Regulators and competition spurring or retarding innovation in the telecommunications sector?

This paper empirically explores how technology policy affects innovation behaviour in the telecommunications sector. Our empirical analysis aims at shedding light on the following highly topical issues: (I) Whether opening up the domestic market to competition spurs innovative activity?, (ii) Whether the presence of independent regulatory agency influence innovation behaviour of telecommunications operators?, and (iii) What is the direction of Granger-causality between innovation creation and technology diffusion in the communications sector? We develop an econometric model that takes into account the dynamic, non-linear nature of the innovation process and interdependency between equations for a patent count variable, R&D and technology diffusion. We use data from 61 major telecommunications operators between the years 1991 and 1996 to investigate how technology policy has influenced their innovative activities, i.e. their R&D expenditures and the number of patent applications, and the diffusion of communications technologies in their domestic markets. – Innovation ; technology diffusion ; telecommunications ; technology policyTutkimus selvittää aineistoanalyysin avulla teknologiapolitiikan vaikutuksia innovaatiokäyttäytymiseen telekommunikaatiosektorilla. Empiirisen analyysin tavoitteena on valaista seuraavia ajankohtaisia kysymyksiä: (I) Kannustaako kotimaisten markkinoiden avaaminen kilpailulle innovaatiotoimintaa?, (ii) Onko riippumattoman sääntelyviranomaisen läsnäololla vaikutusta teleoperaattoreiden innovaatiokäyttäytymiseen?, (iii) Mikä on Granger-kausaalisuuden suunta innovaatioiden kehittämisen ja teknologioiden leviämisen välillä viestintäsektorilla? Tutkimuksessa kehitetään ekonometrinen malli, joka ottaa huomioon innovaatioprosessin dynaamisen, epälineaarisen luonteen sekä keskinäisen riippuvuuden yritysten patentointia, T&K-menoja ja teknologioiden leviämistä kuvaavien yhtälöiden välillä. Raportoidussa empiirisessä tutkimuksessa analysoidaan teknologiapolitiikan vaikutuksia teleyritysten innovaatiotoimintaan - niiden T&K-menoihin ja patenttihakemusten lukumäärään, sekä viestintäteknologioiden leviämiseen yritysten kotimaan markkinoilla - käyttäen aineistoa 61 suuren teleoperaattorin toiminnasta ajanjaksona 1991-1996. – Innovaatio ; teknologioiden leviäminen ; televiestintä ; teknologiapolitiikk

Do technology diffusion theories explain the OSS business model adoption patterns?

This paper addresses the question of the software companies’ timing of adoption of the open source software (OSS) business models comprising the supply of OSS products and/or services. The game-theoretic technology adoption models do not explain well the observed diffusion patterns of the OSS business model among the sample of 716 European software firms. Instead, it seems that the network effects influentially shape the diffusion path of the OSS supply strategies. Our study further contributes to the technology diffusion literature as our econometric model aims at separating, unlike the previous empirical studies on technology diffusion, the role that the replacement effect has in the diffusion patterns of new technologies. Our data detect a clear replacement effect hindering the incumbents’ investments in new technology. The expected price declines of the computer programs – and thus the expected declining license revenues from the proprietary software – accelerate less the incumbent firms’ timing of adoption of the OSS supply model than that of the entrants

Public R&D subsidies and employment growth: Microeconomic evidence from Finnish firms

This study empirically explores whether the public financial support for entrepreneurial R&D affects employment growth at the firm level. The data from the Finnish companies suggests that the firms that have received public R&D funding have not generally witnessed any greater employment growth than other companies. However, we find that the public R&D support targeted to the certain types of R&D activities notably contribute to the creation of new jobs: employment in those firms that have received public funding for the R&D projects targeted to the new business areas has clearly grown relatively more than in other companies. The relationship between the firm's total innovation and employment growth is not statistically significant

Does marginal cost pricing of public sector information spur firm growth?

The firm-level data concerning re-users of geographical information (GI) active in architectural and engineering activities and related technical consultancy sector from 15 countries during the year 2000-2007 suggests that the pricing of public sector GI strongly relates to the firms' sales growth. Firms functioning in the countries in which public sector agencies provide fundamental geographical information either freely or at maximum marginal costs have grown, on average, about 15 percent more per annum than the firms in the countries in which public sector GI is priced according to the cost-recovery principle. The difference-in-difference estimations further show that positive growth impact materializes already one year after switching to the marginal cost pricing scheme but a stronger boost to the firm growth takes place with a two year lag. Interestingly, marginal cost pricing has not generated notable growth among the large firms; it has been SMEs benefiting most from cheaper geographical information. It seems credible that switching to marginal cost pricing of public sector information (PSI) substantially lowers SMEs' barriers to enter new market areas in the provision of GI-based products and services

