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on Innovation |
| By: | Philippe Aghion; Lint Barrage; David Hemous; Ernest Liu |
| Abstract: | We analyze a model of green technological transition along a supply chain. In each layer, a good is produced with a dirty technology, or, if the required "electrification" innovation has occurred, with a clean technology which uses the immediate upstream good. We show that the economy is characterized by a single equilibrium but multiple steady-states, and that even in the presence of Pigouvian environmental taxation, a targeted industrial policy is generally necessary to implement the social optimum. We also show that: (i) small, targeted, industrial policy may bring large welfare gains; (ii) a government which is constrained to focus its subsidies to electrification on one particular sector, should primarily target downstream sectors; (iii) when extending the model so as to allow for supply chains also for the dirty technology, overinvesting in electrification in the wrong upstream branch may derail the overall transition towards electrification downstream. Finally, we illustrate our model with a calibration to decarbonization of global iron and steel production via hydrogen direct reduction, and show that, absent industrial policy, the economy can get stuck in a "wrong" steady-state with CO2 emissions vastly above the social optimum even with a carbon price in place. |
| Keywords: | Technological change, Green Growth, supply chain |
| Date: | 2024–07–10 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2017 |
| By: | Mr. JaeBin Ahn; Chan Kim; Ms. Nan Li; Andrea Manera |
| Abstract: | This paper examines the impact of Foreign Direct Investment (FDI) on knowledge diffusion by analyzing the effect of firm-level FDI activities on cross-border patent citations. We construct a novel firm-level panel dataset that combines worldwide utility patent and citations data with project-level greenfield FDI and crossborder mergers and acquisitions (M&A) data over the past two decades, covering firms across 60 countries. Applying a new local projection difference-indifferences methodology, our analysis reveals that FDI significantly enhances knowledge flows both from and to the investing firms. Citation flows between investing firms and host countries increase by up to around 10.6% to 13% in five years after the initial investment. These effects are stronger when host countries have higher innovation capacities or are technologically more similar to the investing firm. We also uncover knowledge spillovers beyond targeted firms and industries in host countries, which are particularly more pronounced for sectors closely connected in the technology space. |
| Keywords: | Greenfield FDI; Brownfield FDI; cross-border M&A; Inward FDI; Outward FDI; Knowledge spillover; Patent citation; LP-DiD |
| Date: | 2024–07–12 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/152 |
| By: | Talke, Katrin; Müller, Sebastian; Wieringa, Jaap E. |
| Abstract: | Differentiating products by means of novel technical features is an accepted approach to achieving and retaining long-term success. So far, innovation research has treated technical newness as a static concept. In this paper, we introduce a dynamic perspective and enhance the technical newness concept in three ways. First, we acknowledge that customers become accustomed to a product and perceive it as less new as time goes by. Second, we consider product updates that introduce new features and functionalities across a product’s life cycle. Third, we uncover how technical newness affects the sales performance of new products over time. We track 175 cars over their life cycle, and find that the effect of technical newness takes an inverted-U shape. Our results imply that a dynamic perspective is crucial both when assessing a product’s technical newness and when analyzing its performance impact. |
| Keywords: | Technology life cycle, Technological Change, Management of Technological Innovation |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:300544 |
| By: | Martin Beraja; Wenwei Peng; David Y. Yang; Noam Yuchtman |
| Abstract: | Venture capital plays an important role in funding and shaping innovation outcomes, characterized by investors’ deep knowledge of the technology, industry, and institutions, as well as their long-running relationships with the entrepreneurship and innovation community. China, in its pursuit of global leadership in AI innovation and technology, has set up government venture capital funds so that both national and local governments act as venture capitalists. These government-led venture capital funds combine features of private venture capital with traditional government innovation policies. In this paper, we collect comprehensive data on China’s government and private venture capital funds. We draw three important contrasts between government and private VC funds: (i) government funds are spatially more dispersed than private funds; (ii) government funds invest in firms with weaker ex-ante performance signals but these firms exhibit growth rates exceeding those of firms in which private funds invest; and (iii) private VC funds follow government VC investments, especially when hometown government funds directly invest on firms with weaker ex-ante performance signals. We interpret these patterns in light of VC funds’ traditional role overcoming information frictions and China’s unique institutional environment, which includes important frictions on mobility and information. |
