Cooperative and noncooperative R&D with spillovers: The case of labor-managed firms

This research focuses on the behavior of not-for-profit enterprises. In particular, using a familiar model of cost-reducing R&D with spillovers, we examine strategic interactions between labor-managed firms in a duopoly. Research spillovers have not been previously considered in the context of labor-managed firms. Among four market scenarios involving (i) competition in research and production; (ii) cooperation in research and production; (iii and iv) competition or cooperation in research and the reverse in production, our results show that research is greatest under full cooperation, while output is greatest under full competition. Output and R&D are the lowest in the case when firms compete in research, but form a production cartel. The degree of research spillovers has a crucial bearing upon these rankings. Some of these results differ from those for profit-maximizing firms. The effects of changes in research spillovers on employment (output) are shown to depend upon the nature of the underlying production technology. Policy implications are discussed.     

R&D policy in a volatile economy

The literature on R&D-based growth establishes that market equilibrium is inefficient and derives optimal R&D policy. Normative analyses of this type use the assumption of steady state, largely motivated by analytical convenience. This paper questions this steady-state approach by introducing endogenous cycles as long-run equilibria. We show that the government fails to maximize welfare if policy which is optimal in steady state is myopically applied in cyclical equilibria. More specifically, we demonstrate that (i) cycles arise in the (very) standard R&D-based model of Grossman and Helpman [1991. Innovation and Growth in the Global Economy. MIT Press, Cambridge, MA (Chapter 3)] once the model is framed in discrete time, (ii) these cycles are inefficient in the sense that they prevent welfare maximization, (iii) optimal steady-state R&D policy fails to eliminate cycles, and can even create inefficient cycles, (iv) the application of R&D subsidies leads to a trade-off between growth and macroeconomic stability, and (v) optimal R&D policy in a fluctuating economy is state-dependent, which generalizes optimal steady-state R&D policy.     

IS FINANCIAL SUPPORT FOR PRIVATE R&D ALWAYS JUSTIFIED? A DISCUSSION BASED ON THE LITERATURE ON GROWTH

Many economists have long held that market failures create a gap between social and private returns to research and development (R&D), thereby limiting private incentives to invest in R&D. However, this common belief that firms significantly underinvest in R&D is increasingly being challenged, leading the rationale behind public support for private R&D to be questioned. In this paper, we attempt to clarify the perspectives of two sources: the theoretical literature on endogenous growth, and its recent developments in integrating a geographical dimension, and the empirical literature that measures the social returns to R&D in relation to the private returns. Ultimately, we are able to clearly distinguish among different types of market failures and compare their relative impact on the gap between the private and social returns to R&D. Two main conclusions are reached. First, systematic firm underinvestment in R&D is not demonstrated. Second, even though instances of underinvestment do occur, they are mainly explained by surplus appropriability problems rather than by knowledge externalities. This suggests the need for a new policy mix that employs more demand‐oriented instruments and is more concentrated on identifying efficient allocations among activities rather than merely increasing global private R&D investment.     

Environmental regulations in private and mixed duopolies: Taxes on emissions versus green R&D subsidies

In this article, we compare two kinds of environmental regulations—emissions taxes and green R&D subsidies—in private and mixed-duopoly markets in the presence of R&D spillovers. We show that a green R&D subsidy is better (worse) than an emissions tax when the green R&D is efficient (inefficient), irrespective of R&D spillovers, whereas the existence of a publicly owned firm encourages the government to adopt a subsidy policy. We also show that the optimal policy choice depends on R&D efficiency and spillovers. In particular, when green R&D is inefficient and the spillover rate is low (high), the government should choose an emissions tax and (not) privatize the state-owned firm. When green R&D is efficient, however, an R&D subsidy is better, but a privatization policy is not desirable for society, irrespective of spillovers.     

On the way to creativity: Engineers as intrapreneurs in organizations

Organizations often hide creativity and talent. This paper describes how to make engineers active in the field of intrapreneurship within large firms where they often are employed in R&D. This development is seen, in Europe at least, most desirable by the companies today. Technology has an extensive impact on the society and economy nowadays, and it is important to study how technological innovations appear and who is behind them. Entrepreneurship and organizational intrapreneurship are, in many cases, the basis of technological innovations and firm renewal. Engineers are the company's special professional workforce that has the role to produce and develop innovations. Since the world of high-tech companies needs the cooperation of many experts, engineers must be able to cooperate well with other fields of expertise such as marketing, research and development as well as external suppliers and service providers. Also, innovations today often ask not only for unique technical knowledge but also social knowledge to make these innovations meaningful. In this sense, social innovation parallels technical innovation. Thus, in this paper we explore the origins of the intrapreneurship capacity in engineering settings of hightech firms, thereby concentrating on three issues: Who is the intrapreneur and the engineer-intrapreneur in particular? What kind of managerial and organizational support is required to facilitate the intrapreneur's upcoming? What are the educational and work related consequences for practical intrapreneurship tool development?     

