nep-ino New Economics Papers
on Innovation
Issue of 2022‒09‒12
nine papers chosen by
Uwe Cantner
University of Jena

  1. Flow of Ideas : Economic Societies and the Rise of Useful Knowledge By Cinnirella, Francesco; Hornung, Eric; Koschnick, Julius
  2. Are big data a radical innovation trigger or a problem-solving patch? The case of AI implementation by automotive incumbents By Quentin Plantec; Marie-Alix Deval; Sophie Hooge; Benoît Weil
  3. The Socio-Economic Impact of Public Policies in the Space Sector in Italy By Massimo FLORIO; Paolo CASTELNOVO; Veronica LUPI; Valentina MORRETTA; Davide VURCHIO; Lorenzo ZIRULIA; Simonetta DI CIACCIO; Mauro PIERMARIA
  4. The Next Wave of Energy Innovation: Which Technologies? Which Skills? By David Popp; Francesco Vona; Myriam Grégoire-Zawilski; Giovanni Marin
  5. Towards a new vision of innovation through COVID-19?: A comparative reading of 11 countries’ strategies By Hunter McGuire; Caroline Paunov
  6. Financial Markets and Green Innovation By Aghion, Philippe; Boneva, Lena; Breckenfelder, Johannes; Laeven, Luc; Olovsson, Conny; Popov, Alexander; Rancoita, Elena
  7. How did COVID-19 shape co-creation?: Insights and policy lessons from international initiatives By Muthu de Silva; Nikolas Schmidt; Caroline Paunov; Orlagh Lavelle
  8. Nobel laurates and the role of the industry in the emergence of new scientific breakthroughs By Quentin Plantec; Pascal Le Masson; Benoît Weil
  9. Do Funding Agencies Select and Enable Risky Research: Evidence from ERC Using Novelty as a Proxy of Risk Taking By Reinhilde Veugelers; Jian Wang; Paula Stephan

  1. By: Cinnirella, Francesco (University of Bergamo); Hornung, Eric (University of Cologne); Koschnick, Julius (London School of Economics)
    Abstract: Economic societies emerged during the late eighteenth-century. We argue that these institutions reduced the costs of accessing useful knowledge by adopting, producing, and diffusing new ideas. Combining location information for the universe of 3,300 members across active economic societies in Germany with those of patent holders and World’s Fair exhibitors, we show that regions with more members were more innovative in the late nineteenth-century. This long-lasting effect of societies arguably arose through agglomeration economies and localized knowledge spillovers. To support this claim, we provide evidence suggesting an immediate increase in manufacturing, an earlier establishment of vocational schools, and a higher density of highly skilled mechanical workers by mid-nineteenth century in regions with more members. We also show that regions with members from the same society had higher similarity in patenting, suggesting that social networks facilitated spatial knowledge diffusion and, to some extent, shaped the geography of innovation
    Keywords: Economic Societies ; Useful Knowledge ; Knowledge Diffusion ; Innovation ; Social Networks JEL Classification: N33 ; O33 ; O31 ; O43
    Date: 2022
  2. By: Quentin Plantec (TSM - Toulouse School of Management Research - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - CNRS - Centre National de la Recherche Scientifique - TSM - Toulouse School of Management - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées); Marie-Alix Deval; Sophie Hooge; Benoît Weil
    Abstract: Big data, supported by AI technologies, is mainly viewed as a trigger for radical innovation. The automotive industry appears as a key example: the most critical innovative challenges (e.g., autonomous driving, connected cars) imply drawing more extensively on big data. But the degree of innovativeness of the industrial purpose of incumbents, who are already embedding such technologies in their end-products, is worth investigating. To answer this research question, we relied on a mixed-method approach and used knowledge search as a theoretical framework. First, we conducted a quantitative analysis on 46,145 patents from the top-19 automotive incumbents. By comparing AI and non-AI patents, we showed that incumbents mainly rely on knowledge exploitation for data-driven innovation leading to incremental innovations. But, surprisingly, such innovation path foster more technologically original inventions with AI, which is not the case for non-AI patents. Second, we conducted a qualitative study to better understand this phenomenon. We showed that big data and AI technologies are integrated in the industrialization phase of new vehicles development process, following creative problem-solving logics. We also retrieved technical and organizational challenges limiting data-driven innovation. Those findings are discussed regarding the knowledge search and the new product development literature in the context of automotive industry.
