nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2013‒11‒22
ten papers chosen by
Fulvio Castellacci
Norwegian Institute of International Affairs (NUPI)

  1. The technological origins and novelty of breakthrough inventions. By Arts, Sam; Veugelers, Reinhilde
  2. Profiting from innovation: Firm level evidence on markups. By Cassiman, Bruno; Vanormelingen, Stijn
  3. Sources of spillovers for imitation and innovation. By Cappelli, Riccardo; Czarnitzki, Dirk; Kraft, Kornelius
  4. Knowledge spillover effects at the sub-regional level. Theory and estimation By Andrea Bonaccorsi; Cinzia Daraio
  5. Patent Value and Citations: Creative Destruction or Strategic Disruption? By David S. Abrams; Ufuk Akcigit; Jillian Popadak
  6. Does competitive pressure spur or hinder corporate basic research?. By Ṧaljanin, Salem; Thorwarth, Susanne
  7. Thanks, but No Thanks: Firms’ Adoption of R&D Tax Credits. By Kelchtermans, Stijn; Neicu, Daniel; Teirlinck, Peter
  8. (International) R&D collaboration and SMEs: The effectiveness of targeted public R&D support schemes. By Hottenrott, Hanna; Lopes Bento, Cindy
  9. How global is R&D? Firm-level determinants of home country bias in R&D. By Belderbos, Rene; Leten, Bart; Suzuki, Shinya

