Defense-related R&D as a model for “Grand Challenges” technology policies

National defense represents a significant share of most OECD governments’ R&D budgets and an even higher share of their mission-oriented R&D spending. This public R&D investment has focused on research and innovation supporting defense missions, and in many cases the military services of these governments have purchased weapons systems incorporating the resulting technologies. Defense-related R&D investment has influenced innovation in the broader civilian economy of several OECD nations, including the United States, the United Kingdom, and France. The scope and nature of this influence remains uncertain and subject to considerable debate. Nonetheless, policymakers throughout the industrialized economies have expressed interest in “applying the lessons” of defense-related and other mission-oriented R&D programs to such challenges as climate change. This paper examines the characteristics of defense-related mission R&D programs in the industrial economies, with particular attention to the subset of nations for which reliable longitudinal data on defense R&D spending are available. I highlight the characteristics that distinguish mission-oriented R&D in this field from mission-oriented R&D in other sectors and to point out some significant differences among OECD economies in the structure of their defense-related R&D programs. The discussion also emphasizes the ways in which the unique structure of defense-related R&D limit its utility as a model for mission-oriented R&D programs aimed at other goals.     

Characteristics of research and development performing firms in Canadian manufacturing

The purpose of this paper is to examine some of the salient characteristics of R&D performing firms in Canadian manufacturing. The paper begins by presenting a brief overview of recent trends in R&D in the Canadian economy. The next section analyzes the main characteristics of those firms which undertake research and development activities in Canadian manufacturing industries. Various aspects are examined in this section including the R&D expenditure patterns of industries in the research-intensive and non-research-intensive sectors, R&D by size of firm and by size of program, levels of R&D intensity in terms of small, medium and large R&D performing firms. The importance of foreign ownership and its implication for the level of R&D activity is also considered. The paper concludes by summarizing the highlights of R&D performing firms and draws some implications for the structure of Canadian manufacturing based on the findings.     

The obsession for competitiveness and its impact on statistics: the construction of high-technology indicators

High technology is a concept much in vogue in OECD countries, for it is a symbol of an “advanced” economy. This paper looks at why and how the concept and its indicator acquired such fame. It explains that the reason has to do with the fact that the indicator emerged in the context of debates on the competitiveness of countries and their efforts to maintain or improve their positions in world trade. The first part looks at the early statistics behind the indicator (R&D/sales), statistics developed in official analyses of industrial R&D surveys before the 1950s. The second part traces the evolution of the R&D/sales ratio in the 1960s through its use as an indicator of research or technological intensity. The third part discusses the internationalization of the indicator via the OECD.     

The impact of patent protection and financial development on industrial R&D

Stronger protection of patent rights is thought to spur innovation through securing returns to R&D investments. Those investments must be financed, however, suggesting that the responsiveness of R&D to patent reforms varies with financial development levels. We examine the joint impact of domestic and international financial-market development and patent protection on R&D intensities in 22 manufacturing industries in 20 OECD countries for the period 1990-2009. We show that stronger patent rights increase R&D intensities in patent-intensive industries, accounting for the need for external financing and the amount of tangible assets. The primary impact varies across types of financial development: patent protection raises R&D in high-patent industries where countries have more limited equity and credit markets. In contrast, in countries with more developed bond markets industry R&D is more sensitive to patent rights. Interestingly, patent rights in countries that are more exposed to foreign direct investment increase R&D intensities at all levels of financial development.     

Determinants of R&D investment: The Extreme-Bounds-Analysis approach applied to 26 OECD countries

This paper investigates the determinants of R&D investment at the national level with an emphasis on the roles of patent rights protection, international technology transfer through trade and FDI, and economic growth, in addition to the essentials of human capital accumulation and the number of scientific researchers. The Extreme-Bounds-Analysis (EBA) approach is applied to examine the robustness and sensitivity of these factors.The results of the EBA tests on data from 26 OECD countries from 1996 to 2006 showed that tertiary education and the proportion of scientific researchers in a country were robust determinants that had positive effects on R&D intensity. Foreign technology inflows had a robust and negative impact on domestic R&D. Patent rights protection and the income growth rate are fragile determinants of R&D investment.     

