Endogenous Innovation Research Articles

Trade Friction and Chinese Innovation: A Case Study of the Semiconductor Industry

Major Chinese innovative technologies still depend on imported foreign core technologies. This dependence could affect sustaining growth in technological innovation for the Chinese Hi-Tech industry, which is one of the areas that has been most affected by the recent US-China trade conflict. The research explores if there is an impact of tension in trade scene on innovation in core technologies from the perspective of Hi-Tech industry experts in China. The method used a combination of semi-structured interviews and questionnaires addressed to experts and managers in the Chinese Hi-Tech industry. The statistical analysis used regression analysis of the experts’ answers where the findings propose a possible positive impact on endogenous innovation in the long term if it is combined with government policies that enhance innovation and increase R&D expenditures. The paper also highlighted the challenges that affect innovation in this industry and stresses the importance of the role of the entrepreneurial state that helped China to achieve breakthroughs in other domains. A case study of the semiconductor industry was analysed as a far-reaching endeavor, taking into account the scale of the challenges and the way forward for this significant core technology on which all of China’s Hi-Tech industries and exports depend.

Comparison between different licensing schemes in a Stackelberg model when the follower is the innovator

In the present paper we consider a differentiated-good Stackelberg model, when the follower firm engages in an R&D process that gives an endogenous cost-reducing innovation. We assume that there can exist a technology transfer between innovator and non-innovator firm. The aim of this paper is three-fold: to do a comparison of the fixed-fee and royalty licensing cases, of the two-part tariff and royalty licensing cases, respectively of the two-part tariff and fixed-fee licensing cases, in order to state in which case is indicated for the innovator firm to license its technology. This comparison allows us to identify which licensing scheme is more profitable for the innovator (follower firm).

Nemzeti innovációs rendszerek a visegrádi országokban

THE AIMS OF THE PAPER This paper undertakes a comparison of post-socialist countries on the basis of their national innovation systems, as well as their emerging innovation policies. The main focus of the study is the Visegrad group, with some general remarks concerning Slovenia, the Baltic countries, and South-Eastern Europe. METHODOLOGY The paper is based on a synthesis of available international studies, supplemented with comparative statistics. MOST IMPORTANT RESULTS Innovation systems in the Visegrad countries show a stagnant or lagging dynamic in comparison with leading innovators. In addition to state-financed innovation activity, business innovation also shows considerable weakness, greatly affected by the dominant “dependent market economy” development model. Endogenous innovation capacities are weak, and do not represent the global state-of-the-art. Innovation policy struggles with significant weaknesses and low efficiency. Competitive support schemes redistribute resources to already successful innovators, without encouraging a catching-up process. The weakness of the regional and local tier in public policy leads to the increase of territorial polarisation. RECOMMENDATIONS Innovation policy should meet real demands, with support systems tailored to serve the catching-up of domestic enterprises. Grants should take into account the different needs of different actors, and undertake their activities in a territorially differentiated manner. Acknowledgements: This publication/research has been supported by the European Union and Hungary and co-financed by the European Social Fund through the project EFOP-3.6.2-16-2017-00017, titled Sustainable, intelligent and inclusive regional and city models.

Developing Endogenous Innovations: Corporate Entrepreneurship and Effectuation

Abstract We empirically explore the process of corporate entrepreneurship (CE) through the conceptual lens of effectuation, a theory describing how entrepreneurs innovate. In particular, we investigate how endogenous innovations emerge and evolve into new products or services. The study thus provides an alternative perspective to most CE research that assumes a causation or rational-analytic approach to innovation. We implement a qualitative, multi-case study research design with corporate innovation projects as the level of analysis. Data are from interviews as well as secondary sources and were analyzed using within and cross case analysis. Findings reveal organic stages through which ideas are shaped into viable products. Findings show important effectuation principles at work including stakeholder commitments, affordable loss thinking, and a focus on control instead of prediction. Interestingly, findings illustrate how effectuation may differ in the corporate as compared to the new venture context. Implications for the wider literature are discussed along with limitations of the research design.

Barriers to Reallocation and Economic Growth: The Effects of Firing Costs

We study how factors that hinder the reallocation of inputs across firms influence aggregate productivity growth. We extend Hopenhayn and Rogerson’s (1993) firm-dynamics model to allow for endogenous innovation. We evaluate the effects of firing taxes on reallocation, innovation, and productivity growth. We find firing taxes can have opposite effects on entrants’ innovation and incumbents’ innovation, and the overall outcome depends on the relative strengths of these forces. In the entrant-driven growth calibration, firing taxes reduce aggregate productivity growth, whereas aggregate productivity growth increases in the incumbent-driven growth calibration. (JEL D24, E23, E24, J23, J24, J62, K31, O31, O47)

Transcription-Related Dynamics from Immune Disability into Endogenous Innovation.

