the birth of a new industry entry by start ups and the drivers of firm growth the case of encryption software the paper analyses the birth of the encryption software industry esi a new niche in the software industry using a chandlerian perspective this work reports the main facts about fir entry and growth with a particular focus on start up strategies and actions since scale economies do not play a major role in esi the paper investigates the different sources of fir competitive advantages this work shows that innovation and product differentiation along with investments in co specialised assets are variables strongly correlated to young fir probability to survive and grow in doing so we have collected highly detailed information on product introduction us patents granted worldwide alliances and biographical data of fir founders 2004 elsevier b v all rights reserved jel classificatio m13 l86 o32

is the division of labor limited by the extent of the market evidence from the chemical industry in the age of outsourcing it is easy to forget that outsourcing is simply one manifestation of the division of labor adam smith s dictum that the division of labor is limited by the extent of the market has created difficulties when applied to a division of labor among firms rather than within a firm the problems are both for analytical attempts to formalize it and for empirical attempts to test it bresnahan and gambardella show that the smith stigler theorem holds when the extent of the market is defined in terms of the number of users instead of simply the total size of demand therefore division of labor is increasing in the number of users and decreasing in the average size of users this article provides an empirical test of bresnahan and gambardella s theoretical argument using data from the chemical industry the chemical industry shows systematic variation across technologies and countries in the extent of the division of labor in plant design and engineering we develop an empirical model in which large firms decide whether to build plants using in house resources or to contract out and small chemical firms also decide whether to invest in a plant the number of specialized suppliers of plant design and engineering services sefs vary with the demand for their services the empirical results support the predictions of bresnahan and gambardella we find that the number of sefs increases when the market expands through an increase in the number of potential buyers but not when the market expansion is due to an increase in the average size of buyers moreover an increase in the share of large firm investment decreases small firm investment which decreases the number of sefs in turn this further depresses small firm investment copyright 2009 the author 2009 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

hybrid r d we develop a model of r d collaboration in which individual firms carry out in house research on core activities and undertake bilateral joint projects on non core activities with other firms we develop conditions on the profit functions of the firm under which r d investments in different projects of a firm are complementary we show that this condition is met by standard price and quantity setting oligopoly models we then study the relation between the number of joint projects and investments and profits in this context we identify a second aspect of complementarity equilibrium investments in in house as well as in each joint project are increasing in the number of projects however we find that an increase in number of joint projects of all firms lowers collective profits suggesting the presence of excessive incentives for conducting research

an examination of the antecedents and implications of patent scope this paper focuses on the concept of patent scope and contributes to existing research in three ways first it offers a re examination of the construct and identifies two dimensions of patent scope 1 the number of variations of the core inventive idea identified in the patent reflected in the number of claims in the patent e g merges and nelson 1994 and 2 the positioning of those variations in the inventive space which is reflected in the number of technological classes in which patent examiners classify those claims second it investigates the implications of patent scope for the firm s subsequent inventive performance and finds that when the scope of a patents spans across a higher number of technological classes the extent to which the inventing firm itself succeeds in building on the knowledge underlying its own patent is lower third it investigates the antecedents of scope and suggests that prior investment in scientific knowledge and in related inventive experience are two factors that affect the scope of the patents that firms develop the theoretical predictions elaborated in this paper are supported by an empirical examination of a longitudinal sample of firms in the photonics industry

specialized supply firms property rights and firm boundaries the proper specification of intellectual property rights iprs is a delicate and controversial matter in this paper we consider one specialized context in which iprs can add to efficiency we build on contributions of both firm capabilities scholars e g teece pisano et al and property rights economists e g hart to show that iprs can affect efficiency by influencing the location of technological innovation using a simple set up where the key choice is whether a technology intensive input will be supplied by an independent firm or produced in house we analyze how the choice is affected by the strength of iprs and by the existence and nature of information spillovers specifically we show that when the supply relationship is likely to produce new information of value to the supplier stronger property rights favor independent suppliers over vertical integration an important implication of our model backed by empirical case studies is that strong iprs therefore encourage investments in specialized firms with strong firm capabilities in the area of innovative input supply iprs therefore may play a role along with multiple other factors in the location of firm boundaries in some cases this contribution to the viability of small specialized firms with their superior ability to innovate in some cases must be taken into account in evaluating recent criticisms of over fragmented ipr ownership i e the anticommons problem it also contributes to an understanding of iprs in the post chandlerian economy where smaller specialized firms play a prominent role copyright 2004 oxford university press

complementarities in the search for innovation managing markets and relationships abstract extant research has characterized a firm s search for external knowledge in its innovation activities as either relational or transactional in nature the former implies that a firm chooses and develops collaborative relationships with knowledge sources like universities customers or suppliers while the latter suggests transactions governed by markets for technology we argue that prior literature has ignored that both search strategies are interrelated and complementary adopting one strategy has a higher marginal return on innovation performance if the other one is present moreover we suggest the benefits from complementarity to be higher when a firm is more distant to the technological frontier in the industry and when markets for technology in that industry are shallow we test our hypotheses on a sample of 3921 german firms from 2001 to 2009 and find support for our hypotheses

general technological capabilities product market fragmentation and markets for technology abstract the combination of a firm capability i e ability to generate general purpose technologies and a market structure condition i e fragmentation of downstream submarkets may encourage licensing in an industry that is the probability of licensing should increase when product markets are fragmented and technologies support general purposes evidence consistent with these predictions emerges from a 1993 to 2001 panel of 87 firms that owned at least one u s software security patent between 1976 and 2001 the analysis uncovers some fundamental characteristics of how external knowledge exploitation functions in particular technology markets thrive when product markets are fragmented and firms have the capability to produce general technologies

