The effect of competitive and non-competitive R&;D collaboration on firm innovation

A firm can improve its innovation either by its internal research and development (R&D) efforts or by forming external collaborative R&D alliances. While previous studies on R&D collaboration and knowledge diffusion mainly focus on various external sources of R&D collaboration, little effort has been made to investigate the joint impact of competitive and non-competitive R&D collaborations on firm innovation simultaneously. By examining the data of 165 Taiwanese firms in the information and communication technology industry, we find that: (1) non-competitive R&D collaborations with universities have a positive direct impact on firm’s innovation performance; and (2) both non-competitive and competitive R&D collaborations have a positively moderating effect on the relationship between a firm’s internal R&D efforts and firm innovation and the positive moderating effect is higher for non-competitive R&D collaborations than that of competitive R&D collaborations. These findings suggest that R&D collaborations, either non-competitive or competitive, exhibit the nature of a win–win situation. We also derive implications for firms’ selection of R&D alliance partners and government policies.     

Measurement of R&;D Multipliers: The Case of Greece

The present paper applies empirically the methodology of backward and forward R & D multipliers for the case of Greece, which, despite its high growth rates in output (G.D.P.), ranks last among European Union (E.U) countries in R&D expenditure. The backward R&D multipliers measure the total amount of R&D expenditure embodied in one unit of an industrys final demand. On the other hand, forward multipliers reflect the percentage of an industrys R&D expenditures that is embodied in the final output categories. The results show that the Greek economy experiences a decrease in backward R&D multipliers over the time period 1993–1997, and some policy implications are discussed, regarding the countrys priority to increase R&D diffusion and stimulate R&D financing.     

Technology dissemination programmes and extramural R&;D support in India

This article offers a brief overview of the programmes in place for the provision of financial support to entrepreneurs and R&D organizations for technology commercialization and dissemination in India. Financial assistance is provided under these programmes to the industrial enterprises and R&D organizations by the Government of India for undertaking the development of new technology based products. Technology financing under these programmes is provided in the form of: grants, loan, and/or equity with the aim to strengthen the linkages of R&D laboratories with industry, as well as for the production of technology based products for the domestic and global market. Extramural funding agencies of the central government departments such as DSIR & DBT are involved in mainly the provision of financial support for R&D.     

What the design of an R&;D tax incentive tells about its effectiveness: a simulation of R&;D tax incentives in the European Union

Most industrialized countries apply special tax incentives to boost the R&D expenditures of firms. This study considers the design of such R&D tax incentives as applied in the European Union and simulates its effect on the post-tax R&D expenditures of firms in different industries and different profit/loss-situations by means of the simulation model European Tax Analyzer. Any restrictions and progressive tax incentives are explicitly taken into account. Our results indicate that for designing and measuring public support to R&D it is often not sufficient to focus only on tax rate effects of R&D tax incentives and the design of a tax incentive must be in accordance with the framing tax system in order to be effective. As soon as there are any limitations in place, our results suggest a considerably lower impact of R&D tax incentives on the post-tax R&D expenditures than the commonly used B-Index by the OECD. The results clearly illustrate the beneficial impact of immediate cash refunds for unused tax incentives.     

Rationales and mechanisms for revitalizing US manufacturing R&;D strategies

The race to economic superiority is increasingly occurring on a global scale. Competitors from different countries are employing new types of growth strategies in attempts to win that race. The United States cannot, therefore, continue to rely on outdated economic growth strategies, which include an inability to understand the complexity of the typical industrial technology and the synergies among tiers in high-tech supply chains. In this context, a detailed rationale is provided for maintaining a viable domestic technology-based manufacturing capability. In the United States, the still dominant neoclassical economic philosophy is at best ambivalent on the issue of whether a technology-based economy should attempt to remain competitive in manufacturing or let this sector continue to offshore in response to trends in comparative advantage, as revealed through shifts in relative prices. The paper argues that the neoclassical view is inaccurate and that a new innovation model is required to guide economic growth policy. Specifically, the paper provides (1) a rationale for why an advanced economy such as the United States needs a manufacturing sector; (2) examples of the process of deterioration of competitive positions for individual industries and, more important, entire high-tech supply chains; (3) an explanation of the inadequacy of current economic models for rationalizing needed new policy strategies; and (4) a new economic framework for determining both policy mechanisms and targets for those mechanisms, with emphasis on the systems nature of modern technologies and the consequent requirement for public–private innovation ecosystems to develop and deliver these technologies. Several targets are suggested for major policy mechanisms.     

Collaborative R&;D: intellectual property rights between Tsinghua University and multinational companies

Tsinghua University, one of the top universities in China, has conducted a lot of collaborative R&D projects with multinational companies in the recent years. One of tough issues in the collaborative R&D is to deal with the intellectual property rights. The Chinese Patent Law and other relevant laws make Tsinghua University to look for more intellectual property rights. Several factors such as the input from the collaborative parties, the property of R&D, the relation between the collaborative project and the activities of R&D made before, or to be made after, the collaboration, and the life and potential market of the technologies play an important rule in the treatment of Intellectual property rights. The different collaborative models have different models of the distribution of intellectual property rights between the University and multinational companies.      

