Knowledge specialization and R&D collaboration

This paper contributes to the knowledge-based explanation of R&D networks. It argues that knowledge overlap and novelty are complementary inputs of a R&D alliance, in forms that depend upon the exploration breadth and depth of the R&D activity. The paper investigates how the hypothesis of specialization of the knowledge endowments can recover a number of characteristic empirical properties of a pattern of R&D collaboration in the economy. Implications for network evolution are discussed.     

The spatial component of R&D networks

We study the role of geography in R&D networks by means of a quantitative, micro-geographic approach. Using a large database that covers international R&D collaborations from 1984 to 2009, we localize each actor precisely in space through its latitude and longitude. This allows us to analyze the R&D network at all geographic scales simultaneously. Our empirical results show that despite the high importance of the city level, transnational R&D collaborations at large distances are much more frequent than expected from similar networks. This provides evidence for the ambiguity of distance in economic collaboration which is also suggested by the existing literature. In addition we test whether the hypothesis of local buzz and global pipelines applies to the observed R&D network by calculating well-defined metrics from network theory.     

Learning from successes and failures in pharmaceutical R&D

In this paper, we build a cumulative innovation model to understand the role of both success and failure in the learning dynamics that characterize pharmaceutical R&D. We test the prediction of our model by means of a unique dataset that combines patent information with R&D projects, thus distinguishing patents related to successfully marketed products from those covering candidate drugs that failed in clinical trials. Results confirm model predictions showing that patents associated with successfully completed projects receive more citations than those associated with failed projects. However, we also show that failed projects can be in turn cited more often than patents lacking clinical or preclinical information. We further explore the ‘black box’ of innovation, providing evidence that both successes and failures contribute to R&D investment decisions and knowledge dynamics in science-driven sectors.     

Asymmetric firms,technology sharing and R&D investment

We use a combination of theory and experiment to study the incentives for firms to share knowledge when they engage in research and development (R&D) in an uncertain environment. We consider both symmetric and asymmetric starting points with regards to the amount of initial knowledge firms have before conducting R&D and look at how differences in starting positions affect the willingness of firms to share knowledge. We investigate when and if firms find R&D cooperation beneficial and how investment in R&D is affected by the outcome of the sharing decisions. The experimental evidence shows that overall subjects tend to behave consistently with theoretical predictions for the sharing of knowledge, although leaders who are not compensated by a side payment from laggards are more willing to share than predicted by the theory, and leaders who are compensated are less willing. The data on investment suggests less investment with sharing than without, consistent with theory. Compared to exact numerical predictions, there is overinvestment or underinvestment except for symmetric firms under no sharing. All cases of overinvestment and underinvestment, regardless of sharing or not and regardless of starting positions, are well explained by smoothed-out best (quantal) responses.     

The impact of public R&D expenditure on business R&D*

This paper attempts to quantify the aggregate net effect of government funding on business R&D in 17 OECD Member countries over the past two decades. Grants, procurement, tax incentives and direct performance of research (in public laboratories or universities) are the major policy tools in the field. The major results of the study are the following: Direct government funding of R&D performed by firms has a positive effect on business financed R&D (except if the funding is targeted towards defence activities). Tax incentives have an immediate and positive effect on business-financed R&D; Direct funding as well as tax incentives are more effective when they are stable over time: firms do not invest in additional R&D if they are uncertain of the durability of the government support; Direct government funding and R&D tax incentives are substitutes: increased intensity of one reduces the effect of the other on business R&D; The stimulating effect of government funding varies with respect to its generosity: it increases up to a certain threshold (about 10% of business R&D) and then decreases beyond; Defence research performed in public laboratories and universities crowds out private R&D; Civilian public research is neutral for business R&D. * We thank the participants to various seminars, including the OECD Committee for Scientific and Technology Policy and the NBER 2000 Summer Institute on Productivity for helpful comments and suggestions. All opinions expressed in this article are those of the authors and do not reflect necessarily the views of the OECD or Université Libre de Bruxelles.     