information gathering through alliances abstract the effect of a firm s uncertainty regarding technological development on the formation of alliances is examined and it is shown that this uncertainty is positively related to the number of alliances however higher uncertainty also makes the firm less likely to ally with others if the collected information is redundant the higher the similarity between the technological regimes of potential alliance partners the lower the incentive to ally also direct ties are preferred to indirect ones if uncertainty is high since direct ties yield more accurate information than indirect ties

size r d productivity and decision styles we extend the size innovation debate by incorporating decision making style as a relevant factor in the innovation process we propose that the size of firms affects the scale and quality of product innovation through the adoption of different decision making styles using the literature on cognition we conceptualize decision making style as the degree to which firms rely on analytical information for decision making during the r d process using longitudinal data of spanish firms we show that as firms increase in size they rely more extensively on analytical decision tools for the innovation activity additionally we show that the size of firms is negatively related to product innovation productivity in terms of scale and positively related to the quality and that these relationships are mediated by firms reliance on analytical decision making style we discuss theoretical and managerial implications for innovation research and practice

institutions capital and growth the international development community has encouraged investment in physical and human capital as a precursor to economic progress recent evidence shows however that increases in capital do not always lead to increases in output we develop a growth model where the allocation and productivity of capital depends on a country s institutions we find that increases in physical and human capital lead to output growth only in countries with good institutions in countries with bad institutions increases in capital lead to negative growth rates because additions to the capital stock tend to be employed in rent seeking and other socially unproductive activities

pre empted patents infringed patents and firms participation in markets for technology abstract in recent years firms have increasingly contributed to and been confronted with a patent landscape characterized by numerous but marginal inventions overlapping claims and patent fences as a result firms risk their patent applications to be pre empted or to be infringed upon by rivals while both aspects constitute major challenges for the appropriation of returns to inventive activity extant literature suggests that participation in the market for technology might actually resolve or at least alleviate these problems in this paper we investigate the effect of pre empted and infringed patents on firms engagement in in and cross licensing based on a sample of more than 1100 german manufacturing firms our results show that firms engage in in licensing as a reaction to pre empted patents and in cross licensing if their protected ip was infringed upon however these effects vary depending on the fragmentation of technology fields and whether the firm operates in a discrete or complex product industry

complementarity and external linkages the strategies of the large firms in biotechnology in biotechnology large firms enter into different kinds of linkages with universities and small medium sized research intensive firms we test the hypothesis that the strategies of external linkage of the large firms with other parties are complementary to one another we show that if any two strategies are complementary i e undertaking more of one strategy raises the marginal value of the other then they are positively correlated using data for a sample large us european and japanese chemical and pharmaceutical producers we find that the strategies above are positively correlated even after controlling for firm specific characteristics

the role of institution building in us industrial modernization programs abstract an important issue for evaluating industrial modernization programs is how well alternative intervention strategies address the underlying problems that contribute to uneven patterns of technology adoption the one on one industrial extension service model where the state agency provides technical assistance directly to individual firms constitutes one approach by contrast institution building approaches emphasize inter firm learning in which government serves as the catalyst for bringing technology developers together with potential users and for providing closer linkages between organizations that are the technology leaders and those that tend to be followers programs that support such inter firm learning opportunities stand a better chance of contending with the underlying problems retarding technology transfer are more likely to gain acceptability by both technology leaders and followers and are more likely to garner funds from the private sector

regulatory attitudes and environmental innovation in a model combining internal and external r d the extent to which environmental regulatory institutions are either green or brown impacts not just the intensity of regulation at any moment but also the incentives for the development of new pollution control technologies we set up a strategic model of r d in which a polluter can deploy technologies developed in house or license technologies developed by specialist outsiders an eco industry polluters exert r d effort and may even develop redundant technologies to improve the terms on which they procure technology from outside we find that while regulatory bias has an ambiguous impact on the best available technology strategic delegation to systematically biased regulators can improve social welfare

global markets for technology evidence from patent transactions abstract the paper analyses the recent evolution of international markets for technology by examining changes in ownership of us granted patents we study the effects of the geographical origin of patents proxied by their first priority country on the probability of patents being traded on the timing of the transaction and on the probability of observing a cross border transaction while controlling for the characteristics of the patents the time and sector specificities the analyses are based on a comprehensive dataset that covers all the patents granted by the uspto over the 2002 2012 period the data from the us patent reassignment database have been cleaned and processed and a subset of 95 542 granted patents that have been traded has been identified we obtain evidence from survival models that there has been an increase in the rate of patent transactions in recent years the obtained results indicate that patents with a first non us original applicant have less probability of being traded and show a longer time to transaction than us first priority patents we also find that more science based patents which are usually characterized by a higher technological uncertainty are more likely to be traded but are much less likely to be involved in cross border deals the results are discussed in light of the impact of asymmetric information and search costs on international patent transactions

strategizing by firms in the presence of markets for resources strategizing by firms from the resource based view is concerned with the process through which firms acquire a distinctive bundle of resources that is costly and time consuming for competitors to duplicate or imitate a central question facing any firm therefore is its strategy for accumulating the resources that underpin its production activities in this article the process of resource accumulation is discussed as one involving potentially both internal resource development and external resource acquisition from the perspective of the strategic issues involved in making a choice between these options emerging markets for technologies and know how through licensing and other forms of resource exchange have opened up new avenues through which firms may jostle for advantage the article is concerned with three major aspects of this process illustrating the discussion with cases from biotechnology and pharmaceuticals first the strategizing by firms around the internal development vs external sourcing issue is discussed as informed by the practices of leading firms and how these lend greater variety of strategic options for firms second the potential competitive advantages as well as disadvantages to be secured by firms through the process of external sourcing as compared with the well known potential advantages accruing to incumbents through internal development such as time compression diseconomies and causal ambiguity and third the criteria to be used by firms to strategically evaluate resources individually as contrasted with the strategic evaluation of the resource bundle or totality these criteria it is argued turn on the issues of marginal value contribution resource complementarities and synergies resource variety and transferability involving intellectual property issues successful firms it is argued expand their options through blending internal resource accumulation with external resource leverage thereby deepening their distinctive dynamic capabilities this approach extends the framework of the rbv enabling it to encompass resource driven schumpeterian competition and such aspects of industrial dynamics as specialization modularization and imitative challenge copyright 2003 oxford university press

