nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2014‒08‒20
four papers chosen by
Fulvio Castellacci
Norsk Utenrikspolitisk Institutt

  1. Paradigm Shift or Business as Usual? Dynamic Complementarities in Innovation Strategies By James H. Love; Stephen Roper; Priit Vahter
  2. Knowledge Complementarity of a Firm’s Internal and External R&D Capabilities By Koski, Heli; Svento, Rauli
  3. Global Investment Decisions and Patent Protection: Evidence from German Multinationals By Nabokin, Tatjana
  4. Environmental Policies and Risk Finance in the Green Sector: Cross-country Evidence By Chiara Criscuolo; Carlo Menon

  1. By: James H. Love (Aston University Business School); Stephen Roper (Warwick University Busines School); Priit Vahter (University of Tartu)
    Abstract: We investigate claims of a ‘paradigm shift’ towards firms using open innovation as a conscious strategic choice. Such a claim implicitly involves two elements: first, there should be some evidence that firms are increasingly likely to use a combination of internal and external knowledge in their innovation activity, and second, there should evidence that firms derive a systematic advantage from so doing. Using a panel of Irish manufacturing plants over the period 1991-2008 we develop four archetypal innovation strategies. We find little evidence, either from considering successive cross-sectional waves of comparable surveys, or in terms of the strategy switch choices of specific plants, that there has been a systematic move towards the use of an ‘open’ innovation strategy. We then test for the presence of complementarities in the joint use of internal R&D and external innovation linkages. In static terms we find no evidence of complementarity, but in dynamic terms find evidence that strategy switches by individual plants towards an open innovation strategy are accompanied by increased innovation outputs.
    Keywords: innovation strategies; dynamic complementarities; open innovation; Ireland
    JEL: O31 O33 D92
    Date: 2013–06–03
  2. By: Koski, Heli; Svento, Rauli
    Abstract: We use data from over 1500 Finnish companies for the years 2006-2008 and 2008-2010 to explore complementarity of a firm’s R&D strategy with its external knowledge acquisition and innovation collaboration strategies. We define knowledge complementarity (tacit knowledge complementarity) of R&D capabilities to exist when increase in investments in R&D also increases marginal returns from broader external knowledge search (deeper innovation collaboration with external partners). Our estimation results provide support for knowledge complementarity of external R&D. Instead, our data provide no evidence on tacit knowledge complementary of external R&D generally. However, our empirical results concerning the separate types of external R&D suggest that a firm’s acquisition of new technology (i.e., advanced machinery, equipment or software) for innovation purposes appears to be tacit knowledge complementary.
    Keywords: open innovation, external knowledge search, complementarity
    JEL: D83 O3 L2
    Date: 2014–08–06
  3. By: Nabokin, Tatjana
    Abstract: This paper investigates the role of patent protection in the global investment decisions of multinational firms. Using comprehensive firm-level panel data of German multinationals, we investigate how changes in a host country’s patent protection influence the extensive and intensive margin of foreign direct investment (FDI) decisions. We isolate the effect of patent protection by estimating a difference-in-difference type approach and controlling for an extensive set of fixed effects. At the extensive margin, we find that strengthening patent protection increases the probability of locating a foreign affiliate, whereby the effect is stronger for firms that highly depend on patent protection. The effect depends further on a host country’s initial legal and economic development. Given that a parent has established a foreign affiliate, no systematic effects of patent protection are found for the decision on how much to invest in the affiliate at the intensive margin. With regard to the ownership structure, we find that multinationals take into account the risk of intellectual property infringements and increase the ownership share held in the foreign affiliate after strengthening patent protection.
    Keywords: Intellectual property rights; patent protection; foreign direct investment; multinationals
    JEL: O34 F23
    Date: 2014–08
  4. By: Chiara Criscuolo; Carlo Menon
    Abstract: Start-up firms play a crucial role in bringing to the market the innovations needed to move to a greener growth path. Risk finance is essential for allowing new ventures to commercialise new ideas and grow, especially in emerging sectors. Still, very little is known about the drivers and the characteristics of risk finance in the green sector. This paper aims to fill this gap by providing a detailed description of risk finance in the green sector across 29 OECD and BRIICS countries over the period 2005-2010 and identifying the role that policies might have in shaping high-growth investments in this sector. Results are drawn from a comprehensive deal-level database of businesses seeking financing in the green industry combined with indicators of renewable policies and government R&D expenditures. The results suggest that both supply-side policies and environmental deployment policies, designed with a long-term perspective of creating a market for environmental technologies, are associated with higher levels of risk finance relative to more short-term fiscal policies, such as tax incentives and rebates. In addition, when focusing on renewable energy generation, the results confirm the positive association of generous feed-in tariffs (FITs) with risk-finance investment. However in the solar sector excessively generous FITs tend to discourage investment. Politiques de l'environnement et financement par capital-risque dans le secteur vert : Données internationales Les jeunes entreprises jouent un rôle fondamental dans la mise sur le marché des innovations nécessaires à l’évolution vers une trajectoire de croissance plus respectueuse de l’environnement. Le financement par capital-risque est essentiel pour leur permettre de croître et de commercialiser de nouvelles idées, notamment dans les secteurs émergents. Pourtant, les déterminants et les caractéristiques de ce financement dans le secteur vert sont toujours en grande partie méconnus. Le présent document vise à combler cette lacune en décrivant de façon détaillée le financement par capital-risque dans le secteur vert dans 29 pays de l’OCDE et BRIICS au cours de la période 2005-2010, et en mettant en évidence l’influence qu’ont pu avoir les politiques publiques sur la configuration des investissements dans les entreprises à forte croissance de ce secteur. Les résultats proviennent d’une vaste base de données des transactions des entreprises du secteur vert à la recherche de financements, qui a été croisée avec des indicateurs des politiques relatives aux énergies renouvelables et des dépenses publiques de R-D. Ils donnent à penser qu’aussi bien les politiques agissant sur l’offre que les politiques de déploiement conçues dans une perspective à long terme pour créer un marché pour les technologiques environnementales donnent lieu à un volume plus important de financement par capital-risque que des mesures budgétaires à plus court terme comme les incitations fiscales et les allégements d’impôts. En outre, les résultats concernant la production d’énergie renouvelable confirment la corrélation positive entre tarifs d’achat généreux et investissements en capital-risque. Cela étant, les tarifs d’achat excessivement généreux dans la filière solaire ont tendance à décourager l’investissement.
    Date: 2014–03–31

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