nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2008‒02‒16
five papers chosen by
Rui Baptista
Technical University of Lisbon

  1. What Happens When Firms Patent? New Evidence from U.S. Economic Census Data By Natarajan Balasubramanian; Jagadeesh Sivadasan
  2. Microeconomic Reform and Technical Efficiency in Australian Manufacturing By Neil Dias Karunaratne
  3. Product Innovation and Growth: The Case of Integrated Circuits By Marco Corsino
  4. Democratizing Entry: Banking Deregulations, Financing Constraints, and Entrepreneurship By William Kerr; Ramana Nanda
  5. The Dynamics of Research Joint Ventures: A Panel Data Analysis By Tomaso Duso; Enrico Pennings; Jo Seldeslachts

  1. By: Natarajan Balasubramanian; Jagadeesh Sivadasan
    Abstract: In this study, we present novel statistics on the patenting in US manufacturing and new evidence on the question of what happens when firms patent. We do so by creating a comprehensive firm-patent matched dataset that links the NBER patent data (covering the universe of patents) to firm data from the US Census Bureau (which covers the universe of all firms with paid employees). Our linked dataset covers more than 48,000 unique assignees (compared to about 4,100 assignees covered by the Compustat-NBER link), representing almost two-thirds of all non-individual, non-university, non-government assignees from 1975 to 1997. We use the data to present some basic but novel statistics on the role of patenting in US manufacturing, including strong evidence confirming the highly skewed nature of patenting activity. Next, we examine what happens when firms patent by looking at a large sample of first time patentees. We find that while there are significant cross-sectional differences in size and total factor productivity between patentee firms and non-patentee firms, changes in patentownership status within firms is associated with a contemporaneous and substantial increase in firm size, but little to no change in total factor productivity. This evidence suggests that patenting is associated with firm growth through new product innovations (firm scope) rather than through reduction in the cost of producing existing products (firm productivity). Consistent with this explanation, we find that when firms patent, there is a contemporaneous increase in the number of products that the firms produce. Estimates of (within-firm) elasticity of firm characteristics to patent stock confirm our results. Our findings are robust to alternative measures of size and productivity, and to various sample selection criteria.
    Keywords: Innovation, productivity, new products, firm scope
    JEL: O30 O31 O34 O33 L25
    Date: 2008–01
  2. By: Neil Dias Karunaratne (School of Economics, The University of Queensland)
    Abstract: The technical efficiency dividend reaped by Australian manufacturing industries following the implementation of microeconomic reforms over the past three decades is analysed empirically in this paper. The technical efficiency scores have been estimated for manufacturing industries using a combined stochastic production-frontier inefficiency model that is free of simultaneity bias. The model parameters have been estimated using maximum likelihood techniques using a panel data set covering a cross-section of 8 industries spanning a time-series of 26 years (1969-1995). The empirical results shed light on how technical inefficiency in manufacturing has been whittled down by the microeconomic reform induced trade liberalisation and technology diffusion processes. Generalised likelihood ratio tests reject the null hypotheses that trade liberalisation and technology transfer had no significant impact on the reduction of technical inefficiency. The reduction of effective rate of assistance and technical efficiency and technology proxies such as intra-industry trade and capital deepening are negatively correlated during the study period. These findings give credence to the predictions of endogenous growth theories that openness of the economy provides a conduit for accessing new technology that promotes innovation and technical efficiency. The increase in technical efficiency of manufacturing industries is the unsung hero behind the emergence of the 'new economy' or the spectacular pick-up of productivity growth observed for Australia during the 1990s. The error-correction modelling reported at the outset confirms that this productivity pick-up is not an artefact of a cyclical upturn. It is attributable to the microeconomic reforms and the technology transfer that has followed it. The paper concludes on the need for further research , first, to shed light on the constituents of total factor productivity such as technical change and technical progress and second, to design policy to address the challenging issues of equity-efficiency trade-off lest it degenerates into a back-lash that could nullify the whole reform agenda.
