nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2023‒09‒11
nine papers chosen by
Fulvio Castellacci, Universitetet i Oslo

  1. Capabilities, Institutions and Regional Economic Development: A Proposed Synthesis By Koen Frenken; Frank Neffke; Alje van Dam
  2. Research and/or Development? Financial Frictions and Innovation Investment By Filippo Mezzanotti; Timothy Simcoe
  3. Contested Transparency: Digital Monitoring Technologies and Worker Voice By Belloc, Filippo; Burdin, Gabriel; Dughera, Stefano; Landini, Fabio
  4. Economic complexity and the sustainability transition: A review of data, methods, and literature By Bernardo Caldarola; Dario Mazzilli; Lorenzo Napolitano; Aurelio Patelli; Angelica Sbardella
  5. Regional incidence and persistence of high-growth firms: Testing ideas from the Entrepreneurial Ecosystems literature By Alex Coad; Clemens Domnick; Pietro Santoleri; Stjepan Srhoj
  6. The Behavioral Additionality of Government Research Grants By Rainer Widmann
  7. Accelerating Innovation Ecosystems: The Promise and Challenges of Regional Innovation Engines By Jorge Guzman; Fiona Murray; Scott Stern; Heidi L. Williams
  8. Economic Consequences of the Unitary Patent By Lena Kalukuta Mahina; Bruno Van Pottelsberghe
  9. Occupational Reallocation Within and Across Firms: Implications for labor-market polarization By MUKOYAMA Toshihiko; TAKAYAMA Naoki; TANAKA Satoshi

