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.     

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.     

Convergence to symmetry in dynamic strategic models of R&D: The undiscounted case

Will R&D increase or decrease the asymmetry between firms over time? We examine this issue in the context of a dynamic, alternate-move duopoly model of non-cooperative R&D. The asymmetry we consider is with respect to the initial stocks of technological knowledge which provides one firm a greater potential for current and future profits in the product market. Utilizing a value loss process constructed from the Optimality Equation of dynamic programming, we show that for the undiscounted case the asymmetry between the firms disappears over time. We obtain this convergence-to-symmetry result by imparting a temporal character to R&D through the notion that R&D investment cannot be changed instantaneously, by allowing research externalities, complementarity or substitutability between own and appropriated R&D, and either increasing, decreasing or constant returns to scale in the production of technical knowledge from own and rival R&D.     

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.     

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.     

R&D and aggregate fluctuations

Empirical observations raise interesting questions regarding the sources of the excessive volatility in the R&D sector as well as the nature of the relation between the sector and aggregate fluctuations. Using US data for the period 1959–2007, we identify sectoral technology and capital investment-specific shocks by employing a Vector Autoregression. The identifying assumptions are motivated by a two-sector dynamic general equilibrium model. Controlling for real and nominal factors, we find that capital investment-specific shocks explain 70 percent of fluctuations of R&D investment, while R&D technology shocks explain 30 percent of the variation of aggregate output, net of R&D investment. Technology shocks jointly explain almost all the variation of output in the R&D sector and 78 percent of the variation of output in the rest of the economy. They also constitute the main factor of the procyclicality of R&D investment.     

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.     

Learning from R&D outsourcing vs. learning by R&D outsourcing

We analyze how research and development (R&D) outsourcing influences product innovation. We propose a separation between learning from R&D outsourcing, whereby the firm improves its ability to innovate by using outsourced R&D directly in new products, from learning by R&D outsourcing, whereby the firm indirectly uses outsourced R&D by integrating it with internal R&D to create new products. Building on the knowledge-based view, we argue that learning from R&D outsourcing is likely to have an inverse U-shaped relationship with product innovation, because the initial benefits of using outsourced component R&D knowledge to innovate products is eventually outweighed by the hollowing out of the firm's ability to innovate. In contrast, we propose that learning by R&D outsourcing is likely to have a U-shaped relationship with product innovation, because the initial challenges of integrating internal and external R&D are eventually overcome, resulting in more innovations. Finally, we distinguish between domestic and foreign R&D outsourcing and propose a liability of foreignness in R&D outsourcing as it has a lower impact on new products than domestic R&D outsourcing. The empirical analysis shows that outsourced R&D has an inverted U-shaped relationship with the number of new products, while the interaction between outsourced R&D and internal R&D has a U-shaped relationship with the number of new products. It also shows that domestic outsourced R&D has a higher positive impact on the number of new products than foreign outsourced R&D.     

Abatement R&D,market imperfections,and environmental policy in an endogenous growth model

We develop an endogenous growth model featuring environmental externalities, abatement R&D, and market imperfections. We compare the economic performances under three distinct regimes that encompass public abatement, private abatement without tax recycling, and private abatement with tax recycling. It is found that the benefit arising from private abatement will be larger if the degree of the firms’ monopoly power is greater. With a reasonably high degree of monopoly power, a mixed abatement policy by which the government recycles environmental tax revenues to subsidize the private abatement R&D is a plausible way of reaching the highest growth rate and welfare.     

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?     

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.     

Property rights protection,financial access and corporate R&D: Evidence from a large representative sample of Chinese firms

The motivation of this paper is to explore why corporate R&D investments are significantly different under similar institutional backgrounds. Our estimates not only confirm a positive relationship from property rights protection (hereafter PRP) to corporate R&D, but also show the mediation effect of financial access on this positive relationship. Thus, we use financial access to explain the variant effect of PRP on corporate R&D. With exogenous instrumental variables, our estimates are robust to endogeneity issues.     