    Keywords: Big data,AI technologies,automotive industry,digital transformation
    Date: 2022–06
  3. By: Massimo FLORIO (Department of Economics, Management, and Quantitative Methods, University of Milan (Italy)); Paolo CASTELNOVO (Department of Economics, Management, and Quantitative Methods, University of Milan (Italy)); Veronica LUPI (Department of Economics, Management, and Quantitative Methods, University of Milan (Italy)); Valentina MORRETTA (Department of Economics, Management, and Quantitative Methods, University of Milan (Italy)); Davide VURCHIO (Department of Economics and Finance, University of Bari “Aldo Moro†(Italy)); Lorenzo ZIRULIA (Department of Economics, Management, and Quantitative Methods, University of Milan (Italy)); Simonetta DI CIACCIO (Italian Space Agency (Italy)); Mauro PIERMARIA (Italian Space Agency (Italy))
    Abstract: The purpose of this work is assessing the impact of the Italian Space Agency (ASI) on the innovation and performance of the Italian space system. Based on descriptive evidence from three surveys and econometric analysis using balance-sheet, patent and scientometric data, we find that, when considering upstream companies and downstream intermediate users in the field of Earth observation (EO) as a whole, the socio-economic benefit – taxpayer cost ratio is higher than 1, and is particularly high in the downstream EO sector. As regards the upstream sector, the econometric analysis shows a significant effect of procurement on economic performance and innovation. Also for the downstream sector (companies and research centres), descriptive evidence from the surveys shows a positive effect of EO data on economic performance and innovation. Finally, we observe a significant impact of ASI also on scientific productivity.
    Keywords: space industry, Earth observation, socio-economic impact
    JEL: D61 H50 O32 O38
    Date: 2022–01
  4. By: David Popp; Francesco Vona; Myriam Grégoire-Zawilski; Giovanni Marin
    Abstract: The costs of low-carbon energy fell dramatically over the past decade, leading to rapid growth in its deployment. However, many challenges remain to deploy low-carbon energy at a scale necessary to meet net zero carbon emission targets. We argue that developing complementary technologies and skills must feature prominently in the next wave of low-carbon energy innovation. These include both improvements in physical capital, such as smart grids to aid integration of intermittent renewables, and human capital, to develop the skills workers need for a low-carbon economy. We document recent trends in energy innovation and discuss the lessons learnt for policy. We then discuss the need for complementary innovation in both physical capital—using smart grids as an example of how policy can help—and human capital, where we show how a task approach to labor informs policy and research on the worker skills needed for the energy transition.
    Keywords: low-carbon energy, innovation, patents, human capital, skills
    JEL: J24 O31 O38 Q42 Q55
    Date: 2022
  5. By: Hunter McGuire (OECD); Caroline Paunov (OECD)
    Abstract: This paper discusses how countries’ vision for science, technology and innovation (STI) priorities has evolved through COVID-19. The analysis was conducted on a sample of 171 STI strategy documents from 11 countries that were released between 2013 and 2021. Depending on the context, these documents seek to build consensus, manage actors, communicate or signal directions for policy, or achieve internal organisational motives. Most of the documents that have emerged since the COVID-19 crisis focus on a dominant ambitious societal goal and specific technologies to implement that goal. For example, environmental sustainability is a shared goal across different countries’ STI strategies, but its specific meaning differs. Most countries’ STI strategies also identify digitalisation as an important tool to achieve other socio-economic goals. Inclusivity is prominent in agendas reflecting country-specific circumstance. Improving resilience is a shared priority and increased in prominence with the COVID-19 experience.
    Keywords: COVID-19, digital transition, digitalization, green transition, inclusivity, innovation, resilience, STI policy, sustainability, technology
    JEL: D63 I18 Q01 Q55 O38
    Date: 2022–08–25
  6. By: Aghion, Philippe; Boneva, Lena; Breckenfelder, Johannes; Laeven, Luc; Olovsson, Conny; Popov, Alexander; Rancoita, Elena
    Abstract: Fulfilling the commitments embedded in the Paris Agreement requires a climate-technologyrevolution. Patented innovation of low-carbon technologies is lower in the EU than in selectedpeers, and very heterogeneous across member states. We motivate this fact with anendogenous model of directed technical change with government policy and financialmarkets. Variations in carbon taxes, R&D investment, and venture capital investment explaina large share of the variation in green patents per capita in the data. We discuss implicationsfor policy, concluding that governments can play a catalytic role in stimulating greeninnovation while the role of central banks is limited. JEL Classification: E5, G1, O4, Q5
    Keywords: central banks, climate change, directed technical change, financial markets, public policy
    Date: 2022–07
  7. By: Muthu de Silva (Birkbeck, University of London); Nikolas Schmidt (OECD); Caroline Paunov (OECD); Orlagh Lavelle (OECD)
    Abstract: Co-creation – the joint production of innovation between combinations of industry, research, government and civil society – was widely used to respond to COVID-19 challenges. This paper analyses 30 international co-creation initiatives that were implemented to address COVID-19 challenges. Evidence on these initiatives was gathered based on structured interviews with initiative leaders. Existing co-creation networks enabled the rapid emergence of new initiatives to address urgent needs, while digital technologies enabled establishing new – and, where necessary, socially distanced – collaborations. Aside from funding initiatives, governments engaged actively in co-creation by granting access to their networks, advising on initiative goals and offering support to improve quick delivery. The role of civil society was important as well, and the socially impactful nature of research and innovation was a motivating factor for engagement. Harnessing a similarly strong motivation is an important driver of effective future co-creation endeavours also to address the challenges of the green transition.
