The effects of R&D tax credits on patenting and innovations

Norwegian business spending on R&D is low by OECD standards. To stimulate business R&D, in 2002 the Norwegian government introduced a tax-based incentive, SkatteFUNN. We analyze the effects of SkatteFUNN on the likelihood of innovating and patenting. Using a rich database for Norwegian firms, we find that projects receiving tax credits result in the development of new production processes and to some extent the development of new products for the firm. Firms that collaborate with other firms are more likely to be successful in their innovation activities. However, the scheme does not appear to contribute to innovations in the form of new products for the market or patenting.     

The French defence industry in the knowledge management era: A historical overview and evidence from empirical data

In the defence industry the recent development of a ‘market for technology’, the creation of new European high-technology companies as well as transformations in government agencies have driven firms to reposition their technological and organizational skills. Our objective is to show that the transformations that have occurred in the past 10 years have not only redefined skills and the organization of production, but also have given a more strategic place to knowledge management (KM) practices. We provide a contextual and historical overview based on qualitative interviews, in order to better understand the relation between KM and innovative behaviour in this industry. We build an original industrial and technological database comprising various samples that provides quantitative information concerning KM and innovative practices. The results of the statistical analysis reveal the specificity of firms in this industry. Taking account of the size of these firms and their technological intensity, we show that the behaviour of defence industry firms in terms of KM practices, differs from that of other firms. This is evident from their technological performance, and innovation and patenting intensity. This structural tendency is explained as an innovative behaviour in the French national innovation system rather than merely a ‘trend’.     

日本企业的合作与创新：企业和项目层面分析/FONT

    摘要：本文以日本技术水平在上世纪六十至八十年代的快速发展为背景,借助专利信息研究日本的创新特色。本文的着眼点为创新中的合作行为,采用OECD的三极专利族（Triadic Patent Families）数据库、参照特定时期和特定年份的全部专利、并选取两个相似的美国公司,重点对5个日本国际性经营公司创新中的合作行为分企业和项目两个层面进行考察。本文的分析结果显示：日本企业在技术追赶过程中有高于世界水平的联合倾向,这种倾向表现为很强的外生性;日本的项目合作水平也要高于世界水平,这体现了日本的合作性团队文化对于创新中信息共享的重要性。该研究对中国的启示是：应该重视产业政策在促进技术提升中的作用和培养有利于合作的企业文化。       

The impact of academic patenting on university research and its transfer

This paper contributes to the ongoing debate on the impact of academic patenting on publishing and knowledge transfer. Drawing upon two separate surveys of academics, and their CV information, we provide empirical evidence for UK academics in engineering and physical sciences. The contribution of this paper is two-fold. First, our findings show that (the intensity of) academic patenting complements publishing up to a certain level of patenting output, after which we find evidence of a substitution effect. We also find weak evidence of important differences across scientific fields with the more basic-oriented fields showing indications of a crowding-out effect. Second, our analysis of the potential impact of patenting on knowledge transfer shows a positive correlation between the stock of patents and engagement in knowledge transfer channels. However, we find that a substitution effect sets in, indicating an inverted U-shaped relationship between patenting and several knowledge transfer channels.     

Neither at the cutting edge nor in a patent-friendly environment: Appropriating the returns from innovation in a less developed economy

Despite increased focus on understanding how firms appropriate the returns from innovation, our knowledge regarding firms' behaviour in less developed economies (LDEs) is still scant. This paper provides a nuanced view as to how firms that are not at the technological frontier attempt to capture value when they encounter fragile patenting conditions. I analyse a unique dataset on innovative activities in Brazil. My findings reveal the effects (if any) of a number of factors on the use of a wide range of appropriability mechanisms. These factors include measures of knowledge intensity, novelty of products and processes, firm size, degree of competition, innovation cooperation, government support for innovation, and type of ownership. In addition, my empirical exercise provides evidence of the extent to which firms in an LDE adopt different appropriability mechanisms in pairs. Overall, this paper indicates that even in the absence of an effective patent system, firms do use patents. However, there are other patterns of appropriability in which firms use design (being registered or not registered accordingly), lead-time or trademarks in association with other means of appropriation.     

