Exploring Strategic R&D Success Factors

This paper identifies strategic R&D success factors for organizations that produce R&D results for proprietary use. First, six types of R&D organizations are identified by using the criteria of profit orientation and external or internal use of R&D results. Following this, success criteria are identified by studying sample organizations that match the classification criteria. In the concluding section it is shown that important success criteria can be derived, many of which are independent of the organizational arrangement chosen for the generation of R& D results. Among them are: embedment into the scientific system, development of core competencies, securing appropriability, choosing appropriate organizational structures and processes.     

Institutions and the R&D of GM-crops

This paper analyzes how different institutional structures shape the research and development (R&D) of genetically modified crops (GM-crops). Whether this R&D is conducted within companies, cooperatives or public research organizations (both publicly and privately funded R&D) is expected to influence the type of crops and traits that are developed and therefore the effects on society and ecosystems that potentially could follow from the use of GM-crops. This issue is analyzed empirically by statistical analysis of 1323 notifications for field trials with GM-crops that have been submitted under two EU Directives in seven European countries. The results show that the type of R&D organization influences the traits and crops that are developed. Companies are more likely to submit notifications that concern GM-crops that secure the potential for profit than are other types of R&D organizations, while R&D organizations that are purely publicly funded are more likely to submit notifications that only concern biosafety research than are cooperatives and companies. Consideration of the environment, food safety and food security might justify institutional reforms of R&D of GM-crops. This might include increased public funding combined with changes in intellectual property rights.     

A compared R&D-based and patent-based cross impact analysis for identifying relationships between technologies

The planning of technological research and development (R&D) is demanding in areas with many relationships between technologies. To support decision makers of a government organization with R&D planning in these areas, a methodology to make the technology impact more transparent is introduced. The method shows current technology impact and impact trends from the R&D of an organization's competitors and compares these to the technology impact and impact trends from the organization's own R&D. This way, relative strength, relative weakness, plus parity of the organization's R&D activities in technology pairs can be identified.A quantitative cross impact analysis (CIA) approach is used to estimate the impact across technologies. Our quantitative CIA approach contrasts to standard qualitative CIA approaches that estimate technology impact by means of literature surveys and expert interviews. In this paper, the impact is computed based on the R&D information regarding the respective organization on one hand, and based on patent data representative regarding R&D information of the organization's competitors on the other hand. As an illustration, the application field ‘defence’ is used, where many interrelations and interdependencies between defence-based technologies occur. Firstly, an R&D-based and patent-based Compared Cross Impact (CCI) among technologies is computed. Secondly, characteristics of the CCI are identified. Thirdly, the CCI data is presented as a network to show the overall structure and the complex relationships between the technologies. Finally, changes of the CCI are analyzed over time. The results show that the proposed methodology has the potential to generate useful insights for government organizations to help direct technology investments.     

Strategic technology editing of the patent stage: lesson from a case of inkjet printer development

Patents are conventionally regarded as representing post-procurement of rights based on results of research and development (R&D). Patents can also be regarded as factors promoting R&D itself. In this study, the author examines the strategic meaning of patents in R&D through analyses of the R&D processes at Canon Inc., which is widely considered to submit patents strategically. The author identified characteristic behaviour related to patent acquisition in the R&D of inkjet printers. Canon constructed a strong patent group precisely by editing patents submitted earlier. Characteristic patent submissions were also identified: they elevated the obtained R&D results to higher concepts as milestones of R&D. These findings are discussed from the viewpoint of the meaning of patents for R&D and the possibility of effective R&D at the patent stage.     

The impact of R&D programme success on the decision to capitalise development expenditures in European firms

The financial reporting treatment of R&D expenditures can have important implications for firms’ strategic investment in R&D. Yet, financial reporting issues have been largely neglected in the R&D management literature. In this study, we first hypothesise that firms’ capitalisation of development expenditures subsequent to the mandatory adoption of IAS 38 (International Accounting Standard 38: Intangible Assets) is positively and significantly impacted by a measure of R&D programme success. Our empirical findings – based on a pan-European sample of firms – reveal strong support for this prediction. Our findings also offer support for our second hypothesis which predicts that capitalisation of development expenditures in conjunction with an evaluation of R&D programme success has a positive and significant impact on growth in shareholder value. Consequently, our work suggests that an important challenge for R&D professionals within firms is to develop improved measures of R&D success and to communicate this information to senior executives.     

