Measuring Innovation in European Industry

This paper analyses the results of the 1993 Community Innovation Survey (CIS). Fifty per cent of European firms introduced a product or process innovation during 1990-92. The share of innovating firms varies between industrial sectors and firm size. The percentage of innovating firms is higher for large firms than for smaller ones. In high-tech sectors this share is two thirds and for traditional ones is one third. The largest part of firms' expenditure for innovation is linked to the adoption and diffusion of technologies through machinery and equipment, which absorbs 50% of firms' innovation expenditure. R&D activities represent, on average, 20% of total innovation expenditure while other innovative activities, such as design and trial production, account respectively for 10% and 11%. The mix of innovation inputs, especially R&D and investment, is strongly correlated with firm size, displays little change across countries and varies greatly across industries.     

Horizontal Agreements and R&D Complementarities: Merger versus RJV

We study the decision of two firms within an oligopoly concerning whether to enter into a horizontal agreement to exploit complementarities between their R&D activities and if so, whether to merge or form a research joint venture (RJV). In contrast to horizontal merger and motivated by real-world evidence, we incorporate a probability that an RJV contract will fail to enforce R&D sharing. We find that a horizontal agreement always arises in equilibrium, which is consistent with empirical findings that R&D complementarities between firms positively influence the formation of horizontal agreements. The insiders’ merger/RJV choice involves a trade-off: While merger offers certainty that R&D complementarities will be exploited, it leads to a profit-reducing reaction by outsiders on the product market, where competition is Cournot. Greater contract enforceability (quality) and R&D investment costs both favour RJV. Interestingly, the insiders may choose to merge even when RJV contracts are always enforceable, and they may opt to form an RJV even when the likelihood of enforceability is negligible. We also explore the welfare implications of the firms’ merger/RJV choice.     

Objects and Subjects in Technological Interdependence. Towards a Framework to Monitor Innovation

Technology, even more than other aspects of economic life, is characterized by a strong interdependence across both sectors and organizations. However, we still know little about the determinants and impact of technological interdependence. The standard input-output analysis is unable to explain interdependence in technological life since a large proportion of innovations are either untraded or are disembodied from products. Innovations which are not appropriated by the innovators are not signalled by prices. Moreover, input-output tables do not systematically consider exchanges within economic organizations, such as firms. This paper proposes a more complex accounting framework for innovation which would monitor the technological field of the innovation and the product where it is used, as well as the producer-user interrelationship.     

Innovation success of non-R&;D-performers: substituting technology by management in SMEs

This paper investigates the impact of in-house R&D and innovation management practices on innovation success in small and medium-sized firms (SMEs). While there is little doubt about the significance of technology competence for generating successful innovations, in-house R&D activities may be a particular challenge for SMEs due to high risk exposure, high fixed costs, high minimum investment and severe financial constraints. SMEs may thus opt for refraining from R&D and relying more on innovation management tools in order to achieve innovation success. We analyse whether such a strategy can pay off. Based on data from the German CIS, we find that R&D activities are a main driver for innovation success if combined with external R&D, using external innovation sources or by entering into co-operation agreements. SMEs without in-house R&D can yield a similar innovation success if they effectively apply human resource management tools or team work to facilitate innovation processes.

Innovation, R&D cooperation and labor recruitment: evidence from Finland

This article investigates the role played by one type of firm interaction, namely R&D cooperation, and also the acquisition of labor, in the promotion of industrial innovations. We employ a unique innovation dataset from Finland which combines firm specific information about the innovation performance of the firms along with their individual characteristics, as well as firm specific information regarding the origins of their recent labor acquisitions. Analyzing this data allows us to identify the different roles which the knowledge spillovers and labor markets play in the innovation process. Our results suggest that small firms are generally more innovative than large firms; R&D cooperation is an essential feature of innovation, but the variety of cooperation is of little importance; and labor acquisition appears to be only of limited importance for innovation.

Innovation and productivity in SMEs: empirical evidence for Italy

Innovation in SMEs exhibits some peculiar features that most traditional indicators of innovation activity do not capture. Therefore, in this paper, we develop a structural model of innovation that incorporates information on innovation success from firm surveys along with the usual R&D expenditures and productivity measures. We then apply the model to data on Italian SMEs from the “Survey on Manufacturing Firms” conducted by Mediocredito-Capitalia covering the period 1995–2003. The model is estimated in steps, following the logic of firms’ decisions and outcomes. We find that international competition fosters R&D intensity, especially for high-tech firms. Firm size and R&D intensity, along with investment in equipment, enhances the likelihood of having both process and product innovation. Both these kinds of innovation have a positive impact on firm’s productivity, especially process innovation. Among SMEs, larger and older firms seem to be less productive.