The role of data and knowledge in firms' service and product innovation

The importance of data and different sources of knowledge in the development of new services and products, and further in the creation of new markets, has dramatically increased during the past few decades. This empirical study uses data from 531 Finnish firms to explore the determinants of generation of new data-based products and services. The empirical findings emphasize the role of a firm's absorptive capacity and its ICT competence in data-based innovation. It seems that generally a firm's external information sources play a more prominent role than internal information sources. Particularly customer involvement in innovation process positively relates to the production of new data-based products and services. The reported empirical findings further indicate that data-based product and service innovation tends to be rather strongly demand-driven

Firm growth and profitability: The role of mobile IT and organizational practices

This study uses a unique survey data from 398 Finnish manufacturing firms to explore how the order of magnitude of mobility and connectivity of a firm's ICT stock in conjunction with various organizational innovation and HRM practices affect the firm's performance. The data suggest that mobile connectivity as such does not significantly contribute to the firm's growth and profitability. However, the empirical results find support for the agency theory based argument: a greater mobility associated with the use of a pertinent economic incentive scheme and a systematic performance monitoring seems to promote the firm's growth. In addition, re-organization of tasks within an organization is implemented most successfully, boosting profitability, when the firm's re-organization strategy incorporates the adoption of mobile, Internet-connected IT stock

Feedback mechanism in the evolution of networks: The installed user base and innovation in the communications sector

In the presence of network externalities, demand is strongly affected by major technology diffusion processes. Therefore, not only sales levels, but also the installed user base of network technologies may influence R&D intensity via the price mechanism. This causality may, however, not be unidirectional. This paper develops and tests an econometric model that allows both contemporaneous correlation and inter-temporal feedback between the processes of technology creation and diffusion. We use industry-level data from 1980 to 1995 to empirically explore the patterns of causality between the evolution of communications networks and the determination of the R&D intensity of the communications sectors among OECD countries.Verkostovaikutusten luonnehtiessa markkinoita teknologioiden leviämisellä on merkittävä vaikutus markkinakysyntään. Tämän takia teknologioiden menekin lisäksi myös verkostoteknologioiden käyttäjämäärä saattaa vaikuttaa T&K -intensiteettiin markkinoiden hintamekanismin kautta. Tämä kausaalisuussuhde ei kuitenkaan ole välttämättä yksisuuntainen. Raportoitu tutkimus esittää ja testaa ekonometrista mallia, joka sallii sekä samanaikaisen korrelaation että yli ajan ulottuvan takaisinkytkennän teknologioiden kehittämis- ja leviämisprosessien välillä. Kausaalisuussuhteita viestintäverkostojen leviämisen ja viestintäsektorin T&K -intensiteetin välillä tutkitaan empiirisesti käyttäen OECD-maita koskevaa toimialatason aineistoa aikaväliltä 1980- 1995

Public R&D funding and entrepreneurial innovation

This study does not find any significant direct relationship between the public R&D funding and the firms' innovation output. The firms obtaining the public R&D support were not performing significantly better, on average, than others. However, we find evidence that the public R&D finance has substantially influenced the innovation output of the firms that have undertaken certain types of innovations activities. Particularly, public funding targeted to the firms focusing on new business areas in their R&D projects seems successful. Certain types of collaboration seem to also generate better entrepreneurial performance in terms of innovation. Those large firms that have more intensively collaborated with the SMS firm partners in their publicly funded R&D projects have filed more patent applications than other companies

Private-collective software business models: Coordination and commercialization via licensing

The private-collective business models that involve both private investment incentives and the production of public goods are not well understood. This empirically oriented research uses the unique data from the software industries of five European countries (Finland, Germany, Italy, Portugal and Spain) to illuminate the patterns of private, entrepreneurial provision of software placed in the public domain. The estimation results strongly suggest that the highly restrictive GPL (General Public License) works as an efficient coordination mechanism for the (leading) developers of the OSS community and spreads particularly via the firms that have participated in the OSS development projects. The software companies supplying the OSS, instead, tend not to aim at using the GPL to coordinate the further development of their own OSS. The firms are rather the origin of more flexibly licensed OSS products though generally the software firms’ OSS business strategies relate to the restrictive licensing strategy choices

Firm size, managerial practices and innovativeness: some evidence from Finnish manufacturing

In this study we use a survey data on 398 Finnish manufacturing firms for the years 2002 and 2005 to empirically explore whether and which organizational factors explain why certain firms produce larger innovative research output than others, and whether the incentives to innovate that certain organizational practices generate differ between small and large firms, and between those firms that are operating in low-tech and high-tech industries. Our study indicates that there appear to be vast differences in the organizational practices leading to more innovation both between small and large firms, and between the firms that operate in high- and low-tech industries. While innovation in small firms benefits from the practices that enhance employee participation in decision-making, large firms that have more decentralized decision-making patterns do not seem to innovate more than those with a more bureaucratic decision-making structure. The most efficient incentive for innovation among the sampled companies seems to be the ownership of a firm's stocks by employees and/or managers. Performance based wages also relates positively to innovation, but only when it is combined with a systematic monitoring of the firm's performance.Innovation, firm size; organizational practices; HRM practices