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on Innovation |
| By: | Wirkierman, Ariel L. (Institute of Management Studies(IMS), Goldsmiths, University of London); Ciarli, Tommaso (UNU-MERIT, and Science Policy Research Unit (SPRU), University of Sussex); Savonna, Maria (Science Policy Research Unit (SPRU), University of Sussex, and Department of Economics and Finance, Luiss University) |
| Abstract: | The paper provides a novel, empirically grounded map of innovation 'clubs' in the EU, based on a unique analysis of micro-aggregated, country-level data. Using exploratory factor analysis we articulate innovation variables in a taxonomy of four 'latent' innovation theories: Network-Innovation-System, Kaldorian, New-Growth-Theory, and Schumpeterian. We then characterise clusters of countries ('clubs'), based on their performance against this taxonomy, and design a new map of EU innovation clubs. We identify an articulated map of EU innovation hierarchy beyond the rather well-known 'core-periphery' structure, and interpret how some of the peripheries are functional to the 'consolidated core' of innovative countries, raising an issue of long-term sustainability of such hierarchies. We also find that even the most innovative clusters show concerning weaknesses. The strongest cluster in terms of its innovation system does not seem to exploit its full potential and lags behind with respect to radical product innovations. Instead, the leading cluster in terms of radical product innovations is strongly dependent on external innovative activity, is focused on scale-intensive sectors, and has a fairly weak innovation system. The periphery of small countries that show a healthy network structure, do so because they mainly include supplier-dominated firms, reliant on innovation inputs from the core. We offer some reactions on innovation policy within a broader view of EU cohesion. |
| Keywords: | Innovation theories, National Innovation System, Exploratory Factor Analysis, European cohesion policy |
| JEL: | O30 O52 C38 |
| Date: | 2021–05–11 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2021020&r= |
| By: | Xiao-Shan Yap (Eawag, Swiss Federal Institute of Aquatic Science and Technology, Switzerland); Bernhard Truffer (Eawag, Swiss Federal Institute of Aquatic Science and Technology, Switzerland) |
| Abstract: | Sustainability transitions research has increasingly adopted global perspectives on how to deal with sustainability challenges. However, “global” has so far been limited to Earth’s surface and atmosphere. We argue that transitions research should include developments that relate to the orbit and outer space (hereinafter also Space). The Space sector has grown substantially over the last decade in terms of the number of rocket launches, the diversity of actors involved or new essential services that depend on Space-based infrastructures. This entails fundamentally new opportunities to manifold industrial sectors, and enables developing countries to potentially leapfrog polluting industrial development pathways. At the same time, the expansion of the Space sector creates manifold sustainability pressures like atmospheric pollution, high energy consumption, or Space debris in the orbit. This led to recent surges in arguably “green” innovations such as reusable rockets, but also the development of new governance arrangements protecting outer space as a finite resource for humankind. This research note sketches major recent developments in the Space sector and points to promising avenues of research for innovation and transition studies, not only in terms of a new empirical application field but also as an inspiration for new theoretical insights and innovation policies. |
| Keywords: | Outer space; Sustainability transitions; Mission; Governance; Commons; Beyond national jurisdiction |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:aoe:wpaper:2102&r= |
| By: | Brancati, Emanuele (Sapienza University of Rome, and IZA Institute of Labor Economics); Pietrobelli, Carlo (UNU-MERIT, and University of Roma Tre); Torres Mazzi, Caio (UNU-MERIT) |
| Abstract: | This paper explores how value-chain governance affects the innovation performance of suppliers of intermediate products. We take advantage of a unique dataset of Italian firms to identify governance regimes along suppliers' technological capabilities and the level of explicit coordination in the value chain. Our results indicate that 'modular' value-chain governance is more conducive to innovation for suppliers, especially when these firms have medium capability levels. Conversely, market-based governance modes appear to strongly reduce the innovativeness of suppliers with low capability. These patterns are also reflected in export performances and sales of innovative products. Our results go partially against other findings in the GVC literature, whereby relational value chains are seen to provide the most favourable environment to learn and innovate. Interestingly, the highest levels of technological capabilities consistently reduce the correlation between supplying intermediates and innovation performance, which indicates that technology-gap is an important mediator of learning within value chains. |
| Keywords: | global value chains, export, suppliers, innovation, technological capabilities |
| JEL: | F14 O30 O32 |
| Date: | 2021–04–22 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2021017&r= |
| By: | Kishimoto, Shin; Suzuki, Keishun |
