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on Technology and Industrial Dynamics |
| By: | María García-Vega; Elena Huergo |
| Abstract: | Firms are increasingly outsourcing their high-tech services. Theory suggests that R&D outsourcing allows firms to specialize in core knowledge-intensive tasks, thereby increasing innovation, but R&D outsourcing may also undermine internal capabilities. Our goal is to empirically assess the relative importance of these two possibilities, distinguishing between national and international R&D outsourcing and firms’ exporting status. We examine R&D purchases of more than 10,000 Spanish firms for the period 2004-2014. We show that R&D outsourcing improves firm innovation. Product innovation rises mostly with domestic outsourcing, while process innovation increases with both domestic and international R&D outsourcing. In addition, we find that international outsourcing provides an extra premium, mostly for exporters. Our results contribute to a better understanding of how firms organize the production of knowledge and innovation. |
| Keywords: | R&D outsourcing; transaction cost economics; innovation; international versus domestic outsourcing; exporters. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:not:notgep:18/10&r=tid |
| By: | Berdud, M.; Garau, M.; Neri, M.; O'Neill, P.; Sampson, C.; Towse, A. |
| Abstract: | In the pharmaceutical industry, intellectual property (IP) rights protection including patents, data exclusivity (DE), and supplementary protection certificates (SPCs), are important due to the high costs of research and development (R&D) for new medicines and the issue of appropriability, a concept that reflects innovator's capacity to capture or appropriate the added value created by successful innovation. Problems can arise if the amount of appropriation is too low or too high. A low degree of appropriability could result in dynamic inefficiency or a suboptimal (too low) investment in innovation. However, too much IP protection might grant the originator market power for an excessive period. Such market power enables prices above manufacturing and distribution cost to give a return on R&D, but results in static inefficiency, whereby innovative medicines are not used by some patients/countries/systems. This research paper by OHE contributes to this debate by analysing the functioning of a specific market for innovative treatments, Direct Acting Antivirals (DAAs) for hepatitis C virus (HCV) in six European countries. The authors explore potential for in-class competition for DAAs to offset innovators' market power and to maximise the social welfare generated by the adoption of pharmaceutical innovation via lower prices. Using a multidisciplinary methodological approach combining a theoretical economic framework with uptake/market share analyses by country and interviews, this OHE research concludes that - (i) IP incentives for R&D may have encouraged a high degree of in-class competition of DAAs close to the first entrant launch; (ii) in-class competition had a positive impact on uptake and adoption of DAAs in the top-5 European countries and; (iii) although in-class competition is a necessary condition for early adoption and fast uptake of innovative medicines, it is not sufficient as there are other factors related to the performance of the new technology, characteristics of the healthcare system and political factors which can have an effect. |
| Keywords: | Economics of innovation; Economics of Industry |
| JEL: | I1 |
| Date: | 2018–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:ohe:respap:002040&r=tid |
| By: | Alberto Galasso; Hong Luo |
| Abstract: | Liability laws designed to compensate for harms caused by defective products may also affect innovation. We examine this issue by exploiting a major quasi-exogenous increase in liability risk faced by US suppliers of polymers used to manufacture medical implants. Difference-in-differences analyses show that this surge in suppliers’ liability risk had a large and negative impact on downstream innovation in medical implants, but it had no significant effect on upstream polymer patenting. Our findings suggest that liability risk can percolate throughout a vertical chain and may have a significant chilling effect on downstream innovation. |
| JEL: | K13 O31 O32 O34 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25068&r=tid |
| By: | Ashish Arora; Wesley M. Cohen; Colleen M. Cunningham |
| Abstract: | We study how the inventive capability of a firm conditions its participation in a division of innovative labor. Capable firms are, by definition, able to invent; for them, external inventions substitute for their own R&D. However, external knowledge is an input into internal invention, and thus, more valuable to firms with inventive capability. Using a simple model of innovation and imitation, we explore how inventive capability affects a firm’s R&D investments, and thus whether and how it innovates, imitates, or does neither. Further, we study how these outcomes are conditioned by the supply of external knowledge as well as the supply of external inventions. In an advance over the literature, we treat firm inventive capability as unobserved, and use a latent class multinomial model to infer its value. Using a recent survey of product innovation and the division of innovative labor among US manufacturing firms, we find that high capability firms tend to use internal, rather than externally generated inventions, to innovate, and they use external knowledge to enhance their internal inventive activity. By contrast, lower capability firms are more likely to introduce “me-too” or imitative products, and when they innovate, are more likely to rely on external sources of inventions. Our findings suggest the successful pursuit of R&D-led growth depends both on firm inventive capability and the external knowledge environment. |
| JEL: | O31 O32 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25051&r=tid |
| By: | Emin M. Dinlersoz; Nathan Goldschlag; Amanda Myers; Nikolas Zolas |
| Abstract: | This paper reports on the construction of a new dataset that combines data on trademark applications and registrations from the U.S. Patent and Trademark Office with data on firms from the U.S. Census Bureau. The resulting dataset allows tracking of various activity related to trademark use and protection over the life-cycle of firms, such as the first application for a trademark registration, the first use of a trademark, and the renewal, assignment, and cancellation of trademark registrations. Facts about firm-level trademark activity are documented, including the incidence and timing of trademark registration filings over the firm life-cycle and the connection between firm characteristics and trademark applications. We also explore the relation of trademark application filing to firm employment and revenue growth, and to firm innovative activity as measured by R&D and patents. |
| JEL: | D22 L10 L21 L25 M30 O34 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25038&r=tid |
| By: | Pavel Chakraborty; Michael Henry |