The role of technology standards in product innovation: Theory and evidence from UK manufacturing firms

This paper studies the role of technology standards in firms’ product innovation in terms of both incremental innovation (within a technology life cycle) and radical innovation (beyond the present technology cycle). We first develop a theoretical model which predicts that technology standards can be used by firms as an “insurance” hedging against the risky process of developing new products. This insurance mechanism fosters incremental innovation and product growth especially for those further away from the technological frontier. Using data from a weighted panel of UK manufacturing firms over seven years, we find that the use of technology standards over past years significantly enables a firm’s incremental innovation while also reducing its incentive to deliver radical innovation. Additionally, we show that this relationship is contingent on a firm’s R&D intensity in line with predictions of our theoretical model.     

Patents, venture capital, and software start-ups

This paper analyzes the relation between the patenting behavior of startup firms and the progress of those firms through the venture capital cycle. Linking data relating to venture capital financing of software startup firms with data concerning the patents obtained by those firms, we find significant and robust positive correlations between patenting and several variables measuring the firm's performance (including number of rounds, total investment, exit status, receipt of late stage financing, and longevity). The data also show that (1) only about one in four venture-backed software firms acquired even one patent during the period of the study; (2) patenting practices very considerably among the sub-sectors of the software industry; and (3) the relationship between patent metrics and firm performance depends less on the size of the patent portfolio than on the firm's receipt of at least one patent.     

关系资本、双元创新与高技术产业主导设计

利用2004-2012年中国车辆标准数据和442家汽车企业专利数据，采用结构方程模型，实证检验了企业双元创新如何在标准联盟组合的关系资本与高技术产业主导设计间发挥中介作用。结果表明：在标准联盟组合的商业关系与高技术产业主导设计间，企业探索式创新和利用式创新均起到部分中介作用；在标准联盟组合的政治关系与高技术产业主导设计间，企业探索式创新起到部分中介作用，而利用式创新的中介作用不显著。研究结论为主导设计与网络组织理论提供了新的经验和证据，为国家和企业推动高技术产业主导设计的确立提供了理论指导。     

On the relationship between environmental management, environmental innovation and patenting: Evidence from German manufacturing firms

This paper analyses empirically the relationship between environmental innovations, environmental management and patenting. In particular it tests a number of propositions on how environmental management systems and the interaction with environmentally more or less concerned stakeholders are associated with the probability of firms to pursue innovation in general (measured as patenting behaviour) and specifically environmental innovation (measured based on firm self-assessment and through patent data). In applying a negative binomial as well as binary discrete choice models the relationship is studied using data on German manufacturing firms. As a novel and important insight, the study finds that environmental innovation can be meaningfully identified using patent data and that environmental innovation defined this way is less ubiquitous than self-reported environmental innovation. It also reveals that the implementation level of environmental management systems has a positive effect exclusively on environmental process innovation, whereas it is negatively associated with the level of a firms’ general patenting activities. For environmental product innovation and patented environmental innovations a positive relationship with environmentally concerned and a negative link with environmentally neutral stakeholders is found.     

Venture capital as a catalyst to commercialization

We find that the public funding of academic research and venture capital have a complementary relationship in fostering innovation and the creation of new firms. Using panel data on metropolitan areas in the United States, from 1993 to 2002, our analyses reveal that the positive relationships between government research grants to universities and research institutes and the rates of patenting and firm formation in a region become more pronounced as the supply of venture capital in that region increases. Our results remain robust to estimation with an instrumental variable to address potential endogeneity in the provision of venture capital. Consistent with perspectives that emphasize the importance of an innovation ecosystem, our findings point to a strong interaction between private financial intermediation and public research funding in promoting entrepreneurship and innovation.     

