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on Innovation |
| By: | Peter Persoon |
| Abstract: | Technological knowledge evolves not only through the generation of new ideas, but also through the reinterpretation of existing ones. Reinterpretations lead to changes in the classification of knowledge, that is, reclassification. This study investigates how reclassified inventions can serve as renewed sources of innovation, thereby accelerating technological progress. Drawing on patent data as a proxy for technological knowledge, I discuss two empirical patterns: (i) more recent patents are more likely to get reclassified and (ii) larger technological classes acquire proportionally more reclassified patents. Using these patterns, I develop a model that explains how reclassified inventions contribute to faster innovation. The predictions of the model are supported across all major technology domains, suggesting a strong link between reclassification and the pace of technological advancement. More generally, the model connects various, seemingly unrelated knowledge quantities, providing a basis for knowledge intrinsic explanations of growth patterns. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.08656 |
| By: | Yoichiro NISHIMURA; Katsushi SUZUKI |
| Abstract: | This study examines the impact of bank–firm relationships on innovation outcomes by utilizing patent data from Japanese firms. Our results reveal that compared with other firms, (1) firms with closer relationships with banks are less likely to engage in high-risk innovation and that (2) firms that receive board member appointments or equity investment from banks tend to pursue exploitative innovation rather than exploratory innovation. Conversely, firms with greater dependence on loans from specific banks tend to exhibit greater R&D investment but produce fewer patents than do other firms. These findings suggest that while banks with close relationships with firms may encourage higher levels of R&D investment, they simultaneously impede the pursuit of high-quality and exploratory innovation. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25051 |
| By: | Ningzi Li; Shiyang Lai; James Evans |
| Abstract: | As large-scale social data explode and machine-learning methods evolve, scholars of entrepreneurship and innovation face new research opportunities but also unique challenges. This chapter discusses the difficulties of leveraging large-scale data to identify technological and commercial novelty, document new venture origins, and forecast competition between new technologies and commercial forms. It suggests how scholars can take advantage of new text, network, image, audio, and video data in two distinct ways that advance innovation and entrepreneurship research. First, machine-learning models, combined with large-scale data, enable the construction of precision measurements that function as system-level observatories of innovation and entrepreneurship across human societies. Second, new artificial intelligence models fueled by big data generate 'digital doubles' of technology and business, forming laboratories for virtual experimentation about innovation and entrepreneurship processes and policies. The chapter argues for the advancement of theory development and testing in entrepreneurship and innovation by coupling big data with big models. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.08706 |
| By: | Gaetan de Rassenfosse |
| Abstract: | Patent systems vary widely in how rigorously they define and enforce inventors' rights. On one hand, formal statutes ("law on the books") set the scope of what can be patented and outline procedural safeguards. On the other hand, actual enforcement ("law in practice") determines whether those rights hold up in practice. To capture these dimensions, researchers have developed simple indices of legal provisions and more nuanced proxies for enforcement effectiveness, along with metrics of how applicant-friendly each office's procedures are. Comparative studies of "twin patents" -- identical inventions filed in multiple jurisdictions -- reveal systematic differences in grant rates and bar heights across major offices. By combining these approaches, we gain a multifaceted view of patent-system strength that balances statutory design, administrative practice, and actual enforcement. This perspective is crucial for understanding how different regimes support innovation and shape global knowledge flows. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.07121 |
| By: | Joshua S. Gans |
