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on Innovation |
| By: | Carlo Altomonte; Nevine El-Mallakh; Tommaso Sonno |
| Abstract: | We build a novel worldwide database merging information on patent-citations of firms paired with information on firms' affiliation to Business Groups (BGs). We exploit these data to document how BGs appropriate knowledge through standalone firm acquisition. First, we confirm that innovative standalone firms have a higher probability of becoming part of a BG. Second, we document how BGs tend to acquire firms that are on an upward trend in patents and citations. We also show that innovating activity significantly deteriorates post-acquisition, particularly for firms with high-quality, cited patents. Third, we show that such a deterioration in innovation activity is driven by acquired firms patenting within the same technological classes of the acquiring BG, while the latter does not hold for acquired firms patenting in different technologies than the BG's. We also find that acquisitions occurring in environments characterized by higher market concentration and more mature leading firms are associated with a relatively more pronounced reduction in innovation. These results generalize the defensive acquisition narrative, suggesting that BGs leverage these transactions as a strategic manoeuvre to solidify their market position in the face of potential competition. |
| Keywords: | business groups, innovation |
| Date: | 2024–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1996&r= |
| By: | Koike Yasutaka-Mori; Toshitaka Maruyama; Koki Okumura |
| Abstract: | This paper develops an endogenous growth model that incorporates a frictional inventor market and examines the allocation of inventors across firms, knowledge diffusion, and its impact on growth. In our model, inventors play dual roles: they engage in in-house R&D and transfer knowledge from previous employers to new ones when changing jobs. Using an administrative panel dataset on German inventors matched to their employing establishments and patents, we find that, relative to general workers, inventors are more likely to transition to less productive establishments and suffer a higher wage growth via the transition. We also find that the knowledge base of establishments measured by patents grows faster when a significant proportion of their inventors originate from establishments possessing a larger knowledge base. We then calibrate the model to reflect these empirical findings and examine the effects of innovation policy. While subsidies to frontier firms discourage knowledge diffusion from these firms to technologically lagging firms, these subsidies also encourage innovation within frontier firms. The former negative effect dominates in the short term, but the latter positive effect dominates in the long run. |
| Date: | 2024–03 |
| URL: | https://d.repec.org/n?u=RePEc:dpr:wpaper:1244&r= |
| By: | Sánchez, Mariola; Nerja, Adrian |
| Abstract: | In this paper, we compare the scenarios of exclusive licenses and cross-licenses under the existence of partial vertical integration. To do this, a successive duopoly model is proposed, with two owners and two firms competing in a differentiated product market. Each technology owner has a share in one of the competing firms, so that competition is also extended to the upstream R&D sector. We propose a novel analysis where differences in the size of their innovation process are allowed, extending the results in Sánchez et al. (2021). We find that the cross-licensing scenario is preferred when the size of the innovation is small; this occurs regardless of the participation in the competing companies and how many innovate. If the innovation is very large, the owners may be better off with exclusive licenses. |
| Keywords: | Patent Licensing; Exclusive licenses; Market for technology; Asymmetric innovation |
| JEL: | L13 L24 O33 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120829&r= |