| Abstract: | Policy makers sometimes intervene in patent licensing negotiations to guide licensing fees, but the impacts of such interventions on economic growth and welfare are relatively unknown. This paper develops a novel Schumpeterian growth model featuring a cooperative game-theoretic framework that describes negotiations about licensing fees. We find that the growth effect of intervention is negative if firms can raise unlimited external funds for their R&D investment. However, when the amount of external funds available is limited, both the growth and the welfare effects of intervention can be positive. This result means that interventions are desirable when the internal funds of firms are the main source of their R&D investment. |
| Keywords: | Patent licensing negotiations, Schumpeterian growth, Cooperative game, Patent protection, Financial constraints. |
| JEL: | C71 D45 O30 |
| Date: | 2021–05–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:108009&r= |
| By: | PERIANEZ FORTE Inmaculada (European Commission - JRC); WILSON James |
| Abstract: | The entrepreneurial discovery process (EDP) is widely conceived as an inclusive, evidence-based process of stakeholder engagement that produces information about the potential for new activities, thus enabling effective targeting of research and innovation policy. How this interactive process should be stimulated and organised remains highly context-dependent. This document analyses new evidence collected on the smart specialisation policy experience across European Union (EU) regions and countries during the 2014-2020 programming period as part of a broader analytical exercise carried out by the Smart Specialisation Platform of the European Commission’s Joint Research Centre (JRC). To this end, the document is developed in six sections. After an introduction, section 2 reviews existing literature related to the entrepreneurial discovery process with a specific focus on the mechanisms and practices used by countries and regions to foster entrepreneurial discovery processes within their Research and Innovation Strategies for Smart Specialisation (RIS3). Section 3 and 4 explain the research questions addressed by this study and the data and methodology applied. Section 5 presents and analyses the main findings of our study. Finally, section 6 provides some final thoughts and conclusions. |
| Keywords: | smart specialisation, smart specialisation strategies, entrepreneurial discovery process, innovation policies |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc124405&r= |
| By: | Damioli, Giacomo (European Commission, Joint Research Centre (JRC)); Van Roy, Vincent (European Commission, Joint Research Centre (JRC)); Vertesy, Daniel (UNU-MERIT, and the International Telecommunication Union); Vivarelli, Marco (UNU-MERIT, and Catholic University of Milan) |
| Abstract: | This study investigates the possible job-creation impact of AI technologies, focusing on the supply side, namely the providers of the new knowledge base. The empirical analysis is based on a worldwide longitudinal dataset of 3,500 front-runner companies that patented the relevant technologies over the period 2000-2016. Obtained from GMM-SYS estimates, our results show a positive and significant impact of AI patent families on employment, supporting the labour-friendly nature of product innovation in the AI supply industries. However, this effect is small in magnitude and limited to service sectors and younger firms, which are the leading actors of the AI revolution. Finally, some evidence of increasing returns seems to emerge; indeed, the innovative companies which are more focused on AI technologies are those obtaining the larger impacts in terms of job creation. |
| Keywords: | Innovation, technological change, patents, employment, job-creation |
| JEL: | O31 O33 O34 E24 |
| Date: | 2021–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2021016&r= |
| By: | Benavente, Jose Miguel (Inter-American Development Bank (IADB)); Zuniga, Pluvia (UNU-MERIT) |
| Abstract: | The role of market competition on firm innovation remains a controversial policy question, especially in the context of developing countries. This paper presents new empirical evidence about the impact of market competition on firm innovation engagement in Colombian and Chilean manufacturing industries. We correct for the endogeneity of market competition using instruments proxying entry costs and policy interventions (i.e. competition decisions and entry law reforms), our results are like those of developed countries. Market competition increases firm propensity to invest in innovation in manufacturing enterprises and this relationship is linear in Chilean while in Colombian industries it takes the form of an inversed-U shape relation. The impact of competition is decreasing with the level of sector asymmetry -as preconised in the literature, while the impact of firm distance to the frontier affects firm innovation engagement differently in the two countries. In Chile, competition raises innovation incentives for the third and fourth productivity quartiles while no impact is found for firms in the first (bottom) two quartiles. In contrast, in Colombia market competition raises innovation engagement across regardless their firm productivity position but effects are stronger in the medium range (second and third quartiles). Our main results are robust to controlling for past innovation engagement, import competition and business dynamics. |
| Keywords: | Market Competition, Innovation, Technology Purchasing, Productivity, Latin American Firms |
| JEL: | O32 D41 O47 D24 |
| Date: | 2021–05–19 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2021024&r= |
| By: | Ashish Arora; Sharon Belenzon; Matt Marx; Dror Shvadron |