Resonant R&D structure for effective technology development amidst megacompetition—an empirical analysis of smart cooperative R&D structure in Japan’s transport machinery industry

Under the megacompetition in globalizing economy while facing long lasting economic stagnation, the effective utilization of potential resources for innovation has become a crucial strategy for R&D intensive industries. The construction of a smart cooperative R&D structure has thus become significant. Among Japan’s R&D intensive industries, the transport machinery industry has constructed an effective cooperative R&D structure by smartly complementing both comparatively advantageous and disadvantageous technologies by means of integrating the effective utilization of technology spillover and joint collaborative R&D.Prompted by this complementing system, this paper attempts to elucidate the mechanism enabling the transport machinery industry to construct the smart cooperative R&D structure. Resonant R&D structure is identified as a source of such R&D cooperation leading to increasing its marginal productivity of technology.     

The national innovation policy effect according to firm location

The regional nature of innovation and innovation policy was investigated. The aim of this study was to determine whether the specific economic and institutional conditions of a region had an influence on the results of a national policy intended to support entrepreneurial innovation. The analysis compared the effect of the national R&D subsidies on the innovation effort of firms located in central regions, which concentrate an important percentage of the national innovation activity, together with those firms located in periphery regions. Significant regional differences were detected with regard to the national R&D subsidies’ effect and distribution. The central regions manifested a higher subsidy effect compared to the periphery regions. The results of this study have allowed us to conclude that the region plays an important differentiating role in connection with the final result of the innovation policy aimed at the entire national territory. Therefore, this study recommends including the geographical location of the firm in future evaluations.     

R&D strategy and Australian manufacturing industry: an empirical investigation of emphasis and effectivness

This research investigates the degree of emphasis placed by the Australian manufacturing industry on Research and Development (R&D) strategy as well as on other organisational strategies such as marketing, HRs (HR), technology, and operations at the functional level. The research extends further to investigate whether the emphasis on R&D strategy differs with contextual factors such as firm size, firm’s generic strategy, type of market, firm’s life cycle stage, etc. A mail survey was carried out to collect information from manufacturing firms across Australia. This was followed by an on-site interview of some of the senior managers of manufacturing firms from three Australian states: South Australia, Victoria and New South Wales.The study found that although the emphasis on R&D strategy has received a high priority in the past few years, it has not been as effective as the operations strategy and the technology strategy. The operations strategy has been accorded the highest importance in the past few years and this will continue in the future. The study also indicated that firms, which adopt a differentiation generic strategy, put more emphasis on R&D than the firms, which adopt cost leadership and focus generic strategies. The results did not indicate any evidence of a relationship between firm size and the R&D strategy although large firms are found to put more emphasis on operations and marketing strategies. Relatively higher emphasis was placed on the R&D strategy by businesses: at the growth stage; involved in the manufacture of consumer goods as opposed to industrial goods; involved in exports with a higher sales growth in export markets; and having a higher growth rate relative to their industry.     

Innovation diffusion: research agenda for developing economies

This paper reviews the literature on innovation to build an agenda for research on innovation diffusion in developing countries. The main ideas on innovation diffusion are discussed, aiming at identifying the key aspects that determine the introduction and development of new technologies in an economy. Analysis of the literature suggests that innovation diffusion depends on three contextual aspects that are economy and government, technology strategies of firms, and management of innovation. Based on this analysis, four areas for research on the subject are identified, aiming at increasing the knowledge about mechanisms and approaches of innovation diffusion in developing countries.     

A patent race in a real options setting: Investment strategy, valuation, CAPM beta, and return volatility

In this paper, we study financial properties of R&D intensive firms through a continuous-time real-options patent-race model. Numerical analysis in this study shows that intense competition drives a firm to invest more aggressively, which then pushes up its cost of capital and return volatility while introducing negative return correlation with its competitor. Furthermore, we find that a firm's position in competition has important impacts on its financial properties. For instance, a firm's cost of capital is a non-monotonic function of its relative position in the race. In addition, the relationship between cash flow uncertainty and investment can be negative when a firm is far ahead or far behind, or positive when firms are close in the race.     

