Contests for cooperation—A new approach in German innovation policy

A new approach in German innovation policy organizes contests of proposals for developing innovation networks. Based on an overview of the different programs, we investigate the advantages and problems of such an approach. We find that this type of policy may have a relatively large impact and can, therefore, be regarded as a rather efficient instrument of innovation policy. Compared to conventional policies, administration of the program is a much more critical issue. The contest approach may stimulate learning effects on the side of the administration but may also require a high degree of flexibility. The main disadvantage is the additional time that is required for conducting the contest. As a distinct ‘picking the winner’ approach, the contest approach is not suited as a means for achieving a leveling-out of regional welfare.     

Technology, security, and policy implications of future transatlantic partnerships in space: Lessons from Galileo

Policy makers seek to identify an institutional framework that facilitates the commercialization of publicly funded R&D, while simultaneously addressing innovation market failure. In the space industry, the formation of such a framework is complicated by national security considerations and the fact that numerous sovereign nations are often included in the commercialization process. This paper analyses how multi-public partnerships with industry can promote commercially viable space programs, resolve market failures, and address transatlantic security concerns. The benefits and policy implications of the formation of such transatlantic multi-public-private partnerships (TMP³) are illustrated based on a case study of the design of a major European public-private project in the space industry: the Galileo space-based navigation system.     

Subsidy and networking: The effects of direct and indirect support programs of the cluster policy

Industrial clusters have attracted considerable attention worldwide for their expected contribution to regional innovation. Recently, policymakers in various countries have developed specific cluster policies. However, there exist few empirical studies on cluster policies. Focusing on the Industrial Cluster Project (ICP) in Japan initiated by the Ministry of Economy, Trade and Industry in 2001, we address two research questions on the support programs of the cluster policies: if the project participants who exploit various support programs are more successful in network formation within the cluster than others, and which kind of support program contributes to firm performance. We pay special attention to the differences between direct R&D support and indirect networking/coordination support. The estimation results, which are based on recent original survey data, suggest that cluster participants who exploit support programs (especially indirect support measures) expand the industry-university-government network after participating in the ICP. Moreover, we find that not every support program contributes to firm performance; firms should therefore select the program that is most aligned with their aims. Indirect support programs have an extensive and strong impact on output whereas direct R&D support has only a weak effect.     

Advancing innovation in the public sector: Aligning innovation measurement with policy goals

There is sufficient evidence, drawn from surveys of innovation in the public sector and cognitive testing interviews with public sector managers, to develop a framework for measuring public sector innovation. Although many questions that are covered in the Oslo Manual guidelines for measuring innovation in the private sector can be applied with some modifications to the public sector, public sector innovation surveys need to meet policy needs that require collecting additional types of data. Policy to support public sector innovation requires data on how public sector organizations innovate and how a strategic management approach to innovation can influence the types of innovations that are developed. Both issues require innovations surveys to delve deeply into the innovation processes and strategies that are used by public sector managers. Implementation of the measurement framework proposed in this paper would open up opportunities for a new, policy-relevant research program on public sector innovation.     

Environmental policy vs. public pressure: Innovation and diffusion of alternative bleaching technologies in the pulp industry

In the late 1980s and early 1990s, concern over dioxin in both paper products and wastewater led to the development of techniques that reduced the use of chlorine in the pulp industry. Both regulatory and consumer pressure motivated this change. Unlike previous studies, we use patent data to examine the evolution of two competing bleaching technologies in five major paper-producing countries, both of which reduce the use of chlorine in the pulping process. The use of patent data allows us to focus on the invention stage. However, adoption data are also presented, and by the end of the 1990s, nearly all pulp production in these countries used one of these technologies. While previous studies emphasize the importance of regulation for inducing innovation, here we find substantial innovation occurring before regulations were in place. Instead, pressure from consumers and the public at large to reduce the chlorine content of paper drove invention, prior to the introduction of environmental policies in any of the countries concerned.     

A policy insight into the R&D-patent relationship

Contrary to an accepted wisdom, this paper shows that cross-country variations in the number of patents per researcher do not only reflect differences in the propensity to patent but also signals differences in research productivity. We put forward and test an empirical model that formally accounts for the productivity and the propensity component of the R&D-patent relationship. The two components play an important role, as witnessed by the impact of several policies, including education, intellectual property and science and technology policies. Indicators based on domestic priority filings reflect research efforts and are primarily affected by varying propensities to patent. In contrast, international filings, especially triadic patents, rather capture variations in research productivity.     