| Abstract: | We estimate the effect of patent protection on follow-on investments in corporate scientific research. We exploit a new method for identifying an exogenous reduction in the protection a granted patent provides. Using data on public, research-active firms between 1990 and 2015, we find that firms decrease follow-on research after a reduction in patent protection, as measured by a drop in internal citations to an associated scientific article. This effect is stronger for smaller firms and in industries where patents are traded less frequently. Our findings are consistent with a stylized model whereby patent protection is a strategic substitute for commercialization capability. Our results imply that stronger patents encourage follow-on research, but also shift the locus of research from big firms toward smaller firms and startups. As patent protection has strengthened since the mid-1980s, our results help explain why the American innovation ecosystem has undergone a growing division of innovative labor, where startups become primary sources of new ideas. |
| JEL: | O30 O32 O34 |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28880&r= |
| By: | Dong HUO; Jianwei DANG; MOTOHASHI Kazuyuki |
| Abstract: | A general view of standard essential patents (SEPs) is that they provide profiting opportunities by licensing-out, in general, under the FRAND (Fair, reasonable and non-discriminatory) terms. However, a large part of SEPs holders declares "generous" free-license terms, thus abandon direct profiting opportunities. A patent can be used not only for appropriating rent from itself, but also for using it as a leverage to sustain the patent holder's competitive position in the market. This paper empirically addresses the determinants of such motivation for patenting (leverage strategy), by using the license terms of SEPs (free vs. royalty-bearing, and the inclusion of reciprocal terms). Using intellectual property rights disclosure data of IETF, a standard development organization, this paper investigates both firm-level and patent-level factors in shaping the license terms based on three-stage estimation of structural equations. Two types of strategy, "generic" leveraging against all potential competitors in a technology market and "specific" leveraging for keeping firm's competitive position to specific competitor as a licensee, are identified, and it is found that the former motivation works stronger for SEPs holders. |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:21028&r= |
| By: | Benavente, Jose Miguel (Inter-American Development Bank (IADB)); Zuniga, Pluvia (UNU-MERIT) |
| Abstract: | The objective of this paper is to evaluate whether market competition matters for the effectiveness of innovation policies. Using data for Chilean and Peruvian manufacturing firms, we implement propensity matching techniques combined with differences-in-differences estimation to evaluate the impact of innovation subsidies on the post-treatment innovation investment effort of firms and test whether such impact differs according to the intensity of competition. We corroborate the existence of "crowding-in" effects in beneficiaries when compared to a control group of untreated firms. The subsidy impact is found either only significant in highly competitive sectors or larger in more competition-intensive industries -compared to low competition ones. Thus, we confirm that market competition plays a moderating role in the effectiveness of innovation policies to stimulate firm innovation investment. The results are robust to different matching and estimation methods. Our results therefore suggest that market contexts should be considered in the design of innovation policies. |
| Keywords: | Innovation Subsidies, Innovation Policy, Market Competition Latin American firms |
| JEL: | O38 O31 R38 H71 |
| Date: | 2021–05–19 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2021025&r= |
| By: | Ricardo D. Brito; Eduardo Correia de Souza, Rodrigo Moita |
| Abstract: | Product market characteristics vary considerably across R&D intensity-based “technology levels†of the OECD-STI taxonomy, as well as across categories of the Rauch (1999) classification. Both higher technology and more differentiated products display lower price elasticity of demand and longer quality ladders. However, variety proliferation decreases with the technology level and increases with the Rauch category, while price dispersion increases with technology but not with the Rauch. Additionally, Rauch categories do not differ in factor intensities, while higher tech industries are more capital intensive than lower tech ones. From this evidence, we conclude that R&D intensity is an appropriate measure of vertical differentiation, while the Rauch classification mainly captures horizontal differentiation. |
| Keywords: | R&D intensity; Product differentiation; Product market characteristics |
| JEL: | L10 F14 |
| Date: | 2021–06–14 |
| URL: | http://d.repec.org/n?u=RePEc:spa:wpaper:2021wpecon16&r= |
| By: | Jonas Heiberg (Eawag, Swiss Federal Institute of Aquatic Science and Technology, Switzerland); Bernhard Truffer (Eawag, Swiss Federal Institute of Aquatic Science and Technology, Switzerland) |
| Abstract: | The technological innovation systems (TIS) framework is one of the dominant perspectives in transitions studies to analyze success conditions of newly emerging technologies and industries. Key conditions for innovation success reside in overcoming so-called system failures. So far, TIS studies mostly adopted a rather harmonious view on the values, goals and interests that motivate the different actors and by this were unable to address competition, conflicts and, in particular, battles over diverging directionalities within the system. To tackle this “harmony fallacy”, we propose an institutional logics based measure for “value-based proximities” among actors, which serve to identify the “degree of harmony” in the field. To operationalize these concepts, we apply socio-technical configuration analysis (STCA) based on transcripts from 26 interviews, covering the case of modular water technologies in Switzerland. Results indicate that value orientations crucially affect system failures, diverging technological preferences and collaboration patterns. Conflictual field logics may prevent the stabilization of system structures in a specific country and drive actors to engage in sub- or transnational networks. This analysis enables to inspire key conceptual tasks of innovation system analysis, like the identification of system failures, the setting of appropriate system boundaries and the formulation of better policy implications. |