R&D spillovers and employment: evidence from European patent data

In this paper we investigate the role of patents in the relationship between R&D activity, spillovers and employment at the firm level. A reduced-form labour demand equation is estimated. Our analysis is based upon a dataset consisting of 879 R&D-intensive manufacturing firms worldwide for which information was collected for the period 2002–2010. We use data from all EU R&D investment scoreboard editions issued every year until 2011 by the JRC-IPTS (scoreboards). Since the innovation output of the industrial strategy of every firm is the number of patents, the main contribution to the existing literature is to investigate also the impact of patents/R&D ratio and patents/spillovers ratio on employment level. The empirical results suggest a significant impact of R&D spillover effects on company employment although the results differ substantially according to the spillover stock, which may considerably affect policy implications.     

Cooperative R&D and Commitment to A Policy of Know-how Trading

In this paper, we develop a theoretical framework to investigate the impact of adopting a strategy of know-how trading on the degree of research and development (R&D) cooperation. We show that the consequences of cooperation in know-how sharing under the conditions of the model are similar to a policy of cooperation in R&D investments in areas with large spillovers. An industry-wide policy of cooperation among competitors with respect to R&D investment and sharing would simply result in maximal joint profits. This cooperative R&D outcome could be generalized to any degree of spillover other than 100%. In this paper, the commitment to a policy of know-how trading by the participants in an industry is explained by the firm’s attempt to induce the equilibrium of a single industry-wide cooperative research joint venture. In a repeated game framework, we show that pre-commitments by non-cooperative firms to disclose their own know-how to the industry can be effective in inducing cooperative R&D investments by the participants.     

Quantifying knowledge exchange in R&D networks: a data-driven model

We propose a model that reflects two important processes in R&D activities of firms, the formation of R&D alliances and the exchange of knowledge as a result of these collaborations. In a data-driven approach, we analyze two large-scale data sets, extracting unique information about 7500 R&D alliances and 5200 patent portfolios of firms. These data are used to calibrate the model parameters for network formation and knowledge exchange. We obtain probabilities for incumbent and newcomer firms to link to other incumbents or newcomers able to reproduce the topology of the empirical R&D network. The position of firms in a knowledge space is obtained from their patents using two different classification schemes, IPC in eight dimensions and ISI-OST-INPI in 35 dimensions. Our dynamics of knowledge exchange assumes that collaborating firms approach each other in knowledge space at a rate μ for an alliance duration τ. Both parameters are obtained in two different ways, by comparing knowledge distances from simulations and empirics and by analyzing the collaboration efficiency \(\mathcal {\hat {C}}_{n}\). This is a new measure that takes in account the effort of firms to maintain concurrent alliances, and is evaluated via extensive computer simulations. We find that R&D alliances have a duration of around two years and that the subsequent knowledge exchange occurs at a very low rate. Hence, a firm’s position in the knowledge space is rather a determinant than a consequence of its R&D alliances. From our data-driven approach we also find model configurations that can be both realistic and optimized with respect to the collaboration efficiency \(\mathcal {\hat {C}}_{n}\). Effective policies, as suggested by our model, would incentivize shorter R&D alliances and higher knowledge exchange rates.     

Effects of a blocking patent on R&D with endogenous survival activities

This study analyzes the effect of strengthening patent protection for innovation and economic growth by introducing a blocking patent into the endogenous growth model developed by Furukawa (Econ Lett 121(1):26–29, 2013a), which features survival activity of patent holders in the R&D sector with a variety-expansion model. Results show that strengthening patent protection can raise the economic growth rate and social welfare through an endogenous survival investment. Additionally, this study examines the effects of increasing subsidies for R&D. We find that increasing R&D subsidy rate can negatively affect economic growth and social welfare because of the investment for survival activities. This result shows the novel role of a blocking patent in determining innovation effects of R&D subsidies. Furthermore, we analyze the effect of patent breadth which is another patent instrument in this model on innovation and economic growth. Results show that the growth and welfare effects of the profit-division rule and the subsidy rate for R&D may vary with the size of patent breadth.     