我国医药制造业出口贸易活动与研发资金投入关系研究——基于VAR模型

选取1998—2015年我国医药制造业相关数据,建立向量自回归模型(VAR模型)进行协整检验,并借助脉冲响应函数和方差分解进行分析,以探求医药制造业出口贸易活动与研发资金投入二者的相关关系。研究表明:我国医药制造业出口贸易活动对研发资金投入存在长期稳定的正向推动作用,出口贸易活动收益每增加1%,研发资金投入增加1.30%;且这种推动作用有一定的滞后性,滞后期为3年。政府相关部门和企业都应当正确认识这种正向推动作用及其滞后性,并通过大力开展出口贸易活动从而带动研发资金投入的增加,最终提高产业创新能力和竞争力。     

The lag structure of the relationship between patenting and internal R&D revisited

The principal purpose of this study is to revisit the classic research question regarding the lag structure of the patents–R&D relationship through an examination of the impact of internal R&D on firm patenting in the context of the global pharmaceutical industry during 1986–2000. Our empirical analysis, using both a multiplicative distributed lag model and a dynamic linear feedback model, differs from previous work that examines the patents–R&D relationship in three aspects. First, our estimation results exhibit direct evidence on lagged R&D effects, with the first lag (t − 1) of R&D being significant in all distributed lag specifications. Second, a U-shaped lag structure of the patents–R&D relationship is found in most estimations of the multiplicative distributed lag model, which suggests a potential long-run effect of internal R&D investments on firm patenting. Finally, the results from the dynamic linear feedback model coincide with those from the multiplicative distributed lag model, indicating not only lag effects from more recent R&D but also an overall long-run effect of internal R&D investments in the distant past on the knowledge production or innovation process of incumbent pharmaceutical firms.     

Governmental innovation support in Norway: Micro- and macro-level effects

The present article focuses on a government supported program in Norway. “The Innovation Plan”, aiming at overcoming the critical lack of innovation now facing industry. A framework based on the well known structure-conduct-performance paradigm serves as the theoretical point of departure. Both secondary and primary data are applied to assess micro- and macro-level effects.In this piece of research governmental R&D support was found to exert an impact on the level of R&D activities, as well as on the willingness to direct R&D resources towards projects representing solutions high in novelty. Various types of positive outcomes such as increased technical competence and spin-offs, as well as various types of economic effects could also be traced for the supported projects. Implications of the findings are highlighted.     

