nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2012‒10‒13
seven papers chosen by
Rui Baptista
Technical University of Lisbon

  1. Entrepreneurial innovations and taxation By Haufler, Andreas; Norbäck, Pehr-Johan; Persson, Lars
  2. Innovation Process in Japan in the Early 2000s as Seen from Inventors: Agenda for strengthening innovative capability (Japanese) By ISOGAWA Daiya; OHASHI Hiroshi
  3. Determinants of innovation in a small open economy: A multidimensional perspective By Luisa Carvalho; Teresa Costa; Jorge Caiado
  4. Characterizing the evolution of the EU R&D intensity gap using data from top R&D performers By Federico Biagi; Juraj Stančík
  5. Microeconometric Evidence of Financing Frictions and Innovative Activity By Amaresh K. Tiwari; Pierre Mohnen; Franz Palm; Sybrand Schim van der Loeff
  6. Competitive Dynamics, IP Litigation and Acquisitions - The Struggle for Positional Advantage in the Emerging Mobile Internet By Timo Seppälä; Martin Kenney
  7. Trends in UK BERD after the Introduction of R&D Tax Credits By Steve R. Bond; Irem Guceri

  1. By: Haufler, Andreas; Norbäck, Pehr-Johan; Persson, Lars
    Abstract: Stimulating entrepreneurship is high on the policy agenda of many countries. We study the effects of tax policies on entrepreneurs’ choice of riskiness (quality) of an innovation project, and on their mode of commercializing the innovation (market entry versus sale). Limited loss offset provisions in the tax system induce entrepreneurs innovating for entry to choose projects with inefficiently little risk, whereas this imperfection does not arise when innovating for sale. Tax systems which systematically favor market entry of entrepreneurs can thus lead to welfare losses due to inefficient quality choices, despite leading to more competition in the product market.
    Keywords: business taxation; innovation; market entry
    JEL: H25 L13 M13 O31
    Date: 2012–09
  2. By: ISOGAWA Daiya; OHASHI Hiroshi
    Abstract: This paper estimates a dynamic oligopoly model of product innovation to evaluate an equilibrium effect of public policy on firms' innovation activities. The model considers a multi-agent Markov-Perfect Nash Equilibrium, allowing for firms' dynamic decision making on innovation activities and entry and exit. The estimation results obtained by using Japanese firm-level data on product innovation identify net positive spillovers among firms' dynamic innovation activities. Simulation exercises based on the obtained estimates indicate that, while the existing subsidies indeed encourage firms' innovation activities, they are far from optimal.
    Date: 2012–10
  3. By: Luisa Carvalho (School of Business Administration, ESCE/Polytechnic Institute of Setubal); Teresa Costa (School of Business Administration, ESCE/Polytechnic Institute of Setubal); Jorge Caiado (CEMAPRE, School of Economics and Management (ISEG), Technical University of Lisbon)
    Abstract: This paper uses logistic regression analysis to examine how intramural and extramural R&D, acquisition of machinery, equipment and software, acquisition of external knowledge, training, market introduction and other procedures and technical preparations determine the innovation behaviour of manufacturing and service firms. We adopt a multidimensional view of innovation by considering product, process, organizational and marketing innovations as dependent variables separately. The study reports on the Community Innovation Survey (CIS4) of a small open-economy country. The empirical results indicate that intramural R&D has a positive impact on innovation. In contrast, the influence of extramural R&D on innovation is unclear. All innovation activities contribute towards organizational innovation. The study also suggests that there are no significant differences between services and manufacturing firms concerning the propensity to innovation.
    Keywords: Innovation, manufacturing firms, service firms, CIS
    JEL: L60 L80 O30 O32
    Date: 2012–10
  4. By: Federico Biagi; Juraj Stančík
    Abstract: In this paper we look at the evolution of the R&D intensity gap between the EU and its major competitors using data from the Industrial Scoreboard covering the period 2002-2010. We focus on R&D intensity and we assess whether the gaps relative to major competitors arise from differences in industrial composition (structural component) or differences within sectors (intrinsic component). The paper is divided in two parts. In the first part of the paper we first present the evolution of the R&D intensity gap between the EU and its major competitors (US, Japan, BRIC, Asian Tigers) and then we look more closely at the role and evolution of the structural and intrinsic component for each pair-wise comparison, by looking at four basic macro-sectors defined in term of their R&D intensity. In the second part of our work we concentrate on the EU-US R&D intensity gap and, by applying firm level analysis, we test whether the results obtained by the statistical decomposition of aggregate R&D intensity are confirmed. In particular we test whether there is evidence of across-sector variability in R&D intensity and whether, within sectors, EU and US firms are performing differently, controlling for size, cyclical effects, common macroeconomic shocks and company’s age. Age is important for at least two reasons. First, young companies might have more problems in finding access to funds necessary in order to invest in R&D. Second, young companies might have to be especially aggressive in terms of innovation if they want to enter and succeed in markets where incumbents already exist. Therefore, our aim here is also to document the age profile for R&D intensity and to verify whether the R&D intensity gap between EU and non-EU companies is related to age of the firm. Finally we check if R&D intensity is affected by the abundance of internal funds (as captured by the profit/sales ratio), if this relationship changes with the age of the company and if the latter shows across-regional variation. Our results from firm level analysis indicate that there is evidence of strong across-sector variation and some evidence of within-sectors-across-region variation, which –however- is not always in favour of the US. Moreover we find that R&D intensity tends to decrease as firm size increases (as measured by the number of employees), that the age profile for R&D intensity behaves very differently in the two regions and that young companies in the EU exhibit a much higher reactivity to lagged profits-to-sales ratio, when compared to their US counterpart. We believe that this is an indication that the conditions for accessibility and cost of funds differ significantly across the two regions. Keywords: R&D Intensity, EU R&D gap JEL Codes: L16, O30, O57
