Category: Economics of Innovation

Knowledge spillovers to industry: Opportunities for universities of applied sciences

The brief paper “Knowledge spillovers to industry  – Opportunities for universities of applied sciences” by Sverre J. Herstad, Andreas Altmann and myself now published in the Zeitschrift für Hochschulentwicklung.  Find a pdf of the paper here. The paper is part of a special issue about research at UASs (universities of applied sciences). It condenses recent empirical findings about the characteristics of those firms that utilize and appreciate knowledge spill overs from higher education organizations. We discuss these findings, sketch out how they relate to the third mission of universities and how this can present opportunities for universities of applied sciences.

Public funding for innovation and the exit of firms

My paper “Public funding for innovation and the exit of firms” [this is a pre-print version] is now published in the August issue of the Journal of Evolutionary Economics.

The paper focuses on the effect public subsidies for innovation have on the exit of firms. Utilizing Finnish firm level data I employ a kernel matching approach to eliminate the selection bias of public funding and estimate the counterfactual. As a robustness check a treatment model is estimated. Public funding for innovation exhibits a significant effect reducing the probability of exit. Distinguishing between exit by merger and exit by closure shows that public funding has a significant effect on the former. No significant effect on the latter can be found.

Product innovation and the complementarities of external interfaces

The paper “Product innovation and the complementarities of external interfaces” by Sverre J. Herstad and myself is accepted for publication with the European Management Review. This paper investigates the relationship between new product introduction, and three constructs (search, collaboration and external R&D) developed to capture the different means by which firms link internal R&D to external inputs. By including interaction effects and applying detailed marginal effects analysis, it sheds new light on a research question, which has generated much empirical ambiguity: are external interfaces complements? Search diversity and collaboration diversity measure the extent to which different types of information sources and collaboration partners are used. Both affect innovation performance positively, and are complementary to each other. External R&D measures the relative importance of contract R&D, and is found to have a conditional negative impact which is reduced by search and reinforced when combined with collaboration.  When including interaction effects involving the overall R&D intensity of firms, our findings suggest the existence of two competing ideal types of open innovation strategy and organization.

Industrial innovation collaboration in a capital region context

The paper “Industrial innovation collaboration in a capital region context” by Sverre J. Herstad, Øyvind Pålshaugen and myself is accepted for publication with the Journal of the Knowledge Economy. In this paper we investigate the relationship between capital region location, and the firm level decision to engage in collaboration for innovation.  We find that firm location in the capital region is associated with a slightly lower propensity to engage in innovation collaboration within the region, and a distinctively lower propensity to engage in domestic collaboration as a whole. By contrast, we find no substantial differences between firms in the capital and other Norwegian regions with respect to foreign innovation collaboration, or with respect to innovation activity in general. This means that firms in the capital exchange knowledge among each other by other means than collaboration. They draw comparatively less of their innovation input from the collaboration networks which define the national innovation system as a whole.

Go abroad or have strangers visit?

Go abroad or have strangers visit? On organizational search spaces and local linkages.” Is a paper, on which Sverre J. Herstad and me have been working for quite a while. It was accepted for publication with the Journal of Economic Geography. It is now available online.

The paper explores the role of multinational enterprise groups in linking geographically bounded innovation collaboration networks to external sources of information. To investigate if the information content of the corporate network of affiliates increases with internationalization, we distinguish first between uninational and multinational networks. We then compare affiliation with MNE networks headquartered within the focal economy to affiliation with networks which are controlled from outside. Using Norwegian firm level innovation survey data, we find that the former is associated with the highest likelihood that affiliates combine local collaborative knowledge development outside the corporate network, and innovation search within it.

Do direct R&D subsidies lead to the monopolization of R&D in the economy?

The WP “Do Direct R&D Subsidies Lead to the Monopolization of R&D in the Economy?” by Dirk Czarnitzki and Bernd Ebersberger has been finalized recently.

