Knowledge that Transforms

We elaborate a model of the incentives of scientists to perform activities of control and criticism when these activities, just like the production of novel findings, are costly, and we study the strategic interaction between these incentives. We then use the model to assess policies meant to enhance the reliability of scientific knowledge. We show that a certain fraction of low-quality science characterizes all the equilibria in the basic model. In fact, the absence of detected low-quality research can be interpreted as the lack of verification activities and thus as a potential limitation to the reliability of a field. Incentivizing incremental research and verification activities improves the expected quality of research; this effect, however, is contrasted by the incentives to free ride on performing verification if many scientists are involved, and may discourage scientists to undertake new research in the first place. Finally, softening incentives to publish does not enhance quality, although it increases the fraction of detected low-quality papers. We also advance empirical predictions and discuss the insights for firms and investors as they "scout" the scientific landscape.

In this paper I attempt to measure the ability of a Norwegian publicly subsidized loan program to identify innovative firms that are victims of market imperfections. I apply three complementary control groups, which all have in common that they address specific unobservable characteristics of the program participants. The program participants perform better on a variety of growth measures compared to the firms rejected by the program. Compared with firms that receive private credit financing, I do not find that the program participants perform better in the upper quantiles of the contingent performance distribution despite a lower survival rate. The latter result suggests that the program does not seem to succeed in identifying a target group of firms with a sufficiently high growth potential. Firms with innovation loans are not outperformed by venture portfolio companies with respect to sales growth. The venture portfolio companies do, however, have higher survival rates as well as stronger growth in employment and assets. The latter result possibly indicates that the venture portfolio companies are more likely to succeed in the long run. The overall results indicate that the selection competency of the bureaucrats administrating the program is at level with that of private banks, and possibly also of that of venture funds. Still, in order for the program to provide the same level of welfare improvement as regular business credit provided by the private market, I find that the positive externalities from the program must be sufficiently large to compensate for the direct public subsidy element including risk adjusted return on equity and social costs of public funds.

We analyze the evolution of the international collaboration network in photovoltaic research. Using data on scientific publications for the period 1980-2015, we apply social network analysis to trace the evolution of the global network of countries and national research networks of organizations. Our objective is to identify the determinants of countries' international research embeddedness by looking at national policies and structural properties of the national research networks. We observe a steady increase of publications and collaboration within the global research network. While there is a small group of countries that remains central throughout all years, several countries emerge and catch up while others lose their relative position.We find that cohesion and connectedness of the national system positively affect research output as well as international embeddedness, whereas centralized systems are less embedded. Policy, especially demand side instruments, has a positive effect on publication output and embeddedness.

Legal surprises are unexpected suits or actions in which plaintiffs rely on claims or precedents that may be obscure, unfamiliar, or unknown to the defendants. Our study explores false patent marking suits, a unique type of patent-related legal surprise involving allegations of defendants marking products with ineligible patent numbers to deceive customers and/or deter competitors. An abrupt shift in U.S. Federal Courts’ interpretation of intellectual property rights (IPRs) policy amplified plaintiff incentives for filing these suits while escalating defendant penalties for proven violations. Handling costly legal surprises such as false patent marking suits requires focused attention from managers. Our core premise is that temporal and evidential cues in the timelines and storylines of plaintiffs’ legal narratives in surprise suits attract defendants’ organizational attention. We hypothesize about temporal focus (past, present, and future) and evidentiary reasoning (relevance, credibility, and inferential power) as attention cues and possible predictors of the mode (litigation or negotiation) and timing of case resolution. We apply automated content analysis to official court records for 992 false patent marking cases (2009–2011) and quantify competing risks using hazard models. We find that differences in temporal focus and evidentiary reasoning in the legal narratives of surprise suits are significant predictors of case resolution mode and timing. We also find that defendants countersuing to redirect plaintiffs’ attention is an effective negotiating tactic. We discuss the economic significance and strategic implications of our empirical findings on legal surprises, attention, case resolution mode and timing, and the unintended consequences of IPR policy changes.

Despite numerous studies on modularity, the modularization processes have received less attention. In the global context, product modularity can be leveraged to satisfy heterogeneous market requirements across countries with low costs. Through a longitudinal case study of HomeTech, we examined how multinational R&D created an effective organizational interface to facilitate recombination of its organizational units, and thus product modularization. We found that three elements of an organizational interface were established through a process composed of three phases in HomeTech R&D: regional concentration, establishing a module pool, and creating architecture leader posts. We also found that the three elements exerted the balancing effect and the brokerage effect so that the organizational interface was effective in facilitating recombination of organizational units. We contribute to the literature through showing how organizational modularity can affect product modularity within a firm. We also reveal the critical role of architecture leaders in product modularization. Finally, we enrich the organizational interface concept by highlighting the combination of elements.

The paper examines the formation of clique-spanning ties in intra-corporate co-invention networks, by focusing on the impact of R&D unit spinouts. Using data on thirty-one spinouts in eight large U.S. information and communication technology corporations, we show that the reorganization of R&D units through corporate spinouts is associated with an increase in the extent to which inventors employed in the unit collaborate with inventors located in other cliques within the corporate co-invention network. Interestingly, the spinout effect spills over to all members of the clique of spun-out inventors, also including those who remain with the parent firm. The interpretation of these empirical findings, grounded on existing theories and on the views of inventors and executives involved in the reorganization events, suggests that corporate spinouts generate a shock in intra-corporate research collaboration dynamics, which loosens clique lock-in effects and contributes to reset cliques’ boundaries in the intra-corporate research network.