| JEL: | G18 G24 G28 G30 H19 O3 O38 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32701 |
| By: | Cristiana Bendetti-Fasil; Giammario Impullitti; Omar Licandro; Petr Sedlacek; Adam Hal Spencer |
| Abstract: | R&D is procyclical and a crucial driver of growth. Evidence indicates that innovation activity varies widely across firms. Is there heterogeneity in innovation cyclicality? Does innovation heterogeneity matter for business cycle propagation? We provide empirical evidence that more productive firms are less procyclical in innovation. We develop a model replicating this observation, with selection as the driver of heterogeneous innovation cyclicality. We then examine how heterogeneous innovation and growth influence business cycle propagation. Dynamics of firm entry and exit, coupled with heterogeneous cyclicality, significantly amplify TFP shock propagation. Business cycle fluctuations give substantial welfare losses, with firm heterogeneity contributing significantly. |
| Keywords: | Growth, Business Cycles, Innovation, Heterogeneous Firms |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:not:notcfc:2024/03 |
| By: | Huseyin Ince (Department of Economics, Gebze Technical University); Salih Zeki Imamoglu (Department of Science and Technology Studies, Gebze Technical University); Mehmet Ali Karaköse (Department of Management, Gebze Technical University); Ufuk Cebeci (Department of Industrial Engineering, Istanbul Technical University); Murat Sagbas (National Defense University) |
| Abstract: | The concept of resilience, which has been studied extensively in different disciplines and has recently gained an increasing interest in organisational science, has rarely been studied in the absorptive capacity and innovation literature. In this study, we empirically tested the relationships between organisational resilience capacity, organisational absorptive capacity, and firm innovativeness. By studying 211 firms in Turkey, we found that: (1.a) competence orientation and broad resource networks are positively related to all absorptive capacity variables, (1.b) conceptual orientation is positively related to all absorptive capacity variables except knowledge transformation, (1.c) behavioural preparedness is positively related to knowledge assimilation, (1.d) deep social capital is positively related to knowledge transformation and (2) knowledge assimilation and knowledge exploitation are positively related to firm innovativeness. Also, we found that absorptive capacity mediates the relationship between resilience capacity and firm innovativeness. |
| Keywords: | Organisational resilience capacity, absorptive capacity, firm innovativeness. |
| JEL: | L20 L29 |
| Date: | 2024–07–12 |
| URL: | https://d.repec.org/n?u=RePEc:geb:wpaper:2024-02 |
| By: | Reher, Leonie; Runst, Petrik; Thomä, Jörg; Bizer, Kilian |
| Abstract: | In order to better capture non-R&D based processes related to Learning by Doing, Using and Interacting (DUI) as a basis for policy advice, this paper empirically identifies DUI mode drivers of SME innovation. For the first time, a large set of conceptually derived indicators is used in a self-conducted survey. Using lasso regression as a data-driven selection technique capable of handling such a large number of potential predictors, we find that DUI learning involves a wide range of elements beyond interaction with external actors. Moreover, our results suggest that the relevance of DUI learning for predicting SME innovation depends on both the region and the type of innovation output. SME innovation in lagging regions is strongly related to the DUI mode, which is particularly pronounced in the case of intra-firm learning processes. These results suggest that R&D capacity is not the only main driver of SME innovation, especially in lagging regions, and therefore provide an indication of how firms can compensate for unfavourable conditions in their regional innovation environment. This in turn implies going beyond innovation policy in the narrow sense to a more holistic approach that may include links with other policy areas. |