| Abstract: | Using detailed firm-product-year data across manufacturing industries in India, and exploiting the exogenous nature of China's entry into the WTO in 2001, we investigate the link between the impact of import penetration from China on the product variety of Indian manufacturing firms. We find: (i) robust and significant effect of product drop, with the effect coming only from competitive pressure in the domestic market; (ii) evidence of product drop or 'creative destruction' is robust only for the lower-half of the size distribution; (iii) firms drop their peripheral/marginal products and concentrate on the core ones; and (iv) our result is most strong for firms producing intermediate goods. For an average Indian manufacturing firm, 10 percentage point increase in India's Chinese share of imports in the domestic market reduces the product scope of firms by 1.7-4.4%. In contrast, we find positive effects on product scope as when firms are importing intermediate goods. We also find evidence of significant productivity effects and within-firm factor reallocation. Our results are consistent to a battery of robustness checks and IV estimation. |
| Keywords: | Chinese Competition, Product Drop, Domestic Market, Small Firms |
| JEL: | F1 F14 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:lan:wpaper:245425397&r=tid |
| By: | Lily Fang; Josh Lerner; Chaopeng Wu; Qi Zhang |
| Abstract: | Governments are important financiers of private sector innovation. While these public funds can ease capital constraints and information asymmetries, they can also introduce political distortions. We empirically explore these issues for China, where a quarter of firms’ R&D expenditures come from government subsidies. Using a difference-in-differences approach, we find that the anticorruption campaign that began in 2012 and the departures of local government officials responsible for innovation programs strengthened the relationship between firms’ historical innovative efficiency and subsequent subsidy awards and depressed the influence of their corruption-related expenditures. We also examine the impact of these changes: subsidies became significantly positively associated with future innovation after the anti-corruption campaign and the departure of government innovation officials. |
| JEL: | G28 H25 O32 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25098&r=tid |
| By: | Benos, Nikos; Tsiachtsiras, Georgios |
| Abstract: | In this paper we use country panel data to explore the effect of innovation on top income inequality. We construct a novel dataset of patents by combining patents from USPTO and EPO to test the effect of innovation on income inequality. We demonstrate that innovation has a strong positive correlation with top income shares. Also, we find weak evidence that innovation has a negative effect on overall income inequality. We support our findings by using instrumental variables to tackle endogeneity. In addition our IV analysis shows that the effect of innovation on top income shares remains significant for 3 years. Finally, we show that innovation has a less strong effect on top income inequality when we include defensive patents in the analysis. |
| Keywords: | top income inequality, overall inequality, innovation, citations, defensive patents |
| JEL: | D63 O30 O31 O33 O34 O40 O47 |
| Date: | 2018–09–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:89217&r=tid |
| By: | Billington, Stephen D. |
| Abstract: | Ascertaining whether patents encourage invention necessitates understanding the incentives inventors respond to. The British patent system prior to its reform in 1852 was cumbersome and expensive. Whether it facilitated or delayed the Industrial Revolution is hotly debated. This paper's contribution is to examine the incentives to patent, and the characteristics of patentees, by observing the entire population of British patents granted up to the patent reforms of 1852. I find inventors patented widely because they had valuable inventions. Their value was positively associated with the skills and wealth of patentees. Inventors responded to demand-side conditions, and the system's expense did not hinder invention. |
| Keywords: | Incentives,Innovation,Patents,Patent Quality,Industrial Revolution |
| JEL: | N74 O31 O34 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:qucehw:201810&r=tid |
| By: | Baum, Christopher F (Boston College, DIW Berlin, and Centre of Excellence for Science and Innovation Studies (CESIS)); Lööf, Hans (Centre of Excellence for Science and Innovation Studies (CESIS), Royal Institute of Technology); Stephan, Andreas (Jönköping University, DIW Berlin, and Centre of Excellence for Science and Innovation Studies (CESIS)) |
| Abstract: | STEM-focused industries are critical to the innovation-driven economy. As many firms are running short of STEM workers, international immigrants are increasingly recognized as a potential for high-tech job recruitment. This paper studies STEM occupations in Sweden 2011–2015 and tests hypotheses on new recruitment and the economic impact of foreign STEM workers. The empirical analysis shows that the probability that a new employee is a STEM immigrant increases with the share of STEM immigrants already employed, while the marginal effect on average firm wages is positively associated with the share of immigrant STEM workers. We also document heterogeneity in the results, suggesting that European migrants are more attractive for new recruitment, but non-EU migrants have the largest impact on wage determination. |
| Keywords: | STEM; migration; employment; wages; correlated random effects |
| JEL: | C23 J24 J61 O14 O15 |
| Date: | 2018–10–04 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0472&r=tid |
| By: | Kounetas, Kostas; Napolitano, Oreste; Stavropoulos, Spyridon; Burger, Martijn |
| Abstract: | Assessing regional convergence is an important issue both at the national and at the supranational level, such as the level of European regions. Regional convergence and productivity growth are also principles of the European regional policy. This paper studies regional productivity convergence among 232 NUTS-2 European regions for the period 2003-2011. Despite the European regional policies implemented in the last two decades, the technology gap between European regions has only increased. The objective of this paper is to provide new evidence on production efficiency and the technology gap in European regions. We present a two-stage model of regional productive performance using a meta-frontier framework and a PVAR analysis. The main conclusion is that there exist significant differences in productive performance that confirm the North-South division in Europe. Finally, the results from the PVAR model provide robust evidence for the role played by human capital and innovation activity through patent realization in the technology gaps at the regional level in Europe. |
| Keywords: | Metafrontier, DEA bootstrap, PVAR, Spillovers, European Regions. |
| JEL: | C15 D24 O47 R11 |
| Date: | 2018–01–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:88957&r=tid |