Canadian R&D abroad management practices

In the 1980s, Canadian industrial R&D abroad has grown substantially. In 1995, R&D expenditures by Canadian affiliates, only in the United States, represented some US$1.4 billion and employed some 6300 persons. Nearly 60 Canadian-owned and -controlled corporations conduct overseas R&D, mostly in the US, Western Europe, Japan, and Australia. Canadian corporations are performing commercial R&D abroad in order to support their manufacturing subsidiaries and to come closer to customers and markets. A secondary motivation is to hire skilled personnel, monitor foreign technological development and increase the inflow of new ideas into the corporation. They also chose friendly socio-political environments from a regulatory point of view. Technology transfer and adaptation to local markets is also an important mission of the foreign R&D establishment. Foreign R&D activities of Canadian firms are fairly decentralized and autonomous. Most of the foreign subsidiaries undertook R&D abroad before they were acquired by the Canadian corporation; also the number of Canadian managers was reduced and the R&D projects were usually decided in the affiliate. Three main types of expatriate R&D were found: a majority of the subsidiaries were producing goods in the same or related industries as in Canada (such as machines, transportation equipment or housing equipment). A second group of firms were vertically integrated firms, that conducted process research in Canada and advanced materials and final products research abroad, closer to the markets for this type of goods; they were active in the chemical and metal industries. Only one truly global corporation was found, with an international division of labor among its many foreign laboratories. The degree of autonomy varied across the three types of expatriate R&D units. In the last 10 years, the internationalization of industrial research and development has increased very rapidly. Foreign-affiliated corporations operating in the United States represented some 9.3% of all company-funded R&D in that country in 1987, and close to 18% in 1995 (Dalton and Serapio, in this issue). Similarly, foreign R&D expenditures by US-affiliated companies abroad have more than tripled. Canadian industrial R&D abroad has grown at a similar pace. It now includes over 100 research facilities owned by some 60 Canadian corporations, with subsidiaries in the United States, western Europe, Japan, Australia, and several developing countries (China, Brazil, India, Mexico, and Turkey). However, little is known about the characteristics of this foreign R&D: missions, managerial practices, budgets or innovative activity. This study is the first to present original data from a survey of these facilities, complemented by secondary material from annual reports and the financial and technical press. It follows a previous study of Canadian patents abroad, which concluded that diversification into related activities was the overseas strategy of Canadian multinational corporations (MNCs) with foreign R&D activities [Niosi, J., 1997. The globalization of Canadian R&D, Management International Review 37 (4) (in print).]. The first section of this paper presents (1) a short summary of some relevant literature on the management of foreign R&D, (2) the design of the study, (3) the results, and (4) a comparison of theories with Canadian data. It offers conclusions about the existence of three distinctive types of internationalization in Canadian R&D, each with different strategies and outcomes.     

Marketing/R&D integration in the pharmaceutical industry

Integrating marketing and R&D inputs is one of the fundamental challenges in managing innovation. In the pharmaceutical industry, considering its reputed ‘technology push’ model of innovation, the challenge of integrating marketing and R&D could hardly be greater. Thus, the recent trend among pharmaceutical firms of implementing Marketing/R&D integrating mechanisms calls for upgrading our conceptualization of the innovation process in this industry. It also raises important questions regarding Marketing's contribution in new product development, and how to organize to assure that contribution is leveraged. We use the case of a pharmaceutical firm which recently implemented Marketing/R&D integrating mechanisms to examine Marketing's new roles. We find that the extreme conditions surrounding innovation in the pharmaceutical industry, notably the need to cope with Knightean uncertainty, highlight important contributions of Marketing input in R&D that deserve more attention. We suggest that Marketing's most important contribution under these conditions lies in ‘not getting it wrong’ rather than ‘getting it right,’ in setting minimum criteria in project evaluations rather than definite targets, and in refocusing the attention of R&D staff through the very process of providing this input. Given the value of these contributions, modern pharmaceutical firms would indeed be ill advised to think of drug discovery as merely a linear process. Drug development has become an interactive process where the timing, type and impact of Marketing involvement is balanced and managed via certain organizational mechanisms throughout the R&D process, which is an iterative one.     

Inter-firm R&D partnering in pharmaceutical biotechnology since 1975: Trends, patterns, and networks

This paper analyses a large, longitudinal database on inter-firm R&D partnerships formed in the high-tech pharmaceutical biotechnology industry since 1975. Our research indicates an overall growth in the number of annually, newly established R&D partnerships where research partners consistently prefer contractual partnerships to equity-based alliances. In the networks that develop through these R&D partnerships, small, entrepreneurial biotechnological companies take a leading role during the 1980s when biotechnology first became relevant for the pharmaceutical industry. The 1990s, however, show a different pattern with established, large pharmaceutical companies becoming more dominant, acting as nodal players with multiple partnerships with a variety of other companies.     

