nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2015‒12‒01
eleven papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Inverted-U relationship between innovation and survival: Evidence from firm-level UK data By Ugur, Mehmet; Trushin, Eshref; Solomon, Edna
  2. Innovation, Technological Interdependence, and Economic Growth By Douglas Hanley
  3. R&D and productivity in OECD firms and industries: A hierarchical meta-regression analysis By Ugur, Mehmet; Trushin, Eshref; Solomon, Edna; Guidi, Francesco
  4. Do Firms Respond to Stronger Patent Protection by Doing More R&D? By Joel Blit; Mauricio Zelaya
  5. Breakthrough innovations in aircraft and the intellectual property system, 1900-1975 By David C. Mowery
  6. Frontier Firms, Technology Diffusion and Public Policy: Micro Evidence from OECD Countries By Dan Andrews; Chiara Criscuolo; Peter N. Gal
  7. Barriers to Innovation: Can Firm Age Help Lower Them? By Gabriele Pellegrino
  8. Breakthrough technologies - Robotics, innovation and intellectual property By Andrew Keisner; Julio Raffo; Sacha Wunsch-Vincent
  9. Too much or not enough heterogeneity in Innovation Policies among EU Member States? By Reinhilde Veugelers
  10. Tax incentives and R&D: an evaluation of the 2002 UK reform using micro data By Irem Guceri
  11. Economic growth and breakthrough innovations: A case study of nanotechnology By Lisa Larrimore Ouellette

  1. By: Ugur, Mehmet; Trushin, Eshref; Solomon, Edna
    Abstract: Theoretical and empirical work on innovation and firm survival has produced varied and often conflicting findings. In this paper, we draw on Schumpeterian models of competition and innovation and stochastic models of firm dynamics to demonstrate that the conflicting findings may be due to linear specifications of the innovation-survival relationship. We demonstrate that a quadratic specification is appropriate theoretically and fits the data well. Our findings from an unbalanced panel of 39,705 UK firms from 1997-2012 indicate that an inverted-U relationship holds for different types of R&D expenditures and sources of funding. We also report that R&D intensity is more likely to increase survival when firms are in more concentrated industries and in Pavitt technology classes consisting of specialized suppliers of technology and scale-intensive industries. Finally, we report that the effects of firm and industry characteristics as well as macroeconomic environment indicators are all consistent with prior findings. The results are robust to step-wise modeling, controlling for left truncation and use of lagged values to address potential simultaneity bias.
    Keywords: Innovation, post-entry performance, R&D, survival analysis
    JEL: C41 D22 L1 O21 O3
    Date: 2015–10–19
  2. By: Douglas Hanley (University of Pittsburgh)
    Abstract: There is substantial heterogeneity across industries in the level of interdependence between new and old technologies. I propose a measure of this interdependence--an index of sequentiality in innovation--which is the transfer rate of patents in a particular industry. I find that highly sequential industries have higher profitability, higher variance of firm growth, lower exit rates, and lower rates of patent expiry. To better understand these trends, I construct a model of firm dynamics where the productivity of firms evolves endogenously through innovations. New innovators either replace existing technologies or must purchase the rights to existing technologies from incumbents in order to produce, depending on the level of sequentiality in the industry. Estimating the model using data on US firms and recent data on US patent transfers, I can account for a large fraction of the cross-industry trends described above. Because innovation results in larger monopoly distortions in more sequential industries, there is an overinvestment of research inputs into these industries. This misallocation, which amounts to 2.5% in consumption equivalent terms, can be partially remedied using a patent policy featuring weaker protection in more sequential industries, yielding welfare gains of 1.7%.
    Date: 2015
  3. By: Ugur, Mehmet; Trushin, Eshref; Solomon, Edna; Guidi, Francesco
    Abstract: Effects of R&D investment on frim/industry productivity have been investigated widely thanks to pioneering contributions by Zvi Griliches and others in late 1970s and early 1980s. We aim to establish where the balance of the evidence lies and what factors may explain the variation in the research findings. Using 1,258 estimates from 65 primary studies and hierarchical meta-regression models, we report that the average elasticity and rate-of-return estimates are both positive, but smaller than those reported in prior narrative reviews and meta-analysis studies. We discuss the likely sources of upward bias in prior reviews, investigate the sources of heterogeneity in the evidence base, and discuss the implications for future research. Overall, this study contributes to existing knowledge by placing the elasticity and rate-of-return estimates under a critical spot light and providing empirically-verifiable explanations for the variation in the evidence base.
    Keywords: R&D, knowledge capital, productivity, meta-analysis
    JEL: C8 D24 O30 O32
    Date: 2015–08–11
  4. By: Joel Blit (Department of Economics, University of Waterloo); Mauricio Zelaya (Department of Economics, University of Waterloo)
    Abstract: We examine whether stronger intellectual property rights (IPR) promote firm R&D, using changes in the IPR of export-partner countries as an exogenous source of variation. Constructing an export-weighted index of trade partner IPR by country-industry-year, we find that R&D responds strongly to trade partner IPR, and this after including industry, year, country, and interacted fixed effects. We further find evidence of this relationship at the level of the establishment, using a unique Canadian dataset. Our results suggest a causal link between IPR and firm R&D investments.
