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.     

Competition favors the prepared firm: Firms’ R&D responses to competitive market pressure

This paper aims to contribute to the literature on the long-debated relationship between market competition and firm research and development (R&D) by investigating the effect of competitive market pressure on firms’ incentives to invest in R&D. The paper shows that a firm's R&D response to competitive market pressure depends primarily on its level of technological competence or R&D productivity: firms with high levels of technological competence tend to respond aggressively (i.e., exhibit a higher level of R&D efforts) to intensifying competitive market pressure, while firms with low levels of technological competence tend to respond submissively (i.e., exhibit a lower level of R&D efforts). The differential effect of competitive market pressure on firm R&D, conditioned primarily by the level of firms’ technological competence, is empirically supported by unique firm-level data from the World Bank. Furthermore, the role of firm-specific technological competence in conditioning the R&D-competition relationship is more evident and statistically more significant for firms facing consumers whose utility is relatively more elastic to product quality than to price.     

Long-term research on technology innovation in the form of new technology patents

Recent changes in innovation development are related to the new technological revolution (Industry 4.0), pandemic, economic crises, and new legislation. These trends provide new opportunities for the improvement of production materials, construction, processes, and capacities. Innovative technologies improve the processes of business analyses and forecasting, as well as new product development, order processing, logistics, production automation, quality control, and marketing. Modern technologies are gradually replacing ergonomically demanding and dangerous occupations. Such innovations are particularly necessary for the transformation of problem companies and regions, as they often have a significant impact on economic development. This study is part of our long-term research on the technology innovation of problem companies and regions. Its primary goal is to methodically emphasize the importance and role of technology innovation management, mainly in problem companies, and analytically compare the innovation success of regions and countries from a global perspective. The study was carried out from 2015 to 2021. The time scope of the analyzed data is 2000–2018. The results show a certain Asian dominance in technology innovation management, in terms of the number of technology patents as well as of the growth dynamics and the ability to overcome the pandemic and crises in general.     

The long march to catch-up: A history-friendly model of China’s mobile communications industry

This paper develops a history-friendly model of the process of catch-up by Chinese firms in the mobile communications industry. It aims to explain how the sectoral environment in terms of segmented markets and generational technological change facilitated the catch-up of domestic firms with respect to foreign multinationals. Segmented markets provided a nurturing environment in peripheral markets for the survival of domestic firms starting with low level capabilities in their infant stage. Generational technological change opened windows of opportunities for domestic firms to catch-up with foreign multinationals in new product segments. Segmented markets and generational technological change allowed domestic firms to leverage their initial advantages in peripheral markets to catch-up in core markets. Counterfactual simulations highlight that the process of catch-up was facilitated by relatedness across technological generations. This paper contributes to the literature on catch-up and industry evolution by illustrating the role of technological change and market regimes in the process of catching-up.     

Productivity effects of basic research in low-tech and high-tech industries

R&D encompasses plenty of activities which are usually summarized under the terms of basic research, applied research and development. Although basic research is often associated with low appropriability it provides the fundamental basis for subsequent applied research and development. Especially in the high-tech sector basic research capabilities are an essential component for a firm's success. We use firm-level panel data stemming from Belgian R&D surveys and apply a production function approach which shows that basic research exhibits a premium on a firm's output when compared to applied research and development. When we split the sample into high-tech and low-tech companies, we find a large premium of basic research for firms in high-tech industries, but no premium in low-tech sectors.     

Public infrastructure,location of private schools and primary school attainment in an emerging economy

The paper argues that access to public infrastructure plays a crucial role on the presence of private schools in a community, as it could not only minimise the cost of production, but also ensure a high return to private investment. Results using community, school and child/household-level PROBE survey data from five north Indian states provide some support to this central hypothesis: even after controlling for all other factors, access to village infrastructural facilities is associated with a higher likelihood of having a private school in the community. This is also corroborated by an analysis of household demand for private schools. The paper concludes by examining the effect of private school presence on year 5 pass rates: while all-school pass rates are significantly higher in villages with a private school, private school presence fails to have significant effect on local state school pass rates.     

Biotechnology as a new techno-economic paradigm that will help drive the world economy and mitigate climate change

A techno-economic paradigm embraces a whole constellation of technically and economically interrelated innovations and influences most industries and an entire phase of economic development. Its full potential to drive and shape economic growth can only be realized after far-reaching reforms have been made in the “socio-institutional frameworks” of major economies and the world economy. In close association with ICT, biotechnology – or the trio of biotechnologies: red (biomedicine), green (plant breeding) and white (industrial) – is now capable of such a role, although the necessary reforms remain to be made. This paper shows how far and in what sense it has reached technological maturity, and what “mismatches” between it and the socio-institutional framework are obstructing its further development and diffusion. It argues that biotechnology (green and white) is needed to play a key role in the struggle against climate change – which in turn can be expected to draw out its potential.     

Innovation policy for system-wide transformation: The case of strategic innovation programmes (SIPs) in Sweden

The orientation towards grand societal challenges can be seen as a new wave or paradigm for innovation policy. Such policy aims at system-wide transformation and is often referred to as system innovation policy. While insights from transition studies have provided novel and useful rationales for innovation policy targeting system-wide transformation, it remains unclear how to design, implement and evaluate such policies. The contribution of this paper is to translate and concretize the challenges of system innovation policy towards scope for policy action and analysis. Building on insights from transition studies we group the challenges into four domains: directionality, experimentation, demand articulation, and policy coordination and learning. We relate challenges within the four domains to three generic features of innovation systems: interests and capabilities of actors, networks, and institutions. The derived framework is applied in a case study on the strategic innovation programmes, a recent policy initiative by Vinnova, Sweden’s Innovation Agency, targeting system innovation.     

Estimating the causal effect of R&D subsidies in a pan-European program

We investigate the effect of Europe's largest multilateral subsidy program for R&D-performing small and medium-sized enterprises. The program applied a specific budget allocation rule, referred to as Virtual Common Pot (VCP), which is designed to avoid cross-subsidization between participating countries. This rule creates exogenous variation in funding status and allows us to identify the causal effect of public R&D grants on firm growth. In addition, we compare the program's effect under the VCP rule with the standard situation of a Real Common Pot (RCP), in which program authorities allocate a single budget according to uniform project evaluation criteria. Our estimates suggest that R&D grants had no average effect on job creation and sales growth, but treatment effects were heterogeneous and positive for high-quality projects. Under an RCP the program would have created 53% more jobs and 48% higher sales.     

Knowledge base combinations and firm growth

The link between knowledge and firm growth has been a core topic in economics of innovation for a long time. However, despite strong theoretical arguments, empirical evidence remains inconclusive. One important reason for this conundrum may be the failure of standard indicators to capture firm innovation activities comprehensively. We contribute to overcoming this limitation by looking in the knowledge processes that drive variegated forms of innovation and aim thereby to establish a solid relationship with firm growth in more detail. Our arguments draw on the differentiated knowledge base approach, distinguishing between analytical, synthetic, and symbolic knowledge. We measure the three types of knowledge bases with detailed longitudinal linked-employer-employee micro-data from Sweden. Econometric findings based on a very large sample of small and medium-sized firms indicate significantly positive effects of the three knowledge types, and in particular combinations thereof, on firm growth. In addition, we show that not only high-growth but also slow-growth firms benefit immensely from the use of combinatory knowledge bases. We find evidence on a curvilinear relation between knowledge bases and growth of firms. Beyond certain thresholds increasing the knowledge bases further results in decreasing firm growth. Our results remain robust in a wide range of specifications and econometric models.