    Date: 2012–10
  5. By: Amaresh K. Tiwari; Pierre Mohnen; Franz Palm; Sybrand Schim van der Loeff
    Abstract: Using a unique panel data of Dutch innovation and financial variables we empirically investigate how financing and innovation vary across firm characteristics. The study also tries to gauge the extent of market failure due to the presence of financing frictions. Our main findings can be summarized as follows. First, when firms face endogenous financial constraints, debt financing and innovation choices are not independent of firm characteristics such as age, size, and existing leverage. In the absence of financial constraints, however, firms, almost uniformly across firm characteristics, become less inclined – as compared to firms facing constraints - to engage in innovative activity by raising debt. Second, small, young, highly leveraged, and firms with lower collateralizable assets are more likely to be financially constrained. Third, large, young, and low leveraged firms are more likely to be innovators. Fourth, financial constraints adversely affect a firm’s R&D intensity. Fifth, smaller and younger firms are more R&D intensive. A new estimator, that combines the method of “Correlated Random Effects” and “Control Function” to account for the endogeneity of regressors in a structural equations model, is developed. <P>Nous utilisons une base de données de panel néerlandaise assez originale pour examiner comment les décisions d’innovation et de financement varient selon les caractéristiques des entreprises. Nous examinons en particulier dans quelle mesure il y a une faille de marché due aux besoins de financement de l’innovation. En résumé, nous aboutissons aux résultats suivants. Premièrement, les entreprises soumises à des contraintes financières font leurs choix de financement et d’innovation en fonction de leur âge, de leur taille et de leur degré d’endettement. Sans contraintes de financement, les enterprises sont moins portées à innover en s’endettant, quelles que soient leurs caractéristiques. Deuxièmement, ont tendance à être contraintes financièrement les enterprises jeunes, petites, avec un rapport dettes/fonds propres élevé et peu d’avoirs collatérables. Troisièmement, les entreprises jeunes, grandes et avec un faible rapport dettes/fonds propres ont plus de chances d’être innovantes. Quatrièmement, les contraintes de financement réduisent l’intensité de R-D. Cinquièmement, ce sont les entreprises petites et jeunes qui sont plus intenses en R-D. Pour estimer notre modèle, nous développons un nouvel estimateur qui combine les méthodes des effets aléatoires corrélés et des fonctions de contrôle pour tenir compte de l’endogénéité des régresseurs dans un modèle structurel d’équations simultanées.
    Keywords: Financial Constraints, Capital Structure, R&D, Innovation, Firm Dynamics, Market Failure, Panel Data, Correlated Random Effects, Control Function, Expected ´a Posteriori, financières, structure de capital, R-D, innovation, dynamique de firmes, failles de marché, données panel, effets aléatoires corrélés, fonctions de contrôle, attentes a posteriori.
    JEL: G30 O30 C30
    Date: 2012–09–01
  6. By: Timo Seppälä; Martin Kenney
    Abstract: This article investigates how current global intellectual property (IP) litigation provides insight into the competitive landscape of mobile internet, the strategic thinking processes of firms, and the old mobile telecommunications incumbents and new entrants from internet that are vying for space in the new world of mobile internet. To understand the contemporary industry of smart devices, we used the latest IP litigation data from the U.S. to illustrate how the world of essential patents (i.e., the old incumbents in mobile telecommunications) and the world of platform patents (i.e., the new entrants into mobile internet) have become two complementary areas of technology. This analysis address the necessity for understanding the firms involved in IP litigation cases for smart devices in particular and the corresponding patents these firms use in current global IP litigation. This article provides evidence that elucidates the current turmoil in mobile telecommunications; identifies the valuable patents, corresponding patent categories and technology areas; and discusses and analyzes the competitive landscape of mobile internet through the eyes of IP litigation and IP acquisitions. Furthermore, we provide additional evidence that the patent acquisitions by Apple, Google, and Microsoft changed the nature of their ownership of different technologies and important patents in the world of essential patents.
    Keywords: Apple, Google, Microsoft, Nokia, ICT, Intellectual Property (IP), IP Litigation, IP Acquisitions
    Date: 2012–10–04
  7. By: Steve R. Bond (Nuffield College, Department of Economics and Centre for Business Taxation, University of Oxford, UK, and Institute for Fiscal Studies.); Irem Guceri (St Peter?s College, Department of Economics and Centre for Business Taxation, University of Oxford)
    Abstract: This paper documents the increase in R&D intensity in the UK manufacturing sector in the period following the introduction of R&D tax credits in 2000-02. This increase is broadly in line with that predicted by econometric studies of the impact of R&D tax credits, notably Bloom, Griffith and Van Reenen (2002). If anything, UK manufacturing R&D intensity has risen faster than their model predicts. The timing of this increase is not simply explained by trends in neighbouring economies, although one puzzle is that the increase is largely confined to high tech sub-sectors of manufacturing.
    Keywords: R&D, tax credits
    JEL: H25 O31
    Date: 2012

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