    JEL: O34
    Date: 2015–08
  5. By: David C. Mowery (Haas School of Business, University of California Berkeley, USA)
    Abstract: Modern commercial aircraft are complex products that incorporate innovations in technologies ranging from advanced materials to software and electronics. Although commercial aircraft assuredly qualify as a transformative innovation, in fact today’s commercial aircraft are the result of a process of incremental innovation and improvement that dates back more than a century. A great many of these improvements and incremental innovations originated from government-supported R&D programs sponsored by the military services or government research laboratories. The adoption of commercial-aircraft innovations within many industrial economies, including the United States, also has been influenced by government regulation of air transportation. This paper provides a historical characterization of the innovation and record of technical progress in US commercial aircraft during the 1900-1975 period. It identifies the sources of support for innovation and technological adoption, and examines the origins and impacts of “breakthrough innovations” on the overall evolution of the global commercial aircraft industry. The paper also assesses the role of patents in these important innovations.
    Keywords: Innovation, airplane, intellectual property
    JEL: O3 O34 O38 N7
    Date: 2015–11
  6. By: Dan Andrews; Chiara Criscuolo; Peter N. Gal
    Abstract: This paper analyses the characteristics of firms that operate at the global productivity frontier and their relationship with other firms in the economy, focusing on the diffusion of global productivity gains and the policies that faciliate it. Firms at the global productivity frontier – defined as the most productive firms in each two-digit industry across 23 countries – are typically larger, more profitable, younger and more likely to patent and be part of a multinational group than other firms. Despite the slowdown in aggregate productivity, productivity growth at the global frontier remained robust over the 2000s. At the same time, the rising productivity gap between the global frontier and other firms raises key questions about why seemingly non-rival technologies do not diffuse to all firms. The analysis reveals a highly uneven process of technological diffusion, which is consistent with a model whereby global frontier technologies only diffuse to laggards once they are adapted to country-specific circumstances by the most productive firms within each country (i.e. national frontier firms). This motivates an analysis of the sources of differences in the productivity and size of national frontier firms vis-à-vis the global frontier and the catch-up of laggard firms to the national productivity frontier. Econometric analysis suggests that well-designed framework policies can aid productivity diffusion by sharpening firms’ incentives for technological adoption and by promoting a market environment that reallocates resources to the most productive firms. There is also a role for R&D tax incentives, business-university R&D collaboration and patent protection but trade-offs emerge which can inform the design of innovation-specific policies.<P>Entreprises en pointe, diffusion des technologies et politiques publiques : Microdonnées des pays de l'OCDE<BR>Ce document analyse les caractéristiques des entreprises qui se situent à la frontière mondiale en matière de productivité et leurs relations avec les autres entreprises de l’économie. Les entreprises à la frontière de la productivité mondiale – que l’on définit comme étant les entreprises les plus productives dans chaque industrie correspondant à un code à deux chiffres de la classification des activités économiques, dans 23 pays – sont en général de plus grande taille, plus rentables, plus jeunes, présentent une plus grande propension à breveter et font plus souvent partie d’un grand groupe multinational que les autres entreprises. Malgré le ralentissement de la croissance de la productivité globale, la croissance à la frontière mondiale est demeurée robuste pendant les années 2000, tandis que le creusement de l’écart de productivité entre les entreprises à la frontière et les autres soulève d’importantes questions quant aux raisons faisant que des technologies non rivales n’atteignent pas toutes les entreprises. À cet égard, l’analyse concorde avec un modèle selon lequel les technologies à la frontière mondiale ne rejoignent les entreprises retardataires que lorsqu’elles sont adaptées aux exigences propres à chaque pays des entreprises qui se situent à la frontière nationale. Ce processus très inégal de diffusion des technologies justifie une analyse des différences internationales en ce qui concerne les écarts de performances entre les entreprises à la frontière mondiale et celles qui se situent à la frontière nationale, et le rattrapage des entreprises retardataires par rapport à la frontière de productivité nationale. L’analyse économétrique donne à penser que des politiques-cadres judicieuses peuvent favoriser la diffusion de la productivité en affinant les motivations des entreprises à adopter des technologies nouvelles et en promouvant un environnement de marché qui réaffecte les ressources aux entreprises les plus productives. Les incitations fiscales à la R-D, la collaboration entreprises-universités en R-D et la protection par brevet ont un rôle à jouer, mais des arbitrages nouveaux peuvent inspirer des politiques spécifiques en faveur de l’innovation.
