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on Technology and Industrial Dynamics |
| By: | Gautier Duflos (Centre d'Economie de la Sorbonne et CREST-LEI) |
| Abstract: | This paper analyzes American pharmaceutical firms' persistence in innovating just before the wave of mergers and acquisitions that accompanied the "Biotech revolution". We evaluate the impact of past innovative activity on firms' innovation propensities using a non-linear GMM estimator for exponential models that allows for predetermined regressors and linear feedback. We find that innovative activity at the firm level depends strongly on the scope of past innovations. Breakthroughs in particular depend largely on past quality innovation made by firms, and this effect may likely deter further pioneering discoveries rather than strengthen incentives to invest on non cumulative R&D. The results also shed light on the importance of small firms in the dynamics of innovation in pharmaceutical industry, and suggest that large firms persist in using patents strategically to remain dominant. |
| Keywords: | Patent citations, pharmaceutical industry, persistence in innovation. |
| JEL: | O31 L12 C23 |
| Date: | 2006–01 |
| URL: | http://d.repec.org/n?u=RePEc:mse:wpsorb:bla06029&r=tid |
| By: | James Bessen; Eric Maskin |
| Date: | 2006–05–10 |
| URL: | http://d.repec.org/n?u=RePEc:cla:najeco:321307000000000021&r=tid |
| By: | Arnab Bhattacharjee (University of-St Andrews); Jean Bonnet (CREM – CNRS); Nicolas Le Pape (CREM – CNRS); Régis Renault (THEMA – CNRS) |
| Abstract: | The goal of this paper is to study the role of unobserved human capital in entrepreneurial choice and its impact on the survival of newly created firms. Our starting point is that, when starting a new business, an entrepreneur’s labor market situation (e.g. employed or not) reflects how his human capital may be valuated through salaried labor. This in turn affects the entrepreneurial decision so that, an entrepreneur’s human capital should be correlated with the state at which he decided to start a new firm. We illustrate this point with descriptive statistics computed from a survey of French startups. These statistics show that the impact of education on the new firm’s survival is most pronounced for firms created by individuals salaried in their preferred branch of activity while it is rather limited if the entrepreneur was in the wrong branch or newly unemployed. In this paper we argue, both theoretically and empirically, that these results may be explained by some unobserved heterogeneity in the entrepreneur’s human capital that is correlated both with the initial labor market situation and with some observable measures of human capital such as education or experience. We first present a simple model of entrepreneurial choice that provides predictions about an entrepreneur’s actual human capital as a function of human capital observed by the econometrician as well as the individual’s state in the labor market when the firm was created. The model allows for some information asymmetry on the labor market as well as other sources of inefficiencies such as incentive problems due to moral hazard. It also allows in a simple way for some dynamic considerations on the part of the entrepreneur regarding potential depreciation of his human capital. We argue that the data may be best explained by a model where employer’s information on employee’s human capital is sufficiently poor and where there is a strong concern about human capital depreciation for those with a high level of observed human capital. We then run some duration analysis on our data on new firms’ survival by estimating a proportional hazard Cox model with partial maximum likelihood. The estimation results are coherent with the descriptive statistics on the impact of education on survival for different initial states of the entrepreneur. This econometric analysis will be completed with additional regressions that allow for correcting for unobserved heterogeneity in order to evaluate its magnitude and nature. We have done some preliminary work where unobserved heterogeneity is modelled through random effects (frailties) for different subgroups of individuals according to education level and experience that have a gamma distribution. Our preliminary results show that there is significant unobserved heterogeneity but the estimates of the frailties are consistent with the results obtained by running a standard Cox estimation. |
| Keywords: | Entrepreneurship, Labor Market, Human Capital Valuation, Information Asymmetries, Duration of the New Firm |
| JEL: | J24 L25 D8 C41 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:tut:cremwp:200603&r=tid |
| By: | Corinne Autant-Bernard (CREUSET (EA 3724) - Centre de Recherche Economique de l'Université de Saint Etienne - [Université Jean Monnet - Saint-Etienne]) |
| Abstract: | The purpose of this paper is to empirically investigate how regional advantages and firms characteristics influence the location of R&D. Looking at 2024 decisions of R&D lab location in France, we implement an extended conditional logit with spatially lagged explanatory variables to evaluate the importance of each factor and to test the spatial dimension of knowledge spillovers. The results indicate that large market size, large amount of ideas, and low level of competition in the target region increases the probability of setting up R&D labs while the diffusion of knowledge across regions induces a significant spatial dependence |
| Keywords: | Economic geography; Location choice; Knowledge spillovers; Spatial dependence; géographie économique; externalités de connaissance; choix de localisation; dépendance spatiale |