Unsuccessful patent application and cooperative R&;D

We show that uncertainty in patent approvals may induce the firms to do cooperative R&D. With an exogenous probability of success in patent application, we show that, if all firms apply for patents under non-cooperative R&D, the firms prefer cooperative R&D than non-cooperative R&D for moderate (high) probabilities of success in patent applications, if the cost of patenting is small (large). We also show the implications of entry of non-innovating firms and endogenous probability of success in patent applications.      

Technology variation vs. R&D uncertainty: What matters most for energy patent success?

R&D is an uncertain activity with highly skewed outcomes. Nonetheless, most recent empirical studies and modeling estimates of the potential of technological change focus on the average returns to research and development (R&D) for a composite technology and contain little or no information about the distribution of returns to R&D – which could be important for capturing the range of costs associated with climate change mitigation policies – by individual technologies. Through an empirical study of patent citation data, this paper adds to the literature on the outcomes of energy R&D by focusing on the behavior of the most successful innovations for six energy technologies, allowing us to determine whether uncertainty or differences in technologies matter most for success. We highlight two key results. First, we compare the results from an aggregate analysis of six energy technologies to technology-by-technology results. Our results show that existing work that assumes diminishing returns but assumes one generic technology is too simplistic and misses important differences between more successful and less successful technologies. Second, we use quantile regression techniques to learn more about patents that have a high positive error term in our regressions – that is, patents that receive many more citations than predicted based on observable characteristics. We find that differences across technologies, rather than differences across quantiles within technologies, are more important. The value of successful technologies persists longer than those of less successful technologies, providing evidence that success is the culmination of several advances building upon one another, rather than resulting from one single breakthrough. Diminishing returns to research activities appear most problematic during rapid increases of research investment, such as experienced by solar energy in the 1970s.     

Technology variation vs. R&D uncertainty: What matters most for energy patent success?

R&D is an uncertain activity with highly skewed outcomes. Nonetheless, most recent empirical studies and modeling estimates of the potential of technological change focus on the average returns to research and development (R&D) for a composite technology and contain little or no information about the distribution of returns to R&D – which could be important for capturing the range of costs associated with climate change mitigation policies – by individual technologies. Through an empirical study of patent citation data, this paper adds to the literature on the outcomes of energy R&D by focusing on the behavior of the most successful innovations for six energy technologies, allowing us to determine whether uncertainty or differences in technologies matter most for success. We highlight two key results. First, we compare the results from an aggregate analysis of six energy technologies to technology-by-technology results. Our results show that existing work that assumes diminishing returns but assumes one generic technology is too simplistic and misses important differences between more successful and less successful technologies. Second, we use quantile regression techniques to learn more about patents that have a high positive error term in our regressions – that is, patents that receive many more citations than predicted based on observable characteristics. We find that differences across technologies, rather than differences across quantiles within technologies, are more important. The value of successful technologies persists longer than those of less successful technologies, providing evidence that success is the culmination of several advances building upon one another, rather than resulting from one single breakthrough. Diminishing returns to research activities appear most problematic during rapid increases of research investment, such as experienced by solar energy in the 1970s.     

R&D intensity,economic growth and firm-size growth: theory and practice

This article proposes a theoretical knowledge-driven horizontal research and development (R&D) endogenous-growth model to explain, for 10 innovative countries, the co-movement of the respective R&D intensity, economic growth and firm-size growth, by exploring short-medium-run and long-run growth effects. Bearing in mind some recent literature, we improve the R&D technology, by considering that R&D is more labour intensive through time as complexity increases, that the diffusion of designs is affected by coordination, organizational and transportation costs, and that a potential entrant will come up with the right idea is reduced because of the presence of a larger number of entrants. We show that when the economy is not initially in a steady state, it can take a saddle path towards the unique and locally saddle-path stable interior steady state. Both transitional-dynamics and steady-state behaviours of our theoretical model are then consistent with, respectively, the time-series and the cross-sectional evidence.     