In this paper we explore the impact of R&D subsidies on the concentration of R&D in an economy. First, governments are often criticized of subsidizing predominantly larger firms and thus contributing to the persistence of leadership in markets and higher barriers to entry, and, hence, reduced competition eventually. Second, theoretical literature, such as endogenous growth literature, has also shown that governmental intervention in the market for R&D affects the distribution of R&D which finally affects product market concentration. We test the relationship between R&D subsidies and R&D concentration employing treatment effects models on data of German and Finnish manufacturing firms. The data and estimations allow calculating concentration indices for the population of firms for both the actual situation where some selected companies receive R&D subsidies and the counterfactual situation describing the absence of subsidies.

We find that R&D subsidies do not lead to higher concentration of R&D. On the contrary, we even find that R&D concentration is significantly reduced because of subsidies. This result may be attributed to the fact that technology policy maintains special funding schemes for small and medium-sized companies. The fact that the larger companies benefit from a higher likelihood of a subsidy receipt is offset by the phenomenon that smaller firms may be completely deterred from any R&D activity if they would not receive governmental support.

Entrepreneurschip and regional development

Recently Sverre Herstad (NIFU STEP, Oslo) and myself finalized a short paper about titled “Entrepreneurship and Regional Development”. The paper will be the basis for a keynote at the Business School Ostrava (CZ) later this week. This paper discusses entrepreneurship and regional development from three different viewpoints: regional innovation systems, related variety and open innovation. It distils two major insights for regional development. Heterogeneity and entrepreneurship are to be fostered to support innovation led regional growth. Finally the discussion arrives at one conclusion: regional development strongly hinges on the understanding of regional innovation systems, the heterogeneity of their actors and their entrepreneurial activities. Finally it depends on how these actors interact in generating and exploiting knowledge.

National innovation policy and global open innovation: exploring balances, tradeoffs and complementarities

The “National innovation policy and global open innovation: exploring balances, tradeoffs and complementarities” by Sverre Herstad, Carter Bloch, Bernd Ebersberger and Els Van de Velde has recently been published in Science and Public Policy. The aim of this paper is to suggest a framework for examining the way national policy mixes are responding to the challenges and opportunities of globally distributed knowledge networks, cross- sectoral technology flows and consequently open innovation processes occurring on an international scale. We argue that the purpose of public research and innovation policy remains one of developing and sustaining territorial knowledge bases capable of growing and supporting internationally competitive industries. But the rules of the game have changed. Public policy now needs to carefully balance between: a) promoting the formation of international linkages for knowledge sourcing and information exposure; b) providing incentives for domestic industry intramural R&D for building absorptive capacity and knowledge accumulation; and c) sustaining domestic networking to allow accumulated knowledge to diffuse and recombine.

Technological specialization and variety in regional innovation systems: a view on Austrian regions

The paper “Technological specialization and variety in regional innovation systems: a view on Austrian regions” [a preprint] by Bernd Ebersberger and Florian M. Becke is now published in “Innovation in Complex Social Systems” edited by Petra Ahrweiler.

In this edited volume Petra Ahrweiler ties together a diverse set approaches to illustrate a ‘hard science’ approach to innovation. Natural scientists, computer scientists, mathematicians and social scientists contribute to illustrate cutting-edge methodology in the analysis of innovation complex social systems. The paper “Technological specialization and variety in regional innovation systems” illustrates how patent information can be used to investigate regional patern of technological specialization and their inter-temporal dynamics.

The devil dwells in the tails

The paper “The devil dwells in the tails” by Toke Reichstein, Michael Dahl, Bernd Ebersberger and Morten Jensen  is now published in the Journal of Evolutionary Economics.

This paper explores firm growth rate distribution in a Gibrat’s Law context. It is novel in two respects. First, rather than limiting the analysis to a focus on the conditional mean, we investigate the entire shape of the distribution. Second, we show that differences in the firm growth rate process between large and small firms are highly circumstantial and depend on the industry dynamics. The data used include more than 9,000 Danish manufacturing, services and construction firms. We provide robust evidence indicating that firm growth studies should concentrate less on explaining means and instead focus on other parts of the firm growth rate distribution.