  1. By: Arts, Sam; Veugelers, Reinhilde
    Abstract: We explore the relationship between the technological origins and novelty of inventions on the one hand and their technological impact on the other hand. In particular, we are interested into the technological origins and novelty of breakthrough inventions. By jointly looking at the effects of the origins and novelty on an invention’s average impact, on the likelihood of a very poor invention, and on the likelihood of a breakthrough, we identify some trade-offs researchers face when exploring breakthroughs. For evidence, we consider the US patent record in biotechnology from 1976 to 2001. Our analysis shows that breakthroughs in biotechnology rely more on non-technical and technical prior art, particularly more recent technical prior art, prior art from many different technology fields, and prior art from unfamiliar technology fields. Yet, breakthroughs are less likely to have a dissimilar set of technical prior art citations, as they are more likely to use prior art previously cited by many other inventions. Besides differences in the origins, we find significant differences in the technological novelty. Breakthroughs are more novel in the sense that they are more likely to recombine technological components for the first time in history, particularly more familiar technological components.
    Keywords: origins; novelty; breakthrough; invention; biotechnology; patents;
    Date: 2013–01
  2. By: Cassiman, Bruno; Vanormelingen, Stijn
    Abstract: While innovation is argued to create value, private incentives of …rms to innovate are driven by what part of the value created …rms can appropriate. In this paper we explore the relation between innovation and the markups a …rm is able to extract after innovating. We estimate …rm-speci…c price-cost margins from production data and …nd that both product and process innovations are positively related to these markups. Product innovations increase markups on average by 5.1% points by shifting out demand and increasing prices. Process innovation increases markups by 3.8% points due to incomplete pass-through of the cost reductions associated with process innovation. The ability of the …rm to appropriate returns from innovation through higher markups is affected by the actual type of product and process innovation, the …rms patenting and promotion behavior, the age of the …rm and the competition it faces. Moreover, we show that sustained product innovation has a cumulative effect on the …rms markup.
    Date: 2013–10
  3. By: Cappelli, Riccardo; Czarnitzki, Dirk; Kraft, Kornelius
    Abstract: We estimate the effect of R&D spillovers on sales realized by products new to the firm (imitation) and new to the market (innovation). It turns out that spillovers from rivals lead to more imitation, while inputs from customers and research institutions enhance original innovation.
    Keywords: innovation; imitation; spillovers;
    Date: 2013–09
  4. By: Andrea Bonaccorsi (Department of Energy and Systems Engineering, University of Pisa, Italy); Cinzia Daraio (Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza")
    Abstract: In this paper, we investigate a new approach for the measurement of spillovers. The concept of spillovers is central in many theories of geography, innovation and growth, particularly at the regional level. We evaluate the impact of size and intensity of knowledge production, as observed in publications and patents at the sub-regional level, on the efficiency of manufacturing activity. We employ nonparametric and robust conditional measures in efficiency analysis to a unique dataset at the subregional level (province) for Italy. We find that most Italian provinces are located in a region of absence or extremely low impact of knowledge spillovers. Nevertheless, a few provinces with maximum volume in both patents and publications and some medium-sized provinces with high knowledge intensity show knowledge spillovers.
    Keywords: knowledge spillovers, manufacturing industry, growth, efficiency analysis, conditional efficiency, robust nonparametric estimation
    Date: 2013
  5. By: David S. Abrams; Ufuk Akcigit; Jillian Popadak
    Abstract: Prior work suggests that more valuable patents are cited more and this view has become standard in the empirical innovation literature. Using an NPE-derived dataset with patent-specific revenues we find that the relationship of citations to value in fact forms an inverted-U, with fewer citations at the high end of value than in the middle. Since the value of patents is concentrated in those at the high end, this is a challenge to both the empirical literature and the intuition behind it. We attempt to explain this relationship with a simple model of innovation, allowing for both productive and strategic patents. We find evidence of greater use of strategic patents where it would be most expected: among corporations, in fields of rapid development, in more recent patents and where divisional and continuation applications are employed. These findings have important implications for our basic understanding of growth, innovation, and intellectual property policy.
    JEL: K1 L2 O3
    Date: 2013–11
  6. By: Ṧaljanin, Salem; Thorwarth, Susanne
    Abstract: Corporate basic research is of great economic relevance. However, since potential payoffs of basic research activities are so long-term, firms facing competitive pressure may focus on more near-term, hence more applied research and development projects. This paper addresses the effect of market competition on firms’ in-house R&D investment and on its components basic research as well as applied research and development. We use the stated number of competitors as an indicator for competitive pressure. Our results indicate that increasing competitive pressure leads to a reduction of basic research activities and boosts firms’ expenditures in applied research and development.
    Keywords: basic research; R&D; competition;
    Date: 2013–04
  7. By: Kelchtermans, Stijn; Neicu, Daniel; Teirlinck, Peter
    Abstract: This paper sets out to investigate whether firms learn from their peers with respect to managing the R&D process. We do this by considering to what extent firms with similar economic activities and located in the same region mimic peers’ adoption of newly introduced tax credits for R&D, independent from other explanations such as unobserved correlated effects. Using hazard rate models on a dataset of R&D active Belgian companies, we find that there are significant regional and industry-level peer effects from firms that have accessed tax credits on the other enterprises’ probability of doing the same in the future. Specifically, the more companies access tax credits within an industry and region, the higher the probability of their peers doing so in subsequent years. Due to known issues with the econometric identification of peer effects, we use various specifications in order to check the robustness of our results.
    Keywords: R&D tax credits; peer effects; young innovative companies; information diffusion;
    Date: 2013–08–30
  8. By: Hottenrott, Hanna; Lopes Bento, Cindy
    Abstract: This study analyses the effectiveness of targeted public support for R&D investment. In particular, we test whether the specific policy design aiming at incentivizing (international) collaboration and R&D in small and mediumsized firms achieves the desired objectives on input as well as output additionality. Our results show that the targeted R&D subsidies accelerate R&D spending in the private sector, and especially so in the targeted groups. Further, we differentiate between privately financed R&D and subsidyinduced R&D investment to evaluate their respective effects on innovation performance. The results confirm that the induced R&D is productive as it translates into marketable product innovations. While both types of R&D investments trigger significant output effects, we find that the effect of subsidy-induced R&D investment is higher for firms that collaborate internationally as well as for SMEs.
    Keywords: innovation policy; subsidies; R&D; SMEs; international collaboration;
    Date: 2013–01
  9. By: Belderbos, Rene; Leten, Bart; Suzuki, Shinya
    Abstract: Despite an increasing internationalization of R&D activities by multinational firms, a major portion of corporate R&D still tends to be concentrated in firms’ home countries. We examine to what extent there exists a home country bias in the location of R&D activities of 156 major R&D intensive firms based in Europe, the US and Japan during 1995-2002 and develop hypotheses concerning the firm-level determinants of such home country bias. We define this bias as a share of global R&D activities conducted in the home country that is not proportional to the general attractiveness of the country for multinational firms' R&D activities. We find home bias to be the predominant pattern, but with substantial variation among firms. The extent of the bias increases with the degree of scale and scope economies in R&D, coordination costs of international R&D, and the embeddedness of firms’ R&D in home countries’ innovation systems. Technology leadership is associated with greater home bias if the home country provides relatively strong intellectual property rights protection and firms face potential knowledge dissipation abroad. Our findings imply that home country bias is to an important extent a response to the economics of R&D and centripetal forces favoring centralization of R&D.
    Keywords: R&D internationalization; location strategy; home country bias; innovation;
    Date: 2013–06
  10. By: Paul O'Sullivan (Department of Economics Finance and Accounting, National University of Ireland, Maynooth)
    Abstract: This paper examines a one-shot game where two symmetric incumbents are faced with possible entry into an industry, where firms may differ in the efficiency of R&D in reducing marginal production costs. The decision facing the incumbents is whether to compete at the R&D stage or to form a RJV. R&D competition may imply that remaining in the market is not viable for the incumbents and the entrant is a monopolist. Conversely, RJV formation may make entry unprofitable and, possibly, increase welfare. The effect on welfare will depend on whether output is exported in its entirety or consumed domestically.
    JEL: D2 L2 L4
    Date: 2013

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