| Abstract: | Um die nicht auf formaler Forschung und Entwicklung (FuE) basierenden Prozesse im Zusammenhang mit dem handwerksnahen Innovationsmodus des "Learning by Doing, Using and Interacting (DUI)" als Grundlage für die Gestaltung innovationspolitischer Maßnahmen besser zu erfassen, werden in diesem Forschungspapier die DUI-Treiber von Innovationen in kleinen und mittleren Unternehmen (KMU) empirisch ermittelt. Erstmals wird ein umfangreiches Set konzeptionell hergeleiteter DUI-Indikatoren in einer eigenen Erhebung erhoben und ausgewertet. Unter Verwendung der Lasso-Regression als datengetriebene Selektionsmethode, die in der Lage ist, mit einer so großen Anzahl potenzieller Prädiktoren umzugehen, zeigt sich, dass DUI-Lernen in KMU eine breite Palette von Elementen umfasst, die über die Interaktion mit externen Akteuren hinausgehen. Darüber hinaus deuten unsere Ergebnisse darauf hin, dass die Relevanz des DUI-Lernens als Treiber von Innovationen in KMU sowohl von der Region als auch von der Art des Innovationsoutputs abhängt. So hängt die Innovationstätigkeit von KMU in strukturschwachen Regionen besonders stark mit dem DUI-Modus zusammen, was im Fall von unternehmensinternen Lernprozessen besonders ausgeprägt ist. Diese und andere Ergebnisse deuten darauf hin, dass die FuE-Kapazität insbesondere in strukturschwachen Regionen nicht der einzige Treiber für Innovationen in KMU ist, und geben damit einen Hinweis darauf, wie Unternehmen ungünstige Bedingungen in ihrem regionalen Innovationsumfeld zumindest teilweise kompensieren können. Dies wiederum setzt voraus, dass man über die Innovationspolitik im engeren Sinne hinausgeht und einen ganzheitlicheren Ansatz verfolgt, der auch Verbindungen zu anderen Politikbereichen wie Arbeitsmarkt oder Bildung beinhaltet. |
| Keywords: | innovation measurement, innovation indicator, modes of innovation, SME innovation, regional innovation, lagging regions, lasso regression, variable selection, group lasso, ordinal predictors |
| JEL: | C50 C81 O3 O31 R11 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifhwps:300235 |
| By: | Karam Jo; Seula Kim |
| Abstract: | We study how friction in learning others’ technology, termed “imperfect technology spillovers, ” incentivizes firms to use different types of innovation and impacts the implications of competition through changes in innovation composition. We build an endogenous growth model in which multi-product firms enhance their products via internal innovation and enter new product markets through external innovation. When learning others’ technology takes time due to this friction, increased competitive pressure leads firms with technological advantages to intensify internal innovation to protect their markets, thereby reducing others’ external innovation. Using the U.S. administrative firm-level data, we provide regression results supporting the model predictions. Our findings highlight the importance of strategic firm innovation choices and changes in their composition in shaping the aggregate implications of competition. |
| Keywords: | competition, innovation, technology spillover, endogenous growth |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:24-40 |
| By: | Pierre Cotterlaz; Arthur Guillouzouic |
| Abstract: | This paper shows that the negative effect of geographical distance on knowledge flows stems from how firms gain sources of knowledge through their existing network. We start by documenting two stylized facts. First, in aggregate, the distance elasticity of patent citations flows has remained constant since the 1980s, despite the rise of the internet. Second, at the micro level, firms disproportionately cite existing knowledge sources, and patents cited by their sources. We introduce a framework featuring the latter phenomenon, and generating a negative distance elasticity in aggregate. The model predicts Pareto-distributed innovator sizes, and citation distances increasing with innovator size. These predictions hold well empirically. We investigate changes of the underlying parameters and geographical composition effects over the period. While the distance effect should have decreased with constant country composition, the rise of East Asian economies, associated to large distance elasticities, compensated lower frictions in other countries. |
| Keywords: | Knowledge Diffusion;Innovation Networks;Spatial Frictions;Patent Citation |
| JEL: | L14 O33 R12 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:cii:cepidt:2024-08 |
| By: | Kornelakis, Andreas; Petrakaki, Dimitra |
| Abstract: | The puzzle of how Nokia lost the smartphone wars has intrigued recent scholarship. Despite Nokia’s dominant position in the mobile phone industry and its technological capabilities and reputation for strategic agility, it was completely wiped out from the market, only a few years after the launch of Apple’s iPhone. The article provides a comparative, historical and institutional account on the smartphone industry by focusing on three key players: Nokia, Apple, and Samsung. This perspective enriches earlier accounts that were overly focused on explaining Nokia’s decline by looking at internal organisational design and conflicts. We propose a two-pronged explanation focused on the reconfiguration of industry platforms and financialisation. The article suggests that single company histories could be enriched by integrating a comparative perspective that examines additional cases. We discuss opportunities for further research to understand how success or failure in technological innovation is embedded in a wider societal and institutional context. |