Stochastic innovation and product market organization

Summary This paper analyzes how different types of product market organization affect firms' R&D investments in a stochastic innovation framework. Product market competition determines payoffs to successful and unsuccessful firms. Restrictions on the research project success probability distribution are identified that yield an invariance result for expenditure per R&D project. The impact of the number of firms (n) on the amount of market R&D is shown to be sensitive to product market organization. For a major process innovation, firms undertake more R&D projects under Cournot product market competition than under Bertrand competition, forn sufficiently large. A numerical example is used to illustrate welfare tradeoffs.Tom Lyon, Herman Quirmbach, Ferenc Szidarovszky, Mark Walker and two anonymous referees gave us helpful comments and suggestions on prior versions of this paper. Lucy Atkinson provided expert research assistance on numerical computations. Special thanks to Ted Bergstrom who gave us valuable suggestions about the first proposition.     

Does R&D spur productivity growth in Australia’s broadacre agriculture? A semi-parametric smooth coefficient approach

This article analyses the role of research and development (R&D) in Australia’s broadacre farming by using the semi-parametric smooth coefficient model. While the conventional production function approach only captures the direct effects of R&D, this methodology captures both the direct impact of a change in R&D on output and the indirect impact through changes in efficiency of use of factor inputs in the production process. Moreover, technical inefficiency is introduced in the model allowing it as a function of R&D. Using a unique state-level dataset covering the period 1995–2007, this empirical study finds that once both the direct and indirect effects are taken into consideration, R&D investments significantly increase outputs. The results also show that there are substantial variations in the effects of R&D on output across the state-level average farm through technology parameters as well as through technical inefficiency. Such variations need to be taken into account when designing policies for investing public R&D in agriculture.     

Evidence on the impact of R&D and ICT investments on innovation and productivity in Italian firms

Both research and development (R&D) and information and communication technology (ICT) investment have been identified as sources of relative innovation underperformance in Europe vis-à-vis the USA. In this article, we investigate the R&D and ICT investment at the firm level in an effort to assess their relative importance and to what extent they are complements or substitutes. We use data on a large unbalanced panel data sample of Italian manufacturing firms constructed from four consecutive waves of a survey of manufacturing firms, to estimate a version of the CDM model of R&D, innovation, and productivity [Crépon–Duguet–Mairesse 1998. Research, innovation and productivity: An econometric analysis at the firm level. Economics of Innovation and New Technology 7, no. 2: 115–58] that has been modified to include ICT investment and R&D as the two main inputs into innovation and productivity. We find that R&D and ICT are both strongly associated with innovation and productivity, with R&D being more important for innovation, and ICT investment being more important for productivity. For the median firm, rates of return to both investments are so high that they suggest considerably underinvestment in both these activities. We explore the possible complementarity between R&D and ICT in innovation and production, but find none, although we do find complementarity between R&D and worker skill in innovation.     

International,intersectoral, or unobservable? Measuring R&D spillovers under weak and strong cross-sectional dependence

In the theoretical and empirical growth literature, private and social returns to R&D have been identified as the key drivers of productivity gains and economic development. However, recently the debate on the relative importance of private vis-à-vis social returns has been reinforced by contributions in two emerging fields of the applied econometric literature, namely spatial panel modeling and the common factor approach, which stress the role of cross-sectional dependence as a source for a potential estimation bias linked to the measurement of returns to R&D. In this paper, we account for these methodical advances when estimating sectoral knowledge production functions for OECD countries under weak and strong cross-sectional dependence. By doing so, we are able to uncover technology- and trade-related R&D spillover channels associated with social returns to R&D, while effectively controlling for other types of productivity spillovers and latent macroeconomic shocks. Our results highlight the role played by international-intersectoral R&D spillovers for the social rate of return to R&D, while we get limited evidence for private returns to R&D once cross-sectional dependence is properly accounted for.     

Strategies of biotechnology companies

To identfy the R&D and marketing strategies adopted by by biotechnology firms in the UK, a survey was conducted spanning a range of biotechnology firm size, product, organizational arrangemens. and prior experiences with advanced technology. This was done using a comprehensive questionnaire similar to that used in a comparable investigation in the USA. Twenty-three firms active principally engaged in speciality chemicals human diagnostics and agricultural products.The information from the questionnaires was used to analyse the company strategies under three man headings. These were technology acquisitation,marketing and R&D. Companies were charecterized into three clusters within each of these headings. The means of appropriation for different strategies were then examined although the significance of the results was undermined by the small size. Finally, the relationship between R&D and marketing strategies within the same firms was investigated.     

