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on Innovation |
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Issue of 2009‒07‒11
seventeen papers chosen by Steffen Lippert Massey University Department of Commerce |
| By: | Russell Thomson (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne) |
| Abstract: | This paper examines the determinants of investment in R&D by Australian firms, with a focus on the role of tax policy. The analysis considers an unbalanced panel of financial data of about 500 large Australian firms between 1990 and 2005. The principal result is that no evidence can be found that the user cost of R&D is an important determinant of firm R&D investment decisions. A corollary is that there is no evidence that tax incentives are an effective policy tool. Growth in sales is found to be the primary determinant of R&D investment, which is interpreted as evidence of the central role of demand conditions. |
| Keywords: | R&D investment, R&D tax policy, innovation policy, Australian R&D |
| JEL: | O32 H25 H32 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:iae:iaewps:wp2009n10&r=ino |
| By: | Gerald Carlino; Robert Hunt |
| Abstract: | The authors geocode a data set of patents and their citation counts, including citations from abroad. This allows them to examine both the quantity and quality of local inventions. They also refine their data on local academic R&D to explore effects from different fields of science and sources of R&D funding. Finally, they incorporate data on congressional earmarks of funds for academic R&D. ; With one important exception, results using citation-weighted patents are similar to those using unweighted patents. For example, estimates of the returns to density (jobs per square mile) are only slightly changed when using citation-weighted patents as the dependent variable. But estimates of returns to city size (urbanization effects) are quite sensitive to the choice of dependent variable. ; Local human capital is the most important determinant of per capita rates of patenting. A 1 percent increase in the adult population with a college degree increases the local patenting rate by about 1 percent. ; With few exceptions, there is little variation across fields of science in the contribution of academic R&D to patenting rates. The exceptions are computer and life sciences, where the effects are smaller. There is greater variation in the contribution of R&D funded by different sources-academic R&D funded by the federal government generates smaller increases in patenting rates than R&D funded by the university itself. This effect is somewhat stronger for federally funded applied R&D than for basic R&D. The authors also find small negative effects for cities with greater exposure to academic R&D allocated by congressional earmarks. ; They discuss the implications of these results for policy and future research. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:09-12&r=ino |
| By: | Filip De Beule; Ilke Van Beveren |
| Abstract: | This paper analyzes the drivers of multinational affiliates' R&D intensity, using a unique dataset based on the fourth Community Innovation Survey for Belgium. Specifically, we investigate the role of foreign affiliates' local (host country) embeddedness and of host country spillovers on foreign affiliates' research efforts. Our findings show that foreign affiliates who are able to tap into local knowledge sources demonstrate a higher research intensity, compared to firms lacking such access. Links to clients and public research institutions, in particular, have a powerful impetus on the research effort by foreign subsidiaries. Our findings suggest a complementary relationship between foreign firms' R&D intensity and the internal research efforts of their competitors as a result of demonstration effects, while the use of external R&D by competitors has a negative impact on the research effort of foreign affiliates as a result of technological spillovers. Our findings have important policy implications, especially in terms of the high dependency of the Belgian economy on foreign R&D. One way to attain the R&D intensity put forward by the Lisbon agenda would be to increase public expenditure on research and development, which would also indirectly increase the research intensity of (foreign) firms. |
| Keywords: | R&D intensity, multinational ownership, knowledge sources, spillovers |
| JEL: | F23 L23 O31 O33 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:lic:licosd:24209&r=ino |
| By: | Matthias Bürger (Friedrich-Schiller-University Jena, RTG 1411 - The Economics of Innovative Change); Tom Brökel (Utrecht University, Urban and Regional Research Centre Utrecht (URU)); Alex Coad (Max Planck Institute of Economics, Jena; Centre d'Economie de la Sorbonne, Univ. Paris 1) |
| Abstract: | We investigate the lead-lag relationship between growth of patent applications, growth of R&D, and growth of total sectoral employment for 270 German labour market regions over the period 1999-2005. Our unique panel dataset includes information on four two-digit industries, namely Chemistry, Transport equipment, Medical & Optical Equipment as well as Electrics & Electronics. The results obtained from a vector autoregression model show that an increased innovative activity is associated with subsequent growth of employment in the Medical & Optical Equipment industry as well as in the Electrics & Electronics sector. With respect to the latter growth of patent applications is also associated with subsequent growth of R&D employees indicating either a "success-breeds-success" story or benefits due to agglomeration economies at the level of the region. However we do not find those effects for the other industries due to their idiosyncratic innovation and patenting behaviour. |
