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on Innovation |
| By: | Noel, Michael D.; Schankerman, Mark |
| Abstract: | Strategic patenting is widely believed to raise the costs of innovating, especially in industries characterised by cumulative innovation. This paper studies the effects of strategic patenting on R&D, patenting and market value in the computer software industry. We focus on two key aspects: patent portfolio size which affects bargaining power in patent disputes, and the fragmentation of patent rights ('patent thickets') which increases the transaction costs of enforcement. We develop a model that incorporates both effects, together with R&D spillovers. Using panel data for the period 1980-99, we find evidence that both strategic patenting and R&D spillovers strongly affect innovation and market value of software firms. |
| Keywords: | anti-commons; market value; patent thickets; patents; R&D spillovers |
| JEL: | L43 L86 O31 O33 O34 O38 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5701&r=ino |
| By: | Siebert, Ralph; von Graevenitz, Georg |
| Abstract: | Licensing in a patent thicket allows firms to either avoid or resolve hold-up. Firms’ R&D incentives depend on whether they license ex ante or ex post. We develop a model of a patent portfolio race, which allows for endogenous R&D efforts, to study firms’ choice between ex ante and ex post licensing. The model shows that firms’ relationships in product markets and technology space jointly determine the type of licensing contract chosen. In particular, product market competitors are more likely to avoid patent portfolio races, since the threat of hold-up increases. On the other hand, more valuable technologies are more likely to give rise to patent portfolio races. We also discuss the welfare implications of these results. |
| Keywords: | hold-up problem; innovation; licensing; patent race; patent thicket; research joint ventures |
| JEL: | L13 L49 L63 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5753&r=ino |
| By: | Brusoni, Stefano; Crespi, Gustavo; Francoz, Dominique; Gambardella, Alfonso; Garcia-Fontes, Walter; Geuna, Aldo; Giuri, Paola; Gonzales, Raul; Harhoff, Dietmar; Hoisl, Karin; LeBas, Christian; Luzzi, Alessandra; Magazzini, Laura; Mariani, Myriam; Nesta, Lionel; Nomaler, Önder; Palomeras, Neus; Patel, Parimel; Romanelli, Marzia |
| Abstract: | Based on a survey of the inventors of 9,017 European patented inventions, this paper provides new information about the characteristics of European inventors, the sources of their knowledge, the importance of formal and informal collaborations, the motivations to invent, and the actual use and economic value of the patents. |
| Keywords: | patent value; incentives; innovation; inventor; patent; patent system |
| JEL: | J24 O31 O34 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5752&r=ino |
| By: | Cabral, Luís M B; Cozzi, Guido; Denicolo, Vincenzo; Spagnolo, Giancarlo; Zanza, Matteo |
| Abstract: | To stay on top of global competition, firms and governments often need to acquire innovative goods and services, including ideas and research, from their strategic suppliers. A careful design of procurement policy is crucial to make potential suppliers generate and sell the most suitable innovation. Moreover, procurement by public agencies and large firms often set the incentives for the development of innovations economy-wide. In this paper, guided by recent micro- and macro-economic research, we discuss vices and virtues of the many ways to induce potential suppliers to create and sell innovations. We consider a menu of procurement methods and policies for best procuring new knowledge and innovative products, discussing their costs and benefits in different possible scenarios and suggesting criteria to choose among them. We explain how to optimize the degree of competition between suppliers, as well as other more practical indirect ways to stimulate innovation. We discuss the effects of standard setting activities by large, often public, procurers on innovation races. We evaluate how public and large private firm’s procurement may induce innovation and growth at the national, industry or supply network level by affecting input market prices and the returns to human capital formation. Finally, we point out how risk management methods used in procurement should be modified when innovation is a central concern for a buyer. |
| Keywords: | (procurement) risk management; auctions; competitiveness; contests; ideas; innovation; innovation policy; innovative supply; knowledge; prizes; procurement; R&D; sourcing; standards; supplier investment; technology |
| JEL: | D44 H57 L15 O31 O38 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5774&r=ino |
| By: | Alex Coad (Panthéon-Sorbonne Economie); Rekha Rao (S. Anna School of Advanced Studies, Pisa, Italy) |
| Abstract: | Innovation is commonly seeb as the principal engine of economic development. In this paper, we investigate the microfoundations of economic growth by relating innovation to sales growth at the firm-level, for incumbent firms in four "complex technology" sectors. The average firm, which experiences only modest growth, may grow for a number of reasons that may not be related to "innovativeness". However, given that firms are heterogeneous and that growth rates distributions are typically heavy-tailed, it may be misleading to use regression techniques that focus on the average firm. Using a quantile regression approach, we observe that innovativeness is of crucial importance for a handful of "superstar" fast-growth firms. |
| Keywords: | Innovation, firm growth, quantile regression. |
| JEL: | O31 L25 |
| Date: | 2006–06 |
| URL: | http://d.repec.org/n?u=RePEc:mse:wpsorb:r06050&r=ino |
| By: | Naghavi, Alireza; Ottaviano, Gianmarco I P |
