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on Technology and Industrial Dynamics |
| By: | Diego R. Känzig; Maximilian Konradt; Lixing Wang; Donghai Zhang |
| Abstract: | We study how business cycle fluctuations shape the pace and direction of innovation. Non-green innovation is procyclical, while green innovation is countercyclical, both over the cycle and in response to economic shocks. We explain this divergence in a dynamic general equilibrium model with endogenous green and non-green innovation. Green patents derive more value from distant profits, making green innovation less sensitive to short-run fluctuations. Endogenous innovation costs reinforce this mechanism, making green and non-green innovation effective substitutes. Evidence from market-implied patent valuations and scientist earnings supports the mechanism. The model implies larger and greener effects of innovation subsidies during downturns. |
| JEL: | E32 O31 Q55 Q58 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35795 |
| By: | Ludovic Dibiaggio (SKEMA Business School, France); Lionel Nesta (Université Côte d'Azur, CNRS, GREDEG, France; SKEMA Business School, France; OFCE, Sciences Po Paris, France) |
| Abstract: | Research on national innovation systems emphasizes linkages among distributed capabilities but offers limited means of observing whether they are technologically connected. We conceptualize domestic integration as the system-level capacity to connect complementary capabilities across techniques, functions, and applications. Using 1.4 million AI-related patents and 330, 000 scientific publications from 1990 to 2021, we operationalize integration through cross-layer alignment and distinguish it from downstream application specialization. Integration is positively associated with quality-weighted inventive performance, but its contribution changes over technological development. Before 2012, it supports inventive performance across levels of specialization, consistent with footloose integration under uncertainty. After 2012, its returns increasingly depend on strong downstream specialization, indicating grounded integration. Cross-layer alignment is also associated with higher patent quality and the reuse and deepening of existing AI combinations rather than radical combinatorial novelty. These findings identify domestic integration as a distinct dimension of national innovative capacity and suggest that technological sovereignty depends less on self-sufficiency than on the capacity to connect and reconfigure complementary capabilities. |
| Keywords: | domestic integration; national innovation systems; artificial intelligence; technological evolution; technological sovereignty |
| JEL: | O31 O33 O34 D80 L86 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:gre:wpaper:2026-24 |
| By: | Coyle, Diane; Nguyen, Nghi; Poquiz, John Lourenze; Riley, Rebecca |
| Abstract: | This paper provides early evidence that AI adoption by firms is linked to management practices in unique ways. Using panel data from the UK Management and Expectations Survey (MES), we find that firms with higher baseline management scores are significantly more likely to adopt AI. This relationship is specific to AI: the same management practices show no relationship with the adoption of other technologies such as robotics, specialized equipment, or specialized software. We also find that management capabilities related to performance measurement appear strongly related to AI adoption. These results suggest that organisational complementarities are specific to different technologies, with implications for policies to encourage AI adoption by firms. |
| Keywords: | AI; technology adoption; management practices; technology diffusion; organisational capital; decentralisation; ICT |
| JEL: | D24 L23 O31 O33 |
| Date: | 2026–09–28 |
| URL: | https://d.repec.org/n?u=RePEc:eoe:escoed:escoe-dp-2026-13 |
| By: | Grillitsch, Markus (CIRCLE, Lund University); Tavassoli, Sam (Deakin University); Obschonka, Martin (University of Amsterdam) |
| Abstract: | Firms in peripheral and less knowledge endowed regions often struggle with innovation, as it is deeply rooted in and influenced by local characteristics. Although recent research highlights the significant, yet complex and hard-to-quantify role of local 'soft factors' such as culture and macro-psychology (e.g., local psychological openness) for firm innovation, we know relatively little about its specific role for firms located in the knowledge periphery. This study examines the hypothesis that favorable local soft factors, such as psychological openness, can compensate for unfavorable local hard factors for innovation of firms located in the knowledge periphery. Drawing upon Schmookler's scissor metaphor, we theoretically elaborate how local psychological openness impacts firm innovation by shaping both the demand and supply sides of the innovation process. In our arguments, we also incorporated the contingent impact of both regional (external) and firm (internal) factors on the relationship between local psychological openness and firm innovation. Our empirical investigation of a large and longitudinal sample of Swedish firms across 2004 to 2018 revealed a compensatory effect of local psychological openness for local 'structural knowledge gaps' in less endowed peripheral regions. Implications for research and policymaking addressing innovation in firms and regions are discussed. |
| Keywords: | firm innovation; local psychological openness; knowledge spillovers; peripheral regions |
| JEL: | O31 O33 R11 |
| Date: | 2026–09–25 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:lucirc:2025_007 |