| Abstract: | Building on recent advances in the literature on knowledge creation and innovation (notably Carnehl and Schneider (2025), we propose a novel general equilibrium model that explicitly incorporates artificial intelligence (AI) as a decision-enhancing technology capable of interpolating between known points of knowledge. Our framework formalises the trade-off between AI’s coverage— its ability to span wider knowledge gaps—and its accuracy, and reveals the surprising result that, beyond producing immediate productivity gains, AI fundamentally alters the novelty of research. Specifically, when AI systems offer sufficiently broad coverage, they incentivise exploratory research that taps into novel, distant areas of knowledge and accelerates long-run growth; conversely, limited coverage promotes incremental research that may boost short-term efficiency while dampening the overall advancement of new ideas. Moreover, our analysis uncovers that the type of knowledge—whether novel or dense—plays a critical role in determining both the growth and welfare implications of AI, charting a new path for understanding how knowledge influences research strategies. By also examining the roles of market structure, licensing arrangements, and regulatory frameworks, our work contributes new, policy-relevant insights that reconcile the immediate benefits of AI adoption with the demands of sustainable long-term economic expansion. |
| JEL: | O30 O31 O40 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33907 |
| By: | Ando, Yoshiki; Bessen, James; Wang, Xiupeng |
| Abstract: | R&D investment has grown robustly, yet aggregate productivity growth has stagnated. Is this because “ideas are getting harder to find”? This paper uses micro-data from the US Census Bureau to explore the relationship between R&D and productivity in the manufacturing sector from 1976 to 2018. We find that both the elasticity of output (TFP) with respect to R&D and the marginal returns to R&D have risen sharply. Exploring factors affecting returns, we conclude that R&D obsolescence rates must have risen. Using a novel estimation approach, we find consistent evidence of sharply rising technological rivalry. These findings suggest that R&D has become more effective at finding productivity-enhancing ideas but these ideas may also render rivals’ technologies obsolete, making innovations more transient. |
| Keywords: | R&D, innovation, productivity, obsolescence |
| JEL: | L10 O32 O33 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:124764 |
| By: | Estrin, Saul; Herrmann, Andrea; Levesque, Moren; Mickiewicz, Tomasz; Sanders, Mark |
| Abstract: | We present a Schumpeterian model of new venture creation, under uncertainty, which explains the tradeoff between speed-to-breakeven and revenue-at-breakeven and relates this to the level of innovation. We then explore the tradeoffs between these outcomes empirically in a sample of 331 information and communication technology (ICT) ventures using a multi-input, multi-output stochastic frontier model. We estimate the contribution of financial capital and labor to the outcomes and the tradeoffs between them, as well as address heterogeneity across ventures. We find that more innovative (and therefore more uncertain) ventures have lower speed-to-breakeven and/or lower revenue-at-breakeven. Moreover, for all innovativeness levels, new ventures face a tradeoff between speed-to-breakeven and revenue-at-breakeven. Our results suggest that it is the availability of proprietary resources (founder equity and founder labor) that helps ventures overcome bottlenecks in the venture creation process, and we propose a line of research to explain the variation in venture creation efficiency. |
| Keywords: | entrepreneurship; innovation; new venture creation; proprietary resource; Stochastic frontier analysis; Schumpeterian growth model |
| JEL: | O31 L29 |
| Date: | 2025–06–06 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:128098 |
| By: | Marco Vivarelli (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore, Milano, Italy – UNU-MERIT, Maastricht, The Netherlands – IZA, Bonn, Germany - Global Labor Organization (GLO), Essen, Germany); Mariacristina Piva (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore, Piacenza, Italy); Massimiliano Tani (School of Business, The University of New South Wales, Canberra, Australia – IZA, Bonn, Germany) |
| Abstract: | Labor mobility is considered a powerful channel to acquire external knowledge and trigger complementarities in the innovation and R&D investment strategies; however, the extant literature has focused on either scientists’ mobility or migration of high-skilled workers, while virtually no attention has been devoted to the possible role of short-term business visits. Using a unique and novel database originating a country/sector unbalanced panel over the period 1998-2019 (for a total of 8, 316 longitudinal observations), this paper aims to fill this gap by testing the impact of BVs on R&D investment. Results from GMM-SYS estimates show that short-term mobility positively and significantly affects R&D investments; moreover, our findings indicate - as expected - that the beneficial impact of BVs is particularly significant in less innovative countries and in less innovative industries. These outcomes justify some form of support for BVs within the portfolio of the effective innovation policies, both at the national and local level. |
| Keywords: | Business visits; labor mobility; knowledge transfer; R&D investments |