Persistence of innovation and patterns of firm growth

In this work we exploit a long-in-time panel of Spanish manufacturing firms observed during the period 1990–2012 to examine the long-run contribution of innovation persistence to sales growth and market share dynamics. We examine two main research questions. First, do persistent innovators grow more than other firms? Second, do persistent innovators show more persistent growth patterns over time compared to other firms? We find negative answers to both questions: firms that persistently innovate over the first decade, do not grow more and do not display more persistent growth dynamics in the succeeding years, regardless of whether innovation persistence is defined in terms of R&D, patenting activity, or product or process innovation. These findings lend support to luck and random theories of firm growth, in turn challenging innovation persistence theories commonly suggesting that persistent innovators enjoy large and sustained comparative advantages.     

Innovation and productivity in developing countries: A study of Argentine manufacturing firms’ behavior (1992-2001)

Following the methodology employed in studies for industrialized countries and using panel data from innovation surveys in Argentina with information for 1992-2001, this paper contributes to the nascent literature that analyzes the determinants of innovative inputs and outputs and their impacts on manufacturing firms’ productivity in developing countries. The econometric results show that in house R&D and technology acquisition expenditures have positive payoffs in terms of enhanced probability of introducing new products and/or processes to the market. In turn, innovators attain higher productivity levels than non-innovators. The results also show that large firms have a higher probability of engaging in innovation activities and of becoming innovators.     

If you cannot block, you better run: Small firms, cooperative innovation, and appropriation strategies

This empirical study examines small firms’ strategies for capturing returns to investments in innovation. We find that small firms’ strategies are qualitatively different from those found in earlier studies of both small and large firms. Most of the small firms examined here find informal means of protection, such as speed to market or secrecy, more important than patenting. Only firms with university cooperation—typically R&D intensive and science-based small firms—were likely to identify patents as the most important method of appropriating innovation returns in their field. Thus, the strategic choice for most small firms is between secrecy and speed to market. Firms that cooperate in innovation with horizontal partners or significantly depend on vertical partners tend to prefer speed, whereas process innovators with modest R&D investments or few cooperative R&D activities display a preference for trade secrets. Indeed, cooperation activities greatly influence the choice of intellectual property strategy for small firms. Earlier research has emphasized patents and trade secrets as key strategies of appropriation, yet these strategies do not appear to be very beneficial for small firms engaged in cooperative innovation. These results raise policy questions regarding the functionality of the existing system of intellectual property rights.     

Inventing by combining pre-existing technologies: Patent evidence on learning and fishing out

I develop a model of innovation where new technologies are combinations of pre-existing technological components. The model captures two opposing forces. The best ideas are used up (knowledge is exhaustible). However, as firms learn which technologies can be combined, new ideas become feasible (knowledge accumulates). I test the model with more than 80 years of US patent data. Technological components are proxied by 13,517 patent office technology classifications. These are reused and recycled in 10,000 distinct three-component sets. Consistent with a learning/fishing-out dynamic, I show patenting in one set of components is correlated with a subsequent increase in similar patents (sharing two of three components), but a subsequent decrease in identical patents (sharing all three components). I use patent renewal data to show my results are not driven by changes in demand for various technology bundles. My results suggest the positive impact of learning on subsequent patenting is larger than the negative impact of fishing out.     

Organisational learning antecedents and open innovation: Differences in internationalisation level

The aim of this study is to inspect differences in internationalisation level of firms from a transitional economy based on their innovation outcomes, open innovation and organisational learning practices. Results indicate that firms with lower internationalisation level owe their innovation success to coupled and outbound open innovation practices that originate from market research, competitor tracking and public information. Mediating effect of outbound innovation is present in the relationship between market research and innovation success. Firms with higher internationalisation level do not exhibit significant effect of open innovation on innovation success, but their organisational learning antecedents such as market research and research and development negatively affect innovation success, while public information and forecasting have a significant positive effect on innovation success. The major contribution of this study is the understanding of how organisational learning antecedents and open innovation practices interact in firms with different internationalisation levels, whereby firms with higher internationalisation level already have competitive advantage that lower internationalisation firms need to achieve.     