So far, thymus involution in adults is believed to be irreversible, and endogenous innovation for thymus‐related immunodeficiency remains to be an intractable puzzle. With the expectation of addressing this dilemma, human ovarian surface epithelium (OSE) has been reengineered as epithelial‐mesenchymal transition (EMT)‐tridimensional‐spheroid biologics (ETSB) using a dynamic EMT‐3D‐floating system along with 160 Gy X‐ray‐amelioration, which inoculates subcutaneously into aging rhesus and athymic Balb/cnu/nu mice. Herein, it is bioinformatically validated that ETSB can reset Clock/Arntl‐Per3/Tim molecule rhythm dynamics to re‐prime thymus residual (parathyroid or fatty‐like invalid vesicles yet no thymic architecture) to evolutionary transcription with overall cortex‐medulla endogenized by TECs undergoing MET/EMT reversion. Rhythm dynamics immediately resettles the bHLH‐LTβR‐NFκB‐RelA/B loop as a cascade to provoke the core immune microenvironment for multifunctional innovation of dynamic TCR orchestration, with harmonious naïve T‐subsets and TRECs renewals (P < 0.005). Subsequently, peripheral biological burden and tumor metastasis dynamics are addressed by innovative TCR‐defense/attack dynamics quickly (P < 0.005 vs Control), yet without autoimmune indication to hosts. Moreover, a functional blockade of core‐rhythm dynamics deeply impedes the endogenous innovation of invalid thymus residual. Thus this study may help pioneer a prospective strategy to innovate panoramic central‐peripheral immune microenvironments and defense dynamics for immune‐deficient/aging victims.

The launch and evolution of a technology‐based economy: The case of Austin Texas

AbstractThis paper uses the lens of institutional theory to explain the launch and evolution of Austin, Texas's technology‐based economy. The case underscores the importance of context, contingency, and the evolution of key local development organizations in explaining how regional economic development trajectories can change and evolve. The case history provides insights into how economic development networks form and operate to “set off” processes of industrial specialization and agglomeration and how they can promote successful adaptation to change in technology and industrial structure. The Austin story further suggests a “stage” process of regional technology‐based evolution where the development of industrial agglomerations linked to a substantial local research base is seen as a necessary precursor to increasing endogenous innovation and start‐up activity. Successfully navigating these stages is bolstered by the formation of institutions and networks that are durable, strategic, and adaptive, and which, at the right time, recognize and support entrepreneurial firm development to help sustain technology‐based growth.

Non-diversifiable Risk and Endogenous Innovation

I propose a theoretical framework to study jointly the process of innovation and asset pricing properties of investment in innovation. The model emphasizes the disruptive nature of new technologies. When risk-sharing is limited, this feature gives rise to hedging motives against potential disruption. Investors' hedging activity increases the pace of innovation and generates observed empirically volatile fluctuations of the volume of investments in innovation and risk premium on such investments. The model explains a set of stylized facts that link innovation activity and risk, and reconciles empirical properties and puzzles of aggregate flows and performance in venture capital.

Demand‐led growth with endogenous innovation

AbstractThis paper contributes to the recent macro‐dynamics literature on demand‐led growth, drawing upon the seminal idea that the implications of Harrodian instability may be tamed by a source of autonomous expenditure in the economy. Contrary to the other contributions in this literature, real autonomous expenditure is not growing at an exogenously given rate, and partly consists of a flow of profit‐seeking R&amp;D and innovation expenditures raising labour productivity through time. If the state of distribution, hence the wage share, is exogenously fixed and constant, the model gives rise to dynamics in a two dimensional state space, that may converge to, or give rise to a limit cycle around, an endogenous growth path. An exogenous rise of the profit share exerts negative effects on long‐run growth and employment, showing that growth is wage led.