the changing technology of technological change general and abstract knowledge and the division of innovative labour abstract in the past most innovations have resulted from empiricist procedures the outcome of each trial yielding knowledge that could not be readily extended to other contexts while trial and error may remain the primary engine of innovation developments in many scientific disciplines along with progress in computational capabilities and instrumentation are encouraging a new approach to industrial research instead of relying purely on trial and error the attempt is also to understand the principles governing the behaviour of objects and structures the result is that relevant information whatever its source can now be cast in frameworks and categories that are more universal the greater universality makes it possible for the innovation process to be organised in new ways firms can specialise and focus upon producing new knowledge and the locus of innovation may be spread across both users and producers more generally the use of general and abstract knowledge in innovation opens up the possibility for a division of labour in inventive activity the division of innovative labour the implications for public policy especially that on intellectual property rights are discussed

bargaining foundations of shapley value1 a transferable utility economy in which each agent holds a resource which can be used in combination with the resources of other agents to generate value according to the characteristic function v is studied using a dynamic model of bargaining the main theorem establishes that the payoffs associated with efficient equilibria converge to the agents shapley values as the time between periods of the dynamic game goes to zero in addition it is demonstrated that an efficient equilibrium exists and is unique when an additivity condition is satisfied to demonstrate the sensitivity of the solution to the institutional detail we modify the model to allow for partnerships and show that the shapley value is no longer achieved

complementarities of innovation activities an empirical analysis of the german manufacturing sector abstract innovation strategies in manufacturing often involve internal rd it is based on data from the german part of the community innovation survey cis 3 the results provide evidence for significant complementarities between internal r d and r d cooperation but cast doubt on the complementarity of internal and contracted r d since a productivity effect on firms patenting probability or sales with new products cannot be found

bargaining and value we present and analyze a model of noncooperative bargaining among n participants applied to situations describable as games in coalitional form this leads to a unified solution theory for such games that has as special cases the shapley value in the transferable utility tu case the nash bargaining solution in the pure bargaining case and the recently introduced maschler owen consistent value in the general nontransferable utility ntu case moreover we show that any variation in a certain class of our bargaining procedure which generates the shapley value in the tu setup must yield the consistent value in the general ntu setup

asset stock accumulation and sustainability of competitive advantage given incomplete factor markets appropriate time paths of flow variables must be chosen to build required stocks of assets that is critical resources are accumulated rather than acquired in strategic factor markets barney barney j 1986 strategic factor markets expectations luck and business strategy management sci october 1231 1241 sustainability of a firm s asset position hinges on how easily assets can be substituted or imitated imitability is linked to the characteristics of the asset accumulation process time compression diseconomies asset mass efficiencies inter connectedness asset erosion and causal ambiguity

how do competitive pressures affect incentives to innovate when there is a market for inventions competition and intellectual property ip protections are complements in stimulating innovation when ip is appropriable a market for inventions forms and competitive pressures increase incentives to innovate competition among producers the demand side of the market for inventions and competition among inventors the supply side of the market for inventions create incentives to innovate when ip is not fully appropriable markets for inventions are limited and competitive pressures can decrease incentives to innovate firms vertically integrate r d and production and share technology to appropriate the returns to ip this implies that antitrust policy and ip protections are complements

determinants of international activity evidence from the chemical processing industry abstract this paper empirically investigates two important determinants of international activity through wholly owned operations joint ventures and technology licensing namely country risk and intellectual property rights iprs protection using a comprehensive database on investments in chemical plants during the period 1981 1996 we show that higher levels of country risk are associated with less activity into recipient economies the analysis also suggests that international activity with smaller resource commitment tends to be preferred in countries with higher levels of risk and that multinational investment is more responsive to changes in risk conditions than indigenous investment after controlling for several country characteristics we do not find iprs protection playing a significant role in fostering international activity or conditioning its mode

competition and the efficiency of markets for technology the sale of r d projects through licensing facilitates the division of labor between research and development activities this vertical specialization can improve the overall eciency of the innovative process however these gains depend on the timing of the sale the buyer of an r d project should assume development at the stage at which he has an eciency advantage we show that in an environment where the seller is overcondent about the value of the project she may delay the sale to the more ecient rm in order to provide veriable information about its quality though this delay implies higher total development costs for the project we obtain a condition for the equilibrium timing of licensing and examine how factors such as the intensity of competition between potential buyers inuence it we show that a wide array of dierent explanations based on dierences in information beliefs or risk proles lead to the same qualitative results we present empirical evidence from pharmaceutical licensing contracts that is consistent with our theoretical predictions

wholly owned subsidiary versus technology licensing in the worldwide chemical industry this paper empirically analyzes the determinants of the choice between wholly owned subsidiary and technology licensing as a strategy for expansion abroad we use a new and comprehensive database on worldwide plant level investments in the chemical industry during the 1981 1991 period we find that both cultural distance and the presence of other potential licensors favor the use of licensing as a strategy for expanding abroad whereas prior experience favors the choice of wholly owned subsidiary an implication of this study is that competition in the market for technology can foster the international diffusion of technology through the use of arm s length agreements