Geographic and technological R&;D spillovers within the triad: micro evidence from US patents

This paper aims at assessing the magnitude of R&D spillover effects on large international R&D companies’ productivity growth. In particular, we investigate the extent to which R&D spillover effects are intensified by both geographic and technological proximities between spillover generating and receiving firms. We also control for the firm’s ability to identify, assimilate and absorb the external knowledge stock. The results estimated by means of panel data econometric methods (system GMM) indicate a positive and significant impact of both types of R&D spillovers and of absorptive capacity on productivity performance.

Evaluating the Short-Run Benefits of Six Department of Energy R&;D Projects

This paper evaluates the short-run benefits of research and development (R&D) projects funded by the Automotive Lightweighting Materials (ALM) Program of the Office of FreedomCAR and Vehicle Technologies of the U.S. Department of Energy (DOE). The six ALM projects evaluated—using qualitative and quantitative evaluation methods—yielded numerous benefits in the short-run. From the qualitative assessment, all met their technical goals, increased intellectual knowledge among the research teams, and led to increased collaboration among DOE, the auto industry, its suppliers, and national laboratories. Moreover, U.S. competitiveness appeared to have increased as a result of each R&D effort. One interesting finding, however, is that most of the participants indicated their firms would not have engaged in the research efforts without DOE funding. If they had engaged in the effort, it would have been with considerably less person time and financial commitment. With respect to quantitative measures, several graduate students were supported by the projects and numerous publications and presentations resulted, although these metrics varied across the ALM R&D projects.     

R&;D productivity and the organization of cluster policy: an empirical evaluation of the Industrial Cluster Project in Japan

Industrial clusters have attracted increasing attention as important locations of innovation. Therefore, several countries have started promotion policies for industrial clusters. However, there are few empirical studies on cluster policies. This paper examines the effects of the “Industrial Cluster Project” (ICP) in Japan on the R&D productivity of participants, using a unique dataset of 229 small firms, and discusses the conditions necessary for the effective organization of cluster policies. Different from former policy approaches, the ICP aims at building collaborative networks between universities and industries and supports the autonomous development of existing regional industries without direct intervention in the clustering process. Thus far, the ICP is similar to indirect support systems adopted by successful European clusters. Our estimation results suggest that participation in the cluster project alone does not affect R&D productivity. Moreover, research collaboration with a partner in the same cluster region decreases R&D productivity both in terms of the quantity and quality of patents. Therefore, in order to improve the R&D efficiency of local firms, it is also important to construct wide-range collaborative networks within and beyond the clusters, although most clusters focus on the network at a narrowly defined local level. However, cluster participants apply for more patents than others without reducing patent quality when they collaborate with national universities in the same cluster region.     

The role of firm and national level factors in fostering R&D cooperation: a cross country comparison

This paper explores the factors that affect firms’ propensity to engage in R&D cooperation using a CIS-3 sample of innovative firms located in seven European countries. It performs the analysis separately for the manufacturing and the service sectors in order to examine whether there are specific features that shape the service firms’ R&D cooperative behaviour in particular ways. Differences between the manufacturing and the service sectors in the cooperative behaviour of firms become much more evident once an appropriate structure of endogeneity is determined. We compare different countries because, so far, the empirical evidence produced comes from single countries or countries that are all quite homogeneous in terms of industrial structure. Instead, we consider also countries, such as transition economies, that have not been analyzed so far. We find that public subsidies positively affect firms’ propensity to engage in R&D cooperation in all countries, but they seem particularly important to enhance firms’ cooperativeness in the service sector. Implications for innovation policy are examined.     

Corporate criminal liability and optimal firm behavior: internal monitoring versus managerial incentives

Legislation addressing corporate criminal liability has been the subject of worldwide debate ever since the financial scandals of the early 2000s. Under current regimes, firms must observe such compliance requirements as internal monitoring mechanisms, the purpose of which is inducing firms to detect the wrongful conduct of their agents. We develop an analytical framework for identifying when, and to what extent, firms may find it beneficial to adopt these regulatory devices. We conclude that more productive firms, those operating in sectors with more market power, and firms whose managers have more opportunities for criminal activity are more likely to prevent wrongful conduct—either through monitoring or the payment of efficiency wages. When the potential returns to illegal activities are high or the firm is large, internal monitoring is probably the optimal strategy of crime prevention; in contrast, smaller firms typically proceed by paying efficiency wages (or ignoring crime). This paper also analyzes the role of the State’s legal capacity as well as the effects of interactions between the structure of reputational losses and the firm’s market power.     

“We really don’t want to move,but...”: identity and strategy in the internationalisation of industrial R&;D

In Norway, as in many other high-cost OECD countries in a geographical and cultural periphery, policy-makers seem to have given up attempts at attracting large numbers of foreign R&D investments. Instead, a major focus of innovation policies is to help companies internationalise yet with an aim to maintain or even increase their level of R&D and other innovation activities nationally. Based on case studies of eight Norwegian companies and their motives for and experiences with internationalisation of R&D, this article questions this policy. From the perspective of the companies, many factors explain how, why and where they carry out their R&D activities.      