Innovation in the service sector: The demand for service-specific innovation measurement concepts and typologies

There is evidence that the notion of innovation, well established in the manufacturing sector, cannot simply be transposed to the service sector. This article deals critically with existing measurement concepts derived from manufacturing, and introduces a new typology with a view to obtaining a better understanding of innovation in services. Selected results from the German innovation survey are analysed in order to support the conceptual findings and to identify potential improvements. Special attention is directed towards the inclusion of knowledge-intensive business services that are of particular importance for innovation processes.     

Some critical episodes in the progress of medical innovation: An Anglo-American perspective

The central concern of this paper is to show that medical innovations have depended heavily on breaking down barriers that have long prevailed in the academic world, in the form of disciplinary boundaries that have coalesced into separate departments; to be specific, some of the biggest breakthroughs for the Life Sciences have come from the realm of the Physical Sciences. The present study is confined mainly to molecular biology and to diagnostic technologies (as well as to the therapeutic technologies that have frequently flowed from them); both owed a great deal to institutional innovations that emerged in the Anglo-American medical research world. Opportunities for transfers of instrumentation and techniques across disciplinary boundaries have been considerably strengthened as medical schools have been located, geographically and organizationally, closer to the universities. The American Medical Centers and the Stanford Program provide many examples. These achieved more than counterparts in the UK like the Cavendish Laboratories at Cambridge, which had pioneered in such fields.     

Public provision of sales contingent claims backed finance to SMEs: A policy alternative

In Europe (and elsewhere) governments intervene to stimulate innovation in the SME sector, and because SMEs face financial constraints in particular, governments encourage the provision of debt and equity (venture capital) finance to such firms. This paper discusses sales contingent claim (SCC) backed finance - funding secured only on a claim written on sales - that offers a different repayment profile to debt and equity. The attractiveness of such finance to firms as well as the behaviour of firms financed in this way are analysed. For various reasons SCC-backed financial instruments are generally not available to SMEs on the market, but it is argued that wider availability could further stimulate the growth and innovative activity of SMEs. The correction of this market incompleteness by the introduction of government schemes providing SCC-backed corporate finance for SMEs in higher risk (higher tech) sectors is recommended. The workability of such a scheme is explored by looking at existing examples aimed largely at project finance for larger firms.     

Boundary spanning innovation and the patent system: Interdisciplinary challenges for a specialized examination system

This article discusses the importance of boundary spanning innovation, demonstrates the drawbacks of popular metadata based boundary spanning measures, and proposes a new full text semantic similarity measure of boundary spanning. It subsequently uses the semantic distance boundary spanning measure to demonstrate that boundary spanning innovation has become more common in recent decades, and show that these boundary spanning inventions pose challenges for the traditional specialized-examiner patent examination model. Examining the applications for inventions that span technical boundaries takes longer and requires more back-and-forth with the patent office than their comparatively simple peers. Finally, this article discusses potential reforms to the patent examination system to help address these challenges.     

Absorptive capacity and the search for innovation

This paper examines the link between a firm's absorptive capacity-building activities and the search process for innovation. We propose that the enhanced access to university research enjoyed by firms that engage in basic research and collaborate with university scientists leads to superior search for new inventions and provides advantage in terms of both the timing and quality of search outcomes. Results based on a panel data of pharmaceutical and biotechnology firms support these contentions and suggest that the two research activities are mutually beneficial, but also uncover intriguing differences that suggest differing roles of internally and externally developed knowledge.     

The effectiveness of subsidies revisited: Accounting for wage and employment effects in business R&D

The present paper investigates the effectiveness of public subsidies on business enterprise research in a panel of OECD countries. We contribute to the literature by explicitly distinguishing between the effects of a subsidy on R&D employment and expenditure, thereby accounting for a potential increase in scientists’ wages. We employ instrumental variable regressions to address endogeneity problems of the subsidization. The results indicate that subsidies are effective in generating additional research expenditure. Expenditure for business research increases by roughly 20% more than employment. We take this as evidence that subsidies may raise scientists’ wages given standard production functions.     

Distance to the frontier and the perception of innovation barriers across European countries

Barriers to innovation have mainly been studied in a single country context. This paper studies differences in the perception of innovation barriers between innovative and non-innovative firms for 18 EU countries. The countries are grouped by their distance to the technological frontier using Community Innovation Surveys for the years 2002–2004 and 2004–2006. The results show that knowledge barriers related to the availability of skilled labour, innovation partners and technological knowledge are more important for firms located in countries close to the frontier, while the opposite is true regarding the availability of external finance. Moreover, while the share of innovators decreases with the distance to the technological frontier, the share of firms not interested or in no need of innovation increases. This is consistent with the idea that as firms approach the technological frontier, they increasingly need to focus on the creation of own knowledge and the adoption of innovation-based growth strategies to stay competitive.     