| Abstract: | We study the decision of firms between vertical integration and outsourcing in a dynamic setting with product innovation. In so doing, we model an industry in which R&D is performed by independent research labs and outsourcing production requires complementary upstream and downstream inventions. In the presence of search friction and incomplete outsourcing contracts, we show that the ex-post bargaining power of upstream and downstream parties at the production stage feeds back to R&D incentives, thus affecting the emergence and the performance of labs specialized in complementary inventions. |
| Keywords: | incomplete contracts; innovation; outsourcing |
| JEL: | F12 F23 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5681&r=ino |
| By: | Girma, Sourafel; Gong, Yundan; Görg, Holger |
| Abstract: | We investigate whether inward FDI, either at the firm or industry level, has any impact on product innovation by Chinese State owned enterprises (SOEs). We use a comprehensive firm level panel data set of Chinese SOEs covering the period 1999 to 2003. Our results show that foreign capital participation is associated with higher innovative activity. Inward FDI in the sector has a negative effect on innovative activity in SOEs. However, there is a positive effect of FDI on SOEs that export, invest in human capital or R&D, or have prior innovation experience. We also find that SOEs with internal R&D activity and human capital development are successful innovators. Hence, our results suggest that rather than relying on sector level inward FDI to improve domestic innovative activity, it is important to get the firm-level fundamentals right. |
| Keywords: | China; competition; FDI; innovation; spillovers; state-owned enterprises |
| JEL: | F23 O31 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5838&r=ino |
| By: | Graham, Stuart J.H.; Harhoff, Dietmar |
| Abstract: | This paper assesses the impact of adopting a post-grant review institution in the US patent system by comparing the “opposition careers” of European Patent Office (EPO) equivalents of litigated US patents to those of a control group of EPO patents. We demonstrate several novel methods of "twinning" US and European patents and investigate the implications of employing these different methods in our data analysis. We find that EPO equivalents of US litigated patent applications are more likely to be awarded EPO patent protection than are equivalents of unlitigated patents, and the opposition rate for EPO equivalents of US litigated patents is about three times higher than for equivalents of unlitigated patents. Patents attacked under European opposition are shown to be either revoked completely or narrowed in about 70 percent of all cases. For EPO equivalents of US litigated patents, the appeal rate against opposition outcomes is considerably higher than for control-group patents. Based on our estimates, we calculate a range of net welfare benefits that would accrue from adopting a post-grant review system. Our results provide strong evidence that the United States could benefit substantially from adopting an administrative post-grant patent review, provided that the post-grant mechanism is not too costly. |
| Keywords: | litigation; opposition; patent system; post-grant review |
| JEL: | K11 K41 L10 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5680&r=ino |
| By: | Olga M. Fuentes (Department of Economics, Boston University); Simon Gilchrist (Department of Economics, Boston University) |
| Abstract: | We examine the evolution of the demand for skilled workers relative to unskilled workers in the Chilean manufacturing sector following Chile’s liberalization of trade in the late 1970’s. Following such trade reforms, the standard Heckscher-Olin model predicts that a low labor-cost country like Chile should experience an increased demand for low skilled workers relative to high skilled workers. Alternatively, if trade liberalization is associated with the adoption of new technologies, and technology is skill-biased, the relative demand for skilled workers may rise. Using a newly available plant-level data set that spans the sixteen year period 1979-1995, we find that the relative demand for skilled workers rose sharply during the 1979-1986 period and then stabilized. The sharp increase in demand for skilled workers coincided with an increased propensity to adopt new technologies as measured by patent usage. Plant-level analysis of labor demand confirms a significant relationship between the relative demand for skilled workers and technology adoption as measured by patent usage and other technology indicators. Our results suggest that skill-biased technological change is a significant determinant of labor demand and wage structures in developing economies. |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:bos:wpaper:wp2005-045&r=ino |
| By: | Uschi Backes-Gellner (Institute for Strategy and Business Economics, University of Zurich); Frank Maass (Institut für Mittelstandsforschung Bonn (IfM Bonn), (Institute for Small and Medium Size Enterprises, Bonn)); Arndt Werner (Institut für Mittelstandsforschung Bonn (IfM Bonn), (Institute for Small and Medium Size Enterprises, Bonn)) |
| Abstract: | This paper investigates the determinants of inter-firm cooperation in research and development (R&D). We analyse the impact of structural and firm specific characteristics, market performance, access to resources and managerial techniques on different types of inter-firm R&D cooperation. Based on a survey of 886 enterprises in manufacturing and industry/business-related services located in Germany, we estimate several models with different types of R&D partnerships as a dependent variable to find out which types of enterprises are more or less likely to form or join either type of R&D partnership. The findings suggest that the availability and the quality of a firm’s own R&D resources are common factors driving R&D cooperation in general. Differentiating between cooperation activities in R&D among enterprises on the same production level on the one hand and vertical cooperation between enterprises and suppliers/customers or cross-sector alliances between enterprises and public research institutes on the other hand, we find cooperation type specific determinants of entry. The size of a firm, its location, access to financial resources and network experience seem to be most important. |
