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on Innovation |
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Issue of 2008‒04‒29
eleven papers chosen by Steffen Lippert Massey University Department of Commerce |
| By: | Bronwyn H. Hall (of California at Berkeley and University of Maastricht); Alessandro Maffioli (Inter-American Development Bank) |
| Abstract: | The paper surveys impact evaluations of government Technology Development Funds (TDF) in Argentina, Brazil, Chile and Panama. All the evaluations were done at the recipient (firm) level using data from innovation surveys, industrial surveys, and administrative records of the granting units, together with quasi-experimental econometric techniques to minimize the effects of any selection bias. TDF effectiveness is found to depend on the financing mechanism used, on the presence of non-financial constraints, on firm-university interaction, and on the characteristics of the target beneficiaries. The surveyed evaluations considered four levels of potential impact: R&D input additionality, behavioural additionality, increases in innovative output, and improvements in performance. The evidence suggests that TDF do not crowd out private investment and that they positively affect R&D intensity. In addition, participation in TDF induces a more proactive attitude of beneficiary firms towards innovation activities. However, the analysis does not find much statistically significant impact on patents or new product sales and the evidence on firm performance is mixed, with positive results in terms of firm growth, but little corresponding positive impact on measures of firm productivity. |
| Keywords: | Innovation and R&D, Policy Evalution |
| JEL: | O32 O38 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:idb:ovewps:0108&r=ino |
| By: | Nicolas van Zeebroeck (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels.); Bruno van Pottelsberghe (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels, DULBEA, Université Libre de Bruxelles and ECARES, Université Libre de Bruxelles.); Dominique Guellec (OECD -DSTI, Paris.) |
| Abstract: | The sharp increase in academic patenting over the past 20 years raises important issues regarding the generation and diffusion of academic knowledge. Three key questions may be raised in this respect: What is behind the surge in academic patenting? Does patenting affect the quality and quantity of universities' scientific output? Does the patent system limit the freedom to perform academic research? The present paper summarizes the existing literature on these issues. The evidence suggests that academic patenting has only limited effects on the direction, pace and quality of research. A virtuous cycle seems to characterise the patent-publication relationship. Secondly, scientific anti-commons show very little effects on academic researchers so far, limited to a few countries with weak or no research exemption regulations. In a nutshell, the evidence leads us to conclude that the benefits of academic patenting on research exceed their potential negative effects. |
| Keywords: | Patent systems, Research Exemption, Academic Patenting. |
| JEL: | O31 O34 O50 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:08-013&r=ino |
| By: | Alexander Cuntz |
| Abstract: | This paper addresses the key determinants of merger failure, in par- ticular the role of innovation (post-merger performance) and technology (ex-ante selection) when rms decide to separate. After a brief review of the existing literature we introduce a model of process innovation where merged firms exibit intra-merger spillover of knowledge under different mar- ket regimes, depending on whether firms integrate vertically or horizontally. Secondly, we describe an ideal matching pattern for ex-ante selection cri- teria of technological partnering, abstracting from nancial market power issues. In a final section we test the model implications for merger failure for M&A data from the US biotechnology industry in the 90s. We find that post-merger innovation performance, in particular with large spillovers, in- creases the probability of survival, while we have no evidence that market power effects do so in long run. Additionally, we find extensive technology sourcing activity by firms (already in the 90s) which contradicts the notion of failure and suits well the open innovation paradigm. |
| Keywords: | merger failure, innovation performance, technology, matching, open innovation, biotechnology |
| JEL: | O30 L22 L25 C78 L65 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2008-029&r=ino |
| By: | Sudipto Bhattacharya (NLondon School of Economics, and CEPR); Sergei Guriev (Stockholm School of Economics, Stockholm; Centre for Economic and Financial Research (CEFIR), Moscow, and CEPR) |
| Abstract: | We develop a theory of control rights in the context of licensing interim innovative knowledge for further development, which is consistent with the inalienability of initial innovator's intellectual property rights (IPR). Control rights of a downstream development unit, a buyer of the interim innovation, arise from his ability to prevent the upstream research unit from forming financial coalitions at the ex interim stage of bargaining, over the amount and structure of licensing fees as well as the mode of licensing, either based on trade secrets or via patenting. We model explicitly the equilibrium choice of the financial structure of licensing fees and show that the innovator's financial constraint is more likely to bind when the value of her innovation is low. By constraining the flexibility of the upstream unit regarding her choice of the mode of licensing of her interim knowledge, the controlling development unit is able to reduce the research unit's payoffs in such contingencies. This incentivises the research unit to expend costly e¤ort ex ante to generate more productive interim innovations. We show that such interim control rights can be renegotiation-proof. |
| JEL: | D23 K12 O32 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:cfr:cefirw:w0118&r=ino |
| By: | Wendy Dobson (Institute for International Business, Rotman School of Management); A.E. Safarian (Rotman School of Management) |
| Abstract: | How is the Chinese economy making the transition from imitation to innovation as the source of sustained long term growth? We address this question using the evolutionary approach to growth in which institutions support technical advance and enterprises develop capabilities to learn and innovate. Growth is seen as a series of disequilibria in which obstacles to innovation such as outdated institutions and weak incentive systems can cause growth to slow. We review existing literatures on institutions and firm behavior in China and compare these findings with those of our survey of Chinese firms in 2006. Industry and firm studies in the literature show how productivity is rising because of firm entry and exit rather than the adoption of new technologies. A striking feature both of the studies in the literature and our survey is the increasing competitive pressures on firms that encourage learning. Our survey of privately owned small and medium enterprises in five high tech industries in Zhejiang province found a market-based innovation system and evidence of much process and some product innovations. These enterprises respond to growing product competition and demanding customers with intensive internal learning, investment in R&D and a variety of international and research linkages. |
