Count on Your Subordinates: Young Managers and Innovation Efficiency

We investigate the relationship between executives’ horizons and firms’ innovation efficiency. Motivated by Acharya, Myers, and Rajan’s (2011, JF) theory, we devise a measure of internal governance based on the difference in expected horizons between a CEO and her subordinates. Consistent with our conjecture, we find robust evidence that subordinate managers with longer horizon compared to the CEO can improve firm’s innovation efficiency. Internal governance has a stronger effect on innovation efficiency for firms with elder, generalist CEOs and when the number of subordinates on the board is higher. However, while the presence of powerful CEOs attenuates the effect, overconfident CEOs do not negate the internal governance effect. Our proposed internal governance mechanism seems to be able to address the managerial myopia issue in corporate settings

Ideas and innovation in East Asia

The generation, diffusion, absorption and application of new technology, knowledge or ideas are crucial drivers of development. This paper surveys the diverse approaches to innovation adopted by East Asian economies, the problems faced and outcomes achieved, as well as possible policy lessons. Knowledge flows from advanced countries remain the primary source of new ideas in developing economies. The authors evaluate the role of three main channels for knowledge flows to East Asia - international trade, acquisition of disembodied knowledge and foreign direct investment. The paper then looks at the exceptionally fast growth in domestic innovation efforts in Korea, Taiwan (China), Singapore and China, drawing on information about R&D as well as original analysis of patent and patent citation data. Citation analysis shows that while East Asian innovations continue to draw heavily on knowledge flows from the US and Japan, citations to the same or to other East Asian economies are quickly rising, indicating the emergence of national and regional knowledge stocks as a foundation for innovation. A last section pulls together findings about policies and institutions to foster innovation, under three heads: the overall business environment for innovation (macroeconomic stability, financial development, openness, competition, intellectual property rights and the quality of communications infrastructure), human capital development, and government fiscal support for innovation.E-Business,Knowledge Economy,Economic Theory&Research,Technology Industry,Agricultural Knowledge&Information Systems

Are Universities Patent Trolls?

Hold-up is a primary component of patent litigation and patent licensing today. Universities are engaged in an unprecedented surge in patenting. At the confluence of these seemingly unrelated developments is a growing frustration on the part of industry with the role of universities as patent owners. Time and again, when I talk to people in a variety of industries, their view is that universities are the new patent trolls. In this article, I argue that universities should take a broader view of their role in technology transfer. University technology transfer ought to have as its goal maximizing the social impact of technology, not merely maximizing the university’s licensing revenue. Sometimes those goals will coincide with the university’s short-term financial interests. Sometimes universities will maximize the impact of an invention on society by granting exclusive licenses for substantial revenue to a company that will take the invention and commercialize it. Sometimes, but not always. At other times a non-exclusive license, particularly on a basic enabling technology, will ultimately maximize the invention’s impact on society by allowing a large number of people to commercialize in different areas, to try out different things and see if they work, and the like. University policies might be made more nuanced than simply a choice between exclusive and non-exclusive licenses. For example, they might grant fieldspecific exclusivity, or exclusivity only for a limited term, or exclusivity only for commercial sales while exempting research, and they might condition continued exclusivity on achievement of certain dissemination goals. Particularly in the software context, there are many circumstances in which the social impact of technology transfer is maximized either by the university not patenting at all or by granting licenses to those patents on a royalty-free basis to all comers. Finally, I think we can learn something about the raging debate over who is a patent troll and what to do about trolls by looking at university patents. Universities are non-practicing entities. They share some characteristics with trolls, at least if the term is broadly defined, but they are not trolls. Asking what distinguishes universities from trolls can actually help us figure out what concerns us about trolls. What we ought to do is abandon the search for a group of individual companies to define as bad actors. In my view, troll is as troll does. Universities will sometimes be bad actors. So will non-manufacturing patent owners. So will manufacturing patent owners. Instead of singling out bad actors, we should focus on the bad acts and the laws that make them possible

Technology Variation vs. R&D Uncertainty: What Matters Most for Energy Patent Success?

