The Great Realignment: How the Changing Technology of Technological Change in Information Technology Affected the U.S. and Japanese IT Industries, 1983"“1999

This paper empirically shows that innovation in Information Technology (IT) has become increasingly dependent on and intertwined with innovation in software. This change in the nature of IT innovation has had differential effects on the performance of the United States and Japan, two of the largest producers of IT globally. We document this linkage between software's contribution in IT innovation and the differential innovation performance of US and Japanese electronics, semiconductors, and hardware firms. We collect patent data from USPTO in the period 1980-2002 and use a citation function approach to formally show the trend of increasing software dependence of IT innovation. Then, using a broad unbalanced panel of the largest US and Japanese publicly listed IT firms in the period 1983-1999, we show that (a) Japanese IT innovation relies less on software advances than US IT innovation, (b) the innovation performance of Japanese IT firms is increasingly lagging behind that of their US counterparts, particularly on IT sectors that are more software intensive, and (c) that US IT firms are increasingly outperforming their Japanese counterparts, particularly in more software intensive sectors. The findings of this paper could provide a fresh explanation for the relative decline of the Japanese IT industry in the 1990s

Going Soft: How the Rise of Software Based Innovation Led to the Decline of Japan's IT Industry and the Resurgence of Silicon Valley

This paper documents a shift in the nature of innovation in the information technology (IT) industry. Using comprehensive data on all IT patents granted by the USPTO from 1983-2004, we find strong evidence of a change in IT innovation that is systematic, substantial, and increasingly dependent on software. This change in the nature of IT innovation has had differential effects on the performance of the IT industries in the United States and Japan. Using a broad unbalanced panel of US and Japanese publicly listed IT firms in the period 1983-2004, we show that (a) Japanese IT innovation relies less on software advances than US IT innovation, (b) the innovation performance of Japanese IT firms is increasingly lagging behind that of their US counterparts, particularly in IT sectors that are more software intensive, and (c) that US IT firms are increasingly outperforming their Japanese counterparts, particularly in more software intensive sectors. The findings of this paper thus provide a fresh explanation for the relative decline of the Japanese IT industry in the 1990s. Finally, we provide suggestive evidence consistent with the hypothesis that human resource constraints played a role in preventing Japanese firms from adapting to the shift in the nature of innovation in IT.Innovation, Technological change, IT industry, Software innovation, Japan

Essays on Firm Performance, Innovation, and Cross-Border Economic Activity

<p> This thesis is composed of three essays that explore different facets of firm performance, innovation, and cross-border economic activity.</p> <p> The first essay documents a systematic shift in the nature of innovation in information technology (IT) towards increasing dependence on software. Using a broad panel of US and Japanese publicly listed IT firms in the period 1983-2004, it shows this change in the nature of IT innovation had differential effects on the performance of the IT industries in the United States and Japan, resulting in US firms increasingly outperforming their Japanese counterparts, particularly in more software-intensive sectors. It also provides suggestive evidence that human resource constraints played a role in preventing Japanese firms from adapting to the documented shift in IT innovation.</p> <p> The second essay asks whether the United States have a comparative advantage in applications-related software research. It classifies software patents into downstream and upstream software inventions based on a unique classification algorithm, then offers empirical evidence that downstream software research is disproportionally concentrated in the United States, and that U.S. firms are significantly less likely to locate downstream software research projects offshore than upstream research projects. It also explores self-citation and co-invention patterns of software patents and provides suggestive evidence that U.S. firms may use intra-firm knowledge flows to mitigate challenges of conducting downstream software research remotely. Finally, it explores the sources for the observed U.S. advantage in downstream software research and provides initial empirical evidence supporting the hypothesis that it is at least partially due to the relative abundance of lead users of software within the United States.</p> <p> The final essay uses a rich panel dataset of Slovenian firms in the period 1994-2010 to examine how receiving foreign investment impacts the subsequent performance and behavior of local firms. Using a variety of propensity score based estimation techniques, it shows that foreign investment leads recipient firms to subsequently significantly expand the scale and scope of their activities. In addition, the essay explores how heterogeneity in investor origin modulates the effects of foreign investment, and it shows that investor origin heterogeneity is indeed important for understanding local firms’ ex post performance, the scale of their operations, the scope of their product mix and their geographical presence in export markets. It finds, for instance, that firms receiving investment from advanced country investors subsequently broaden the scope of their product mix and the number of export destinations they serve, while those receiving investment from developing country investors decrease their scope in terms of product space and geographical coverage. The empirical analysis is motivated with a theoretical model in which local firms endogenously chose their product mix and export destinations. The model details how receiving foreign investment affects the way firms alter their ex-post behavior, and then shows that predictions of the model align closely with the empirical results. The findings in this essay suggest that incorporating investor heterogeneity and the multi-product and multi-destination nature of firms yields important insights for furthering our understanding of how foreign investment impacts recipient firms.</p