| JEL: | O23 H20 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ttp:iibwps:11&r=ino |
| By: | Holger Görg; Aoife Hanley |
| Abstract: | We provide a comprehensive empirical analysis of the links between international services outsourcing, domestic outsourcing, profits and innovation using plant level data. We find a positive effect of international outsourcing of services on innovative activity at the plant level. Such a positive effect can also be observed for domestic outsourcing of services, but the magnitude is smaller. This makes intuitive sense, as international outsourcing allows more scope for exploiting international factor price differentials, therefore giving the establishment higher profits and more scope to restructure production activities towards innovation. We also find that international outsourcing has a positive effect on profitability, as predicted by theory, while this is not true for domestic sourcing. The results are robust to various specifications and an instrumental variables analysis |
| Keywords: | international services outsourcing, innovation, R&D |
| JEL: | F14 O31 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1417&r=ino |
| By: | Shi Qi (Department of Economics, University of Minnesota) |
| Abstract: | This paper studies how advertising influences firms’ incentives to invest in R&D. The link between advertising and industry innovation is important, not only because advertising can spur R&D by spreading product knowledge, but also because advertising can discourage new innovative firms from entering the industry. This paper finds that a worse advertising technology can result in local improvements in industry innovation rates. Globally, however, a complete ban on advertising always reduce industry growth. This result is significant because industry advertising spending is quantitatively significant and there are potential connections between public policy towards advertising and R&D. This paper presents a variant of the Grossman and Helpman (1991) quality ladder model. The key difference is that the model in this paper allows advertising to gradually spread product awareness among consumers. This model differs from the entry deterrence literature by assuming perfect price discrimination. Technically, this assumption allows a fully tractable model and analytical characterization of a stationary equilibrium in a dynamic setting, which is not previously available. In terms of economic analysis, this assumption eliminates the extra profit incentives for new firms to enter early, and makes incumbent firms more inclined to use advertising as a deterrent. |
| Keywords: | Advertising, Entry Deterrence, Innovation |
| JEL: | L15 L25 M37 |
| Date: | 2008–03–24 |
| URL: | http://d.repec.org/n?u=RePEc:min:wpaper:2008-1&r=ino |
| By: | Thomas J. Holmes; David K. Levine; James A. Schmitz, Jr. |
| Abstract: | When considering the incentive of a monopolist to adopt an innovation, the textbook model assumes that it can instantaneously and seamlessly introduce the new technology. In fact, firms often face major problems in integrating new technologies. In some cases, firms have to (temporarily) produce at levels substantially below capacity upon adoption. We call such phenomena switchover disruptions, and present extensive evidence on them. If firms face switchover disruptions, then they may temporarily lose some unit sales upon adoption. If the firm loses unit sales, then a cost of adoption is the foregone rents on the sales of those units. Hence, greater market power will mean higher prices on those lost units of output, and hence a reduced incentive to innovate. We introduce switchover disruptions into some standard models in the literature, show they can overturn some famous results, and then show they can help explain evidence that firms in more competitive environments are more likely to adopt technologies and increase productivity. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmsr:402&r=ino |
| By: | Jan Kranich (Leuphana Universität Lüneburg) |
| Abstract: | This paper discusses a model of the New Economic Geography, in which the seminal core-periphery model of Krugman (1991) is extended by endogenous research activities. Beyond the common ’anonymous’ consideration of R&D expenditures within fixed costs, this model introduces vertical product dierentiation, which requires services provided by an additional R&D sector. In the context of international factor mobility, the destabilizing eects of a mobile scientific workforce are analyzed. In combination with a welfare analysis and a consideration of R&D promoting policy instruments and their spatial implications, this paper makes a contribution to the so-called brain drain debate. |
| Keywords: | R&D, New Economic Geography, Vertical Dierentiation |
| JEL: | F12 F14 F17 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:lue:wpaper:83&r=ino |
| By: | Robin Cowan; Nicolas Jonard |
| Abstract: | Network formation is often said to be driven by social capital considerations. A typical pattern observed in the empirical data on strategic alliances is that of small world networks: dense subgroups of firms interconnected by (few) clique-spanning ties. The typical argument is that there is social capital value both to being embedded in a dense cluster, and to bridging disconnected clusters. In this paper we develop and analyze a simple model of joint innovation where we are able to reproduce these features, based solely on the assumption that successful partnering demands some intermediate amount of similarity between the partners. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2008-06&r=ino |
| By: | Hiroshi Ohashi (Faculty of Economics, University of Tokyo) |
| Abstract: | This paper provided a conceptual framework to quantify consumer gains from product innovations. Using an example of VCRs, we illustrate a model that is useful to measure consumer welfare, and describe what data are to be used for the analysis. We also make a selective survey of papers that measure the consumer welfare of product innovations and discuss advantages and limitations of the analytical framework. |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:tky:fseres:2008cf555&r=ino |