| By: | Korneliusz Pylak (Lublin University of Technology, Lublin, Poland); Michael Fritsch (Friedrich Schiller University Jena, Germany); Michael Wyrwich (University of Groningen, The Netherlands, and Friedrich Schiller University Jena, Germany) |
| Abstract: | This study examines the dynamics of regional innovation activity in Europe from 2000 to 2020 using patent applications. Standard convergence measures indicate that regional disparities are narrowing, with initially lagging regions catching up to the leading ones. Our analysis reveals two persistent ‘clubs’: the ‘lagging’ and the ‘advanced’ regions. Although these groups are becoming increasingly similar, the differences between them remain largely unchanged. Despite two decades of growth, the disparity between the two clubs still accounts for a great deal of the total variation in regional patenting. These patterns suggest a convergence illusion that is overlooked in the current scholarly debate. |
| Keywords: | regional innovation, convergence, convergence clubs, European regions |
| JEL: | O31 R11 O47 |
| Date: | 2026–09–28 |
| URL: | https://d.repec.org/n?u=RePEc:jrp:jrpwrp:2026-011 |
| By: | Silvia Iossa; Saverio Barabuffi |
| Abstract: | This study examines whether universities shape the regional innovation effects of public R&D expenditure and whether this role varies across regional development trajectories. We analyse a panel of 1166 EU NUTS 3 regions over the period 2007-2020, combining data on European public R&D funding, patenting performance, university presence and regional development traps. Toa ddress the endogeneity of public R&D expenditure, we employ a control function aproach. The results show that public r&D expendirue positively affects patenting performance in both university and non-university, but the difference between them is not statistically significant. University presence therefore does not sistematically amplify the returns to public R&D. However, its moderating role becomes more pronounced in regions exposed to development trap risk and in regions experiencing persistent stagnation, while evidence is weaker for trap intensity. These fundings suggest that universities act as contingent rather than unviersal catalyst of public R&D. Their contribution appears particularly relevant in vulnerable and persistently stagnant regional trajectories, but less able to offset sever structural constraints. The study contributes to debates on the geography of public R&D and regional development traps by showing that the effectiveness of research funding depends not only on institutional presence, bu also on the development rajectory in which that institutional capacity is embedded. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.08004 |
| By: | Friedrich, Jonathan (CIRCLE, Lund University); Stihl, Linda (CIRCLE, Lund University); Miörner, Johan (CIRCLE, Lund University); Souza, Vitor (CIRCLE, Lund University); Nilsson, Fredrik (CIRCLE, Lund University); Grillitsch, Markus (CIRCLE, Lund University) |
| Abstract: | Geographical research on the global economy has largely failed to conceptualize processes of circular change, while geographical issues are rarely considered in scholarship on the circular economy. Therefore, in this paper, we conceptualize a globally integrated circular economy and identify the key mechanisms of circular (de-)couplings. We provide a novel framework for understanding these changes by combining four essential dimensions - actors, resources, functions and geography - which we illustrate with empirical examples. This can inform human geographic research approaches to the topic and policy making at different levels on how to rethink global entanglements and drive circularity-oriented changes. |
| Keywords: | circular economy; global economy; global production network; global value chains; transitions |
| JEL: | F63 O19 Q01 |
| Date: | 2026–09–25 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:lucirc:2025_001 |
| By: | Alex Blumenfeld; Jonathon Hazell; Chen Lian; Andreas Schaab |
| Abstract: | We measure how artificial intelligence (AI) affects the economy through its impact on software engineering productivity. We use information from financial markets to develop a forward-looking measure that is available in real time. We estimate the sensitivity of each firm’s stock return to an AI stock market index, and how this sensitivity depends on the share of firm payroll in software engineering. We use a model to map this cross-sectional relationship into software engineering productivity gains. From November 2022 to December 2025, AI increased the market’s expected present value of software engineering productivity by the equivalent of a permanent 32.6% productivity increase. The corresponding effect on the level of GDP is 3.6% in the baseline and 6.5% when higher software engineering productivity also raises R&D productivity. By mid-2026, amid rapid progress in coding agents, the effect of AI on productivity and GDP had more than doubled relative to the end of 2025. |
| JEL: | E22 G12 O33 O47 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35793 |
| By: | Yannis Kastis; Hillary Vipond |