  1. By: Koen Frenken; Frank Neffke; Alje van Dam
    Abstract: The capability framework in evolutionary economic geography views regional economic development as a process of related diversification through the acquisition of capabilities that render a regional economy more complex. Using this framework, we synthesize seven theoretical notions that hitherto remained rather disconnected: relatedness, complementarity, variety, complexity, diversification, agents of structural change, and related variety. We formulate a constructive critique of the capability framework, relaxing the overly restrictive assumption that the presence of capabilities in a region is both necessary and sufficient for complex products to be produced in a region. Instead, we argue that the complexity of a regional economy depends primarily on the institutions that support firms to coordinate production in complex value chains within and across regions. The augmented framework allows for closer integration of evolutionary and relational approaches in economic geography, providing new links between the literatures on clusters, innovation systems and global production networks.
    Keywords: diversification, relatedness, complexity, institution, value chain
    JEL: B52 O1 O43 R1
    Date: 2023–08
  2. By: Filippo Mezzanotti; Timothy Simcoe
    Abstract: Abstract U.S. firms have reduced their investment in scientific research (“R”) compared to product development (“D”), raising questions about the returns to each type of investment, and about the reasons for this shift. We use Census data that disaggregates “R” from “D” to study how US firms adjust their innovation investments in response to an external increase in funding cost. Companies with greater demand for refinancing during the 2008 financial crisis made larger cuts to R&D investment. This reduction in R&D is achieved almost entirely by reducing investments in basic and applied research. Development remains essentially unchanged. Although patenting is more strongly correlated with development than research investments, the impact of the crisis appears in citation-weighted patent output after 3 to 5 years. Finally, we show that if other firms patenting similar technologies are exposed to the crisis, then a focal firm's Development investment declines. We consider several mechanisms that could explain these results, and without ruling out every alternative, conclude that the overall pattern is consistent with an important role for technological competition in R&D financing decisions.
    JEL: G30 L20 O31 O32
    Date: 2023–08
  3. By: Belloc, Filippo (University of Siena); Burdin, Gabriel (Leeds University Business School); Dughera, Stefano (University Paris Ouest-Nanterre); Landini, Fabio (University of Parma)
    Abstract: Advances in artificial intelligence and data analytics have notably expanded employers' monitoring and surveillance capabilities, facilitating the accurate observability of work effort. There is an ongoing debate among academics and policymakers about the productivity and broader welfare implications of digital monitoring (DM) technologies. In this context, many countries confer information, consultation and codetermination rights to employee representation (ER) bodies on matters related to the workplace governance of these technologies. Using a cross-sectional sample of more than 21000 European establishments, we document a positive association between ER and the utilization of DM technologies. We also find a positive effect of ER on DM utilization in the context of a local-randomization regression discontinuity analysis that exploits size-contingent policy rules governing the operation of ER bodies in Europe. Finally, in an exploratory analysis, we find a positive association between DM and process innovations, particularly in establishments where ER bodies are present and a large fraction of workers perform jobs that require finding solutions to unfamiliar problems. We interpret these findings through the lens of a labor discipline model in which the presence of ER bodies affect employer's decision to invest in DM technologies.
    Keywords: digital-based monitoring, algorithmic management, HR analytics, transparency, innovation, worker voice, employee representation
    JEL: M5 J50 O32 O33
    Date: 2023–08
  4. By: Bernardo Caldarola; Dario Mazzilli; Lorenzo Napolitano; Aurelio Patelli; Angelica Sbardella
    Abstract: Economic Complexity (EC) methods have gained increasing popularity across fields and disciplines. In particular, the EC toolbox has proved particularly promising in the study of complex and interrelated phenomena, such as the transition towards a greener economy. Using the EC approach, scholars have been investigating the relationship between EC and sustainability, proposing to identify the distinguishing characteristics of green products and to assess the readiness of productive and technological structures for the sustainability transition. This article proposes to review and summarize the data, methods, and empirical literature that are relevant to the study of the sustainability transition from an EC perspective. We review three distinct but connected blocks of literature on EC and environmental sustainability. First, we survey the evidence linking measures of EC to indicators related to environmental sustainability. Second, we review articles that strive to assess the green competitiveness of productive systems. Third, we examine evidence on green technological development and its connection to non-green knowledge bases. Finally, we summarize the findings for each block and identify avenues for further research in this recent and growing body of empirical literature.
    Date: 2023–08
  5. By: Alex Coad (Waseda University); Clemens Domnick (European Commission - JRC); Pietro Santoleri (European Commission - JRC); Stjepan Srhoj (University of Split)
    Abstract: Policy-makers and scholars often assume that a higher incidence of high-growth firms (HGFs) is synonymous with vibrant regional economic dynamics, and that HGF shares are persistent over time as Entrepreneurial Ecosystems (EEs) have slowly-changing features. In this paper we test these hypotheses, which are deeply rooted in the EE literature. We draw upon Eurostat data for up to 20 countries over the period 2008-2020 and study HGF shares in NUTS-3 regions in Europe. Analysis of regional rankings yields the puzzling finding that the leading EEs in Europe, apparently, are in places such as southern Spain and southern Italy. These places would not normally be considered Europe’s foremost entrepreneurial hotspots. Additional results do not provide strong support for the hypothesis that more developed regions feature higher HGF shares. We do find evidence consistent with HGF shares displaying persistency over time. However, we show that more developed regions do not have higher persistence in their HGF shares, and that the strength in persistence does not increase across the HGFs distribution, which does not support path-dependency as the main mechanism behind the observed persistence. Overall, we call for a more nuanced interpretation of both regional HGF shares and the EEs literature.
    Keywords: Entrepreneurial Ecosystems, High-Growth Firms, Persistence, Firm Growth, Entrepreneurship Policy, Regional Policy
    Date: 2023–07
  6. By: Rainer Widmann (MPI-IC)
    Abstract: There are different forms of public support for industrial R&D. Some attempt to increase innovation by prompting firms to undertake more challenging projects than they would otherwise do. Access to a dataset from one such program, the Austrian Research Promotion Agency, allows me to examine the effect of research grants on firms' patenting outcomes. My estimates suggest that a government research grant increases the propensity to file a patent application with the European Patent Office by around 12 percentage points. Stronger effects appear for more experienced firms of advanced age. Additional evidence indicates that grants induce experienced firms to develop unconventional patents and patents that draw on knowledge novel to the firm. I interpret the findings in a "exploration vs. exploitation" model, in which grants are targeted at ambitious projects that face internal competition from more conventional projects within firms. The model shows that this mechanism is more salient in experienced firms, leading to a stronger response in behavior for this group of firms.
    JEL: O38
    Date: 2023–08–21
  7. By: Jorge Guzman; Fiona Murray; Scott Stern; Heidi L. Williams
    Abstract: Motivated by the establishment of major U.S. Federal programs seeking to harness the potential of regional innovation ecosystems, we assess the promise and challenges of place-based innovation policy interventions. Relative to traditional research grants, place-based innovation policy interventions are not directed toward a specific research project but rather aim to reshape interactions among researchers and other stakeholders within a given geographic location. The most recent such policy - the NSF “Engines” program - is designed to enhance the productivity and impact of the investments made within a given regional innovation ecosystem. The impact of such an intervention depends on whether, in its implementation, it induces change in the behavior of individuals and the ways in which knowledge is distributed and translated within that ecosystem. While this logic is straightforward, from it follows an important insight: innovation ecosystem interventions – Engines -- are more likely to succeed when they account for the current state of a given regional ecosystem (latent capacities, current bottlenecks, and economic and institutional constraints) and when they involve extended commitments by multiple stakeholders within that ecosystem. We synthesize the logic, key dependencies, and opportunities for real-time assessment and course correction for these place-based innovation policy interventions.
    JEL: D78 L2 O3
    Date: 2023–08
  8. By: Lena Kalukuta Mahina; Bruno Van Pottelsberghe
    Abstract: The year 2023 will most likely be remembered in the future history of the European patent system, similarly to 1978, that marked the creation of the European Patent and the Patent Cooperation Treaty, or similarly to 1883 with the Paris Convention. Called for long the Community Patent, it has been renamed “Unitary patent” (UP), or patent with a unitary effect. Its raison d’être is to cope with the many weaknesses (see van Pottelsberghe, 2009) of the European Patent (EP) system, which reduced the effectiveness of the European patent policy in stimulating innovation.
    Keywords: Intellectual property, Unitary patent, European patent
    Date: 2023–08
  9. By: MUKOYAMA Toshihiko; TAKAYAMA Naoki; TANAKA Satoshi
    Abstract: This study analyzes how labor-market frictions interact with firms' decisions to reallocate workers across different occupations during labor-market polarization. We compare the patterns of occupational reallocation within and across firms in the United States and Germany in recent years. We find that within-firm reallocation contributes significantly to the decline in employment in routine occupations in Germany, but much less in the United States. We construct a general equilibrium model of firm dynamics and find that the model with different firing taxes can replicate the difference in firm-level adjustment patterns across these countries. We conduct two counterfactual experiments, highlighting the different roles played by the within-firm cost of reorganizing occupational mix and across-firm frictions created by firing taxes.
    Date: 2023–07

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