Exploring science-and-technology-led innovation: a cross-country study

Countries can enhance endogenous innovation using multifaceted incentives for science and technology indicators. We explore country-level innovation using OECD data for research and development (R&D), patents, and exports. We deploy a dual methodology of descriptive visualization and panel regression analysis. Our results highlight industry variances in R&D spending. As a nation develops, governmental expenditure on R&D decreases, and businesses take on an increasing role to fill the gap, increasing local innovation. Our portfolio of local versus foreign resident ownership of patents highlights implications for taxation/innovation policies. Countries with high foreign ownership of patents have low tax revenues due to the lack of associated costs with, and mobility of income from, patents. We call on these countries to devise targeted policies encouraging local patent ownership. Policy makers should also recognize factors influencing high-technology exports for innovation. Lastly, we call on countries to reinstate horizontal and vertical policies, and design national innovation ecosystems that integrate disparate policies in an effort to drive economic growth through innovation.

Dynamic competition and intellectual property rights in a model of product development

We study innovation timing and socially optimal intellectual property rights (IPRs) when firms facing market uncertainty invest strategically in product development. If demand growth and volatility are high, attrition occurs and IPRs should ensure the cost of imitation attains a lower bound we identify. If demand growth and volatility are low then provided that the private imitation incentive is socially excessive, IPRs should set the cost of imitation high enough to induce preemption, and possibly winner-take-all preemption. Moreover, the welfare achieved with optimal IPRs is then greater with endogenous innovation than if firm roles are predetermined, illustrating the importance of fostering dynamic competition. In extensions we show how firms benefit from open standards, takeovers have ambiguous welfare effects and simple licensing schemes are welfare improving.

Malthus in the Light of Climate Change

To reconsider the Malthusian predictions of natural limits to economic development, the paper develops a multi-sector growth model with exhaustible resource extraction, investments in physical and knowledge capital, climate change, and endogenous fertility. Economic growth is driven by endogenous innovations which increase in the availability and productivity of research labour. Poor substitution of natural resources triggers sectoral change. Climate change is the result of polluting resource use which is, like consumption and investments, based on the intertemporal optimization of the households. Highlighting the importance of bounded resource supply and of rational extraction decisions I show that climate change is independent of population growth in steady state and there is no causal relationship between climate and population during transition to steady state. The consumption per capita growth rate rises in the innovation rate and the output elasticities of labour and capital in the different sectors. Unlike climate policy, population policy is not warranted; it may be counterproductive because labour is crucial for the research sector.

Strategic Commitment to Price in a Supply Chain with Downstream Innovation

We consider a supply chain with an upstream supplier and a downstream manufacturer who invests in innovation. We present an analytical framework for innovation decisions in a centralized, a flexible price and a commitment to price. These results show that the innovation by commitment to price is still insufficient and the supplier remains flexible price beyond a threshold amount of demand uncertainty. To solve this problem, we propose a combination mechanism, which consists of a commitment to price, a cost sharing and a compensation for the risk of demand uncertainty. We study the impact of combination mechanism with endogenous downstream innovation. Our research results show that the innovation by combination mechanism may be greater than or equal to the one by a centralized. More importantly than all of that, the combination mechanism can improve the performance of the supply chain and ensure that both supply chain members achieve a win-win situation.

Index Measurement and Influencing Factor Analysis of China&amp;apos;s Financial Innovation Structure

Since the reform and opening up in 1978, China has basically established a financial system that has adapted to the requirements of the market economy after several stages of financial innovation. Based on financial innovation events in China from 1979 to 2015, this paper compiles the structural index of China's financial innovation, and analyses the evolution trends and influencing factors of China's financial innovation structure. The index reflects the increasingly complexity and maturity of the overall structure of financial innovation since the reform and opening up, while the cumulative contribution of the six innovative forms to the changes in innovation structure has become more consistent and stable. The empirical analysis shows that the exploration of financial innovation is the continuous driving force to promote the change of financial innovation structure in China. What’s more, major reform decisions, opening to the outside world, as well as scientific and technological progress promote the structural change of China's financial innovation, while the financial crisis inhibits the structural change of China's financial innovation. The policy implication of this paper is that China needs to deepen reform, create a more suitable environment for endogenous financial innovation, carry out more original financial innovation, focus on promoting system, management and technology innovation, and pay attention to the selection of opportunity and window period of innovation.