present at the biotechnological revolution transformation of technological identity for a large incumbent pharmaceutical firm abstract management of successful incumbent firms experience difficulty in recognizing the need for and effecting change in the firm s technological identity after an externally generated shift in the industry s technological trajectory nonetheless some large pharmaceutical firms have transformed their technological identity in drug discovery from a chemical random screening to biological drug design model we report how one of the world s most successful incumbents transformed technically sophisticated senior management championed the transformation it was achieved primarily through hiring many new scientists embodying biotechnology existing personnel acquired the expertise or left continual self transformation is part of the corporate ethos some differences in incumbent and entrant technology remain incumbents use a wider range of techniques consistent with their complementary assets publication and incentive compensation policies are driven by the need to attract and retain the best scientists professor firm collaborations are ubiquitous often non public and best identified in quantitative analyses by co publishing collaborations with new biotechnology firms are used primarily to substitute for developing internal expertise judged of marginal value no drug discovery collaborations exist with other major incumbents we identify another seven or eight incumbents similarly transforming as indicated by top scientific talent and patenting success

managing innovation optimal incentive contracts for delegated r d with double moral hazard abstract managing innovation involves double moral hazard because the principal delegates r d to a specialized agent and then makes decisions to apply the resulting invention double moral hazard is significant because innovation by the principal implies that the optimal incentive contract satisfies monotonicity conditions the analysis shows that the optimal incentive contract for delegated r d is an option delegated r d with simultaneous sampling results in shirking but delegated r d with sequential sampling attains the efficient outcome the analysis considers a combined problem with simultaneous and sequential search and gives sufficient conditions under which delegated r d attains the first best the discussion also considers delegated r d with stochastic innovation and with stochastic quality of inventions

is there complementarity or substitutability between internal and external r d strategies abstract the various strands of extant empirical research are inconclusive about the complementarity or substitutability between different innovation mechanisms such as internal and external r d using a panel sample of 83 incumbent pharmaceutical firms covering the period 1986 2000 our empirical analysis suggests that instead of a clear cut answer to the question of whether internal and external r d are complementary or substitutive innovation activities there appears to be a contingent relationship between internal and external r d strategies in shaping a firm s innovative output the results from our study indicate that the level of in house r d investments which is characterized by decreasing marginal returns is a contingency variable that critically influences the association between internal and external r d strategies in particular internal r d and external r d through either r d alliances or r d acquisitions are complementary innovation activities at higher levels of in house r d investments whereas at lower levels of in house r d efforts internal and external r d turn out to be substitutive strategic options

internal rebellions and external threats a model of government organizational forms in ancient china in ancient china a ruler needed to handle both internal rebellions and external threats to decrease the possibility of internal rebellions a ruler could organize the government to establish the balance of power among ministers while effective in preventing internal rebellions this approach could make the defense of the country against external threats less effective the tradeoff between preventing internal rebellions and dealing with external threats in a ruler s choice of government organizational form is affected by the size of the population the level of coordination efficiency and the degree of increasing returns in the military sector if the magnitude of external threats increases regardless of the type of equilibrium organizational form the equilibrium level of the concentration of power among division heads increases

does public scientific research complement private investment in research and development in the pharmaceutical industry abstract this paper analyzes how pharmaceutical research and development r d investment responds to publicly supported biomedical research performed mainly at universities and nonprofit institutions new microlevel data on investment by the u s national institutes of health allow measures of public basic and clinical research in seven medical classes to be included in a distributed lag model explaining pharmaceutical r d investment using a panel of medical classes observed over 18 years the analysis found strong evidence that public basic and clinical research are complementary to pharmaceutical r d investment and thereby stimulate private industry investment however differences in the relevance and degree of scientific and market uncertainty between basic and clinical research lead to differences in the magnitude and timing of the pharmaceutical investment response

market structure and organizational form this paper studies the determinants of a firm s organizational form in the context of an imperfectly competitive industry there are two kinds of organizational forms the multi divisional form m form and the unitary form u form an m form firm suffers from ignorance of demand externalities among different products and double marginalization is eliminated in contrast in a u form firm demand externalities are taken into consideration and double marginalization exists a firm s optimal choice of organizational form depends on the market structure

paradigm changing vs paradigm deepening innovation how firm scope influences firm technological response to shocks we examine the direction of firms research efforts as they respond to the shock of a sharp increase in the price of a key input in terms of direction firms can respond to this shock with paradigm changing investments that develop technologies to use substitute inputs or with paradigm deepening investments that develop technologies to improve the utilization efficiency of the existing input we develop a framework that suggests that firms emphasis on paradigm changing versus paradigm deepening investments depends on the degree of input relatedness across their businesses we test our hypotheses by examining the responses of large manufacturing firms in the united states to the oil shock of the early 1980s our framework predicts and our results show that the more related a firm s businesses are the larger its investments into paradigm changing technologies are and the smaller its investments into paradigm deepening technologies in response to the oil shock are we identify the implications of these findings for technological evolution and diversification literatures

dynamic complementarities in innovation strategies using a panel of irish manufacturing plants over the period 1991 2008 we test for dynamic complementarities in the joint use of internal r d and external knowledge sources we find little evidence either from considering successive cross sectional waves of comparable surveys or in terms of the strategy switch choices of specific plants that there has been a systematic move towards the joint use of internal and external knowledge in innovation we then test formally for the presence of complementarities in the joint use of internal r d and external innovation linkages in static terms we find no evidence of complementarity but in dynamic terms find evidence that strategy switches by individual plants towards a more open strategy are accompanied by increased innovation outputs

ideas for rent an overview of markets for technology this article surveys some of the recent literature on technology markets and summarizes its main issues and insights we structure our analysis in three parts the supply and demand of technology the factors that condition the formation and growth of technology markets industry structure and dynamic issues in addition we summarize some of the studies that have tried to document the size and growth of these markets we find that the literature has focused mainly on the supply of technology but several other aspects of these markets remain under studied including the demand for external technology the role of uncertainty in technology markets and the dynamic interaction between industry structure and the market for technology understanding these will illuminate whether markets for technology will continue to grow or remained confined to pockets of the economy copyright 2010 the author 2010 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