The Effects of Integration on R&D Incentives in Systems Markets

We consider a systems market where two complementary components must be used in combination to provide valuable services. The market for the first component is monopolized whereas the market for the second is potentially served by multiple firms. We show that integration of the monopolist into the competitive complementary market may distort incentives for R&D, reducing total economic welfare.     

The Evolution of R&D Laboratories in the Brazilian Polymer Industry

ABSTRACT

Ronstadt observed that R&D laboratories in foreign subidiaries of American multinationals follow an evolutionary pattern of development. First, these laboratories adapt foreign technology to the local conditions and local raw materials. Later, laboratories focus their activity in obtaining product quality. In the last stage, these R&D units generate new technology of a long-term or exploratory nature for the corporate parent. Based on this theoretical background, this paper studies the evolution of R&D investments in polymer firms in Brazil. The methodology used was a case study conducted in 5 firms from the polymer area, complemented with secondary sources.

RESUMEN. Según Ronstadt, los laboratorios de I&D de las subsidiarias extranjeras de las multinacionales norteamericanas, cumplen un programa de desarrollo evolucionario. En primer lugar, estos laboratorios adaptan las tecnologías extranjeras a las condiciones locales y las materias primas existentes. A continuación, los laboratorios orientan sus actividades en obtener un producto de alta calidad. En la última etapa, estas unidades de I&D generan nueva tecnología de características a largo plazo o naturaleza exploratoria para la corporación matriz. Usando como base estos antecedentes teóricos, este documento estudia la evolución de las inversiones realizadas por las empresas de polímeros en el campo de la I&D en el Brasil. La metodología utilizada fue un estudio de caso realizado en 5 empresas fabricantes de polímeros, complementado con otras fuentes secundarias.

RESUMO. Ronstadt observou que os laboratórios de R&D em subsidiárias estrangeiras de multinacionais americanas seguem um padrão evolutivo de desenvolvimento. Primeiro, estes laboratórios adaptam a tecnologia estrangeira às condiç[otilde]es e às matérias-primas locais. Posteriormente, os laboratórios focalizam a sua atividade na obtenção da qualidade do produto. E, finalmente, estas unidades de R&D geram uma nova tecnologia para a matriz de natureza exploratória ou de longo prazo. Baseado nesta experiência teórica, este trabalho investiga a evolução dos investimentos de R&D em empresas de polímeros no Brasil. A metodologia usada foi um estudo de caso conduzido em cinco empresas da área de polímeros, complementada por fontes secundárias.     

Introduction. The Internationalisation of the Innovation Process

The international economics of business and management has focused - both in the academic literature and in corporate and public policy discussions - increasingly on issues of globalisation, innovation and 'competitiveness'. These issues, and in particular their interrelation, are analysed in detail in this Special Issue of the International Journal of the Economics of Business. This opening article aims to set the scene by considering how the rather distinct literatures around the above three topics can best be drawn upon in order to focus on what implications the new global economic environment has for the economics of business and public policy.     

R&;D in SMEs: a paradox?

This paper has three objectives: (1) to survey the relevant literature addressing the (apparent) paradox of Research & Development investments carried out within Small and Medium Enterprises; (2) to provide focused summaries of the articles in this special issue; (3) to draw some general conclusions in terms of policy implications.

Noncooperative,cooperative, and delegative R&D

We discuss alternative organizational forms of research and development in a symmetric duopoly framework. Firms play a noncooperative game at the output stage but can collaborate at the R&D stage. In the absence of patent protection, technology licensing that prevents imitative R&D may emerge as an equilibrium outcome. In general, greater probabilities of success in R&D rule out noncooperative arrangement at the R&D stage. Delegative R&D, where firms move sequentially, tends to dominate the cooperative form of R&D.Department of Economics, Monash University     

Essential research in technology management

Now that we live in a world full of cutting-edge breakthroughs, technology management seems to be particularly essential. The Journal of Business Research has published a special issue entitled “Essential Research in Technology Management.” This special issue includes 11 papers. Six of them are from the 2007 Chinese Society for Management of Technology Annual Meeting and Conference held at Feng Chia University, Taiwan, while the other five are invited. All of them went through double-blind reviews and revisions. These papers contribute to various perspectives of technology management in different countries.     

The Effects of UK Pharmaceutical Policy on Government Drug Expenditure: Cost Control and Incentives for R&D

This paper investigates the impact of UK pharmaceutical policy on the level of NHS pharmaceutical expenditure. UK pharmaceutical policy is one which has managed to control costs, but at the same time, has not sacrificed the rewards for conducting long-term R&D in the UK. The analysis provides evidence that the government policies which encourage long-term R&D and the development of new drugs actually lead to lower overall pharmaceutical expenditure by the NHS. The reason for this is attributed to the savings associated with the replacement of new drugs for other less effective drugs. Additional results show that the UK receives positive spillovers from the R&D conducted by US firms and this R&D has a cost reducing impact on NHS pharmaceutical expenditure.     