| JEL: | O31 J61 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:ctc:serie5:dipe0049 |
| By: | Shijun Gu; Chengcheng Jia |
| Abstract: | Can the expansion of higher education lead to firm productivity growth? In this paper, we examine how China's college expansion program contributes to the rapid growth of firms' R&D expenditure and productivity. In our model, heterogeneous firms make endogenous R&D decisions, requiring them to allocate skilled workers between production and R&D. We structurally estimate the model using firm-level data on the level and distribution of R&D, as well as macro-level data on skill prices and sectoral allocation. Quantitative analysis reveals that between 2004 and 2018, the combination of the R&D-sector-biased technology shock, the skill-biased technology shock, and the skilled-labor supply shock leads to a 12 percent increase in total factor productivity (TFP), of which one-fifth is explained by the rising supply of skilled labor. Counterfactual analysis shows that a further increase in the share of skilled labor has the potential to increase TFP by an additional 2 percent, but the marginal effect diminishes due to the rising wages of unskilled labor. |
| Keywords: | R&D; TFP; skilled labor; college expansion; Chinese economy |
| JEL: | J24 O31 O32 |
| Date: | 2025–06–23 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedcwq:101133 |
| By: | Ronald B. Davies; Mahdi Ghodsi (The Vienna Institute for International Economic Studies, wiiw); Francesca Guadagno (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | The hope that multinational firms will improve local employment and productivity is a driving force behind policy efforts to attract investment. Such spillovers are often motivated by technological spillovers from foreign to domestic firms. We address this possibility by using the patenting activity of foreign multinationals in Europe as a measure of affiliate activity alongside more traditional proxies. We find that local firms’ employment and labour productivity is higher when FDI activity increases, particularly when those multinationals are upstream of locals. Furthermore, this effect is particularly significant among domestic patenting firms. Thus, it seems that the benefits of inbound investment are greatest for local innovators who are exposed to inbound innovating foreigners. |
| Keywords: | spillovers; Foreign Direct Investment; Patents |
| JEL: | F23 O24 O33 O34 Q55 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:wii:wpaper:265 |
| By: | Lövgren, Linda (Department of Real Estate and Construction Management, Royal Institute of Technology); Söderberg, Inga-Lill (Department of Real Estate and Construction Management, Royal Institute of Technology); Vigren, Olli (Stanford University) |
| Abstract: | The lack of affordable housing is a longstanding global challenge. Addressing this issue requires not only technical solutions but also new social practices – social innovation. This article explores the role of social innovation in increasing access to affordable housing through a theory-focused literature review. We find that the concepts often lack clarity and theoretical grounding, making it difficult to measure innovation outcomes or guide practical implementation. We adopt the social innovation ecosystem framework developed by Audretsch et al. (2022) and discuss policy, finance, culture, supports, human capital, and market perspectives. We propose an expanded version of the framework, adapted specifically for affordable housing. It introduces two key additions: explicit identification of the social innovator and the integration of spatial concepts—space and place—to capture the inherently local nature of housing initiatives. This contribution aims to advance both social innovation theory and housing research, while also informing policy and practice. |
| Keywords: | social innovation; innovation; affordable housing; social housing |
| JEL: | O35 R21 R31 R38 R58 |
| Date: | 2025–06–25 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:kthrec:2025_006 |
| By: | Crescenzi, Riccardo; Ganau, Roberto |
| Abstract: | Global connectivity is necessary for innovation to thrive. However, in response to external shocks, economies reduce external exposure and focus resources on internal markets. This closure is in contrast to the need for innovative solutions for recovery. We explore this paradox by looking at regional innovation in the United States in the aftermath of the Great Recession. We compare foreign direct investment (FDI) with similar domestic, inter-state investment to assess whether a ‘local innovation premium’ is associated with global connectivity vis-à-vis domestic linkages. We show that what matters for post-crisis innovation is active internationalisation through outward FDI and congruence in technological capabilities between connected territories. |
| Keywords: | innovation; foreign direct investment; domestic investment; great recession; regions; USA |
| JEL: | F21 O30 O19 O51 R12 |
| Date: | 2025–06–16 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:128136 |