| Keywords: | cross-sector alliances, inter-firm cooperation; R&D cooperation; SME |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:iso:wpaper:0053&r=ino |
| By: | Mercedes Gumbau Albert (Universitat de València); Joaquín Maudos Villarroya (Instituto Valenciano de Investigaciones Económicas) |
| Abstract: | This paper analyses the importance of different technological inputs (R&D and human capital) and different spillovers in explaining the differences in patenting among Spanish regions in the period 1986-2003. The analysis is based on the estimation of a knowledge production function. A region¿s own R&D activities and human capital are observed to have a positive significant effect on innovation output, measured by the number of patents. R&D spillovers weighted by the distance and the volume of trade flows between regions cause positive effects on a region¿s patents. However, distance matters more than the intensity of trade flows and the R&D spillover effects between regions are bounded: spillovers from closer regions perform better than spillovers from distant regions. On the opposite side, human capital spillovers do not cause any effect outside the region itself. El trabajo analiza la importancia de diferentes inputs tecnológicos (I+D y capital humano) y sus correspondientes efectos spillover en la explicación de las diferencias en la propensión a patentar de la regiones españolas en el periodo 1986-2003. El análisis se basa en la estimación de una función de producción de conocimiento. Los resultados indican que el gasto en I+D y el capital humano de cada región afectan positivamente a la actividad innovadora (nmero de patentes). Los efectos spillover asociados al gasto en I+D (ponderados por la distancia kilométrica y los flujos comerciales) afectan positivamente al número de patentes. Sin embargo, la distancia importa más que la intensidad de los flujos comerciales. Los spillovers tecnológicos están acotados ya que son más importantes los asociados a las regiones más próximas. Por el contrario, los efectos spillover procedentes del capital humano no tienen efectos fuera de la propia region considerada. |
| Keywords: | patentes, I+D, capital humano, spillovers patents, R&D, human capital, spillovers |
| JEL: | O18 O31 R11 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:ivi:wpasec:2006-11&r=ino |
| By: | Griffith, Rachel Susan; Harrison, Rupert; Simpson, Helen |
| Abstract: | European Union countries have implemented widespread reforms to product markets in order to stimulate competition, innovation and economic growth. We provide empirical evidence that the reforms carried out under the EU Single Market Programme (SMP) were associated with increased product market competition, as measured by a reduction in average profitability, and with a subsequent increase in innovation intensity and productivity growth for manufacturing sectors. In our analysis we exploit exogenous variation in the expected impact of the SMP across countries and industries to identify the effects of reforms on average profitability, and the effects of profitability on innovation and productivity growth. |
| Keywords: | competition; innovation; productivity growth |
| JEL: | L1 O31 O47 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5849&r=ino |
| By: | Melamed, Ran; Shiff, Gil; Trajtenberg, Manuel |
| Abstract: | The goal of this paper is to lay out a methodology and corresponding computer algorithms, that allow us to extract the detailed data on inventors contained in patents, and harness it for economic research. Patent data has long been used in empirical research in economics, and yet the information on the identity (i.e. the names and location) of the patents’ inventors has seldom been deployed in a large scale, primarily because of the “who is who” problem: the name of a given inventor may be spelled differently across her/his patents, and the exact same name may correspond to different inventors (i.e. the “John Smith” problem). Given that there are over 2 million patents with 2 inventors per patent on average, the “who is who” problem applies to over 4 million “records”, which is obviously too large to tackle manually. We have thus developed an elaborate methodology and computerized procedure to address this problem in a comprehensive way. The end result is a list of 1.6 million unique inventors from all over the world, with detailed data on their patenting histories, their employers, co-inventors, etc. Forty percent of them have more than one patent, and 70,000 have more than 10 patents. We can trace those multiple inventors across time and space, and thus study the causes and consequences of their mobility across countries, regions, and employers. Given the increasing availability of large computerized data sets on individuals, there may be plenty of opportunities to deploy this methodology to other areas of economic research as well. |
| Keywords: | computer software; inventors; mobility; patents |
| JEL: | C81 C88 O30 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5833&r=ino |
| By: | Gersbach, Hans; Schmutzler, Armin |
