nep-ino New Economics Papers
on Innovation
Issue of 2022‒09‒26
eight papers chosen by
Uwe Cantner
University of Jena

  1. Of Academics and Creative Destruction: Startup Advantage in the Process of Innovation By Julian Kolev; Alexis Haughey; Fiona Murray; Scott Stern
  2. Dynamics of First-Time Patenting Firms By Nilsen, Øivind A.; Raknerud, Arvid
  3. Innovation union:Costs and benefits of innovation policy coordination By Teodora Borota Milicevic; Fabrice Defever; Giammario Impullitti; Adam Hal Spencer
  4. Credit constraints and open innovation strategies By Pierluigi Murro; Valentina Peruzzi
  5. Patenting - A Cost Management Perspective By Ulrike Michel-Schneider
  6. New Frontiers: The Origins and Content of New Work, 1940–2018 By David Autor; Caroline Chin; Anna M. Salomons; Bryan Seegmiller
  7. Entrepreneurship in the long-run: Empirical evidence and historical mechanisms By Michael Fritsch; Michael Wyrwich
  8. Strategic sectors and essential jobs: a new taxonomy based on employment multipliers By Lorenzo Cresti; Maria Enrica Virgillito

  1. By: Julian Kolev; Alexis Haughey; Fiona Murray; Scott Stern
    Abstract: What is the role of startups within the innovation ecosystem? Since 2000, startups have grown in their share of commercializing research from top U.S. universities; however, prior work has little to say on the particular advantages of startup ventures in the innovation process relative to more traditional alternatives such as academia and established private-sector incumbents. We develop a simple model of startup advantage based on private information held by the initial inventor, and generate predictions related to the value and impact of startup innovation. We then explore these predictions using patents granted within the regional ecosystems of top-25 research universities from 2000 to 2015. Our results show a significant startup advantage in terms of forward citations and outlier-patent rates. Further, startup innovation is both more original and more general than innovation by incumbent firms. Moreover, startups that survive to become “scale-ups” quickly grow to dominate their regional innovation ecosystems. Our findings have important implications for innovation policy.
    JEL: L24 L26 M13 O31 O32 O34
    Date: 2022–08
  2. By: Nilsen, Øivind A. (Dept. of Economics, Norwegian School of Economics and Business Administration); Raknerud, Arvid (SSB)
    Abstract: This paper investigates firm dynamics in the period before, during, and after an event consisting of a first published patent application. The analysis is based on patent data from the Norwegian Industrial Property Office merged with data from several business registers covering a period of almost 20 years. We apply an event study design and use matching to control for confounding factors. The first patent application by a young firm is associated with significant growth in employment, output, assets and public research funding. Moreover, our results indicate that economic activity starts to increase at least three years ahead of the first patent application. However, we find no evidence of additional firm growth after patent approval for successful applicants. Our findings indicate that the existence of a properly functioning patenting system supports innovation activities, especially early in the life cycle of firms.
    Keywords: Patenting; Firm performance; Panel data; Event study design
    JEL: C33 D22 O34
    Date: 2022–08–30
  3. By: Teodora Borota Milicevic; Fabrice Defever; Giammario Impullitti; Adam Hal Spencer
    Abstract: We build a two-region endogenous growth model to analyse the gains from innovation policy cooperation in an economic union. The model is calibrated to two blocks of the EU: the old and new members. R&D subsidy coordination is motivated by the distortion from subsidy competition, the strategic motive, and by intertemporal knowledge spillovers, which drive growth. The ideas production function features decreasing returns, making growth semi-endogenous, where policy affects growth temporarily. We compute gains from harmonised subsidies, chosen in each region to maximise EU welfare, with respect to competitive and observed subsidies. First, we find substantial gains to coordination, which derive exclusively from the strategic motive. Second, extending to include endogenous idea flows via FDI gives knowledge spillovers as the main driver of coordination gains. Third, extending to fully endogenous growth gives similar results. Fourth, conclusions based on steady state analysis have misleading optimal subsidies and overstate the estimated gains.
    Keywords: Optimal innovation policy, growth theory, international policy coordination, EU integration, FDI spillovers.
    Date: 2022
  4. By: Pierluigi Murro (LUISS University); Valentina Peruzzi (Sapienza University of Rome)
    Abstract: We investigate whether credit constraints affect firms' reliance on open innovation strategies. Using data on 7,000 Italian small and medium-sized enterprises, we find that credit restricted firms are 26\% more likely to collaborate for innovation than firms not suffering from credit constraints. This result is confirmed both for product and process innovators. However, when accounting for the intensity of the product innovation, we find a negative impact of credit rationing on open innovation for firms introducing completely new products in the market. This confirms the relevance of opportunity costs in the choice between internal and open innovation in presence of credit restrictions. We also look at the role played by innovation partners. In particular, we show that the existence of credit constraints positively affects the probability of firms innovating with their suppliers. Finally, we provide evidence that the impact of credit frictions on innovation collaborations varies with the innovation environment and with the socio-economic conditions of the province where firms are located.
    Keywords: credit constraints; open innovation; product innovation; process innovation
    JEL: O36 G32 D22
    Date: 2022–09
  5. By: Ulrike Michel-Schneider (Faculty of Civil Engineering, Czech Technical University in Prague)
