What are the Channels for Technology Sourcing? Panel Data Evidence from German Companies

Innovation processes within corporations increasingly tap into international technology sources, yet little is known about the relative contribution of different types of innovation channels. We investigate the effectiveness of different types of international technology sourcing activities using survey information on German companies complemented with information from the European Patent Office. German firms with inventors based in the US disproportionately benefit from R&D knowledge located in the US. The positive influence on total factor productivity is larger if the research of the inventors results in co-applications of patents with US companies. Moreover, research cooperation with American suppliers also enables German firms to better tap into US R&D, but cooperation with customers and competitors does not appear to aid technology sourcing. The results suggest that the “brain drain” to the US can have upsides for corporations tapping into American know-how

R&D and productivity in German manufacturing firms

This paper uses a new firm panel data set to explore the relationship between R&D and productivity in German manufacturing firms for the period from 1979 to 1989. The results confirm the view that R&D is an important determinant of productivity growth. In the cross-section, the elasticity of sales with respect to R&D capital is on the order of 14 per cent. Using fixed-effects estimators yields R&D elasticities of about 8 per cent. Differencing estimates improve considerably when growth rates are computed over longer time periods, suggesting that the divergence between time-series and cross-sectional estimates is driven by measurement errors. The paper also considers differences between high-technology and other firms. Cross-section and panel elasticity estimates of the R&D effect diverge considerably for the two groups, while the corresponding rate of return estimators display far less variation. There is some evidence that the R&D elasticity increased during the early 80s, and that it fell sharply back to its 1979 value during the period from 1985 to 1989. --

R&D incentives and spillovers in a two-industry model

This paper develops a two-industry model of R&D. A monopolist supplier sells an intermediate good to an oligopolistic buyer industry where firms compete in quantity and quality-enhancing R&D. The supplier can contribute to downstream product improvements by creating spillover knowledge which downstream firms use as a substitute for their own R&D efforts. Even if a market for R&D information fails to exist, the supplier may appropriate an indirect return on R&D for two reasons. Sufficiently high levels of spillover information lead to greater downstream product quality, and spillover information reduces the sunk cost of R&D necessary to enter the downstream industry. Both effects cause an expansion of downstream output and enhance the demand for the supplier's intermediate good. Given sufficiently strong incentives for supplier R&D, the locus of R&D shifts partially from the downstream to the upstream industry. R&D intensities, technological opportunities, and the industry structure of the downstream industry are determined endogenously. The R&D behavior of supplier and buyer firms is characterized by switching equilibria, thereby providing support for the notion of distinct technological regimes. --

Firm formation and regional spillovers: evidence from Germany

This paper studies the effect of regional spillovers on the rate of firm formation in two major West German industries for the time period from 1989 to 1993. I exploit regional variations in firm formation at the county level to identify the effects of historically given industry structure and employment structure on the emergence of new firms. The results are consistent with the existence of localization and urbanization effects. The emergence of high technology firms seems to be contingent on a heterogeneous historical industry structure, the existence of service providers and in particular on a high share of scientists in universities and extra-university research laboratories. --

Vertical Organization, Technology Flows and R&D Incentives: An Exploratory Analysis

Despite its importance, the impact of vertical organization on innovation incentives has not been investigated in depth. This paper develops a number of testable hypotheses and then provides a first exploratory empirical analysis, using cross-sectional industry-level data. Two simple stylized facts emerge from the empirical results. First, once a fragmented buyer industry is dependent on a relatively concentrated supply sector, the industry’s own R&D intensity is reduced substantially. Second, vertical technology flows appear to act as substitutes for an industry's own R&D if the receiving industry's concentration is relatively low. Both results are largely consistent with a number of case studies and with theoretical arguments discussed in the paper. ZUSAMMENFASSUNG - (Vertikale Organisation, Technologieflüsse und FuE-Anreize - Eine explorative Studie) Der Einfluß der vertikalen Organisation von Industrien auf Innovationsanreize ist trotz der Bedeutung der Fragestellung noch nicht detailliert untersucht worden. Dieses Papier stellt eine Reihe von testbaren Hypothesen vor und präsentiert eine erste explorative empirische Analyse auf der Basis eines Querschnittsdatensatzes. Zwei empirische Regularitäten können nachgewiesen werden. Zum einen liegt die FuE-Intensität einer Industrie erheblich unter dem üblichen Durchschnitt, wenn die Konzentration der Industrie niedrig ist, aber eine Abhängigkeit von einer konzentrierten Zuliefererindustrie besteht. Zum zweiten scheinen vertikale Technologieflüsse als Substitute für die eigene FuE einer Industrie zu fungieren, sobald die Konzentration der Empfängerindustrie relativ niedrig ist. Beide Resultate sind prinzipiell konsistent mit weiterer Evidenz aus Fallstudien und mit den theoretisch hergeleiteten Hypothesen.vertical structure; research and development; appropriability