| Keywords: | Innovation, Agglomeration, Employment |
| JEL: | O18 R11 |
| Date: | 2009–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2009-046&r=ino |
| By: | Matthias Buerger; Tom Broekel; Alex Coad |
| Abstract: | We investigate the lead-lag relationship between growth of patent applications, growth of R&D, and growth of total sectoral employment for 270 German labour market regions over the period 1999-2005. Our unique panel dataset includes information on four two-digit industries, namely Chemistry, Transport equipment, Medical & Optical Equipment as well as Electrics & Electronics. The results obtained from a vector autoregression model show that an increased innovative activity is associated with subsequent growth of employment in the Medical & Optical Equipment industry as well as in the Electrics & Electronics sector. With respect to the latter growth of patent applications is also associated with subsequent growth of R&D employees indicating either a ‘success-breeds-success’ story or benefits due to agglomeration economies at the level of the region. However we do not find those effects for the other industries due to their idiosyncratic innovation and patenting behaviour. |
| Keywords: | innovation, regional dynamics, r&d growth, employment growth, patent growth |
| JEL: | O18 R11 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:0908&r=ino |
| By: | Gastón Llanes (Harvard Business School, Entrepreneurial Management Unit); Stefano Trento (Universitat Autonoma de Barcelona) |
| Abstract: | We present a model of sequential innovation in which an innovator uses several research inputs to invent a new good. These inputs, in turn, must be invented before they can be used by the final innovator. As a consequence, the degree of patent protection affects the revenues and cost of the innovator, but also determines the incentives to invent the research inputs in the first place. We study the effects of increases in the number of required inputs on innovation activity and optimal patent policy. We find that the probability of introducing the final innovation decreases (increases) as the number of inputs increases when inputs are complements (substitutes). We also find that the optimal strength of patents on research inputs is increasing in the degree of substitution between the inputs, but decreasing in the number of inputs for any degree of substitution. |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:hbs:wpaper:09-148&r=ino |
| By: | Aitor Lacuesta; Omar Licandro; Teresa Molina; Luis A. Puch |
| Abstract: | Why is R&D spending so low in Spanish firms? One possible answer may lie in a small contribution of innovative investments to value creation at the firm level. When pulling together complementary sources of spending data and related evidence to measure these investments, we observe that R&D is low for international standards, but overall intangible investment seems adequate. Data from the Central de Balances are then used to assess the effect of R&D and other innovative investments on the value of Spanish firms. The results suggest that intangible investments have a positive impact on market values which is more substantial for innovative sectors, and this is also the case for R&D capital. Such a positive impact is influenced by the size of the firm and its presence in the stock market. In fact, an alternative explanation to low R&D intensity could be found in the small fraction of firms publicly traded in the stock market in Spain, as far as equity holders tend to value intangible assets more than bond holders. Consequently, promoting a more active role of market valuations might be a promising policy. |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:fda:fdaddt:2009-19&r=ino |
| By: | Gastón Llanes (Harvard Business School, Entrepreneurial Management Unit); Ramiro de Elejalde (Universidad Carlos III de Madrid) |
| Abstract: | We present a model of industry equilibrium to study the coexistence of Open Source (OS) and Proprietary (P) firms. Two novel aspects of the model are: (1) participation in OS arises as the optimal decision of profit-maximizing firms, and (2) OS and P firms may (or may not) coexist in equilibrium. Firms decide their type and investment in R&D, and sell packages composed of a primary good (like software) and a complementary private good. The only difference between both kinds of firms is that OS share their technological advances on the primary good, while P keep their innovations private. The main contribution of the paper is to determine conditions under which OS and P coexist in equilibrium. Interestingly, this equilibrium is characterized by an asymmetric market structure, with a few large P firms and many small OS firms. |
| Keywords: | Industry Equilibrium, Open Source, Innovation, Complementarity, Technology Sharing, Cooperation in R&D |
