo Napolitano; Giulio Cimini; Emanuele Pugliese; Andrea Gabrielli
    Abstract: The evolution of economic and innovation systems at the national scale is shaped by a complex dynamics, the footprint of which is the nested structure of the activities in which different countries are competitive. Nestedness is a persistent feature across multiple kinds (layers) of activities related to the production of knowledge and goods: scientific research, technological innovation, industrial production and trade. We observe that in the layers of innovation and trade the competitiveness of countries correlates unambiguously with their diversification, while the science layer displays some peculiar feature. The evolution of scientific domains leads to an increasingly modular structure, in which the most developed nations become less competitive in the less advanced scientific domains, where they are replaced by the emerging countries. This observation is in line with a capability-based view of the evolution of economic systems, but with a slight twist. Indeed, while the accumulation of specific know-how and skills is a fundamental step towards development, resource constraints force countries to acquire competitiveness in the more complex research fields at the price of losing ground in more basic, albeit less visible (or more crowded), fields. This tendency towards a relatively specialized basket of capabilities leads to a trade-off between the need to diversify in order to evolve and the need to allocate resources efficiently. Collaborative patterns among developed nations reduce the necessity to be competitive in the less sophisticated fields, freeing resources for the more complex domains.
    Date: 2022–06
  11. By: Cindy Cunningham; Lucia Foster; Cheryl Grim; John Haltiwanger; Sabrina Wulff Pabilonia; Jay Stewart; Zoltan Wolf
    Abstract: Within-industry productivity dispersion is pervasive and exhibits substantial variation across countries, industries, and time. We build on prior research that explores the hypothesis that periods of innovation are initially associated with a surge in business start-ups, followed by increased experimentation that leads to rising dispersion potentially with declining aggregate productivity growth, and then a shakeout process that results in higher productivity growth and declining productivity dispersion. Using novel detailed industry-level data on total factor productivity and labor productivity dispersion from the Dispersion Statistics on Productivity along with novel measures of entry rates from the Business Dynamics Statistics and productivity growth data from the Bureau of Labor Statistics for U.S. manufacturing industries, we find support for this hypothesis, especially for the high-tech industries.
    Date: 2021
  12. By: Bäumle, Philipp; Hirschmann, Daniel; Feser, Daniel
    Abstract: The concept of intermediation is central to current approaches to innovation policy. While the extant literature distinguishes between academia driven knowledge intermediaries supporting the commercialization of academic knowledge and public intermediaries focusing on the support of socio technical transition processes, little is known about the roles and activities of knowledge intermediaries in sustainability transitions and digitalization, even though the systemic coaction of different intermediaries is essential for policy making. This understudied issue is explored using an explorative-qualitative approach and empirical evidence from interviews of participants in regional knowledge intermediation initiatives. We find that knowledge intermediaries proactively contribute to the two socio technical transitions in question by performing three roles: (i) information dissemination via events, (ii) knowledge exchange via network building, and (iii) implementation support via consulting. Furthermore, we identify additional roles concerning the identification and monitoring of new projects emerging from the interplay between sustainability and digitalization. Working at the intersection of both transitions and cognizant of the effects of digitalization on sustainability, knowledge intermediaries are key actors in fostering digitalization processes that preclude rebound effects on sustainability or contribute to sustainability transitions. This paper contributes to current scholarly discussions by closing the conceptual gap between knowledge and transition intermediaries and emphasizing the interdependencies between digitalization and sustainability.
    Keywords: knowledge intermediaries,transition intermediaries,sustainability transition,digitalization,higher education institutions,qualitative case studies
    JEL: I29 O32 O39 Q29
    Date: 2022
  13. By: Marfri Gambal; Aleksandre Asatiani; Julia Kotlarsky
    Abstract: Competition in the Information Technology Outsourcing (ITO) and Business Process Outsourcing (BPO) industry is increasingly moving from being motivated by cost savings towards strategic benefits that service providers can offer to their clients. Innovation is one such benefit that is expected nowadays in outsourcing engagements. The rising importance of innovation has been noticed and acknowledged not only in the Information Systems (IS) literature, but also in other management streams such as innovation and strategy. However, to date, these individual strands of research remain largely isolated from each other. Our theoretical review addresses this gap by consolidating and analyzing research on strategic innovation in the ITO and BPO context. The article set includes 95 papers published between 1998 to 2020 in outlets from the IS and related management fields. We craft a four-phase framework that integrates prior insights about (1) the antecedents of the decision to pursue strategic innovation in outsourcing settings; (2) arrangement options that facilitate strategic innovation in outsourcing relationships; (3) the generation of strategic innovations; and (4) realized strategic innovation outcomes, as assessed in the literature. We find that the research landscape to date is skewed, with many studies focusing on the first two phases. The last two phases remain relatively uncharted. We also discuss how innovation-oriented outsourcing insights compare with established research on cost-oriented outsourcing engagements. Finally, we offer directions for future research.
    Date: 2022–06
  14. By: Flavio L. Pinheiro; Dominik Hartmann
    Abstract: Recent studies have found evidence of a negative association between economic complexity and inequality at the country level. Moreover, evidence suggests that sophisticated economies tend to outsource products that are less desirable (e.g. in terms of wage and inequality effects), and instead focus on complex products requiring networks of skilled labor and more inclusive institutions. Yet the negative association between economic complexity and inequality on a coarse scale could hide important dynamics at a fine-grained level. Complex economic activities are difficult to develop and tend to concentrate spatially, leading to 'winner-take-most' effects that spur regional inequality in countries. Large, complex cities tend to attract both high- and low-skills activities and workers, and are also associated with higher levels of hierarchies, competition, and skill premiums. As a result, the association between complexity and inequality reverses at regional scales; in other words, more complex regions tend to be more unequal. Ideas from polarization theories, institutional changes, and urban scaling literature can help to understand this paradox, while new methods from economic complexity and relatedness can help identify inclusive growth constraints and opportunities.
    Date: 2022–06
  15. By: Mai, Nhat Chi
    Abstract: This paper explores how talent flow network and the firm life cycle affect the innovative performances of firms. This study first established an interorganizational talent flow network with the occupational mobility data available from the public resumes on LinkedIn China. Thereafter, this information was combined with the financial data of China’s listed companies to develop a unique dataset for the time period between 2000 and 2015. The empirical results indicate the following: (1) the breadth and depth of firms’ embedding in the talent flow network positively impact their innovative performances; (2) younger firms’ innovations are mostly promoted by the breadth of network embedding, but this positive effect weakens as firms increase in age; (3) mature firms’ innovations are primarily driven by the depth of network embedding, and this positive effect strengthens as firms increase in age. This paper enriches and deepens the studies of talent flow networks, and it provides practical implications for innovation management based on talent flow for various types of firms at different development stages.
    Date: 2022–03–27

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