| Keywords: | comparative capitalism; financialisation; industry platforms; innovation; technology |
| JEL: | R14 J01 L81 |
| Date: | 2024–07–18 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:124386 |
| By: | Dekkera, Thekla; Jantos, Louisa |
| Abstract: | Sustainability transformation needs regional engagement of the entirety of actors within. One central actor is the university with its mission and activities to transfer knowledge. This paper provides a first approach to identifying best practice regions for sustainability transformation within Europe and addresses potential literature gaps. By composite indexing of systemic sustainability indices and knowledge transfer metrics on a regional level as well as a subsequent systematic literature review, this work aims at (1) providing best practice regions for sustainability transformation and actor collaboration as well as (2) future research avenues. The study selects Copenhagen, Zurich, Stockholm, and Helsinki as regions of interest. It advocates exploring the dynamics within entire regions, emphasizing the interplay of actors in Regional Innovation Systems (RIS). |
| Abstract: | Die Transformation in Richtung Nachhaltigkeit erfordert ein regionales Engagement der Gesamtheit der Akteure. Ein zentraler Akteur ist die Universität mit ihrem Auftrag und ihren Aktivitäten des Wissenstransfers. Diese Studie bietet einen ersten Ansatz zur Identifizierung von Best-Practice-Regionen für die Nachhaltigkeitstransformation in Europa und geht auf mögliche Literaturlücken ein. Durch eine zusammengesetzte Indexierung von systemischen Nachhaltigkeitsindizes und Wissenstransfer-Metriken auf regionaler Ebene sowie eine anschließende systematische Literaturrecherche zielt diese Arbeit darauf ab, (1) Best-Practice-Regionen für die Nachhaltigkeitstransformation und die Zusammenarbeit von Akteuren zu identifizieren sowie (2) zukünftige Forschungsansätze zu identifizieren. Die Studie wählt Kopenhagen, Zürich, Stockholm und Helsinki als Regionen von Interesse aus. Sie plädiert dafür, die ganzheitliche Dynamik innerhalb der Regionen zu untersuchen und dabei das Zusammenspiel der Akteure in regionalen Innovationssystemen (RIS) zu betonen. |
| Keywords: | Regional Innovation System, Knowledge Transfer, best practice, Europe, University |
| JEL: | I23 O31 O35 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifhwps:300696 |
| By: | Mr. Nathaniel G Arnold; Guillaume Claveres; Jan Frie |
| Abstract: | Relative to the US, productivity growth and investment in R&D in lagging in the EU, where it is more difficult to finance and scale up promising, innovative startups. Many of the most successful EU startups move elsewhere for financing, causing the EU to lose out on both the direct growth benefits and positive spillovers from these innovative firms. The EU could nurture innovative startups by accelerating the development of its venture capital (VC) ecosystem. Reducing regulatory frictions, especially ones that deter pensions funds and insurers from investing in VC, combined with well-designed tax incentives for R&D investments could help accelerate the development of the VC sector. These and other key CMU initiatives, such as the consolidation of stock markets and reforming and harmonizing insolvency regimes, will take time. Given the urgency to boost innovation, giving public financial institutions like the European Investment Fund a more active and expanded role in kickstarting VC markets where needed and in familiarizing investors with the VC asset class can be a helpful interim step. |
| Keywords: | Startups; Venture capital; Productivity; Capital Markets Union |
| Date: | 2024–07–12 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/146 |
| By: | Kumar, Deepak; Weissenberger-Eibl, Marion |
| Abstract: | In the fast-paced realm of technological evolution, accurately forecasting emerging trends is critical for both academic inquiry and industry application. Traditional trend analysis methodologies, while valuable, struggle to efficiently process and interpret the vast datasets of today's information age. This paper introduces a novel approach that synergizes Generative AI and Bidirectional Encoder Representations from Transformers (BERT) for semantic insights and trend forecasting, leveraging the power of Retrieval-Augmented Generation (RAG) and the analytical prowess of BERT topic modeling. By automating the analysis of extensive datasets from publications and patents, the presented methodology not only expedites the discovery of emergent trends but also enhances the precision of these findings by generating a short summary for found emergent trends. For validation, three technologies - reinforcement learning, quantum machine learning, and Cryptocurrencies - were analysed prior to their first appearance in the Gartner Hype Cycle. Research highlights the integration of advanced AI techniques in trend forecasting, providing a scalable and accurate tool for strategic planning and innovation management. Results demonstrated a significant correlation between model's predictions and the technologies' appearances in the Hype Cycle, underscoring the potential of this methodology in anticipating technological shifts across various sectors |