    Keywords: productivity, firm dynamics, reallocation, réaffectation, productivité
    JEL: M13 O30 O40 O43 O57
    Date: 2015–11–12
  7. By: Gabriele Pellegrino (World Intellectual Property Organization, Economics and Statistics Division, 34, chemin des Colombettes CH-1211 Geneva 20, Switzerland; EPFL, College of Management of Technology, Lausanne; Barcelona Institute of Economics, University of Barcelona, Barcelona)
    Abstract: This paper examines how firm age can affect a firm’s perception of the obstacles (deterring vs. revealed) that hamper and delay innovation. Using a comprehensive panel of Spanish firms for the period 2004-2011, the empirical analysis conducted shows that distinct types of obstacle are perceived differently by firms of different ages. First, a clear-cut negative relationship is identified between firm age and a firm’s assessment of both the internal and external shortages of financial resources. Second, young firms seem to be less sensitive to the lack of qualified personnel when initiating an innovative project than when they are already engaged in such activities. By contrast, the attempts of mature firms to engage in innovation activity are significantly affected by the lack of qualified personnel. Finally, mature incumbents appear to attach greater importance to obstacles related to market structure and demand than is the case of firms with less experience.
    Keywords: Barriers to innovation, firm age, probit panel data model
    JEL: C23 O31 O32 O33
    Date: 2015–11
  8. By: Andrew Keisner (Attorney, Davis & Gilbert LLP, New York, New York, U.S.A); Julio Raffo (Economics and Statistics Division, World Intellectual Property Organization, Geneva, Switzerland.); Sacha Wunsch-Vincent (Economics and Statistics Division, World Intellectual Property Organization, Geneva, Switzerland.)
    Abstract: Robotics technology and the increasing sophistication of artificial intelligence are breakthrough innovations with significant growth prospects and the potential to disrupt existing economic and social facets of everyday life. Few studies have analyzed the developments of robotics innovation. This paper closes this gap by analyzing how innovation in robotics is taking place, how it diffuses, and what role intellectual property (IP) plays. The paper finds that robotics clusters are mainly located in the US, Europe, but increasingly also in the Republic of Korea and China. The robotics innovation ecosystem builds on cooperative networks of actors, including individuals, research institutions, and firms. Governments play a significant role in supporting robotics innovation, in particular through funding, military demand, and national robotics strategies. Robotics competitions and prizes provide for an important incentive to innovation. Patents are used to exclude third parties, to secure freedom to operate, to license technologies and to avoid litigation. The countries with the highest number of filings are Japan, China, Republic of Korea and the US. The growing stock of patents owned by universities and PROs, in particular in China, is noteworthy too. Automotive and electronics companies are still the largest patent filers, but new actors in fields such as medical technologies and the Internet are emerging. Secrecy is often used as a tool to appropriate innovation. Copyright protection is relevant to robotics too, mainly in its role in protecting software, and more recently in protecting so-called Netlists. Finally, proprietary approaches co-exist with open-source robotics platforms which are developing rapidly in robotics clusters.
    Keywords: Robotics; artificial intelligence; innovation; patents; trade secrets; copyrights.
    JEL: F23 L86 O3 L6
    Date: 2015–11
  9. By: Reinhilde Veugelers
    Abstract: This contribution focuses on the heterogeneity in innovation capacity within Europe across its different Member States. Who are the leading and who are the lagging EU countries? Is there a trend towards convergence over time? And how has the crisis affected this trend of convergence? We then take a look at the research and innovation policies which the EU countries have in place and try to assess whether these policies match with the heterogeneous EU countries’ innovation capacity positions. We examine both the budgets allocated by EU Member States to R&I as well as the various kinds of R&I policy programmes being deployed. More particularly, we examine how heterogeneous the deployment of policy instruments is across EU member states and whether this matches with the heterogeneity in innovation capacity development among EU countries. Notwithstanding the large and increasing heterogeneity among EU countries in innovation capacity development, the evidence on innovation policies in EU countries shows a relative homogeneity of policy mixes in different countries. Current innovation policy mixes of instruments do not well reflect the countries’ levels of innovation capacity development.
    Keywords: Innovation, innovation policy, institutional reforms, multi-level governance
    JEL: O31 O38
    Date: 2015–08
  10. By: Irem Guceri (Oxford University Centre for Business Taxation)
    Abstract: The United Kingdom introduced an R&D tax incentive scheme rst for SMEs in 2000 and then for large rms in 2002, gradually increasing the generosity of both schemes after 2008. This study exploits the differences between companies with similar characteristics that were just above the size threshold for eligibility to the SME scheme and those that were just below, before and after the 2002 reform. This allows for a difference-in-differences approach to measure the (additional) impact of the tax incentives on firms around this size threshold. Treatment group firms are found to have increased their R&D spending by around 18 percent on average in response to the large company tax incentive, implying a user cost elasticity of -1.35. We do not find significant differences in this effect between sectors.
    Keywords: R&D, tax credits, difference-in-differences
    JEL: H25 O31
    Date: 2015
  11. By: Lisa Larrimore Ouellette (Stanford Law School, USA.)
    Abstract: This paper examines the role of intellectual property and other innovation incentives in the development of one field of breakthrough innovation: nanotechnology. Because nanotechnology is an enabling technology across a wide range of fields, the nanotechnology innovation ecosystem appears to be a microcosm of the global innovation ecosystem. Part I describes the nature of nanotechnology and its economic contribution, Part II explores the nanotechnology innovation ecosystem, and Part III focuses on the role of IP system s in the development of nanotechnology.
    Keywords: Innovation, nanotechnology, intellectual property
    JEL: O3 O34 O38
    Date: 2015–11

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