On the incentives for cooperative research

This paper analyzes incentives for cooperative research for firms competing in the product market. Contrary to the literature, we portray situations to show that non-cooperative R&D can occur even if the probability of success in R&D is large. We then model synergy in cooperative R&D and show that when the innovation size is large, cooperative research is likely to occur.     

Assessing the influence of differentiation strategy and R&D subsidies on R&D cooperation

This paper explores the R&D cooperation determinants of the innovative companies belonging to the Spanish manufacturing sector. Our findings suggest that the variable R&D subsidy is endogenous, significant, and has a strong positive influence on R&D cooperation. This is a clear indication that the achievement of public aid is often conditioned by the obligation for companies to cooperate in R&D. We have also found that the differentiation strategy variable is significant and has a negative influence on R&D cooperation. Companies positioned in a differentiation strategy probably own and use some different knowledge from other companies. Consequently, they will not have much interest in taking advantage of the spillovers generated by other companies. It is therefore logical that they are reluctant to establish cooperation agreements on R&D. Therefore, companies positioned in the differentiation strategy need public policies to support R&D that are not conditioned to the establishment of cooperation agreements.     

The impact of technology intermediaries on firm cognitive capacity additionality

Whereas the provision of R&D subsidies has been central to public policy for many years, governments have recently become increasingly involved in stimulating cooperation for innovation and R&D. In many countries, financial support for technology intermediaries has become one of the key measures of indirect public support. However, little research has assessed the impact of indirect policy measures. In this paper, we shed light on the conditions under which technology intermediaries contribute to knowledge and networking outcomes generated by the firms that call upon them. We hereby focus on firm network and competence additionality as measures for cognitive capacity additionality and study the impact of technology intermediaries on firms. In doing so, we distinguish between R&D and R&D related activity technology intermediaries engage in. The results indicate that absorptive capacity of the technology intermediary does not affect cognitive capacity additionality generated by firms in R&D activities, while the results for R&D related activities are mixed and depending on the type of cognitive capacity additionality studied. The absorptive capacity of firms does not directly affect cognitive capacity additionality, but the results of mediation analysis show that firms with higher levels of absorptive capacity use the services of the technology intermediary more intensively, and subsequently generate higher levels of cognitive capacity additionality.     

Hidden innovators: the role of non-R&D activities

Although R&D has been highlighted as the main source of firm-level innovations, a significant group of firms develop innovations without performing R&D activities. The primary goal of this study is to understand the sources of innovation in such firms. To accomplish this goal, we explore the role played by other, non-R&D activities that can lead to innovation – activities such as technology forecasting, design, use of advanced manufacturing technologies and training. Our empirical analysis is based on a representative panel of Spanish manufacturing firms. The results strongly support the view that non-R&D activities are critical factors in explaining both product and process innovations attained by any firm, especially in the case of firms not performing R&D. Academic, managerial, and policy implications are derived from these results.     

Assessing the nonlinear nature of the effects of R&D intensity on growth of SMEs: a dynamic panel data approach

Based on a sample of Portuguese SMEs for the period 1999–2006 and using two step estimation, namely probit regressions and dynamic estimators, this study makes two important contributions to the literature: (i) identification of a quadratic relationship between R&D intensity and SME growth that takes the form of a U, and so R&D intensity is a stimulating factor of SME growth for high levels of R&D intensity; being a restrictive factor of SME growth for low levels of R&D intensity; and (ii) the growth of SMEs seems to be dependent on the nonlinear effects associated with distinct levels of R&D intensity. The nonlinear effects identified suggest that Portuguese SMEs with high levels of R&D intensity more easily find an efficiency scale and are more dependent on internal financing and short-term debt as sources for funding growth, compared to the case of Portuguese SMEs with lower levels of R&D intensity.     

Comparison of excess social rates of return to product and process R&D

This paper reports results for a well established production function that includes research and development (R&D). By assuming zero depreciation, it can be used to provide estimates of excess social rates of return to R&D. The estimates distinguish spending on product and process innovations for three US manufacturing industries. The results suggest that, while excess social rates of return are found to be negative for product R&D, they are positive for process in each of the industries. They therefore suggest some scope for public R&D subsidies or tax benefits to process R&D but not to product R&D.