R&D spillovers through trade in a panel of OECD industries

This paper investigates the significance of Research and Development (R&D) spillovers through intra- and international trade in intermediate goods for productivity growth in a panel of OECD industries during 1973–1994. In the model, four different sources of R&D are identified: R&D conducted in the particular industry itself, R&D conducted in the same industries in other countries, R&D conducted in other domestic industries, and R&D conducted in other foreign industries. I find that among R&D sources the most important contributions to productivity growth come from the domestic R&D efforts. Here, own R&D is important for both domestic innovation and for the productivity catch-up process. Evidence that international R&D spillovers also have significant effects on productivity growth is found to be less robust. My analysis also shows that human capital affects productivity directly as a factor of production.     

Economic returns to industrial research

This paper investigates the relationship between R&D and corporate performance. The study extends previous research by examining the conditions under which firms benefit from R&D; by incorporating in the analysis the varying costs of R&D inputs; and by employing an opportunity-cost approach that estimates the monetary returns to R&D. The findings indicate that industrial research generates revenues that are significantly higher than the returns that other investments yield. The study also resolves previously conflicting results concerning firm size, and offers new insights on the role of technological opportunities that contradict past studies. Although the potential for innovation is greater in high-tech industries, intense R&D competition prevents technologically dynamic firms from enjoying high returns to R&D. By contrast, the results demonstrate that low-tech firms use R&D successfully as part of their strategies, implying that prior research underestimates the importance of R&D for these firms.     

国际贸易对一国研发投入及自主创新能力影响的实证研究

国际贸易对一国自主创新能力有重要的促进作用,国际贸易的这种效应,不是通过增加一国研发投入而是通过提高研发投入的利用效率来实现的。通过引进技术创新所需要的中间投入品、商品和技术,获得处于世界技术前沿的新技术、新产品信息,借鉴先进的研发管理技术,以提高自主创新能力。     

Whither Foreign R&D in China: Some Concluding Thoughts on Chinese Innovation

The purpose of this article is to highlight the impact of a new range of field-work driven scholarly research regarding foreign R&D in China on the field of Chinese innovation studies. The field of China innovation studies is positioned for a major take-off with the opening up and broadening of the field to a new generation of scholars and experts, including the growing participation and contributions of Chinese nationals from the People's Republic of China (PRC). With the continued opening of China to the outside world has come also increased scholarly access which is allowing for research on issues that heretofore was constrained due to the limited availability of information as well as political and national security sensitivities. The field also is benefiting from the increased visibility being given to innovation matters by the Chinese government and the rise in the number of foreign R&D centres that have been established by foreign companies. New ‘internally-focused’ questions related to R&D spending, the cultural and historical setting for innovation, and the institutional structure are being addressed with some promising results. In addition, a whole new series of ‘externally-focused’ questions also are beginning to dominate the research agenda as more and more foreign firms seek to take advantage of China's improved climate for overseas business as well as the growing number of scientists and engineers at the higher end of the Chinese talent pool. The more we seem to find out, however, the more we realize we need to know to truly understand China's technological potential. That said, it is increasingly clear that foreign influence is having an important shaping effect on the nature of the PRC's R&D system, especially with respect to the strategic role played or potentially being played by returned scholars and experts whose more cosmopolitan perspectives serve as a real asset in building bridges between Chinese traditional attitudes and modes of behaviour towards new knowledge creation and the current institutional constraints on China's innovation trajectory since 1949.     

Unilateral Effects in Merger Analysis: Models,Merits, and Merger Policy

This paper models the Federal Trade Commission’s (FTC) unilateral effects merger policy using a sample of 192 investigations undertaken between 1993 and 2010. Statistical analysis shows that the number of significant rivals represents a reasonable structural proxy for the FTC’s merger challenge decision, although other variables, such as impediments to entry, fringe share, clear evidence of head-to-head competition between the merging firms, competitive effects’ evidence, and efficiency-related proxies, also affect the decision to challenge a merger. Some of these variables suggest that the innovations in the 2010 Merger Guidelines had already been applied in FTC merger analysis.     

Effectiveness of R&;D tax incentives in small and large enterprises in Québec

In this paper we evaluate the effectiveness of R&D tax incentives in Quebec, using manufacturing firm data from 1997 to 2003 originating from R&D surveys, annual surveys of manufactures and administrative data. The estimated price elasticity of R&D is –0.10 in the short run and –0.14 in the long run, with slightly higher elasticities for small firms than for large firms. We show that there is a deadweight loss associated with level-based R&D tax incentives that is particularly acute for large firms. For small firms it is not sizeable enough to suppress the R&D additionality, at least not for quite a number of years after the initial tax change. Incremental R&D tax credits do not suffer from this deadweight loss and are from that perspective preferable to level-based tax incentives.