Effective bioeconomy policies for the uptake of innovative technologies under resource constraints

The bioeconomy is a shared vision for a future European industry entirely based on organic matter. Authorities support this technological development with subsidies and policies stimulating R&D. One major limitation for the bioeconomy is that R&D and industrial growth require the continuous availability of biomass as a primary resource. This resource dependence is already present during the formative years of new biobased innovations and influences the pilot and demonstration phase of the development. Traditionally, it is assumed that public support for pilot and demonstration initiatives may overcome this hurdle.In this paper, we investigate how this resource constraint limits the effectiveness of bioeconomy policies. The future development of the biobased sector is simulated including the inherent dependence of industrial activity on biomass. We simulate the future growth and technological diversity of an emerging biotechnological sector: the sector of manure transformation in Belgium. The paper reports the evolutions for three policy scenarios. The model explicitly accounts for endogenous innovation and knowledge transfer mechanisms. The results show that policies may have an important impact on the sector structure in the long run, but the sector growth remains ultimately constrained by the availability of inputs. So bioeconomy policies to promote innovation will be less effective, unless mechanisms are included to alleviate the resource constraint.

Government debt and the returns to innovation

Elevated levels of government debt raise concerns about their effects on long-term growth prospects. Using the cross-section of US stock returns, we show that (i) high-R&D firms are more exposed to government debt and pay higher expected returns than low-R&D firms, and (ii) higher levels of the debt-to-GDP ratio predict higher risk premiums for high-R&D firms. Furthermore, rises in the cost of capital for innovation-intensive firms predict declines in subsequent productivity and economic growth. We propose a production-based asset pricing model with endogenous innovation and fiscal policy shocks that can rationalize key aspects of the empirical evidence. Our study highlights a novel and distinct risk channel shaping the link between government debt and future growth.

On the cyclicality of R&D activities

This paper develops a real business cycle model with endogenous innovation, in order to explore cyclical fluctuations in R&D activities. A calibrated version of the model is used to discriminate between different R&D production technologies on their ability to account for the observation that R&D in the U.S. is procyclical. The analysis finds that the knowledge-driven specification, commonly used in the growth literature, fails to account for important features of the business cycle, most notably the procycical movement of both R&D investment and R&D employment. An alternative specification that allows for multiple inputs including scientists, staff, and final goods can account for the business cycle phenomena of the U.S. economy, including the procyclicality of R&D activities. An implication of this particular specification of the R&D process is that productivity shocks amplify the business cycle by stimulating more ideas in good times.

The development of ecosystems for technology transfer in Mexico: the role of Patenting Centers

In this article, we evaluate an initiative recently launched by the national government in Mexico to create ‘Patenting Centers’ in various universities and research institutions in diverse regions of the country. We focus particularly on elucidating how the installation of these Patenting Centers has augmented the number of national filings for intellectual property (IP) protection, and how the Centers have contributed to increasing the quality of IP applications. Furthermore, we analyze how the Mexican Patenting Centers have qualitatively contributed to fostering local cultures of innovation, for example through capacity-building activities directed towards scientific researchers. We also attempt to understand how the Patenting Centers have supported processes of technology transfer and commercialization, which we evaluate by examining a case study from the Northwest Biological Research Center (CIBNOR). Our findings indicate that the Mexican Patenting Centers have contributed to increasing IP protection activity in various regions of the country, and that they have augmented interactions between public research institutions and the productive sector. We conclude with suggestions for how the Patenting Center model may be further assessed in the future, to ensure that the government's mission of fostering endogenous innovation and the creation of a knowledge-based economy may continue to be realized.

Endogenous innovation, outward-bound international patenting and national economic development

In this paper the relationship between the pursuit of foreign patent rights by inventors or their assignees and economic development in the countries in which the respective inventors reside is examined. Outward-bound international patenting is contrasted with domestic patenting and with inward-bound international patenting. The empirical analysis establishes plausible evidence that outward-bound international patenting matters for economic development. The main conclusion, based on empirical research about the patenting profiles of 78 countries over 14 years, is that countries whose residents exhibit a relatively high proclivity for obtaining foreign patent protection for endogenous inventions are likely to enjoy relatively high levels of wealth per person. An implication of this conclusion is that the exploitation by national residents of foreign markets for the commercialization of endogenous technology through the sophisticated use of the intellectual property systems of foreign countries is an important factor for national economic development.

Book Review- Endogenous Innovation The Economics of an Emergent System Property

Being an expert with claim of being specialized in Economic Competitiveness and Innovation Indexes, I felt ashamed of my huge ignorance in endogenous growth theory and its impact on innovation. Therefore, this review holds a good intention for exploring the essence and the unique characters of the endogenous economic growth which focus on the investment in human capital, innovation, and knowledge-based economy which will lead to economic development. The endogenous innovation was tackled in this work of Antonelli (2017) to show the innovation in the creative reactions and as emergent property of the system. The author tried to illustrate the early relation between the early economics of knowledge and economics of growth, after discussing the limits of the new growth theory. The author managed to show the random events of innovation as creative response.