| Date: | 2006–04–21 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:ujm-00000003_v1&r=tid |
| By: | Eliasson, Gunnar (The Ratio Institute); Eliasson, Åsa (IBMP, CNRS, Strasbourg and VitiGen AG, Siebeldingen) |
| Abstract: | While innovative technology supply has been the focus of much neo Schumpeterian modeling, few have addressed the critical and more resource demanding commercializing of the same technologies. The result may have been a growth policy focused on the wrong problem. Using competence bloc theory and a firm based macro to macro approach we abandon the assumed linear relation between technology change and economic growth of such models, and demonstrate that lack of local commercialization competences is likely to block growth even though innovative technology supplies are abundant. The break up, reorganization and part withdrawal of Pharmacia from the local Uppsala (in Sweden) economy after a series of international mergers illustrate. Pharmacia has “released” a wealth of technologies in local markets. Local commercialization competence, notably industrially competent financing has, however, not been sufficient to fill in through indigenous entrepreneurship the vacuum left by Pharmacia. Only thanks to foreign investors, attracted by Pharmacia technologies, that have opted to stay for the long term the local Uppsala economy seems to be heading for a successful future. The Pharmacia case also demonstrates the role of advanced firms as “technical universities” and the nature of an experimentally organized economy (EOE) in which business mistakes are a natural learning cost for economic development. |
| Keywords: | Competence Bloc Theory; Commercialization of Innovations; Experimentally Organized Economy; Innovation and Entrepreneurship; Pharmaceutical industry |
| JEL: | L20 L65 M10 |
| Date: | 2006–05–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ratioi:0097&r=tid |
| By: | Christian Keuschnigg; Soren Bo Nielsen |
| Abstract: | In financing start-up firms, venture capitalists carefully select among alternative projects, design incentive compatible financial contracts and support portfolio companies with value enhancing managerial advice. This paper considers how venture capitalists can induce self-selection among entrepreneurial firms with different qualities and growth potential by designing appropriate contracts and offering managerial support. We study the efficiency of the competitive market equilibrium with respect to the level and quality of entrepreneurship and the level of effort by entrepreneurs and venture capitalists. We also provide comparative static results with respect to basic preference and technology parameters. |
| Keywords: | Venture capital, entrepreneurship, self-selection, moral hazard |
| JEL: | D82 G24 M13 |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:usg:dp2006:2006-06&r=tid |
| By: | Maarit Lindström; Mika Pajarinen |
| Keywords: | design, firm performance, manufacturing, economic performance, design management |
| JEL: | L20 L25 L60 M21 |
| Date: | 2006–05–09 |
| URL: | http://d.repec.org/n?u=RePEc:rif:dpaper:1017&r=tid |
| By: | Max Albert |
| Abstract: | The paper presents a linear model of product quality in scientific competition. The only outputs of research are published papers; the only inputs are labor and papers by other researchers, which are cited when used. Researchers compete for status, measured as their rank in a citations count. If quality is hereditary in the production process, competition and self-fulfilling expectations can establish a quality scale. |
| Keywords: | citations, competition, norms, quality, science |
| JEL: | L3 O3 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:esi:discus:2006-06&r=tid |
| By: | A. Frenzel Baudisch |
| Abstract: | Market growth is driven by product innovation. Beyond functional satiation the marginal utility of product performance and variety decreases. We argue that social comparisons underlying innovation diffusion results in consumer motivations for upward assimilation toward the behavior of better performing others, even beyond functional requirements. We distinguish consumption growth patterns driven by functional vs. assimilating motivations. These patterns are tested by time-series analyses of U.S. Footwear consumption between 1955 and 2002. The acceleration of market growth since the 1970s is statistically explained by changes in price, cross-price elasticity, and the increasing demand for innovations, according to our theoretical account of consumption motivations beyond functional satiation. |
| Keywords: | Product Innovation, Innovation Diffusion, Consumption Growth, Social Comparison, Time-Series Analysis |
| JEL: | C22 D12 L67 O33 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:esi:evopap:2006-04&r=tid |
| By: | Martin Hohnisch; Sabine Pittnauer; Dietrich Stauffer |
| Abstract: | A model of new-product diffusion is proposed in which a site-percolation dynamics represents socially-driven diffusion of knowledge about the product's characteristics in a population of potential buyers. A consumer buys the new product if her valuation of it is not below the price of the product announced by the firm in a given period. Our model attributes the empirical finding of a delayed ``take-off'' of a new product to a drift of the percolation dynamics from a non-percolating regime to a percolating regime. This drift is caused by learning-effects lowering the price of the product, or by network-effects increasing its valuation by consumers, with an increasing number of buyers. |
| Keywords: | new-product diffusion, innovation adoption, spatial stochastic processes, percolation |
| JEL: | C15 L15 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:bon:bonedp:bgse9_2006&r=tid |