nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2012‒03‒21
four papers chosen by
Rui Baptista
Technical University of Lisbon

  1. Selection bias in innovation studies: A simple test By De Rassenfosse, Gaétan; Wastyn, Annelies
  2. Patent Citations, University Inventor Patents, and Survival in the German Laser Source Industry (1960-2005) By Luis F. Medrano E.
  3. Secrecy Versus Patents: Process Innovations and the Role of Uncertainty By Tapan Biswas; Jolian McHardy
  4. R&D intensity and market valuation of firm: a study of R&D incurring manufacturing firms in India By Pramod Kumar , Naik; Krishnan, Narayanan; Puja , Padhi

  1. By: De Rassenfosse, Gaétan; Wastyn, Annelies
    Abstract: The study of the innovative output of firms often relies on a count of patents filed at one single office of reference such as the European Patent Office (EPO). Yet, not all firms file their patents at the EPO, raising the specter of a selection bias. Using a novel dataset of the whole population of patents by Belgian firms, we show that the single-office count results in a selection bias that affects econometric estimates of innovation production functions. We propose a methodology to evaluate whether estimates that rely on the single-office count are affected by a selection bias. --
    Keywords: Innovation production function,patent,R&D,selection bias
    JEL: O31 C18 C52 C81
    Date: 2012
  2. By: Luis F. Medrano E. (Friedrich Schiller University Jena, School of Economics and Business Administration)
    Abstract: The relationship between innovation and firm survival is analyzed for the population of German laser source producers from the beginning of the industry until 2005. Innovation effort is approximated by the generation of high quality patents in laser sources technology (IPC H01S) and by having patents with university inventors. Quality patents are defined as those in the upper quartile of the strongly right-skewed distribution of forward citations. Having quality patents is positive and statistically significantly associated with firm survival. New firms without relevant capabilities inherited at their birth may be capable of compensating for their lack of adequate pre-entry experience with corresponding innovative behavior. Having patents with university inventors is apparently not related to firm survival.
    Keywords: firm survival, patent citations, quality patents, university-inventor patents, innovation
    JEL: L25 M13 O30 O52
    Date: 2012–03–09
  3. By: Tapan Biswas; Jolian McHardy (Department of Economics, The University of Sheffield)
    Abstract: Whilst firms often prefer secrecy to patents and process innovations particu- larly lend themselves to secrecy, we establish a rationale for process innovators who patent. Using a simple two-period model, we show that under myopic op- timisation, the incentive to patent rather than pursue secrecy increases as the probability that the rival firm attaches to it being low-cost falls and as the pro- portion of the cost reduction due to the innovation, secured by the rival firm in the period after the patent has expired, falls. However, the gain to the innovating firm from patenting rather than secrecy strictly increases if the cost reduction due to the innovation is sufficiently small that the high-cost firm could profitably bluff that it is low-cost. Finally, allowing the low-cost firm the option of using an output signal in such cases, may make the patent strategy more or less attractive relative to the case of myopic optimisation.
    Keywords: Cournot duopoly; patenting; secrecy; uncertainty;
    JEL: D23 D43 O12 O34
    Date: 2012
  4. By: Pramod Kumar , Naik; Krishnan, Narayanan; Puja , Padhi
    Abstract: The present study examines the impact of R&D expenditure on market valuation of firm using Tobin’s q. The study uses firm level data for Indian manufacturing sector obtained from Prowess database of CMIE for the period 2001-2010. The study forms an unbalanced panel with 326 R&D incurring (reporting) firms and employs Pooled-OLS and fixed effects models to analyze the relationship between R&D investment and firm value. After controlling some firm specific variables the present study finds an inverted U-shaped relationship between R&D intensity and firm value indicating the diminishing marginal return to each rupee spent on R&D. This finding is consistent with the findings of Huang and Liu (2005) for Taiwan and Bracker and Krishnan (2011) for US. It indicates that, R&D investment have a positive impact on the market value of firm at the beginning, but, when the investment exceeds an optimal level, these investments lower the firm value.
    Keywords: R&D intensity, Firm value, Tobin’s q, Manufacturing firms
    JEL: L25 E44 O32 O14
    Date: 2012–02–29

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