    Date: 2007
  3. By: Marco Corsino
    Abstract: A puzzling evidence stemming from the applied research on growth and innovation is that successful innovations do not appear to have a significant effect on sales growth rates, at odds with the expectation that successful innovators will prosper at the expenses of their less able competitors. The present paper tests a research hypothesis claiming that the level of observation at which applied research is typically conducted hampers the identification of a significant association between innovation and sales growth rates. Exploiting a unique and original database comprising detailed information on product innovations by leading semiconductor companies, we find components commercialized in the nearest past to positively affect the stream of corporate revenues.
    Keywords: Firm Growth; Product Innovation; Semiconductor industry
    Date: 2008–02–07
  4. By: William Kerr (Harvard Business School, Entrepreneurial Management Unit); Ramana Nanda (Harvard Business School, Entrepreneurial Management Unit)
    Abstract: We study how US branch-banking deregulations affected the entry and exit of firms in the non-financial sector using establishment-level data from the US Census Bureau's Longitudinal Business Database. The comprehensive micro-data allow us to study how the entry rate, the distribution of entry sizes, and survival rates for firms responded to changes in banking competition. We also distinguish the relative effect of the policy reforms on the entry of startups versus facility expansions by existing firms. We find that the deregulations reduced financing constraints, particularly among small startups, and improved ex ante allocative efficiency across the entire firm-size distribution. However, the US deregulations also led to a dramatic increase in 'churning' at the lower end of the size distribution, where new startups fail within the first three years following entry. This churning emphasizes a new mechanism through which financial sector reforms impact product markets. It is not exclusively better ex ante allocation of capital to qualified projects that causes creative destruction; rather banking deregulations can also 'democratize' entry by allowing many more startups to be founded. The vast majority of these new entrants fail along the way, but a few survive ex post to displace incumbents.
    Keywords: banking, financial constraints, entrepreneurship, entry, exit, creative destruction, growth, deregulation.
    JEL: E44 G21 L26 L43 M13
    Date: 2006–12
  5. By: Tomaso Duso; Enrico Pennings; Jo Seldeslachts
    Abstract: The aim of this paper is to test the determinants of Research Joint Ventures’ (RJVs) group dynamics. We look at entry, exit and turbulence in RJVs that have been set up under the US National Cooperative Research Act, which allows for certain antitrust exemptions in order to stimulate firms to cooperate in R&D. Accounting for unobserved project characteristics and controlling for inter-RJV interactions and industry effects, the Tobit panel regressions show the importance of group and time features for an RJV’s evolution. We further identify an average RJV’s long-term equilibrium size and assess its determining factors. Ours is a first attempt to produce robust stylized facts about cooperational short- and long-term dynamics, an important but neglected dimension in research cooperations. <br> <br> <i>ZUSAMMENFASSUNG - Die Dynamik in Forschungskooperationen: Eine Paneldatenanalyse. Das Ziel dieser Arbeit ist die Analyse der entscheidenden Einflussfaktoren auf die Gruppendynamik in Forschungsgemeinschaften. Wir betrachten Einstieg, Ausstieg und Bewegungen innerhalb von Forschungsgemeinschaften, die unter dem US National Cooperative Research Act gegründet wurden. Der Cooperative Research Act befreit die teilnehmenden Unternehmen von kartell- und monopolrechtlichen Beschränkungen um Anreize für Kooperationen im Bereich Forschung und Entwicklung zu schaffen. Unter Berücksichtigung von unbeobachtbaren Projektcharakteristika und Überwachung von industriespezifischen Effekten und Wechselwirkungen zwischen den Forschungsgemeinschaften zeigt die Tobit-Regression die Wirkung von Gruppen- und Periodenmerkmalen auf die Entwicklung einer Forschungskooperation. Weiterhin wird die durchschnittliche langfristige Größe einer Forschungsgemeinschaft im Gleichgewicht beschrieben und ihre Bestimmungsfaktoren werden untersucht. Der Aufsatz stellt einen ersten Versuch dar, robuste stilisierte Fakten zu kurz- und langfristigen Triebkräften von Kooperationen zu extrahieren um einen Beitrag zu einem zu Unrecht vernachlässigten Teilbereich der Forschung zu leisten.</i>
    Keywords: Research Joint Ventures, Dynamics, Panel Data
    JEL: C23 L24 O32
    Date: 2008–01

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