| Abstract: | We analyze a two-country model of Foreign Direct Investment (FDI). Two firms, each of which is originally situated in only one of the two countries, first decide whether to build a plant in the foreign country. Then, they decide whether to relocate R&D activities. Finally, they engage in product-market competition. Our main points are: first, FDI liberalization causes a relocation of R&D activities if intrafirm communication is sufficiently well developed, external spillovers are substantial, competition is not too strong and foreign markets are not too small. Second, such a relocation of R&D activities will usually nevertheless increase domestic welfare since it only occurs if intrafirm communication is well developed and therefore knowledge generated and obtained abroad flows back to the domestic country. Third, the potential of R&D offshoring makes FDI itself more likely. Fourth, when countries are asymmetric, the small-country firm is more likely to offshore its R&D activities into the large country than conversely. |
| Keywords: | foreign direct investment; R&D; research relocation; spillovers |
| JEL: | F23 O30 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5766&r=ino |
| By: | Giorgio Padrin; Christian Genthon (LEPII - Laboratoire d'Economie de la Production et de l'Intégration Internationale - [CNRS : FRE2664] - [Université Pierre Mendès-France - Grenoble II]); Fabio Arcangeli |
| Abstract: | The paper applies three analytical frames to a better understanding of the itch to invent and innovate cooperatively, a still inadequately treated stylised fact, while drawing some lessons from an ongoing Free/Open Source software project on communication standards, software and services: Jabber , taken as an eloquent case and test bed for the proposed three - layered frame. The first frame derives form the territorial innovation systems literature: some features of the Internet economy, and particularly such standard - setting institutions as IETF working groups, provide a favourable climate to the governance of cooperative software projects. The second one is drawn from the economic theory of networks: the actual inducement s to cooperate can be explained by a class of models about the incentives and costs faced by an agent, rationally deciding whether to join a network and betting upon choosing a fitter one. The third one improves the latter, by introducing a simple evolutionary frame: the software project lifecycle. On the analytical level, a major finding is that economic models overestimate "cooperation failures": if developers were strictly "rational", they should cooperate at a much lower scale compared to observed patterns. This puzzle leads to the suggestion of re- introducing Smithian Moral Sentiment s into economic analysis. As another major point unveiled from the evidence of the case is the sensitive insuppressible key role of intrinsic motivations in this kind of innovative enterprises, linked strictly with the core nature of free /open source style of organizing. It stems that, in terms of institutional arrangement s, there's a wide spectrum of possibilities to experiment with, taking absolutely care not to destroy the vitality of the free ecology mining the critical drives of the innovator s. As far as policies are concerned, the paper aims to switch our attention to the long term sustainability of the novel software - services business models, and a "just" distribution of collective innovations net benefits. |
| Keywords: | economics of internet ; economics of software ; free/open source software<br />Product Life Cycle |
| Date: | 2006–10–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00104246_v1&r=ino |
| By: | Jesús Rodríguez López (Department of Economics, Universidad Pablo de Olavide); Diego Martínez López (Centro de Estudios Andaluces y Department of Economics, Universidad Pablo de Olavide) |
| Abstract: | This paper studies the contribution of Information and Communication Technologies (ICT) to economic growth and labor productivity growth in Andalucía (Spain) over 1995-2004. We find that the contribution of ICT assets to total market GVA growth is quantitatively modest. However the contribution to GVA growth and employment growth within the intensive ICT sectors has experienced a considerable increase during the period. Although our analysis detects that intensive ICT sectors exhibit a high productivity level with respect to that of the non intensive ones, our main conclusion is that the advantages that might emerge from the use of ICT are nor yet observable in the economic dynamics of Andalucía, at least in a similar manner to that of the most developed. |
| Keywords: | Information and Communication Technologies, productivity, regional growth. |
| JEL: | O30 O40 O47 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:pab:wpaper:06.27&r=ino |
| By: | Han Kim, E; Morse, Adair; Zingales, Luigi |
| Abstract: | We study the location-specific component in research productivity of economics and finance faculty who have ever been affiliated with the top 25 universities in the last three decades. We find that there was a positive effect of being affiliated with an elite university in the 1970s; this effect weakened in the 1980s and disappeared in the 1990s. We decompose this university fixed effect and find that its decline is due to the reduced importance of physical access to productive research colleagues. We also find that salaries increased the most where the estimated externality dropped the most, consistent with the hypothesis that the de-localization of this externality makes it more difficult for universities to appropriate any rent. Our results shed some light on the potential effects of the internet revolution on knowledge-based industries. |
| Keywords: | faculty productivity; firm boundaries; knowledge-based industries; theory of the firm |
| JEL: | D85 I23 J24 J31 J62 L23 L31 O33 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5700&r=ino |