Role of human resource practices in absorptive capacity and R&D cooperation

This paper reconceptualises absorptive capacity as a strategic human resource construct and analyses its role in determining R&D cooperation and innovation in firms. In spite of widespread consensus on the role of absorptive capacity in innovation, the literature has so far concentrated only on traditional R&D and human capital based indicators of absorptive capacity. Furthermore, most firm-level studies investigating this relationship are cross-sectional in nature and there is need for longitudinal evidence. Employing the IAB Establishment Panel Survey on about 1200 private sector establishments in Germany during 2007–2011, we apply a structural model that links firms’ human resource practices, R&D collaboration strategies and finally their innovation outcome. Findings from the first stage of the empirical analysis suggest that adoption of employment practices positively affects horizontal, institutional and consulting-based R&D cooperation, while compensation programs positively affect only horizontal R&D cooperation. In the second stage, the effect of cooperative R&D conditioned upon human resource practices on innovation performance is examined. Results indicate that firms having institutional and consulting-based R&D cooperation relationships are more often associated with higher incremental product, process and new-to-market innovation, whereas the effect is relatively weaker in case of horizontal R&D cooperation.     

Firm growth and R&D: Evidence from the Portuguese manufacturing industry

This work studies the effects of R&D activities and investment, both physical and R&D, on the growth of firms by considering a dynamic firm growth model with serial correlation. The main hypotheses maintain that firms with a strong commitment to R&D have a higher growth rate, and investment has a positive effect on firm growth. We investigate such relations with reference to an unbalanced panel data set of Portuguese manufacturing firms over the period of 1990 to 2001. We find that a systematic tendency for smaller firms to grow more quickly is the main reason why firm growth is not entirely stochastic.     

Occupational choice and entrepreneurship: effects of R&D subsidies on economic growth

Most R&D-based growth models fail to explicitly account for the role of entrepreneurs in economic growth. By contrast, this study accounts for this factor and constructs an overlapping-generations model that includes entrepreneurial innovation and the occupational choice of becoming an entrepreneur or a worker. For the role of entrepreneurs, even a policy intended to encourage innovation can negatively affect economic growth. For the effect of such policies, I focus on the role of R&D subsidies. I show that while R&D subsidies promote entrepreneurs’ R&D activities, they increase workers’ wages by boosting labor demand. Thus, it is more attractive to be a worker, which reduces the number of entrepreneurs. Subsidies can have both a negative and positive effect on growth, which results in an inverted U-shaped relationship between R&D subsidies and growth. In addition, a growth-maximizing R&D subsidy rate exists, although this rate is too high to maximize the welfare level of any one generation. When individuals are heterogeneous in their abilities, R&D subsidies reduce intra-generational inequalities.     

Intensity of R&D competition and the generation of innovations in heterogeneous setting

This paper discusses the role of technological spillovers and technological races in dynamic strategic interactions setup. Two firms invest simultaneously into new products creation and into further development of the quality of these products. Each firm may benefit from the costless technological spillover in case of technological leadership of the other firm. At the same time they cooperate in the joint creation of new products. Three different scenarios emerge: constant technological leadership, the technological leapfrogging and symmetric outcome with or without potential spillovers. R&D is maximal for the first scenario and minimal for the symmetric play under the threat of spillover with endogenous specialization of firms’ activities in cases of constant leadership and leapfrogging. Definition of technological competition intensity as inverse to the technology gap allows to recover inverted-U relationship between those two in a multidimensional context.     

Export,R&D and new products. a model and a test on European industries

In this article we extend the model developed by Bogliacino and Pianta (Industrial and Corporate Change 22 649, 2013, b) on the link between R&D, innovation and economic performance, considering the impact of innovation on export success. We develop a simultaneous three equation model in order to investigate the existence of a ‘virtuous circle’ between industries’ R&D, share of product innovators and export market shares. We investigate empirically – at the industry level – three key relationships affecting the dynamics of innovation and export performance: first, the capacity of firms to translate their R&D efforts in new products; second, the role of innovation as a determinant of export market shares; third, the export success as a driver of new R&D efforts. The model is tested for 38 manufacturing and service sectors of six European countries over three time periods, from 1995 to 2010. The model effectively accounts for the dynamics of R&D efforts, innovation and international performance of European industries. Moreover, important differences across countries emerge when we split our sample into a Northern group – Germany, the Netherlands and the United Kingdom – and a Southern group – France, Italy and Spain. We find that the ‘virtuous circle’ between innovation and competitiveness holds for Northern economies only, while Southern industries fail to translate innovation efforts into export success.     