| JEL: | O31 L17 D43 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:hbs:wpaper:09-0xx&r=ino |
| By: | Robin Cowan; Natalia Zinovyeva |
| Abstract: | This paper analyzes empirically the channels through which university research affects industry innovation. We examine how the opening of new science, medicine and engineering departments in Italy during 1985-2000 affected regional innovation systems. We find that creation of a new university department increased regional innovation activity 3-4 years later. On average, an opening of a new department has led to a twenty percent change in the number of patents led by regional firms. Given that this effect occurs within the first half decade of the appearance of a new department, it cannot be ascribed to improvements in the quality and quantity of graduates. At the same time, traditional measures of academic research activity -- publications and patents -- can explain at most 50 percent of this effect, of which the lion's share is due to publications. |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:fda:fdaddt:2009-20&r=ino |
| By: | Jaap W.B. Bos; Ryan C.R. van Lamoen; James W. Kolari |
| Abstract: | In this paper we seek to contribute to the literature on competition and innovation by focusing on individual firms within the U.S. banking industry in the period 1984-2004. We measure innovation by estimating technology gaps and find evidence of an inverted-U relationship between competition and the technology gaps in banking. This finding is robust over several different specifications and is consistent with theoretical and empirical work by Aghion, Bloom, Blundell, Griffith, and Howitt (2005b). The optimal amount of innovation requires a slightly positive mark up. Also, we find that the U.S. banking industry as a whole has consolidated beyond this optimal innovation level and that state-level interstate banking deregulation has lowered innovation. |
| Keywords: | competition, innovation, stochastic frontier analysis, technology gap ratio, banking |
| JEL: | D21 G21 L10 O30 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:use:tkiwps:0916&r=ino |
| By: | Margaret E. Blume-Kohout; Krishna B. Kumar; Neeraj Sood |
| Abstract: | This paper investigates the impact of federal extramural research funding on total expenditures for life sciences research and development (R&D) at U.S. universities, to determine whether federal R&D funding spurs funding from non-federal (private and state/local government) sources. We use a fixed effects instrumental variable approach to estimate the causal effect of federal funding on non-federal funding. Our results indicate that a dollar increase in federal funding leads to a $0.33 increase in non-federal funding at U.S. universities. Our evidence also suggests that successful applications for federal funding may be interpreted by non-federal funders as a signal of recipient quality: for example, non-PhD-granting universities, lower ranked universities and those that have historically received less funding experience greater increases in non-federal funding per federal dollar received. |
| JEL: | H5 I1 I23 O3 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15146&r=ino |
| By: | Russell Thomson (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne) |
| Abstract: | This paper examines the factors influencing the globalisation of R&D, with a particular focus on the role of tax policy, using panel data for 25 OECD countries over the period 1980- 2005. Two measures of globalisation are considered - R&D directly financed from abroad and R&D expenditure by affiliates of US multinational enterprises (MNEs). The econometric analysis, which controls for other determinants of inter-country differences in R&D investment, finds no evidence that host country tax policy is an important determinant of MNE location decisions or in attracting cross-border contract R&D. There is evidence that affiliate fixed capital stock and total sales are strong determinants of R&D performed by affiliates of US MNEs. Controlling for these variables, host country attributes seemed to be less important. In the case of cross-border contract R&D, host country expenditure on R&D via institutions of higher education is also found to be important. |
| Keywords: | Globalisation of R&D, tax policy, foreign direct investment, multinational enterprises |
| JEL: | O38 O31 O32 F21 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:iae:iaewps:wp2009n11&r=ino |
| By: | Simona Bovha-Padilla; Joze P. Damijan; Jozef Konings |
| Abstract: | This paper uses firm level data to show how R&D investment responds to shocks in sales growth in credit constrained firms. A credit constrained firm has to rely on its cash flow and borrowing capacity to survive its short-run liquidity shock when hit by a negative shock. This reduces the possibility for further borrowing in order to invest in non-tangible long term R&D, hence a negative shock should hit R&D investments more in firms that are more credit constrained. We find that in financially constrained firms sales growth is positively associated with R&D investment, suggesting procyclical behavior of R&D investment in credit constrained firms. In contrast, we find that in firms with no financial constraints R&D investment is negatively correlated with sales growth, suggesting countercyclical behavior of R&D, consistent with the Schumpeterian idea of restructuring. Furthermore, we find that the firm level response in R&D investment to sales growth is stronger in firms that are more financially dependent, such as firms that are no part of a multinational, firms not receiving subsidies or firms with less collateral. |