    Keywords: Civil Society, Digitalisation, Industry-science Linkages, Innovation
    JEL: O36 O38 I18
    Date: 2022–08–19
  8. By: Quentin Plantec (TSM - Toulouse School of Management Research - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - CNRS - Centre National de la Recherche Scientifique - TSM - Toulouse School of Management - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées); Pascal Le Masson; Benoît Weil
    Abstract: Since the 1980s, many companies recognized for their major scientific breakthroughs (e.g., IBM, AT&T, etc.), cut their investments in fundamental research activities. In parallel, academics from public research organizations (PRO) and universities engaged more extensively with the industry through research collaborations. The conditions, determinants, and effects of academic engagement have been deeply analyzed. But, the extent to which major scientific breakthroughs of the last century have emerged either from (1) academics and researchers with no interaction with the industry or (2) from scientists interacting with the industry-either as engaged academics belonging to PRO or universities or as corporate scientistsare yet to be more systematically documented. To fill this gap, we explored the extent to which scientists from the quasi-complete cohort of Nobel laureates in Physics, Medicine, and Chemistry were interacting with the industry before their breakthrough discoveries. We designed a unique dataset of their ties with the industry based on affiliations review of 84,423 academic papers and applicant review of 5,207 patent families. First, we showed that one-fifth of the studied cohort of laureates was interacting with the industry before their breakthrough discovery. More importantly, this share is still increasing, mainly through academic engagement, while the share of awarded corporate scientists has remained stable since 1970. Second, we were able to analyze the effects of those interactions with the industry on the post-discovery period by comparing interacting and noninteracting with industry laureates' follow-on research works. While some scientific discoveries were partly made possible thanks to Nobel laureates' industrial partners, those laureates' follow-on knowledge works were not bound to their initial sets of partners. They experienced similar knowledge diffusion-to-industry rates than other laureates but higher academic production rates and diffusion-to-academia rates. Finally, we claim that the extent to which scientific new knowledge still emerges in relation to industrial contexts in modern science has been underevaluated and opens rooms for further research.
    Keywords: Scientific discovery,University-Industry collaborations,Nobel Prize,New Product Development,Knowledge absorption,Academic engagement
    Date: 2022–08
  9. By: Reinhilde Veugelers; Jian Wang; Paula Stephan
    Abstract: Concern exists that public funding of science is increasingly risk averse. Funders have addressed this concern by soliciting the submission of high-risk research to either regular or specially designed programs. Little evidence, however, has been gathered to examine the extent to which such programs and initiatives accomplish their stated goal. This paper sets out to study this using data from the European Research Council (ERC), a program within the EC, established in 2007 to support high-risk/high-gain research. We examine whether the ERC selected researchers with a track record of conducting risky research. We proxy high-risk by a measure of novelty in the publication records of applicants both before and after the application, recognizing that it is but one dimension of risk. We control and interact the risk measure with high-gain by tracking whether the applicant has one or more top 1% highly cited papers in their field. We find that applicants with a history of risky research are less likely to be selected for funding than those without such a history, especially early career applicants. This selection penalty for high-risk also holds among those applicants with a history of high-gain publications. To test whether receiving a long and generous prestigious ERC grant promotes risk taking, we employ a diff-in-diff approach. We find no evidence of a significant positive risk treatment effect for advanced grantees. Only for early career grantees do we find that recipients are more likely to engage in risky research, but only compared to applicants who are unsuccessful at the second stage. This positive treatment effect is in part due to unsuccessful applicants cutting back on risky research. We cautiously interpret this as a “lesson learned” that risk is not rewarded.
    JEL: I23 O31 O33 O38
    Date: 2022–08

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