Issues in Assessing the Effect of Interindustry R&D Spillovers

This paper aims to clarify three issues concerning the weighting methodol ogy generally used to evaluate interindustry R&D spillovers. These issues concern the likely nature of the spillovers estimated through different types of supporting matrices; the similarity between input–output (IO), technology flows and technological proximity matrices; and the relevance of the assumption that a single matrix can be used for different countries. Data analyses of weighting components show that technology flows matrices are in an intermediate position between IO matrices and technological proximity matrices, but closer to the former. The various IO matrices, as well as the three technological proximity matrices, are very similar to each other. The panel data estimates of the effect of different types of interindustry R&D spillovers on industrial productivity growth in the G7 countries reject the hypotheses that a technology flows matrix can be approximated by an IO matrix and that a single IO matrix can be usedfor different countries. By transitivity, the procedure that comprises using a single technology flow for several countries is not reliable. The international comparison shows that each country benefits from different types of R&D externality. In Japan and, to a lesser extent, in the US, the rate of return to direct R&D is very high and is likely to compensate for relatively weak interindustry R&D spillover effects. In the five other industrialized countries, the reverse observation is true: strong social rates of return to R&D counterbal ance the poor performances of direct R&D.     

Introduction: Input–Output Analysis of Interindustry R&D Spillovers

As an introduction to this special issue on intersectoral R&D spillovers, I shall first explain what these spillovers are and how economists try to estimate them. I shall then describe the seven papers selected for this issue from the expanding literature on R&D spillovers, summarize their major results and suggest further avenues of research in this area.     

The R&D knowledge base in city-agglomerations and knowledge searching in product innovative SMEs

ABSTRACT

This paper looks at the relation between the R&D knowledge base of city-agglomerations and knowledge sourcing in product innovative small and medium-sized enterprises (SMEs). The small open Belgian economy is used as a test case. The characteristics of the city-agglomeration’s R&D knowledge are posited to be instrumental for SMEs’ reliance on particular sources of information for innovation. The R&D knowledge base is studied as a multidimensional concept consisting of R&D capacity, R&D specialization and R&D diversification. A representative sample of product innovative SMEs drawn from two waves of the Community Innovation Survey between 2008 and 2012 reveals that a strong R&D capacity at city-agglomeration level favours private external information sources for innovation, but has no influence on the likelihood to rely on public sources for innovation. Accordance between specialization of the private R&D knowledge base and the SME’s activities positively influences the use of clients as information sources for innovation, whereas under these circumstances supplier responsiveness turns out to be less frequently solicited for. A more diversified private R&D environment reduces the reliance on universities and public research organizations as information sources for innovation. A public R&D knowledge base specialized in natural sciences or engineering favours information sources from universities.     

Channels of R&D spillovers: An empirical investigation of Swiss firms

Research and development (R&D) spillovers are, potentially, a major source of endogenous growth in various recent ‘new growth theory’ models. According to these models, firms engage in R&D in order to seek rents. Public aspects of this R&D then spill over to other firms, thereby creating increasing returns relating to scale and long-term growth. The actual mechanisms by which spillovers occur has, however, not been systematically studied. In order to provide empirical facts on this issue the paper investigates the effectiveness of various channels of R&D spillovers. The analysis is based on a survey conducted among 358 Swiss R&D executives representing 127 different lines of business, mainly in the manufacturing sector. The results can be summarized as follows. First, undertaking independent R&D was perceived by the R&D executives questioned as the most effective channel of R&D spillovers at the intra-industry level. This was followed by reverse engineering for product innovations and the utilization of publications and information from technical meetings for process innovations. Second, learning methods that rely on interpersonal communication were judged as moderately effective in the following order of importance: (i) publications and technical meetings; (ii) conversations with employees from innovating firms; and (iii) hiring away employees from innovating firms. The last method, especially, is not valued as effective in the Swiss context. Third, learning methods related to the patent system—licensing technology and patent disclosures in the patent office—were seen as moderately effective or not effective at all. Fourth, the effectiveness of the various channels of R&D spillovers varies from one industry to another. Fifth, the various channels of R&D spillovers can be reduced to subgroups, so that patterns of learning of competitive technology can be established.     

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.     

企业研发决策、政府资助方案及最优资助配比

本文对企业和政府在企业研发决策中研发组织方式进行了理论分析,研究了不同市场和不同决策下的政府的资助方案及最优资助配比。研究发现,在独立研发的情况下,封闭市场需要政府资助诱导企业私人研发的投入,且最优配比为1:2;出口导向型市场政府资助对企业私人研发的投入无诱导作用;进口导向型市场企业无需政府资助亦会进行私人研发投入。在产学研合作的情况下,封闭市场中支付学研机构的研发费用率k和政府资助s满足(1+s)(1-k)=1.5时达最优资助配比。