Tax incentives for innovation: time to restructure the R&;E tax credit

The R&E tax credit has never been effective and subsequent attempts to restructure it have not addressed the major deficiencies. Moreover, in the 25 years since the R&E tax credit was enacted, a steadily increasing number of countries have implemented or expanded competing tax incentives, which in many cases are better structured and larger in size. As a result, the relative impact of the US credit is now negative in terms of incentives to conduct R&D within the domestic economy. The inadequacy of the credit stems largely from its small size and its incremental format. The impact of an R&D tax incentive is affected by its scope of coverage, the ability of industry to take advantage of it over the entire R&D cycle, the magnitude of the incentive relative to other nations’ tax policies, and its ease of implementation. In the end, a tax incentive must sufficiently lower the user’s cost of R&D to overcome barriers to allocation of private-sector resources commensurate with the potential rates of return on such investments. As a policy instrument, a tax incentive for R&D should be most effective if its form is a flat rate applied to all R&D.

Regulation as a cause of firm fragmentation:the case of the Spanish construction industry

Team members organize their relationships to achieve efficient incentives in accordance with institutional constraints. When these constraints change, the rights and tasks of members are reallocated, generating a new contractual structure [or governance mechanism] that solves more easily the problem of collective action associated with team production. We show how this process has worked in the case of Spanish construction firms, in which more restrictive labor and tax regulations have induced parties to substitute market contracts for labor contracts because of the need to avoid moral hazards. We argue that this explains the increased fragmentation of the Spanish construction industry, and technical change does not seem to account for this process.     

The legal and technological battle in the music industry: Information-push versus information-pull technologies

Peer-to-peer (P2P) technologies are often seen as a threat by copyright owners because they encourage piracy by making digital copies easier to obtain. In response, major record companies have come up with new devices designed to protect original material, and lobbied to reinforce legal protection. We view traditional distribution as an information-push technology in which the firm pays to provide information to consumers and P2P as an information-pull technology where consumers spend resources to acquire information on products they have a potential interest in by searching, downloading and testing digital copies of original products before they make their purchase decision. We determine copyright owners’ protection strategies according to the level of legal protection, and we study their effects on profits and consumers’ surplus with the two different information transmission technologies.     

Expanding the R&;E tax credit to drive innovation,competitiveness and prosperity

The research and experimentation (R&E) tax credit has long been the subject of criticism. Some argue that if the goal is more research and innovation, it’s better to increase direct federal funding of research. Others argue that the credit is not effective, that companies would do the research in any case. Some object the very notion of using tax policy to influence private sector behavior, preferring instead a more “neutral” tax code. Still others, including Tassey in this volume, point to what they see are a host of design flaws in the current credit, including that its incremental nature reduces its effectiveness. I will argue here that most of these arguments are mistaken. To promote innovation in a global economy both direct funding and indirect tax incentives are needed. The credit, while it can be improved, has been shown to be effective in stimulating research. Moreover, far from distorting the market, the credit corrects for a market failure where firms are unable to capture all of the benefits of corporate research, leading them to under invest in research. Finally, while reform and expansion are needed, it would be a mistake to shift to a completely flat credit. However, several important changes should be made including doubling the current value of the credit, modifying the Alternative Simplified Credit to become incremental, and expanding the flat credit for collaborative R&D.

Patent cross-licensing,the influence of IP interdependency and the moderating effect of firm size

This paper analyzes technological interdependency as the key factor for companies’ motivation to engage in cross-licensing transactions. It gives evidence on how the incentive effects for mutual technology transfers vary by firm size and the degree to which a firm has to rely on its competitors’ intellectual property (IP dependency). Even though IP dependency exists also among smaller firms, cross-licensing has previously only been analyzed for large firms. This paper fills this gap in the empiric literature using original survey data among German manufacturing companies. Findings suggest that the influence of firm size and IP dependency on the use of cross-licensing can not be regarded separately. While the effect of IP dependency on the relevance of cross-licensing itself has a clear positive effect this seems to be true to a higher extent for small firms and decrease for larger companies. A possible reason for the interaction effect between these two factors is that larger firms have better odds of achieving a technological workaround which can serve as an alternative to in- or cross-licensing; furthermore small high tech firms might need to explicitly use cross-licensing to secure the freedom to operate while a large firm’s patent portfolio itself can serve as an implicit insurance by posing a threat which prevents other technology holders to file patent infringement cases.     

Technology transfer by foreign firms and the utilization of competencies within Indian industry

This article evaluates whether the changing presence of foreign firms in India has had an impact on the performance of India’s industrial sector by impacting on the utilization of intangible capabilities within firms. Foreign firms bring in technological skills and capabilities and these are transferred by a spillover process to all of Indian industry. The results show a strong relationship between the growing presence of foreign firms in India and measures capturing the utilization of varieties of competencies in Indian industry. Thus, the notion that foreign firms’ capabilities can spillover to other sectors of industry finds support in the data.