R&D is an uncertain activity with highly skewed outcomes. Nonetheless, most recent empirical studies and modeling estimates of the potential of technological change focus on the average returns to research and development (R&D) for a composite technology and contain little or no information about the distribution of returns to R&D—which could be important for capturing the range of costs associated with climate change mitigation policies—by individual technologies. Through an empirical study of patent citation data, this paper adds to the literature on returns to energy R&D by focusing on the behavior of the most successful innovations for six energy technologies, allowing us to determine whether uncertainty or differences in technologies matter most for success. We highlight two key results. First, we compare the results from an aggregate analysis of six energy technologies to technology-by-technology results. Our results show that existing work that assumes diminishing returns but assumes one generic technology is too simplistic and misses important differences between more successful and less successful technologies. Second, we use quantile regression techniques to learn more about patents that have a high positive error term in our regressions – that is, patents that receive many more citations than predicted based on observable characteristics. We find that differences across technologies, rather than differences across quantiles within technologies, are more important. The value of successful technologies persists longer than those of less successful technologies, providing evidence that success is the culmination of several advances building upon one another, rather than resulting from one single breakthrough. Diminishing returns to research efforts appear most problematic during rapid increases of research investment, such as experienced by solar energy in the 1970s.

Market Value and Patent Citations: A First Look

As patent data become more available in machine-readable form, an increasing number of researchers have begun to use measures based on patents and their citations as indicators of technological output and information flow. This paper explores the economic meaning of these citation-based patent measures using the financial market valuation of the firms that own the patents. Using a new and comprehensive dataset containing over 4800 U. S. Manufacturing firms and their patenting activity for the past 30 years, we explore the contributions of R&D spending, patents, and citation-weighted patents to measures of Tobin's Q for the firms. We find that citation-weighted patent stocks are more highly correlated with market value than patent stocks themselves and that this fact is due mainly to the high valuation placed on firms that hold very highly cited patents.

Induced innovation and relavtive factor share

We build up an induced innovation model based on Popp's article in AER, 2002. His model measured the effect of energy prices on energy-efficient innovations. Using the relative factor shares of energy and labor instead of the energy prices per se, we are able to explain the patenting activity in a better way. Also, with the combination of theoretical and empirical research, we can prove that technological change of energy is related with prices and quantities of both energy factor and labor factor. Furthermore, we discuss on the possibility of the hypothesis of diminishing returns to knowledge, which reveals that diminishing returns are not necessary to exist in the induced innovation model. The result we got is not very strong but it shows more elasticity than Popp’s model

Market Value and Patent Citations: A First Look

As patent data become more available in machine-readable form, an increasing number of researchers have begun to use measures based on patents and their citations as indicators of technological output and information flow. This paper explores the economic meaning of these citation-based patent measures using the financial market valuation of the firms that own the patents. Using a new and comprehensive dataset containing over 4800 U. S. Manufacturing firms and their patenting activity for the past 30 years, we explore the contributions of R&D spending, patents, and citation-weighted patents to measures of Tobin's Q for the firms. We find that citation-weighted patent stocks are more highly correlated with market value than patent stocks themselves and that this fact is due mainly to the high valuation placed on firms that hold very highly cited patents. We also find that self-citations are worth about twice as much as ordinary citations, especially to smaller firms.

China's absorptive State: research, innovation and the prospects for China-UK collaboration

China's innovation system is advancing so rapidly in multiple directions that the UK needs to develop a more ambitious and tailored strategy, able to maximise opportunities and minimise risks across the diversity of its innovation links to China. For the UK, the choice is not whether to engage more deeply with the Chinese system, but how. This report analyses the policies, prospects and dilemmas for Chinese research and innovation over the next decade. It is designed to inform a more strategic approach to supporting China-UK collaboration