the strategic alliance of the biotechnology firm this article applies the relevant theories of firm organization and inter firm relationships in the high tech environment to explain the institutional reasons that firms choose between internal or external approaches particularly this study tries to understand to what extent and in what way strategic alliances have impacts on individual firms organizational structure financial structure and firms activities also it tries to find out what type of firms tend to benefit most from alliances and thus use more inter firm agreements the theoretical findings are that due to liquidity constraint and asymmetric information reasons young research intensive firms need to use more alliances to survive in the fast changing high technology industry the empirical analysis employs 3 year panel data and finds that the results are consistent with the theoretical predictions

cooperation between rivals informal know how trading it has long been recognized that it is difficult for an innovating firm to fully appropriate the benefits arising from its innovations and that desired research might therefore not be performed nelson 1959 pp 297 306 one sometimes possible solution to this dilemma is cooperative r d conducted by firms who share the costs and benefits of particular r d projects johnson 1973

stable coalition structures with open membership and asymmetric firms i study games of coalition formation with open membership where firms form associations in order to decrease their costs before competing on the market according to previous analyses only the grand coalition forms at the nash equilibrium of such games i show that this result hinges on the assumption of symmetric firms i therefore introduce asymmetric firms in a game where only two associations can form i demonstrate that there exists a coalition proof nash equilibrium coalition structure in this game and that when the equilibrium involves two associations all the members of an association have a higher taste for this association than all nonmembers do journal of economic literature classification numbers c70 c72 l13

patents learning by doing and market structure in the chemical processing industries for a sample of 24 chemical products count data models are used to evaluate firms propensity to patent and the link between patented process innovations and output prices the results show that process patenting was largely an outgrowth of learning by doing propensity to patent increased with firm size but decreased with market concentration reductions in output prices were strongly linked to learning by doing and more weakly to the rate of patenting producer firms appear to have been more successful than non producers in appropriating the value of patented process innovations

patents as indicators of corporate technological strength abstract quantitative indicators of the technological strengths of individual companies would be an important addition to the financial and economic data used in competitor assessments merger acquisition analyses investment decisions and corporate planning and management this paper examines the links between corporate patent and patent citation data and several other indicators of corporate performance changes in sales and profits research and development budgets scientific productivity and expert opinions of company technological strength the study covers 17 us pharmaceutical companies for which financial r d and expert opinion data were readily available for these pharmaceutical companies it was found that the patent data are an excellent indicator of overall corporate technological strength with 1 an overall correlation of 0 82 between expert opinion of pharmaceutical company technical strength and the number of us patents granted to the companies and 2 correlations in the general range of 0 6 to 0 9 between increases in company profits and sales and both patent citation frequency and concentration of company patents within a few patent classes

finite horizon bargaining and the consistent field this paper explores the relationships between noncooperative bargaining games and the consistent value for non transferable utility ntu cooperative games a dynamic approach to the consistent value for ntu games is introduced the consistent vector field the main contribution of the paper is to show that the consistent field is intimately related to the concept of subgame perfection for finite horizon noncooperative bargaining games as the horizon goes to infinity and the cost of delay goes to zero the solutions of the dynamic system associated to the consistent field characterize the subgame perfect equilibrium payoffs of the noncooperative bargaining games we show that for transferable utility hyperplane and pure bargaining games the dynamics of the consistent field converge globally to the unique consistent value however in the general ntu case the dynamics of the consistent field can be complex an example is constructed where the consistent field has cyclic solutions moreover the finite horizon subgame perfect equilibria do not approach the consistent value

harsanyi values of large economies nonequivalence to competitive equilibria abstract we consider economies with many agents and compare the competitive equilibria and the value allocations of the resulting coalitional games in particular we provide a smooth and robust example where the value principle does not hold for the harsanyi ntu value there is a unique competitive equilibrium which however does not belong to the nonempty set of harsanyi value allocations journal of economic literature classification numbers c71 d51

the open eco innovation mode an empirical investigation of eleven european countries this paper deals with the open innovation mode in the environmental realm and investigates the effects that knowledge sourcing has on the environmental innovations eis of firms using the community innovation survey cis 2006 2008 we refer to the firm s probability of both introducing an ei and extending the number of ei typologies adopted we estimate the impact of the depth and breadth of knowledge sourcing in addition we test for the moderating role of the firm s absorptive capacity knowledge sourcing has a positive impact on both types of ei performance however a broad sourcing strategy reveals a threshold above which the propensity to introduce an ei diminishes cognitive constraints in processing knowledge inputs that are too diverse may explain this result absorptive capacity generally helps firms to turn broadly sourced external knowledge into ei however internal innovation capabilities and knowledge socialization mechanisms seem to diminish the ei impact of knowledge sourced through deep external interactions the possibility of mismatches between the management of internal and external knowledge and of problems in distributing the decision makers attention between the two may explain this result

technology policy for a world of skew distributed outcomes abstract this paper draws implications for technology policy from evidence on the size distribution of returns from eight sets of data on inventions and innovations attributable to private sector firms and universities the distributions are all highly skew the top 10 of sample members captured from 48 to 93 percent of total sample returns it follows that programs seeking to advance technology should not be judged negatively if they lead to numerous economic failures rather emphasis should be placed on the relatively few big successes to achieve noteworthy success with appreciable confidence a sizeable array of projects must often be supported the outcome distributions are sufficiently skewed that even with large numbers of projects it is not possible to diversify away substantial residual variability through portfolio strategies

on the contractual governance of research collaborations allocating control and intellectual property rights in the shadow of potential termination abstract this paper investigates the governance design problem of a large company that wants to engage a small and cashless firm into a research collaboration this analysis reflects the frequently observed collaborations between pharma companies and biotechs and an actual research contract is assessed to link theory to practice the governance form refers to the allocation of control rights over the research process and property rights over research output s as determined by the initial contract yet this contract is incomplete the parties negotiate at a later stage from bargaining positions that depend on the initial choice of the governance but they also contemplate the possibility that the collaboration will be terminated by means of a simple model that captures the core aspects of the contractual environment i answer a key research question how should governance be designed in the shadow of potential termination to provide the research firm with the incentives to invest in the collaboration first it is in the company s interest to choose a governance form that eliminates the possibility of termination and stabilizes the collaboration whenever possible second if the collaboration cannot be stabilized the company faces a trade off between reducing the probability of termination and providing incentives which is ultimately resolved by making the collaboration highly unstable third property rights and control are substitutes in the governance design if the company collects more property rights it must relinquish more control rights

