ECONOMICS OF INNOVATION The Effects of Prize Structures on Innovative Performance

Successful innovation is essential for the survival and growth of organizations, but how best to incentivize innovation is poorly understood. We compare how two common incentive schemes affect innovative performance in a field experiment run in partnership with a large life sciences company. We find that a winner-takes-all compensation scheme generates significantly more novel innovation relative to a compensation scheme that offers the same total compensation but shares it across the ten best innovations. Moreover, the winner-takes-all scheme does not reduce innovative output on average and, among teams of innovators, generates more output than the less risky prize structure

Determinants of patent citations in biotechnology: An analysis of patent influence across the industrial and organizational boundaries

The present paper extends the literature investigating key drivers leading certain patents to exert a stronger influence on the subsequent technological developments (inventions) than other ones. We investigated six key determinants, as (i) the use of scientific knowledge, (ii) the breadth of the technological base, (iii) the existence of collaboration in patent development, (iv) the number of claims, (v) the scope, and (vi) the novelty, and how the effect of these determinants varies when patent influence—as measured by the number of forward citations the patent received—is distinguished as within and across the industrial and organizational boundaries. We conducted an empirical analysis on a sample of 5671 patents granted to 293 US biotechnology firms from 1976 to 2003. Results reveal that the contribution of the determinants to patent influence differs across the domains that are identified by the industrial and organizational boundaries. Findings, for example, show that the use of scientific knowledge negatively affects patent influence outside the biotechnology industry, while it positively contributes to make a patent more relevant for the assignee's subsequent technological developments. In addition, the broader the scope of a patent the higher the number of citations the patent receives from subsequent non-biotechnology patents. This relationship is inverted U-shaped when considering the influence of a patent on inventions granted to other organizations than the patent's assignee. Finally, the novelty of a patent is inverted-U related with the influence the patent exerts on the subsequent inventions granted across the industrial and organizational boundaries

The (new) nature and essence of the firm

Extant explanations of the nature and scope of firms, such as transaction costs, property rights, metering and “resources” can be integrated into a more general (capability based) theory of the nature and essence of the firm that recognizes the importance to the firm of creating (and capturing) value from innovation. We note that the appropriability of returns from creative and innovative activity often requires the entrepreneurial creation and co-creation of markets. Accordingly, market failure and transaction costs approaches need to be revamped to capture the essence of entrepreneurial and managerial activity that extends beyond the mere exercise of authority. We suggest that the nature and objective of the firm in an economy with innovation and incomplete markets is to capture value (profit) from its advantages and actions; and that the way in which the firm tries to achieve this (by establishing quasisustainable competitive advantage) is its essence. This is non-separable from its nature and objectives.firm, nature, essence, innovation, dynamic capabilities

ICT Diffusion, inward foreign direct investment,and entrepreneurship in developing countries:a research note

The last decades have stablished the fundamental importance of technological progress for economic growth and wealth creation. Most new technology is created in developed countries. For these countries, the fundamental problem for growth is to harness the economic value of new inventions by converting them into new products, processes and organizational means. Entrepreneurship plays a fundamental role in this course of events (Shane 2001; Michelacci 2003; Acs et al. 2004; 2009). In developing countries the diffusion of new technologies plays an essential role in fostering growth

Entrepreneurs: Jacks of all Trades or Hobos?

Human capital investment theory suggests that entrepreneurs should be generalists, while those who work for others should be specialists; it also predicts higher incomes for entrepreneurs with generalist skills. An alternative view predicts that those with greater taste for variety are more likely to become entrepreneurs and that entrepreneurs will see their incomes decrease with greater skill variety. Data from a survey of 830 independent inventors and 300 individuals from the general population confirm that inventor-entrepreneurs typically have a more varied labor market experience. However, the more varied their experience, the lower their household income. The results support the interpretation that both choice of entrepreneurship and investment in generalist skills are driven by a taste for variety.Entrepreneurship, employment choice, skill, jack-of-all-trades, taste for variety.

University Incubator as Catalyst of Resources for Academic Spin-Offs. The Case of ARCA Consortium

Today we can observe an increasing proliferation of new academic spin-off initiatives aimed to transfer knowledge from the university to the market. Due to their strategic role in enhancing the development of technological innovation, academic spin-offs can attain high levels of social performance and consonance with their environment. At the same time, they must overcome many difficulties if they are to achieve a high level of financial performance and growth. They are often considered to be mere vehicles for the transmission of knowledge, implying that their entrepreneurial potential is not fully exploited. According to the Resource Based View (RBV) the competitive disadvantage of an academic spin-off is due to a lack of resources. This paper will join this stream of research in order to analyze the financial performance of academic spin-offs. We examine the case of Arca Consortium’s incubator, established by the University of Palermo, and of the academic spin-offs it has supported and continues to assist. The empirical analysis, based on two linear regression models, is performed based on 19 case studies of spin-offs created between 2007 and 2009 by academicians of the University of Palerm

University Invention, Entrepreneurship, and Start-Ups

This paper develops a game-theoretic model that predicts when a university invention is commercialized in a start-up firm rather than an established firm. The model predicts that university inventions are more likely to occur in start-ups when the technology transfer officers (TTOs) search cost is high, the cost of development or commercialization is lower for a start-up, or the inventor's effort cost in development is lower in a start-up. We test the theory using data from the Association of University Technology Managers, the National Research Council, and the National Venture Capital Association. Licensing is more likely in general, and especially so in start-ups, by universities with higher quality engineering faculty and older TTOs. Start-ups are more likely by universities in states with larger levels of venture capital. TTO size has no effect on start-ups, but does increase licenses. Conversely, universities that earn greater licensing royalties have fewer start-ups but more licenses. The number of start-ups is decreasing in the interest rate, increasing in the S&P 500, and unaffected by levels of industrial research funding and the presence of a medical school. All of these results are consistent with the predictions of our theory.

The Sources of Knowledge and the Value of Academic Patents

This paper aims at contributing to the literature on the determinants of patent value in two respects. It first puts forward new potential determinants of patent value which are mainly related to the identification of the institutional sources of knowledge and the geographical scope of patenting strategy. Second, it aims at validating the traditional and new determinants of patent value with academic patents. The empirical analysis focuses on 208 patent families applied by six main Belgian Universities. The patent value is approximated by the number of forward patent citations. The estimates confirm the role of most traditional determinants of patent value (e.g., backward citation and family size). Further, the new indicators underline the importance of identifying the institutional sources of knowledge. They provide a more in-depth view on the way non patent citations, backward patent citations, co-assignees, and the geographical scope for protection determine patent value. Policy implications emerge from these results, such as the benefit of local and international collaboration between public research organisations and the need to convince academic researchers with a high scientific profile in terms of publications to crystallize their tacit knowledge into high value academic patents.Patent value, patent indicators, knowledge sources