The paper analyzes the organization of the R&D activity in an incomplete contract framework. It provides theoretical foundations: (a) to understand how the allocation of property rights on innovations may affect both the frequency and the magnitude of these innovations; (b) to rationalize commonly observed features in research employment contracts, such as shop rights, trailer clauses, and the "hired for" doctrine; (c) to discuss the robustness of the so-called Schumpeterian hypotheses to endogenizing the organization of R&D; and (d) to provide a rationale for cofinancing arrangements in research activities

The response of union utility to labor-saving innovation is analyzed within a framework of oligopolistic competition in the product market, taking account of wage bargaining under several alternative structures of industrial relations. Conditions are established under which wages and employment will rise or fall in response to innovation. Union opposition tends to occur when union preferences are weighted in favor of jobs and labor demand is perceived to be inelastic. Thus opposition is more likely with industry- or craft-based union organization in noncompetitive industries and is less likely with enterprise unionism in competitive industries

Thomas J. Prusa, James A. Schmitz, Jr., Can Companies Maintain their Initial Innovative Thrust? A Study of the PC Software Industry, The Review of Economics and Statistics, Vol. 76, No. 3 (Aug., 1994), pp. 523-540

Reviews the book `Creative and Innovative Approaches to the Science of Management,' by Yuji Ijiri

The findings in this paper provide some insight into how small firms are able to innovate. Using a production function approach to relate knowledge generating inputs to innovative output, the empirical results suggest that small firms are the recipients of R&D spillovers from knowledge generated in the R&D centers of their larger counterparts and in universities. Such R&D spillovers are apparently more decisive in promoting the innovative activity of small firms than of large corporations

Firm numbers first rise, then later fall, as an industry evolves. This nonmonotonicity is explained using a competitive model in which innovation opportunities fuel entry and relative failure to innovate prompts exit; equilibrium time paths for price and quantity also share features of the data. The model is estimated using data from the U.S. automobile tire industry, a particularly dramatic example of the nonmonotonicity in firm numbers

Firm numbers first rise, then later fall, as an industry evolves. This nonmonotonicity is explained using a competitive model in which innovation opportunities fuel entry and relative failure to innovate prompts exit; equilibrium time paths for price and quantity also share features of the data. The model is estimated using data from the U.S. automobile tire industry, a particularly dramatic example of the nonmonotonicity in firm numbers

This paper studies the evolution of a competitive industry in which a fixed number of firms reduce costs by innovating and by imitating their rivals' technologies. As the firms' technologies gradually improve, industry output expands and price falls. Technological leaders tend to rely on innovations to reduce their costs, whereas the laggards rely more on imitation. Imitation causes technology to spread from the leaders to the followers and forces some convergence of technology among firms as the industry matures. This convergence is accompanied by faster growth of smaller firms and a consequent tightening of the distribution of output over firms. Since imitation is a kind of spillover of technology, equilibrium is likely to involve insufficient innovative and imitative effort relative to a social optimum

This paper studies the evolution of a competitive industry in which a fixed number of firms reduce costs by innovating and by imitating their rivals' technologies. As the firms' technologies gradually improve, industry output expands and price falls. Technological leaders tend to rely on innovations to reduce their costs, whereas the laggards rely more on imitation. Imitation causes technology to spread from the leaders to the followers and forces some convergence of technology among firms as the industry matures. This convergence is accompanied by faster growth of smaller firms and a consequent tightening of the distribution of output over firms. Since imitation is a kind of spillover of technology, equilibrium is likely to involve insufficient innovative and imitative effort relative to a social optimum