on corporate governance a study of proxy contests abstract this paper examines a sample of firms experiencing proxy contests for seats on their board of directors dissident shareholders usually fail to obtain a majority of board seats nevertheless they capture some seats via mechanisms such as cumulative voting in over half of the sample contests regardless of proxy contest outcome positive and statistically significant share price performance is associated with the contest that finding is predicted by the standard economic analysis of proxy contests in which the challenges benefit shareholders by improving corporate performance the finding runs counter to the claim of berle 1962 that the economists view of proxy contests is a wholly imaginary picture a portion of the positive share price changes taking place in the early stages of some proxy contests is not permanent however and as suggested by manne 1962 is at least partially attributable to temporary increases in the market value of the vote attached to corporate shares

why do firms do basic research with their own money abstractthe question to be addressed is why do private firms perform basic research with their own money interest in this question derives from both analytical and utilitarian considerations there is empirical evidence in the united states which provides the main context for this paper supporting the view that basic research makes a significant contribution to the productivity growth of the economy 4 7 it is widely held that social returns from basic research are significant and higher than private returns and it is for this reason that most such activities continue to be financed by the taxpayer this also implies that measures aimed at increasing basic research by the private sector will be welfare improving in the united states the federal government in the years since the second world war has provided the vast majority of all funds devoted to basic research although the federal share has been declining in recent years and although that share is at its lowest level in about 20 years it still constitutes about two thirds of the total 10 this abstract was borrowed from another version of this item

human capital and economic development abstract this paper develops a general equilibrium model of fertility and human capital investment with young adult mortality because young adult mortality is negatively related to average young adult human capital human capital accumulation lowers mortality inducing demographic transition and industrial revolution data confirm that young adult mortality is related negatively to schooling and the rate of return to schooling and positively to fertility the data indicate a negative relationship between tfp growth and schooling accumulation the model fits the data on country populations per capita incomes human capital total fertility rates infant mortality life expectancy and conditional life expectancy

public financing of cooperative r d projects in spain the concerted projects under the national r d plan abstract this work will analyse the factors which influence decision making within the spanish public sector on the financing of precompetitive research projects developed by firms in collaboration with universities and public research organisms with this objective in mind an econometric model is proposed that explains simultaneously the concession of aid on behalf of the public sector and the amount of such aid the estimates carried out indicate among other results that the destination of the budgeted funds explains a large part of the public financing received however all the evidence would seem to indicate that the funding has not been awarded either in order to significantly favour those firms which most need it nor to give incentive to high levels of cooperation

the outsourcing of r d through acquisitions in the pharmaceutical industry abstract we examine the performance of 160 pharmaceutical acquisitions from 1994 to 2001 and find evidence that on average acquirers realize significant positive returns these returns are positively correlated with prior acquirer access to information about the research and development activities at target firms and a superior negotiating position a unique desperation index is employed to determine the current status of a firm s internal productivity we find that firms experiencing declines in internal productivity or which are more desperate are more likely to engage in an outsourcing type acquisition in an effort to replenish their research pipelines

markets in china and europe on the eve of the industrial revolution prevailing views suggest the industrial revolution began in europe because markets had gradually become more efficient and by the 18th century the scope of economic activity was far larger than in other parts of the world this paper compares the actual performance of markets in europe and china two regions of the world that were relatively advanced in the pre industrial period but would start to industrialize about 150 years apart the analysis covers economies that account for about two fifths of the world s population in the mid 18th century and it considers some three centuries of data our findings suggest that relative levels of market function in china and europe were similar prior to the industrial revolution higher efficiency in europe is seen only in the nineteenth century when industrialization was already underway moreover these improvements occurred in a dramatic and sudden fashion further casting doubt on an evolutionary view of market development rather than being a key condition for subsequent growth gains in efficiency appeared simultaneously with the turning point of modern growth we discuss the implications of these findings for a number of explanations for long run growth and the industrial revolution

governance and uncertainty the trade off between administrative control and commitment this study elaborates upon the motives for initiating equity based collaborations vs acquisition of another firm already having a desired technology we characterize both minority direct investments and joint ventures as options to defer either internal development or acquisition of a target firm in domains where learning about growth opportunities dominates investment activity this incremental mode of governance economizes on the cost of committing resources to a technology with an uncertain value using a sample of 402 transactions in the biotechnology industry we find strong support for the theoretical model the findings suggest that the cost of commitment in the face of technological uncertainty may offset the administrative benefits of hierarchical governance 1998 john wiley sons ltd

the patent paradox revisited an empirical study of patenting in the u s semiconductor industry 1979 1995 we examine the patenting behavior of firms in an industry characterized by rapid technological change and cumulative innovation recent survey evidence suggests that semiconductor firms do not rely heavily on patents to appropriate returns to r d yet the propensity of semiconductor firms to patent has risen dramatically since the mid1980s we explore this apparent paradox by conducting interviews with industry representatives and analyzing the patenting behavior of 95 u s semiconductor firms during 1979 1995 the results suggest that the 1980s strengthening of u s patent rights spawned patent portfolio races among capital intensive firms but it also facilitated entry by specialized design firms

