nep-ino New Economics Papers
on Innovation
Issue of 2023‒09‒11
nine papers chosen by
Uwe Cantner, University of Jena

  1. Economic Consequences of the Unitary Patent By Lena Kalukuta Mahina; Bruno Van Pottelsberghe
  2. The Behavioral Additionality of Government Research Grants By Rainer Widmann
  3. Accelerating Innovation Ecosystems: The Promise and Challenges of Regional Innovation Engines By Jorge Guzman; Fiona Murray; Scott Stern; Heidi L. Williams
  4. Research and/or Development? Financial Frictions and Innovation Investment By Filippo Mezzanotti; Timothy Simcoe
  5. What drives university-industry collaboration? Research excellence or firm collaboration strategy? By Atta-Owusu, Kwadwo; Fitjar, Rune Dahl; Rodríguez-Pose, Andrés
  6. Regional incidence and persistence of high-growth firms: Testing ideas from the Entrepreneurial Ecosystems literature By Alex Coad; Clemens Domnick; Pietro Santoleri; Stjepan Srhoj
  7. Economic complexity and the sustainability transition: A review of data, methods, and literature By Bernardo Caldarola; Dario Mazzilli; Lorenzo Napolitano; Aurelio Patelli; Angelica Sbardella
  8. Capabilities, Institutions and Regional Economic Development: A Proposed Synthesis By Koen Frenken; Frank Neffke; Alje van Dam
  9. Why Machines Will Not Replace Entrepreneurs. On the Inevitable Limitations of Artificial Intelligence in Economic Life. By Van Den Hauwe, Ludwig