Replication data for: Going Soft: How the Rise of Software-Based Innovation Led to the Decline of Japan's IT Industry and the Resurgence of Silicon Valley

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The Great Realignment: How the Changing Technology of Technological Change in Information Technology Affected the US and Japanese IT Industry, 1983-1999

This paper empirically shows that innovation in Information Technology (IT) has become increasingly dependent on and intertwined with innovation in software. This change in the nature of IT innovation has had differential effects on the performance of the United States and Japan, two of the largest producers of IT globally. We document this linkage between software’s contribution in IT innovation and the differential innovation performance of US and Japanese electronics, semiconductors, and hardware firms. We collect patent data from USPTO in the period 1980-2002 and use a citation function approach to formally show the trend of increasing software dependence of IT innovation. Then, using a broad unbalanced panel of the largest US and Japanese publicly listed IT firms in the period 1983-1999, we show that (a) Japanese IT innovation relies less on software advances than US IT innovation, (b) the innovation performance of Japanese IT firms is increasingly lagging behind that of their US counterparts, particularly on IT sectors that are more software intensive, and (c) that US IT firms are increasingly outperforming their Japanese counterparts, particularly in more software intensive sectors. The findings of this paper could provide a fresh explanation for the relative decline of the Japanese IT industry in the 1990s

Stability and degradation pathways of N-nitroso-hydrochlorothiazide and the corresponding aryl diazonium ion

Despite the fact that it was put on the market more than 60 years ago, hydrochlorothiazide (HCT) is still one of the most important antihypertensive drugs. Due to its chemical structure, which contains the secondary aryl-alkyl-amino moiety, it is vulnerable to the formation of N-nitrosamine drug substance-related impurity (NDSRI) N-nitroso-hydrochlorothiazide (NO-HCT). In our study, we reveal that NO-HCT degrades rapidly at pH values 6 to 8. The main degradation products identified are formaldehyde, thiatriazine, and aminobenzenesulfonic acid derivative. Interestingly, degradation of NO-HCT at pH values from 5 to 1 is significantly slower and provides a different impurity profile when compared to the profile generated between pH 6 and 8. Specifically, between pH 1 and 5, HCT is observed as one of the key degradation products of NO-HCT in addition to formaldehyde and aminobenzenesulfonic acid. Moreover, at pH 1, the aminobenzenesulfonic acid derivative is transformed to the corresponding diazonium salt in approximately 3% yield with the nitrosyl cation, which is released during the decomposition of NO-HCT to HCT. This diazonium is highly unstable above pH 5. To verify that degradation of NO-HCT does not produce the corresponding diazonium salt that could be formed via metabolic activation of NO-HCT, this diazonium salt and its hydrolytic and reduction degradation products were synthesized and used as standards for the identification of species formed during the degradation of NO-HCT. This enabled us to confirm that the corresponding aryl diazonium salt, which would be obtained from metabolic activation of NO-HCT, is not observed in the NO-HCT degradation pathway. Our study also demonstrates that this diazonium salt is stable only in the presence of a large excess of strong mineral acid under anhydrous conditions. In the presence of water, it is instantaneously converted to an aminobenzenesulfonic acid derivative. These findings suggest that the NO-HCT should not be considered as a typical compound belonging to the cohort of the concern