Roles, resources and benefits of intermediate organizations supporting triple helix collaborative R&D: The case of Precarn

Triple helix collaborations involving academia, government and industry are believed vital to the success of regional technology development. However, due to differences in culture, organizational functioning and incentive mechanisms as well as the different objectives of the various actors involved, such collaboration is difficult to create and sustain. A case study of the organization called Precarn, a collaborative, which manages a program of triple helix projects, is used here to illustrate how an intermediate organization can help triple helix partnerships towards the successful commercialization of new technologies. The paper contributes to the literature on managing R&D collaborations and innovation networks using organization theories to explain why and how collaborative intermediate organizations can facilitate successful technological adoption and commercialization across innovation networks.     

Environmental regulation, technological diversity, and the dynamics of technological change

Inducing technological progress is an important objective of environmental regulation. We investigate under which conditions regulation-induced technological progress pursues the best technological option. We analyze a setting with vertical and horizontal technological progress, cost uncertainty, time-limited patent protection, and a case that is typical for some emissi4on-intensive industries, like electricity generation or the chemical industry. Under taxes and standards, only the current least-cost technology is used and developed, implying a lock-in into a possibly inferior technology. Tradable permits yield slower progress but can facilitate the simultaneous development of technologies, rendering lock-ins less likely.     

Estimating Regional Variations of R&D Effects on Productivity Growth by Entropy Econometrics

Abstract

In this paper we adopt an entropy econometrics-based estimator to study regional variations in regression coefficients and apply it to analyse productivity growths generated by R&D activities at a regional level. Considering the possible effects of the region's own R&D stock as well as the spillovers produced in other regions, the paper proposes the use of an entropy-based technique to estimate these effects for a specific location. Depending on the degree of heterogeneity of the set of regions analysed, it is possible that some of these regions present characteristics that enable them to more easily convert R&D efforts (generated in the region itself or obtained from other regions by R&D spillovers) into productivity gains, whereas in other regions the effect of (direct or spillover generated) R&D activities may be irrelevant. We illustrate this idea with an empirical application for Spanish regions.

RÉSUMÉ Dans la présente communication, nous adoptons un estimateur d'entropie à base économétrique pour l’étude de variations régionales des coefficients de régression et leur application pour l'analyse de d'augmentations de la productivité produites par des activités de recherche et développement à l’échelon régional. En se penchant sur les effets possibles du stock de recherches et développement propre à la région, ainsi que les retombées produites dans d'autres régions, la communication propose l'emploi d'une technique à base d'entropie pour effectuer une évaluation de ces effets pour un lieu spécifique. En fonction du degré d'hétérogénéité du groupe de régions analysé, il est possible que ces régions présentent des caractéristiques leur permettant de convertir plus facilement des interventions de recherche et développement (R&D) (générées dans cette même région, ou obtenues d'autres régions par retombées de R&D) en gains de productivité, alors que dans d'autres régions, l'effet (direct ou par retombée) d'activités de R&D pourra n'avoir aucune pertinence. Nous illustrons cette idée avec une application empirique pour des régions d'Espagne.

EXTRACTO En este estudio adoptamos un estimador basado en máxima entropía para estudiar las variaciones regionales en coeficientes de regresión, y lo aplicamos al análisis de los crecimientos de productividad generados por actividades de I+D a nivel regional. Considerando los posibles efectos del stock de I+D propio de la región, así como los spillovers producidos en otras regiones, el estudio propone el uso de una técnica basada en entropía para estimar estos efectos en relación con una ubicación específica. Dependiendo del grado de heterogeneidad del conjunto de regiones analizadas, es posible que algunas de estas regiones presenten características que les permitan convertir más fácilmente los esfuerzos de I+D (generados en la región misma u obtenidos de otras regiones a través de spillovers de I+D) en ganancias de productividad, mientras que en otras regiones el efecto de las actividades de I+D (directas o generadas de spillovers) podrían ser irrelevantes. Ilustramos esta idea con una aplicación empírica para regiones españolas.

摘要:

本文中, 我们采用基于熵计量经济学的估计器研究回归系数的区域变化, 并用它分析地域级R&D活动带来的生产率增长。考虑到区域自身R&D储备和其他区域的人才流入可能带来影响, 本文提出一种熵方法估计这些因素对某个特定区域的影响。根据所分析区域集的异质程度, 其中有些区域可能会表现出一些特征, 使其更容易将R&D能力 (该区域自己产生或者从其他区域流入)转化为生产收益, 而另外一些区域R&D活动的影响 (直接或者流入)与生产收益无关。我们以对西班牙地区的实验应用为例证明了这一论点。