Evaluating R&D investment efficiency in China's high-tech industry

Research and development (R&D) investment activity plays a crucial role in developing high-tech industries. In recent decades, China has made sustained investments in its domestic high-tech industries, with the goal of increasing their productivity. This paper investigates the effect of this investment on relative R&D efficiency across China's high-tech sectors. Data Envelopment Analysis (DEA) was used to generate quantitative indices for sector comparisons. The analysis of this study indicates that overall R&D investment efficiency did not increase from 1998 to 2009, despite R&D expenditure increasing by 2188%. Over the same period, most sectors suffered from decreasing returns to scale (DRS), presumably also reflecting the inefficient R&D investment. Most of the sectors showed significant fluctuation on R&D investment efficiency. This research result indicates that the problem of China's high-tech industry may be from the inefficiency of its technology commercialization processes, and therefore represents a critical parameter for policy makers and managers.     

Persistent heterogeneity of R&D intensities within sectors: Evidence and policy implications

Do firms in the same sector converge towards the same R&D intensities? Previous research has often assumed this to be true. A closer examination, using microdata from the EU Industrial R&D Investment Scoreboard for the years 2000–2015, shows considerable heterogeneity in R&D intensities among firms in the same sector, and that this heterogeneity persists over time. Statistical tests of convergence show that the variation in R&D intensities does not decrease over time (i.e. no σ-convergence), although firms with an R&D intensity below the industry average do seem to catch up with the leaders (i.e. evidence of β-convergence). Overall, firms in the same industry do not converge to a common R&D intensity. Policy implications are discussed.     

AMC视角下多市场接触对企业研发强度的影响--基于全球医药行业的实证研究

以往对多市场接触的研究大多集中于考察多市场接触对下游产品市场竞争强度的影响，本文将研究的注意力转向上游要素市场。基于多市场接触理论和动态竞争的意识—动机—能力 (awareness-motivation-capability, AMC) 框架，探讨了多市场接触对企业研发强度的影响。对全球最大的38家制药企业2007—2016年期间的面板数据分析表明，把企业间竞争的范围延伸到上游研发市场时，多市场接触会表现出显著的竞争效应，即多市场接触会正向影响企业的研发强度，从而说明经典的相互克制效应并不适用于要素市场。此外，本文检验了多市场接触和研发强度关系的边界条件，焦点企业专利存量和现金持有比会削弱多市场接触和研发强度之间的正向关系，而销量下降产品比例会强化二者之间关系。     

Measuring the change in R&D efficiency of the Japanese pharmaceutical industry

This paper presents a data envelopment analysis (DEA)/Malmquist index methodology for measuring the change in R&D efficiency at both firm and industry levels. Letting each of ten firms in each year be a separate decision-making unit, and employing one input and three outputs in a DEA case of R&D activity input-output lag, we measure “total factor R&D efficiency” change of Japanese pharmaceutical firms for decade 1983-1992 as defined by the period of R&D input. Decomposing Malmquist index into catch-up and frontier shift components and using “cumulative indices” proposed in this study, we evaluate R&D efficiency change for each firm and empirically show that R&D efficiency of Japanese pharmaceutical industry has almost monotonically gotten worse throughout the study decade.     

基于协整理论的我国医药制造业盈利能力与R&D投入关系研究

以1995—2015年医药制造业数据为样本,用主营业务利润率代表盈利能力,RD投入强度代表RD投入,基于协整理论,建立误差修正模型并进行格兰杰因果检验。结果表明医药制造业盈利能力的提升能够增加RD投入,但RD投入带来盈利能力的提升需要漫长的过程。因此,医药制造企业要提升自身的盈利能力,对RD活动进行稳定持续的资金投入,同时提高RD活动效率,加快成果的商业化进程。     

Post-Soviet science: Difficulties in the transformation of the R&D systems in Russia and Ukraine