| Keywords: | R&D investment, financial constraints, cyclicality |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:lic:licosd:23909&r=ino |
| By: | Elizabeth Webster (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Paul H. Jensen (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne) |
| Abstract: | In this paper, we take another look at the role that patents play in determining successful commercialization. We address this issue using survey data on 3,736 Australian inventions which were the subject of a patent application between 1986 and 2005. Although almost half of the survey respondents’ patent applications were not granted, many still attempted to commercialize their inventions. This variation in patenting and commercialization outcomes enables us to address the question: do patents matter for commercialization? Our results suggest that while the receipt of a patent grant had a positive and significant effect on most commercialization stages, the magnitude of the effect is quite modest. In fact, the marginal increase in the probability of attempting a commercialization stage due to the presence of a patent varies from 2.0 (export) to 8.0 (mass production stage) percentage points. |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:iae:iaewps:wp2009n08&r=ino |
| By: | William Griffiths (Intellectual Property Research Institute of Australia, The University of Melbourne and Department of Economics, The University of Melbourne); Elizabeth Webster (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne) |
| Abstract: | Two parallel streams of research investigating the determinants of corporate R&D exist: one from economics and the other from management. The economists’ variables tend to reflect the firm’s external environment while the explanatory variables used by management scientists are commonly internal to the firm. This paper combines both approaches to test for the relative importance of each type of factor using firm-level data on large Australian companies from 1990 to 2005. Our evidence suggests that most of a firm’s R&D activity can be explained by time-invariant factors which we believe relate to internal and specific characteristics such as the firm’s managerial style, competitive strategy and how it communicates with employees. Of the remaining time-varying portion, we find that past profits, the rate of growth of the industry and the level of R&D activity over the firm’s industry is pertinent. These results are suggestive since we cannot clearly identify the extent to which the firm’s internal behaviour is conditioned by its external environment. |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:iae:iaewps:wp2009n13&r=ino |
| By: | Roberto Fontana (Università Commerciale Luigi Bocconi); Geuna Aldo (University of Turin) |
| Abstract: | We investigate the reasons why different governance modes are used in a sample of successful collaborative patenting activities in Europe. First we show that collaboration activities in the patenting process are much more common than one may expect by looking only at information on co-assignment. Indeed, collaborative patenting activity accounts for more than a quarter of all patents in our sample. This figure is about eight times higher than that from co-assignment data (usually considered to assess cooperation in patenting). We then examine the impact of organizational, individual and project determinants on the choice of three possible modes of governance: coassignment,co-invention, collaborative agreement. We find that higher project complexity and technological scope are associated to tighter modes of governance. We also find a significant negative relationship between licensing and co-assignment, thus providing some support to the view that some licensing can be the result of ex-ante legal agreements rather than of the presence of a market for technology. Finally, inventor specific characteristics matter too. In particular, age increases the probability of choosing looser governance modes while better education is associated to tighter modes. |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:uto:labeco:200910&r=ino |
| By: | Elizabeth Webster (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Paul H. Jensen (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne) |
| Abstract: | The commercialization of inventions is an investment, similar to spending on plant and equipment, and accordingly we would expect it to be affected by macroeconomic conditions. Using data on the commercialization activity from over 4000 inventors, we find evidence that macroeconomic conditions have a pro-cyclical affect on commercialization activities. However, the magnitude of the supply-side effects – the cost of finance and level of public sector research – are estimated to be larger than the growth in aggregate or industry demand. |
| Keywords: | Innovation; Commercialization; Invention; Appropriation |
| JEL: | O31 O34 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:iae:iaewps:wp2009n09&r=ino |