  1. By: Lena Kalukuta Mahina; Bruno Van Pottelsberghe
    Abstract: The year 2023 will most likely be remembered in the future history of the European patent system, similarly to 1978, that marked the creation of the European Patent and the Patent Cooperation Treaty, or similarly to 1883 with the Paris Convention. Called for long the Community Patent, it has been renamed “Unitary patent” (UP), or patent with a unitary effect. Its raison d’être is to cope with the many weaknesses (see van Pottelsberghe, 2009) of the European Patent (EP) system, which reduced the effectiveness of the European patent policy in stimulating innovation.
    Keywords: Intellectual property, Unitary patent, European patent
    Date: 2023–08
  2. By: Rainer Widmann (MPI-IC)
    Abstract: There are different forms of public support for industrial R&D. Some attempt to increase innovation by prompting firms to undertake more challenging projects than they would otherwise do. Access to a dataset from one such program, the Austrian Research Promotion Agency, allows me to examine the effect of research grants on firms' patenting outcomes. My estimates suggest that a government research grant increases the propensity to file a patent application with the European Patent Office by around 12 percentage points. Stronger effects appear for more experienced firms of advanced age. Additional evidence indicates that grants induce experienced firms to develop unconventional patents and patents that draw on knowledge novel to the firm. I interpret the findings in a "exploration vs. exploitation" model, in which grants are targeted at ambitious projects that face internal competition from more conventional projects within firms. The model shows that this mechanism is more salient in experienced firms, leading to a stronger response in behavior for this group of firms.
    JEL: O38
    Date: 2023–08–21
  3. By: Jorge Guzman; Fiona Murray; Scott Stern; Heidi L. Williams
    Abstract: Motivated by the establishment of major U.S. Federal programs seeking to harness the potential of regional innovation ecosystems, we assess the promise and challenges of place-based innovation policy interventions. Relative to traditional research grants, place-based innovation policy interventions are not directed toward a specific research project but rather aim to reshape interactions among researchers and other stakeholders within a given geographic location. The most recent such policy - the NSF “Engines” program - is designed to enhance the productivity and impact of the investments made within a given regional innovation ecosystem. The impact of such an intervention depends on whether, in its implementation, it induces change in the behavior of individuals and the ways in which knowledge is distributed and translated within that ecosystem. While this logic is straightforward, from it follows an important insight: innovation ecosystem interventions – Engines -- are more likely to succeed when they account for the current state of a given regional ecosystem (latent capacities, current bottlenecks, and economic and institutional constraints) and when they involve extended commitments by multiple stakeholders within that ecosystem. We synthesize the logic, key dependencies, and opportunities for real-time assessment and course correction for these place-based innovation policy interventions.
    JEL: D78 L2 O3
    Date: 2023–08
  4. By: Filippo Mezzanotti; Timothy Simcoe
    Abstract: Abstract U.S. firms have reduced their investment in scientific research (“R”) compared to product development (“D”), raising questions about the returns to each type of investment, and about the reasons for this shift. We use Census data that disaggregates “R” from “D” to study how US firms adjust their innovation investments in response to an external increase in funding cost. Companies with greater demand for refinancing during the 2008 financial crisis made larger cuts to R&D investment. This reduction in R&D is achieved almost entirely by reducing investments in basic and applied research. Development remains essentially unchanged. Although patenting is more strongly correlated with development than research investments, the impact of the crisis appears in citation-weighted patent output after 3 to 5 years. Finally, we show that if other firms patenting similar technologies are exposed to the crisis, then a focal firm's Development investment declines. We consider several mechanisms that could explain these results, and without ruling out every alternative, conclude that the overall pattern is consistent with an important role for technological competition in R&D financing decisions.
    JEL: G30 L20 O31 O32
    Date: 2023–08
  5. By: Atta-Owusu, Kwadwo; Fitjar, Rune Dahl; Rodríguez-Pose, Andrés
    Abstract: Research and innovation policy aims to boost research output and university-industry collaboration (UIC) in part to allow firms access to leading scientific knowledge. As part of their mission, universities in many countries are expected to contribute to innovation in their regions. However, the relationship between research output and UIC is unclear: research-intensive universities can produce frontier research, which is attractive to firms, but may simultaneously suffer from a gap between the research produced and the needs of local firms, as well as mission overload. This may hinder local firms’ ability to cooperate with universities altogether or force them to look beyond the region for other suitable universities to interact with. This paper investigates the relationship between the research output of local universities and firms’ participation in UICs across different geographical scales. It uses Community Innovation Survey (CIS) data for Norwegian firms and Scopus data on Norwegian universities’ research output across various disciplines. The results demonstrate that local university research intensity and quality are negatively associated with firm participation in UICs at the local level. Firm characteristics, in particular the firm's general strategy towards cooperation and its geography, turn out to be much more important than university characteristics in explaining UICs. Notably, firms’ cooperation with other external partners at the same scale is a strong predictor of UICs.
    Keywords: Firms; Norway; Research; Universities; University-industry collaboration; 209761
    JEL: R14 J01
    Date: 2021–12–01
  6. By: Alex Coad (Waseda University); Clemens Domnick (European Commission - JRC); Pietro Santoleri (European Commission - JRC); Stjepan Srhoj (University of Split)
    Abstract: Policy-makers and scholars often assume that a higher incidence of high-growth firms (HGFs) is synonymous with vibrant regional economic dynamics, and that HGF shares are persistent over time as Entrepreneurial Ecosystems (EEs) have slowly-changing features. In this paper we test these hypotheses, which are deeply rooted in the EE literature. We draw upon Eurostat data for up to 20 countries over the period 2008-2020 and study HGF shares in NUTS-3 regions in Europe. Analysis of regional rankings yields the puzzling finding that the leading EEs in Europe, apparently, are in places such as southern Spain and southern Italy. These places would not normally be considered Europe’s foremost entrepreneurial hotspots. Additional results do not provide strong support for the hypothesis that more developed regions feature higher HGF shares. We do find evidence consistent with HGF shares displaying persistency over time. However, we show that more developed regions do not have higher persistence in their HGF shares, and that the strength in persistence does not increase across the HGFs distribution, which does not support path-dependency as the main mechanism behind the observed persistence. Overall, we call for a more nuanced interpretation of both regional HGF shares and the EEs literature.
    Keywords: Entrepreneurial Ecosystems, High-Growth Firms, Persistence, Firm Growth, Entrepreneurship Policy, Regional Policy
    Date: 2023–07
  7. By: Bernardo Caldarola; Dario Mazzilli; Lorenzo Napolitano; Aurelio Patelli; Angelica Sbardella
    Abstract: Economic Complexity (EC) methods have gained increasing popularity across fields and disciplines. In particular, the EC toolbox has proved particularly promising in the study of complex and interrelated phenomena, such as the transition towards a greener economy. Using the EC approach, scholars have been investigating the relationship between EC and sustainability, proposing to identify the distinguishing characteristics of green products and to assess the readiness of productive and technological structures for the sustainability transition. This article proposes to review and summarize the data, methods, and empirical literature that are relevant to the study of the sustainability transition from an EC perspective. We review three distinct but connected blocks of literature on EC and environmental sustainability. First, we survey the evidence linking measures of EC to indicators related to environmental sustainability. Second, we review articles that strive to assess the green competitiveness of productive systems. Third, we examine evidence on green technological development and its connection to non-green knowledge bases. Finally, we summarize the findings for each block and identify avenues for further research in this recent and growing body of empirical literature.
    Date: 2023–08
  8. By: Koen Frenken; Frank Neffke; Alje van Dam
    Abstract: The capability framework in evolutionary economic geography views regional economic development as a process of related diversification through the acquisition of capabilities that render a regional economy more complex. Using this framework, we synthesize seven theoretical notions that hitherto remained rather disconnected: relatedness, complementarity, variety, complexity, diversification, agents of structural change, and related variety. We formulate a constructive critique of the capability framework, relaxing the overly restrictive assumption that the presence of capabilities in a region is both necessary and sufficient for complex products to be produced in a region. Instead, we argue that the complexity of a regional economy depends primarily on the institutions that support firms to coordinate production in complex value chains within and across regions. The augmented framework allows for closer integration of evolutionary and relational approaches in economic geography, providing new links between the literatures on clusters, innovation systems and global production networks.
    Keywords: diversification, relatedness, complexity, institution, value chain
    JEL: B52 O1 O43 R1
    Date: 2023–08
  9. By: Van Den Hauwe, Ludwig
    Abstract: This paper critically explores some supposed implications of the development of artificial intelligence (AI), particularly also machine learning (ML), for how we conceive of the role of entrepreneurship in the economy. The question of the impact of AI and ML is examined by hypothesizing a decentralized market-based system and raising the question of whether entrepreneurs will someday likely be replaced by machines. The answer turns out to be highly skeptical. Not only does the materialist worldview behind the ambitions of much AI research cast serious doubts upon the chances of success of any attempts to emulate entrepreneurship algorithmically with the help of computers, the very possibility of artificial general intelligence (AGI) can also be ruled out on purely scientific grounds. The paper concludes that human entrepreneurs will remain the driving force of the market.
    Keywords: Artificial Intelligence, Entrepreneurship, Creativity
    JEL: A12 M0 O3
    Date: 2023–08–10

This nep-ino issue is ©2023 by Uwe Cantner. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.