Are there financing constraints for R&D and investment in German manufacturing firms?

Using a newly constructed panel dataset of German enterprises, I estimate R&D and capital investment equations for the time period from 1990 to 1994. Simple accelerator specifications indicate considerable sensitivity of R&D and investment to cash flow for relatively small firms. Much of this effect vanishes already once error-correcting behavior is taken into account, but a significant positive relationship between cash flow and investment remains for relatively small firms. In the case of R&D, weak but significant cash flow persist both for small and large firms. The evidence from Euler equation estimates is not conclusive. The investment Euler equation for large firms appears to perform relatively well and yields results close to those expected under the null hypothesis of no financing constraints. The estimates from the Euler equation for R&D are not informative. Additional evidence from survey data suggests that the cash flow sensitivity of investment in small firms is likely to reflect financing constraints. --R&D,investment,financial constraints,firm size,credit rationing

Are There Financing Constraints for R&D and Investment in German Manufacturing Firms?

Using a newly constructed panel dataset of German enterprises, I estimate R&D and capital investment equations for the time period from 1990 to 1994. Simple accelerator specifications indicate considerable sensitivity of R&D and investment to cash flow for relatively small firms. Much of this effect vanishes already once error-correcting behavior is taken into account, but a significant positive relationship between cash flow and investment remains for relatively small firms. In the case of R&D, weak but significant cash flow persist both for small and large firms. The evidence from Euler equation estimates is not conclusive. The investment Euler equation for large firms appears to perform relatively well and yields results close to those expected under the null hypothesis of no financing constraints. The estimates from the Euler equation for R&D are not informative. Additional evidence from survey data suggests that the cash flow sensitivity of investment in small firms is likely to reflect financing constraints.

Institutionalized Incentives for Ingenuity – Patent Value and the German Employees’ Inventions Act

Germany is one of few countries in which the monetary compensation for inventors is not only determined by negotiations between employer and employee-inventor, but also by relatively precise legal provisions. In this paper, we describe the characteristics of the German Employees’ Inventions Act (GEIA) and discuss which incentives it creates. We rely on responses from a recent survey of 3,350 German inventors to test hypotheses regarding this institution. We conclude from our data that the law creates substantial monetary rewards for productive inventors. The qualitative responses from our survey confirm this view, but also point to a number of dysfunctional effects

Everything you Always Wanted to Know About Inventors (But Never Asked): Evidence from the PatVal-EU Survey

Based on a survey of the inventors of 9,017 European patented inventions, this paper provides new information about the characteristics of European inventors, the sources of their knowledge, the importance of formal and informal collaborations, the motivations to invent, and the actual use and economic value of the patents

Modeling the Duration of Patent Examination at the European Patent Office

We analyze the duration of the patent examination process at the European Patent Office (EPO). Our data contain information related to the patent’s economic and technical relevance, EPO capacity and workload as well as novel citation measures which are derived from the EPO’s search reports. In our multivariate analysis we estimate competing risk specifications in order to characterize differences in the processes leading to a withdrawal of the application by the applicant, a refusal of the patent grant by the examiner or an actual patent grant. Highly cited applications are approved faster by the EPO than less important ones, but they are also withdrawn less quickly by the applicant. The process duration increases for all outcomes with the application’s complexity, originality, number of references (backward citations) in the search report and with the EPO’s workload at the filing date. Endogenous applicant behavior becomes apparent in other results: more controversial claims lead to slower grants, but faster withdrawals, while relatively well-documented applications (identified by a high share of applicant references appearing in the search report) are approved faster and take longer to be withdrawn