in search of complementarity in innovation strategy internal r d and external knowledge acquisition empirical research on complementarity between organizational design decisions has traditionally focused on the question of existence of complementarity in this paper we take a broader approach to the issue combining a productivity and an adoption approach while including a search for contextual variables in the firms strategy that affects complementarity analysis of contextual variables is not only interesting per se but also improves the productivity test for the existence of complementarity we use our empirical methodology to analyze complementarity between innovation activities internal research and development r d and external knowledge acquisition our results suggest that internal r d and external knowledge acquisition are complementary innovation activities but that the degree of complementarity is sensitive to other elements of the firms strategic environment we identify reliance on basic r dthe importance of universities and research centers as an information source for the innovation processas an important contextual variable affecting complementarity between internal and external innovation activities

effective incomplete contracts and milestones in market distant r d collaboration abstract r d outsourcing is often conducted during the early market distant stages of the innovation process however the main obstacle to this potentially efficient interfirm specialization is the high danger of moral hazard most organizational mechanisms fail to control that type of opportunism because of information asymmetries even ex post in the theory of incomplete contracts this problem is mitigated by assigning the control rights to the supplier to date empirical studies have mainly investigated the interfirm distribution of the control rights however we do not know yet which concrete control right is crucial with regard to supplier opportunism which is the decisive dependent variable our study addresses this research gap for the first time we extend the empirical focus from biotechnology and pharmaceutical firm alliances to a cross industry sample of 113 collaboration cases the results show the effectiveness of contracts that ex ante assign patent ownership rights to the supplier the findings are also relevant for management practice because the majority of practitioners do not use this contract type yet although there is no sign of an effective alternative

the needham puzzle why the industrial revolution did not originate in china one of the most intriguing issues for students of chinese history and comparative economic history is why did the industrial revolution not occur in china in the fourteenth century at that time almost every element that economists and historians usually considered to be a major contributing factor to the industrial revolution in late eighteenth century england also existed in china chinese civilization like the civilizations of mesopotamia egypt and india originated from agriculture the first unified empire qin was formed in 221 b c by 300 b c chinese society had developed into a form that had many characteristics of a market economy with most land privately owned a high degree of social division of labor fairly free movement of labor and well functioning factor and product markets this comparatively developed market economy probably created important attitudes toward profit and contributed to the swift diffusion of the best technology in the han dynasty 206 b c a d 220 the iron tipped plow moldboard and seed drill were widely used in the northern part of china where the main crops were millet and wheat the most significant improvements in chinese agriculture came with the population shift from the north to the rice growing areas south of the yangtze river that started at the beginning of the ninth century and especially after the introduction of a new variety known as champa rice from indochina at the beginning of the eleventh century 2 this variety characterized by better drought resistance and faster ripening enabled farmers to extend the agricultural frontier from the lowlands deltas basins and river valleys to the better watered hill areas and allowed production of two and even three crops a year 3

licensing the market for technology abstract in technology based industries incumbent firms often license their technology to potential competitors such a strategy is difficult to explain within traditional models of licensing this paper extends the literature on licensing by relaxing the assumption of a monopolist technology holder competition in the market for technology induces licensing of innovations and incumbent firms may find it privately profitable to license although their joint profits may well be higher in the absence of any licensing a strong testable implication of our model is that the number of licenses per patent holder decreases with the degree of product differentiation

auctions and bidding a primer maybe the contractor was right to think bid jobs are different but it is more likely that he suffered from too simple a view of what is involved in preparing a competitive bid our analysis will show that even an experienced estimator working in familiar terrain can lose money if he doesn t understand the subtleties of competitive bidding the phenomenon experienced by the painting contractor known as the winner s curse is just one of the surprising and puzzling conclusions that have been turned up by modern research into auctions another is the theoretical proposition supported also by some experimental evidence that for example a sealed bid treasury bill auction in which each buyer pays a price equal to the highest rejected bid would yield more revenue to the treasury than the current procedure in which the winning bidder pays the seemingly higher amount equal to his own bid there are also subtle results that demonstrate the equivalence of such apparently different institutions as the standard sealed bid auction in which the auctioneer seller sells the goods to the highest bidder for a price equal to his bid and the dutch auction in which the auctioneer seller begins by asking a high price and gradually lowers the price until

capitalism as an engine of progress economists from marx to schumpeter have touted capitalism as an engine of technical progress but what kind of an engine is it what are its key components how does it work

collaborative promotion of technology standards and the impact on innovation industry structure and organizational capabilities evidence from modern patent pools this study explores the impact of modern patent pools inter organizational collaborative arrangements for promoting the adoption of technology standards on the rate of follow on innovations based on pooled technologies the vertical structure of associated industries and organizational capabilities of noncollaborating firms on one hand the formation of modern pools can boost follow on innovation by lowering the search negotiation and licensing costs associated with pooled standards on the other hand modern pools may decrease the incentives to invest in follow on innovations because of cannibalization risks and grant back provisions to the extent that modern pools succeed in establishing a dominant standard their collaborative nature and their reliance on markets for technology can reduce technological uncertainty and appropriation hazards hence triggering vertical disintegration in related industries moreover by establishing a dominant standard modern pools can effectively diminish the relati

the gains to bidding firms from merger abstract this study examines the effect of mergers on the wealth of bidding firms shareholders bidding firms gain significantly during the twenty one days leading to the announcement of each of their first four merger bids these results fail to support the capitalization hypothesis that bidders gains are captured at the beginning of merger programs bidders abnormal returns are positively related to the relative size of the merger partners and the gains during the announcement period are larger for mergers which are successful though the gains are larger prior to 1969 merger bids after 1969 also significantly increase the wealth of bidding firms shareholders the results suggest that the inconclusive findings of the earlier studies may be due to methodological deficiencies the findings of this study are consistent with value maximizing behavior by the management of bidding firms