R&D internationalization, R&D collaboration and public knowledge institutions in small economies: Evidence from Finland and the Netherlands

This paper investigates domestic and foreign innovating firms’ determinants of R&D collaboration with domestic universities and public knowledge institutes in Finland and the Netherlands. We put particular emphasis on the impact of incoming academic spillovers on the probability to co-operate with these public R&D institutes.Based on data from Community Innovation Surveys we find that foreign firms in the Netherlands are less likely to co-operate with domestic public knowledge institutions than domestic firms, while in Finland no significant difference can be detected. Another result is that incoming knowledge spillovers are an important determinant for R&D collaboration with domestic public knowledge institutions in both countries. In case of foreign firms in Finland, incoming knowledge spillovers affect the probability to co-operate with public knowledge institutions more positively compared to domestic firms. For the Netherlands no substantial difference could be found in this respect. Further, innovating firms in Finland that require academic or basic knowledge do not co-operate significantly more with public knowledge institutions than those that need applied knowledge. At the same time they are willing to share knowledge with public R&D partners. In the Netherlands innovating firms that require relatively more basic than applied knowledge, increase the probability of co-operation with Dutch universities and public knowledge institutions but there is reluctance to share proprietary knowledge with public R&D partners. For both countries no significant difference between foreign and domestic firms with regard to academic knowledge requirements could be found. This raises the issue whether Finnish innovation policies with a strong focus on R&D co-operation provide incentives for strategic behaviour by domestic public partners to put more emphasis on applied research.     

Creating competition?: Globalisation and the emergence of new technology producers

This paper studies the role of globalisation (through trade, inward FDI and international migration) in the emergence of new countries as contributors to technology generation in the world economy. Increasing FDI is a factor causing the emergence of newer countries with the more sophisticated technology generation associated with patenting, but not in the recent surge of newer countries with the basic capabilities needed to become licensors in the world economy. Yet increases in the international spread of subsidiary research efforts in MNCs have tended on average to reinforce the position of established centres of higher grade technological activity.     

Long-run effects of public-private research joint ventures: The case of the Danish Innovation Consortia support scheme

Subsidized research joint ventures (RJVs) between public research institutions and industry have become increasingly popular in Europe and the US. We study the long-run effects of such a support scheme that has been maintained by the Danish government since 1995. To cope with identification problems we apply nearest neighbor matching and conditional difference-in-difference estimation methods. Our main findings are that (i) program participation effects are instant for annual patent applications and last for three years, (ii) employment effects materialize first after one year and (iii) there are no statistically significant effects on value added or labor productivity. We further show that these overall results are primarily driven by firms that were patent active prior to joining the RJV and that there are no statistically significant effects for large firms. The insignificant results we document for large firms coupled with the fact that these type of firms are over-represented in many support programs, including the one considered here, leads us to suggest a rethinking of support policies that often aim at large firms.     

The skill bias effect of technological and organisational change: Evidence and policy implications

Previous studies have suggested that technological change is the main cause of the recent increase in demand for highly skilled workers in developed countries. However, a more recent strand of literature has also introduced the “Skill Biased Organisational Change” hypothesis, according to which the increasing diffusion of new organisational practices within firms plays a role in the increasing demand for skilled workers. We estimate a SUR model for a sample of 400 Italian manufacturing firms, showing that upskilling is more a function of reorganisational strategy than a consequence of technological change alone. Moreover, some evidence of superadditive effects emerges, which is consistent with the notion that technology and organisation jointly affect the demand for labour.     

(International) R&D collaboration and SMEs: The effectiveness of targeted public R&D support schemes

This study analyses the impact and effectiveness of targeted public support for R&D investment at the firm level. We test whether the policy design aiming at incentivizing (international) collaboration and R&D in SMEs achieves input as well as output additionality. Our results show that the targeted public subsidies trigger R&D spending, especially so in internationally collaborating SMEs. We further evaluate the different impact of privately financed and publicly induced R&D investment on innovation performance. The results confirm that the publicly induced R&D is productive as it translates into marketable product innovations. While both types of R&D investments trigger significant output effects, the effect of policy-induced R&D investment on sales from market novelties is highest for international collaborators as well as for SMEs.     

What exactly are technological regimes?: Intra-industry heterogeneity in the organization of innovation activities

This empirical study analyzes the patterns of innovation within and across industries using firm-level survey data from Finland and Denmark. The theoretical starting point is evolutionary theory with its premise that firms in different technological regimes pursue different paths to innovation. Similar modes of behaviour are found in the two datasets, and they closely correspond to those found in earlier studies. Contrary to prevailing assumptions, however, the results show that industries are not at all uniform in terms of how firms innovate; in almost all four- or five-digit NACE industries, three or more different modes of innovation can be identified. This suggests that firms’ strategic differentiation or local search activities overcome pressures in the technological environment towards homogenous behaviour, at least in the short term.