The Impact of Environmental Policy Stringency on Industrial R&D Conditional on Pollution Intensity and Relocation Costs

Stringent environmental regulations may encourage industrial innovation, as technological advancements lower the cost of pollution abatement (Popp et al. in Handbook of the economics of innovation, vol II. Academic Press, Burlington, pp 873–938, 2010). The pollution-havens hypothesis, on the other hand, indicates that, rather than innovating, dirty industries may relocate to countries with less stringent environmental regulations (Copeland and Taylor in J Econ Lit 42(1):7–71, 2004). Thus, more stringent environmental regulations may increase or decrease innovative activities. This paper examines empirically the impact of environmental regulations on R&D intensities and R&D expenditures in 21 manufacturing industries in 28 OECD countries from 2000 to 2007. I consider pollution intensity and the relative ease of relocation (immobility) as industry characteristics that determine the optimal industry response to increased environmental policy stringency. I find that more pollution intensive industries innovate less as regulatory environments become more restrictive relative to less pollution intensive industries. At the same time, more immobile industries innovate more than more mobile industries as environmental regulations become more stringent, illustrating innovation as an alternative to relocation.     

Strategic R&D Co-operatives

Although firms have many reasons for investing in R&D, still market forces are believed to be inadequate for directing an optimal amount of funds towards R&D investments. An important tool for diminishing this failure on markets for R&D is to sustain R&D co-operatives, a policy instrument recently (re)discovered by public authorities. For quite some time the formal economics literature did not pay substantial attention to this policy, but with the appearance of the seminal analysis of d’Aspremont & Jacquemin (1988) this silence was abruptly disturbed.The objective of the present paper is to develop a general version of the d’Aspremont & Jacquemin (1988) model which still allows for the calculation of explicit equilibria and therefore enables a comparison between co-operative and non-co-operative R&D. While pursuing this objective an analysis is presented which encompasses several recent contributions to the literature.Having established this general characterization of a market with possible strategic R&D co-operatives the arguments against and in favour of this industrial policy are evaluated. It appears that there are circumstances when these strategic alliances could indeed be socially beneficial. However there remains always the threat of firms increasing their market power by extending the co-operative agreement to the product market.     

Analysis of the impact of agricultural R&D investment on food security

This article investigates how agricultural R&D investment affects the food self-sufficiency ratio (SSR). Several studies have argued a causal relationship between agricultural R&D investment and food security. However, most of these studies are based on conceptual logic and few studies have conducted an empirical analysis. This study verifies whether agricultural R&D investment affects the food SSR as a representative indicator of food security. A total of 822 data sets of 41 countries have been used in the analysis in this study and include developed and developing country data over the period 1981–2009. Food self-efficiency is used as a dependent variable, and agricultural R&D investment and other variables are used as explanatory variables. The estimation results show that, first, the cereal SSR and income are in an inverted U-shaped relationship. Second, increases in land productivity increase the cereal SSR and, lastly, the cereal SSR ratio and agricultural R&D investment are in a U-shaped relationship.     

Knowledge organisation in R&D alliances: its impact on product innovation

Based on the knowledge-based view of the firm, this paper analyses how alternative configurations of technological relatedness in interfirm research and development (R&D) alliances influence specific types of product innovation. A longitudinal study of pharmaceutical firms provides support for the argument that complementary alliances contribute to the development of both radical and incremental innovation. Collaborating with partners that have similar technologies only enhances incremental innovation, although its impact is curvilinear. These evidences highlight the importance of designing a suitable portfolio of R&D alliances in order to develop different innovative competences.