firms motivations for cooperative r d an empirical analysis of spanish firms abstract the aim of this paper is to analyze the motives that have caused industrial firms to cooperate in r d there are many theoretical works devoted to the theme but few empirical studies have been carried out with large samples to analyze the factors which determine why firms cooperate in r d we first review the reasons offered by the literature to explain technological cooperation with this allowing us to determine the conceptual framework and to propose some hypotheses we test these hypotheses with a sample of 1652 spanish firms that have carried out r d activities the results obtained suggest that firms motivations for cooperative r d are the complexity of technology and the fact that innovation is costly and uncertain we find that in order to undertake cooperative r d it is necessary to have certain internal capacities in this area with our results being supported by the theory of absorptive capacity however and by contrast with the results presented in other works questions related to market access and search for opportunities do not appear to exert an influence over cooperative r d besides the large sized firms resort more to cooperation and the reasons for cooperative r d differ as between large and small sized firms

population technology and growth from malthusian stagnation to the demographic transition and beyond this paper develops a unied growth model that captures the historical evolution of population technology and output it encompasses theendogenous transitionbetween three regimes that have characterized economic development the economy evolves from amalthusianregime wheretechnologicalprogressis slow andpopulationgrowthprevents anysustainedriseinincomepercapita intoapost malthusianregime wheretechnological progress rises and population growth absorbs only part of output growth ultimately a demographic transition reverses the positive relationship between income and population growth andtheeconomyentersamoderngrowthregimewithreducedpopulationgrowth

contracting for tacit knowledge the provision of technical services in technology licensing contracts abstract recent research on the economic payoff from new technology has emphasized the importance of tacit knowledge or know how this paper shows that arm s length contract can overcome the problems in contracting for know how by bundling complementary inputs with know how in a technology package and leveraging the superior enforceability of contracts over the latter in the empirical part of this paper the relationship between bundling and transfer of know how is analyzed using indian data the results imply that tied sales of inputs may increase the efficiency of contracts involving the transfer of know how a striking result in the context of the current north south debates on intellectual property rights is the packaging of patents with know how

the role of patents in information and communication technologies a survey of the literature during the last few decades the number of patents in information and communication technologies has increased considerably an increasing number of patents and the associated fragmentation of ip rights have generated a series of potentially problematic consequences patent thickets royalty stacking the emergence of patent assertion entities increased patent litigation particularly around standard essential patents and the difficulties with defining fair reasonable and nondiscriminatory licensing terms are some of the most debated issues in the literature that we review in this paper we devote a specific section of our survey to patent quality currently one of the most debated issues surrounding the patent system in our analysis we mix theoretical and empirical arguments with a more policy oriented reasoning this allows us to better position the different issues in the relevant political and economic context

transport costs and the geography of arbitrage in eighteenth century china trade has been considered a condition for growth and development a view that might have merits in explaining the rise of the western world i use a new data set from archival sources of eighteenth century china to revisit this question this analysis suggests previous studies of market integration which attribute much growth to a reduction in transport costs have overestimated these effects ifind the overall level of market integration in china was higher than previously thought and intertemporal effects are important substitutes for trade both factors reduce the importance of trade as a unique explanation for subsequent growth jel 013 018 r1l n25

the role of knowledge in r d efficiency past research has recognized that both demand and capability influence the allocation of r d resources scholars have had an easier time getting a grip on demand than on capability while it has been recognized that knowledge is an important part of capability to date formalization of knowledge and its role in r d activity has been unsatisfactory this paper models the role of knowledge in r d various sources of such knowledge are considered the model throws a different light on analyses that employ a knowledge capital stock and also illuminates the dual private and public nature of technological knowledge

using what you know patented knowledge in incumbent firms and employee entrepreneurship prior studies have shown that the acquisition of relevant knowledge by employees in existing firms is associated with the creation of new firms through employee entrepreneurship some researchers propose that the transition to entrepreneurship may be explained by established firms undervaluing knowledge created by employees whereas other scholars maintain that firm strategies may lead to the underutilization of knowledge we ask the question of which of these drivers is more pronounced as an explanation of employee entrepreneurship and what technological factors matter in this relationship analyzing a unique data set we find that the likelihood of employee entrepreneurship increases with the inventor s assessment of the value of a patent for an invention developed while at the incumbent firm but dramatically decreases when the invention protected by the patent is commercialized by the firm licensed to third parties interdependent with other firms inventions protected by patents or technologically broad we also find that conditional on high valuation by the inventor a matching high valuation by the firm further increases the likelihood of transitioning to entrepreneurship in combination we show that a situation when both the inventor and the firm consider the invention valuable but the firm ends up not commercializing the invention is more predictive of employee entrepreneurship than simple differences in assessing the value of the invention the study refines our understanding of the drivers of entrepreneurship by underscoring the strategic explanation of employee entrepreneurship

the paradox of openness appropriability external search and collaboration a b s t r a c t to innovate firms often need to draw from and collaborate with a large number of actors from outside their organization at the same time firms need also to be focused on capturing the returns from their innovative ideas this gives rise to a paradox of openness the creation of innovations often requires openness but the commercialization of innovations requires protection based on econometric analysis of data from a uk innovation survey we find a concave relationship between firms breadth of external search and formal collaboration for innovation and the strength of the firms appropriability strategies we show that this concave relationship is stronger for breadth of formal collaboration than for external search there is also partial evidence suggesting that the relationship is less pronounced for both external search and formal collaboration if firms do not draw ideas from or collaborate with competitors we explore the implications of these findings for the literature on open innovation and innovation strategy 2013 the authors published by elsevier b v all rights reserved

technological cooperative agreements and firm s r d intensity a note on causality relations abstract in this paper we apply a recently proposed model of vector autoregression for panel data to analyse the granger causality relationship between a firm s intramural r d intensity and technological cooperative agreements the analysis relies on a sample composed of 95 major us european and japanese firms in the semiconductor data processing and telecommunications industries observed during the period 1980 1986 decisions on interfirm technological collaborations are shown to cause a la granger decisions on internal r d investments and vice versa we thus suggest that in contrast with the methodological approaches followed by previous empirical works firms decisions concerning both intramural innovative effort and technological cooperation are endogenous and have to be jointly studied through a simultaneous two equation structural model