| Keywords: | BERT, Topic modelling, RAG, Gartner Hype Cycle, LLM, BERTopic |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esconf:300545 |
| By: | Andreas Schaefer (University of Bath); Maik T. Schneider (University of Graz) |
| Abstract: | With the 4th Industrial Revolution ahead there is huge uncertainty about the likely labour market impacts ranging from massive layoffs as a response to Automation and AI to the view that overall more jobs will be created than lost. Whatever the outcome in the end, there will be major structural change with substantial implications for individual labour income risk. We argue that precautionary savings are an ineffective protection against labour market risk arising from major technological shifts and discuss four policy instruments, 1) a private insurance scheme, 2) a universal basic income, 3) a robot tax, and 4) a governmental insurance scheme. Further, we examine whether these policy instruments are suitable to achieve high and inclusive growth. |
| Keywords: | Artificial Intelligence, Economic Growth, Endogenous Technological Change, Industrial Revolution, Robot Tax, Universal Basic Income. |
| JEL: | H20 O33 O38 |
| Date: | 2024–01 |
| URL: | https://d.repec.org/n?u=RePEc:grz:wpaper:2024-06 |
| By: | Patrick Mellacher (University of Graz, Austria) |
| Abstract: | I develop a simple Schumpeterian agent-based model where the entry and exit of firms, their productivity and markup, the birth of new industries and the social structure of the population are endogenous and use it to study the causes of rising inequality and declining “business dynamism†since the 1980s. My hybrid model combines features of i) the so-called Schumpeter Mark I (centering around the entrepreneur), ii) the Mark II model (emphasizing the innovative capacities of firms), and iii) Cournot competition, with firms using OLS learning to estimate the market environment and the behavior of their competitors. A scenario which is quantitatively calibrated to US data on growth and inequality replicates a large number of stylized facts regarding the industry life-cycle, growth, inequality and all ten stylized facts on “declining business dynamism†proposed by Akcigit and Ates (AEJ:Macro, 2021). Counterfactual simulations show that antitrust policy is highly effective at combatting inequality and increasing business dynamism and growth, but is subject to a conflict of interest between workers and firm owners, as GDP and wages grow at the expense of profits. Technological factors, on the other hand, are much less effective in combatting declining business dynamism in my model. |
| Keywords: | Agent-based economics, Joseph Schumpeter, Evolutionary economics, Innovation. |
| JEL: | B25 C63 D33 L11 O11 O33 O41 |
| Date: | 2023–05 |
| URL: | https://d.repec.org/n?u=RePEc:grz:wpaper:2023-04 |
| By: | Eric Langlais; Nanxi Li |
| Abstract: | This paper studies how the combination of Product Liability and Tort Law shapes a monopoly' incentives to invest in R&D for developing risky AI-based technologies ("robots") that may accidentally induce harm to third-party victims. We assume that at the engineering stage, robots are designed to have two alternative modes of motion (fully autonomous vs human-driven), corresponding to optimized performances in predefined circumstances. In the autonomous mode, the monopoly (i.e. AI designer) faces Product Liability and undertakes maintenance expenditures to mitigate victims' expected harm. In the human-driven mode, AI users face Tort Law and exert a level of care to reduce victims' expected harm. In this set-up, efficient maintenance by the AI designer and efficient care by AI users result whatever the liability rule enforced in each area of law (strict liability, or negligence). However, overinvestment as well as underinvestment in R&D may occur at equilibrium, whether liability laws rely on strict liability or negligence, and whether the monopoly uses or does not use price discrimination. The first best level of R&D investments is reached at equilibrium only if simultaneously the monopoly uses (perfect) price discrimination, a regulator sets the output at the socially optimal level, and Courts implement strict liability in Tort Law and Product Liability. |
| Keywords: | Artificial Intelligence, Algorithms, Tort Law, Product Liability, Strict Liability, Negligence |
| JEL: | K13 K2 L1 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:drm:wpaper:2024-22 |
| By: | Clemens Fuest; Daniel Gros; Philipp-Leo Mengel; Giorgio Presidente; Jean Jean Tirole |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:econpr:_report |