| Keywords: | Technological innovation systems (TIS), values, institutional logics, socio-technical configuration analysis, geography of transitions, modular water technologies |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:aoe:wpaper:2103&r= |
| By: | Fabrizio Guzzo (European Commission - JRC); Carlo Gianelle (European Commission - JRC) |
| Abstract: | This reports provides some insights on the impact of Smart Specialisation on the governance of research and innovation policy systems across EU regions and countries. First, the analysis explores the governance arrangements underpinning Smart Specialisation strategies and the changes introduced by this policy concept. Second, it investigates to what extent (if any) and how Smart Specialisation has been promoting better coordination and collective action. The results show that Smart Specialisation has made the decision-making process and the governance of innovation policy more inclusive. One of the results of this policy experience is the reorganisation and/or establishment of coordination bodies, platforms, thematic working groups, clusters and the like. These organisations are reshaping and strengthening networks of engagement and modalities of cooperation between public and private actors, lowering transaction costs associated with collective action. There is evidence that Smart Specialisation has supported the production of a wide range of tangible and intangible collective goods, which are considered essential in promoting development processes. Finally, under the Smart Specialisation experience, inter-government coordination has received more attention that in the past and, as a result, new norms and arrangements have been experimented. However, despite these changes, and the general increase in pressure for coordination, the effectiveness of horizontal and vertical coordination is still weak. This depends on coordinating bodies and arrangements that are not properly functioning and the persistence of a silo approach in government, which is difficult to overcome. Clearly, this is an area where more efforts are needed in the future, along with the strengthening of the skills and resources to perform policy functions. In view of the new Cohesion Policy 2021-2027, the report provides two main recommendations. First, the Smart Specialisation approach should recognise more explicitly the need for upgrading the quality of governance and policy capacity. Where these elements are weak and/or incomplete they should be addressed with specific measures embedded into strategies and progress should be continuously monitored. Second, territories should discover what governance arrangements work best in their context, preferring the experimentation of new governance structures and processes and the increase of responsibilities and functions of management bodies and other relevant organisations as a result of capacity building processes, to the adoption of ideal models and best practices, which are often formally introduced without promoting real changes. |
| Keywords: | regional innovation policy, smart specialisation, governance, EU Cohesion policy |
| JEL: | O25 O30 R58 |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc123984&r= |
| By: | Benjamin T. Leyden |
| Abstract: | A lack of platform-level competition among digital marketplaces can result in socially inefficient platform design and meaningful welfare losses, even independent of actively anticompetitive behavior. To illustrate the first-order effects platform design can have on competitive outcomes, I investigate how the longstanding design of the product ratings system on Apple’s App Store affected innovative behavior by platform participants. I leverage an exogenous change in this system to show that for nearly a decade, the design of the App Store’s product ratings system led to less frequent product updating by high-quality products. I provide suggestive evidence that this policy resulted in lost, as opposed to simply delayed, innovation. |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9113&r= |
| By: | Ziesemer, Thomas (UNU-MERIT, Maastricht University) |
| Abstract: | We re-consider the traditional result of zero or negative foreign R&D spillovers or strategic reactions to the USA using accumulated shocks in a vector-error-correction model (VECM) for the period 1963-2017. Foreign private and public R&D stocks have a positive and statistically significant effect on US public R&D and labour-augmenting technical change (LATC). US private R&D reacts positively to foreign private R&D and negatively to foreign public R&D shocks. Foreign public and private R&D react positively to US public R&D. All variables react positively to US private R&D. From the time profile of the simulated VECM, we calculate the sum of discounted (at 4%) net gains for (i) additional private and public US R&D, and (ii) for policies reacting to foreign private and public R&D shocks with additional domestic private and public R&D. Additional private and public US R&D expenditures have very high internal rates of return. R&D investments in reaction to shocks from foreign R&D are profitable. All LATC reactions are transitional suggesting semi-endogenous growth for the USA. |
| Keywords: | Growth, productivity, R&D, reaction functions, spillovers, CVAR |
| JEL: | C51 O30 O38 O47 O51 |
| Date: | 2021–03–26 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2021015&r= |