In the late 1980s, the Soviet Union was among the foremost leaders of world science, thanks in large part to its heavy involvement in military programmes. The USSR developed a large research infrastructure but it lacked effective mechanisms for the commercialization of research results. The main aim of the transformation of R&D systems in the post-Soviet states in the 1990s and early 2000s was the re-orientation of scientific activities away from military and towards civilian goals. Analysis of statistical data at the macro-level suggests that this attempt was not particularly successful. Indeed, most newly independent states could not even preserve a ‘critical mass’ of scientific activities in order to remain among the list of significant producers of research results. In the post-Soviet countries (and in this paper we focus on Russia and Ukraine as the largest states of the region), inputs from the R&D system have failed to generate wealth-creating outputs because of a systemic inability to use the resources for generating commercially viable results effectively. All post-Soviet countries, including Russia and Ukraine, urgently need not only a major transformation within the R&D system, but also important changes in the wider ‘environment’. It is important to stress that, in recent years, changes in R&D have been determined not only by the general economic situation itself but also by the general policy of the post-Soviet states. While Russia has expressed ambitions to regain its former influence as a great power and to use S&T to achieve this goal, Ukraine has no clearly determined objectives for the development of its national science system. However, both countries face certain common problems. The development of relevant institutes and the stimulation of demand for R&D results from the side of industry, broader involvement in the international division of scientific work, and the introduction of adequate legal protection for intellectual property rights are all of critical importance for S&T institutes and other research organizations in Russia and Ukraine. This paper shows that the reforms in the R&D sector have been relatively modest and rather unsystematic over the last one and a half decades. The key challenges, which relate to the inertia and the negative aspects of the previous period (for example, a extremely low level of replacement of aging manpower, largely outdated scientific equipment in research laboratories, and institutional mechanisms that are not relevant to the market economy), pose serious problems for the transformation of the R&D systems in both countries, despite new possibilities and a willingness to increase financial support for R&D.     

Specialisation precedes diversification: R&D productivity effects

We model how R&D enters the innovation system in four ways (intramural, extramural, cooperative, and spillover). Despite measuring three different spillovers together, for a very large sample of European enterprises we conclude that the productivity effects of spillovers were at best smaller than intramural R&D productivity effects. We also find that building on the greater skills and experience of enterprises already undertaking R&D (intensity) raised labour productivity more than providing support for those beginning R&D (extensity). Optimal extramural R&D intensity was higher than the actual level; sample firms could boost productivity either by abandoning extramural R&D or by doing much more. There were substantial differences in our sample between enterprises and countries in terms of R&D spillovers. Greater multinational corporation incidence in new EU members accounted for these countries' high direct R&D intensity productivity, regardless of their generally low overall labour productivity. Absorptive capacity made little difference to the utilisation of spillovers.     

Selective subsidies,entrepreneurial founders' human capital,and access to R&D alliances

We investigate if and to what extent the receipt of a “selective” subsidy – a public subsidy awarded through a competitive procedure – helps new technology-based firms (NTBFs) to access R&D alliances. In particular, we theoretically enquire and empirically analyze which founding team-level characteristics allow NTBFs to: i) get a selective subsidy; and ii) access an R&D alliance with another firm or a public research organization/university, once the subsidy is awarded. We use a sample of 902 NTBFs that operate in Italy, where industrial policy has never had an explicit and exclusive mandate neither for targeting NTBFs nor for easing their access to R&D networks. By means of several identification strategies and estimation methods, our results point to the relevance of selective subsidies in facilitating NTBFs to enter R&D alliances, independently from the objective of the policy measure. Second, founders’ technical education figures as a key determinant to get the first selective subsidy. Finally, founders’ previous industry-specific work experience allows NTBFs to better exploit the selective subsidy, by positively moderating the impact of the subsidy on the likelihood to establish a corporate R&D alliance.     

The relationship between research and innovation in the semiconductor and pharmaceutical industries (1981-1997)

This paper evaluates the impact of basic and applied research on innovation in two industries. Whereas innovation in the pharmaceutical industry is closely tied to both basic and applied research, innovation in the semiconductor industry depends mainly upon applied research. Surprisingly, many firms perform little basic research, but they produce many innovations. Within each industry, firms pursue different R&D strategies: firms that emphasize basic research absorb more basic scientific knowledge than those that emphasize applied research. These findings suggest that future research must carefully consider how industry context and the composition of R&D mediate the relationship between research and innovation.