| Abstract: | This paper studies how the organization of production shapes the adoption of new technologies. We examine a shift in production organization in English tailoring induced by the arrival of Jewish tailors fleeing pogroms in the Russian Empire between 1881 and 1905. When Jewish immigrant tailors arrived in England, native tailors were mostly self-employed and used sewing machines, introduced in the 1860s, to raise individual productivity. In Russia, where sewing machines were largely unavailable to them, Jewish tailors worked in ready-to-wear production, which involved a modular approach and greater collaboration within workshops. Upon arriving in England, they combined the sewing machines with their organizational practice to introduce the so-called "Jewish task system", which relied on an extensive division of labor and enabled clothing production to scale. Combining original data on production tasks with firm-level data, and using immigrant settlement patterns predating the introduction of the sewing machine as an instrument, we show that immigrant arrivals induced native tailors to reorganize production toward this system, accelerating both the diffusion of the sewing machine and England's transition to mass-produced clothing. Our findings show that organizing production efficiently around a new technology is a prerequisite for its diffusion. |
| Keywords: | organization of production, technology adoption, immigration |
| JEL: | L23 O33 J61 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26253 |
| By: | Anabela Santos; Andrea Conte |
| Abstract: | Using a newly compiled dataset at NUTS2 level, this working paper provides a mid-term analysis ofthe territorial and sectoral distribution of the two main EU R&I funding instruments, HorizonEurope and Cohesion Policy, over the first five years of implementation of the 2021-2027programming period. The two instruments follow distinct but complementary logics: excellencebasedand territorial convergence, respectively. The findings show substantial territorial differencesin the importance of EU R&I funding. In many Central, Eastern and Southern European regions, the combined contribution of Cohesion Policy and Horizon Europe exceeds 20% of total R&Dexpenditure, making EU funding a major source of R&D financing, particularly in less developedand innovative regions. Horizon Europe is highly concentrated among innovation-leading regions, while less innovative regions rely more on R&I Cohesion Policy funding. The sectoral analysis showsthat Horizon Europe is predominantly oriented towards the higher education sector, whereasCohesion Policy has a stronger contribution to the business sector, which becomes relatively moreimportant as regional innovation performance declines. The differentiated territorial and sectoralroles of Horizon Europe and Cohesion Policy observed in previous programming periods tend topersist during the first five years of the current EU funding architecture, highlighting the importanceof maintaining their complementary roles while strengthening links between competitive and placebasedR&I support. |
| Keywords: | R&I funding; Horizon Europe; Cohesion Policy; EU regions |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:ict:wpaper:2013/414367 |
| By: | Obschonka, Martin (Amsterdam Business School, University of Amsterdam); Grillitsch, Markus (CIRCLE, Lund University); Guldåker, Nicklas (CIRCLE, Lund University); Rauhut, Daniel (CIRCLE, Lund University); Rentfrow, Peter Jason (Department of Psychology, University of Cambridge); Potter, Jeff (Atof Inc., Cambridge); Gosling, Samuel D. (Department of Psychology, University of Texas at Austin; School of Psychological Sciences, University of Melbourne) |
| Abstract: | Personality traits (e.g., the Big Five) shape human behavior, decision-making, and life outcomes. Evidence from various countries suggests that these traits are not randomly distributed but follow systematic regional patterns, fueling interest in their geographical variation. Prior research shows that regional personality compositions can influence—and be influenced by—regional socio-economic development. Here, we present an initial personality map of Sweden based on N = 22, 225 geo-coded personality assessments at the municipal level. In contrast to Sweden's reputation for equality, our analysis reveals notable regional contrasts in personality composition. The data show geographical patterns in adaptive traits (Extraversion, Conscientiousness, Emotional Stability [low Neuroticism]), known predictors of better psychological functioning. Sweden's rust belt exhibits notably lower levels of these traits, while the southernmost region (mainly Scania) shows higher levels. These patterns align with ongoing discussions on regional socio-economic polarization in Sweden and may reflect a macro-psychological imprint of these processes. We therefore propose a future research agenda to examine the causes and consequences of these regional personality variations, while considering potential policy implications. |
| Keywords: | Personality; Regions; Sweden; Culture; Economic history; Geography |
| JEL: | N94 R11 Z13 |
| Date: | 2026–09–25 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:lucirc:2025_006 |
| By: | Holzheu, Kerstin (Sciences Po, Paris); Muñoz-Morales, Juan (IÉSEG School of Management) |
| Abstract: | Life-cycle wage growth varies substantially across countries. We examine the role of the firm productivity distribution by introducing a random-search model that disentangles firm heterogeneity, on-the-job learning, and labor-market frictions. Estimates for Brazil, Colombia, and the United States reveal two distinct disadvantages: a long left tail of low-paying firms in Brazil and a highly compressed firm ladder in Colombia. Counterfactuals show that equating each country's firm distribution to that of the United States closes most of the cross-country gap in life-cycle wage growth: Brazil's wage growth rises from 73 to 103 percent of the U.S. value, and Colombia's from 52 to 115 percent. These results are robust to alternative distributional assumptions, education residualization, and external discipline on the productivity tail. |
| Keywords: | labor markets, income profiles, developing countries |
| JEL: | J24 J31 J63 J64 E24 O11 O12 O15 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18970 |