    Abstract: Purpose: Patenting continues being a growing market, yet critics see significant inefficiencies between the cost spent on protecting inventions and their economic returns. The purpose of this paper is to examine the value of patenting from a cost management point of view and lay out in detail all costs related to it. This approach is intended to support inventors in deciding whether patenting is the right solution for them. Methodology: Utilising a quantitative approach, a comprehensive literature review and analysis of scientific research has been undertaken. Together with secondary literature, further economic resources have been reviewed, both on the topic of patenting, as well as cost management, using here specifically the approach of Life Cycle Cost (LCC). Furthermore, interviews with experts have been conducted to verify results. Findings: Sources prove that a significant amount of patents never recover their cost, yet the annual growth of in force patents reach above 5%. Looking at a business case of patenting an invention from an LCC perspective, the cost for the patent application process and the maintenance of the patent are clear and can be incorporated. Strategic patent management leads to the optimisation of costs, cost reductions and consequently to an increased efficiency of a patent.Practical implication: Patenting is not always the most cost effective or profit maximising solution. The review laid out in this paper should serve those considering the financial aspect of protecting their IP rights while providing an insight about what type of costs are involved in patenting and how these can be optimised. Originality/value: This study is meaningful as it details the related costs of patenting, providing a basis for decision making. Costs laid out include those related to the application or filing process, the periodic financial maintenance, as well as the management and administration of handling these processes and partnerships. Costs related to R&D of the invention, opportunity costs and possible risks are further defined, providing a holistic view of the costs of patenting.
    Keywords: Cost management, Life cycle cost, Patent management, Intellectual property
    JEL: A22 A23
    Date: 2022–07
  6. By: David Autor; Caroline Chin; Anna M. Salomons; Bryan Seegmiller
    Abstract: We address three core questions about the hypothesized role of newly emerging job categories ('new work') in counterbalancing the erosive effect of task-displacing automation on labor demand: what is the substantive content of new work; where does it come from; and what effect does it have on labor demand? To address these questions, we construct a novel database spanning eight decades of new job titles linked both to US Census microdata and to patent-based measures of occupations’ exposure to labor-augmenting and labor-automating innovations. We find, first, that the majority of current employment is in new job specialties introduced after 1940, but the locus of new work creation has shifted—from middle-paid production and clerical occupations over 1940–1980, to high-paid professional and, secondarily, low-paid services since 1980. Second, new work emerges in response to technological innovations that complement the outputs of occupations and demand shocks that raise occupational demand; conversely, innovations that automate tasks or reduce occupational demand slow new work emergence. Third, although flows of augmentation and automation innovations are positively correlated across occupations, the former boosts occupational labor demand while the latter depresses it. Harnessing shocks to the flow of augmentation and automation innovations spurred by breakthrough innovations two decades earlier, we establish that the effects of augmentation and automation innovations on new work emergence and occupational labor demand are causal. Finally, our results suggest that the demand-eroding effects of automation innovations have intensified in the last four decades while the demand-increasing effects of augmentation innovations have not.
    JEL: E24 J11 J23 J24
    Date: 2022–08
  7. By: Michael Fritsch; Michael Wyrwich
    Abstract: We review and discuss research on the development of regional entrepreneurship over time. A particular focus is on the long-term persistence of regional levels of entrepreneurship, its explanation, and its meaning for economic development. What is the state of empirical research in this field, and what can explain the empirical findings? How are long-term trends of entrepreneurial activity linked to regional performance in terms of employment, gross domestic product (GDP), and innovative activity? Based on our assessments we derive conclusions for theory, policy implications, and avenues for further research.
    Keywords: Entrepreneurship, self-employment, regional growth, entrepreneurial culture, historical analysis
    JEL: L26 M13 O1 O33 R11
    Date: 2022–08
  8. By: Lorenzo Cresti; Maria Enrica Virgillito
    Abstract: In this paper we propose a novel sectoral taxonomy integrating three different attributes of sectors, namely i) the strategic dimension reflected into their belonging to different classes of the Pavitt taxonomy, ii) the capacity to create jobs both internally and externally with respect to their sector/country, iii) the essentiality in satisfying basic needs. To accomplish the task we rely on the World Input-Output Tables and on the Socio-Economic Accounts database (Timmer et al., 2015) to build vertically integrated sectoral employment multipliers and we focus on Italy as a case study, a country which has undergone a deep structural transformation in the last twenty years, loosing productive capacity and also employment potential. The period of investigation goes from 2000 until 2014. We validate the patterns against other selected OECD countries. We finally propose an agenda for industrial policies identifying three specific sectors of intervention for the State, namely the pharmaceutical, the automotive and the care sectors.
    Keywords: Input-output; industrial policy; productive structure; employment dynamics; care sectors.
    Date: 2022–09–09

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