技术创新能力培养：特定的培养顺序还是有效的R＆D

现有的研究认为,发展中国家的企业培养自主技术创新能力,首先应引进国外技术,消化、吸收、然后创新。研究表明,这样一条路在我国已经很难走通,特定的R&D活动才是影响企业自主技术创新能力培养最直接、最根本的因素。讨论了这一发现对我国企业培养自主技术创新能力的战略和政策意义。     

Using patent citation patterns to infer innovation market competition

We propose an empirical strategy to estimate competition in innovation markets. Our method relates firms’ market return on equity to information about patent citation patterns. Two innovations are implemented in the methodology. First is the application of daily abnormal stock returns rather than annual measures of Tobin's q. Second is the creation of citation patterns related to the area of science a firm patents in as represented by the detailed patent classification system. We find that markets positively reward firms when patents are granted. We further find that firm's market value increases when its patent portfolio is cited. We find evidence of competition in innovation markets. The market reacts at the time that the citation occurs and does not anticipate future citations at the time of patenting. Holding this effect constant, we find that citations from patents in the same area of science tend to reduce market value. We interpret these findings as consistent with more citations indicating more valuable intellectual property but citations from competing technologies decreasing it.     

Profiting from technological innovation by others: The effect of competitor patenting on firm value

In 1986, Teece proposed a seminal framework for analyzing why innovators may fail to benefit from their innovations. He argued, in part, that firms with the requisite complementary assets can often expropriate an innovator's returns especially when appropriability regimes are weak. In this paper, we explore the implications of this framework from the perspective of an incumbent firm—more precisely, of investors in that firm—facing innovation by established corporate rivals and by inventors from outside its industry. We demonstrate that the financial-market value of publicly traded firms depends on patented innovation by competitors (both established rivals and industry outsiders). Our empirical study generates three main results. First, the financial-market value of an incumbent is negatively associated with “important” patenting by outside inventors. Second, in industries characterized by weak appropriability regimes or by a strong reliance on complementary assets, this relationship is reversed: important patenting by outsiders is positively associated with the incumbent's financial-market value. Third, the effect of outsiders’ patented innovation on the focal incumbent is qualitatively different than that of established rivals’ patented innovation on the incumbent. These results are consistent with implications of Teece [Teece, D., 1986. Profiting from Innovation, Research Policy] and with recently developed models that formalize elements of his framework. More generally, these results support theories about both the market-stealing and spillover effects of innovation.     

Publishing,patenting, and standardization: Motives and barriers of scientists

In this paper, we analyze the motives and barriers of researchers to engage in standardization in comparison with publishing and patenting. We conduct a survey on 129 researchers at the Federal Institute for Materials Research and Testing, one of Germany’s largest federal research institutes. The resultant dataset enables us to study not only the researchers’ motives and barriers but also the effect of those motives and barriers on the extent to which the respective activities are undertaken. We find that publishing constitutes a baseline activity. By contrast, patenting is driven by commercialization motives, and standardization is mainly fostered by intrinsic motivation. With respect to the barriers, we find that they are mostly inherent to the activity itself or the system in which it is performed. Finally, we discuss several options to develop a more integrative incentive system to exploit the possible synergies between standardization and publishing and patenting.     

Do social policies foster innovation? Evidence from India's CSR regulation

We examine the effect of social policies on corporate innovation using India's mandatory Corporate Social Responsibility (CSR) regulation. This regulation mandates firms with pre-tax profits above a certain threshold to spend 2 % of the profits on CSR. We demonstrate a significant bunching of companies just below the profit threshold post-regulation compared to the pre-regulation period. Firms close to the profit threshold manipulate their earnings to avoid compliance by increasing their R&D expenses. We show that, on average, firms that increase R&D expenses to avoid the regulation apply for one more patent and announce two new products. The increase in R&D expenses and patenting is concentrated in firms with a prior history of innovation. Our results suggest that social policies can generate indirect incentives for innovation.