Knowledge that Transforms

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.

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.

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.

This article examines how the excise tax affects firms’ R&D investment, performance, and market strategy in the US medical device industry. The Affordable Care Act imposed a 2.3% excise tax on medical devices beginning in January 2013, and thus this study compares the medical device firms with other high-tech firms before and after the tax incidence. Using COMPUSTAT data from 2006 to 2015, the author finds that the excise tax reduced R&D investment, sales revenue, gross margins, and earnings for medical device firms. In addition, the excise tax increased their global market sales intensity, global market diversification, and customer diversification in the US domestic market.

This study investigates whether country-level technological disparities influence individual scientists’ choice of research agenda and, if so, how the effect of country-level technological disparities on individuals’ research activities differs before and after technology commercialization. To address these research questions, we use research proceedings published from the International Electric Vehicle Symposium (EVS) from 1990 to 2009. We find that a country’s technological capabilities tend to prevent its scientists from studying electric vehicles (defined as a disruptive technology) but encourage them to study hybrid vehicles (defined as a sustaining technology) before electric and hybrid vehicles are launched in the automobile market. We also find that a country’s technological capabilities do not subsequently help its scientists shift their research activities to the technologies that have received positive initial feedback from automobile markets.

This paper explores a case of knowledge-intensive consumer services (KICS). Services have become less neglected in the economics of technical change and innovation studies in general; nevertheless, the advance of this agenda has been uneven. A significant emphasis has been on knowledge-intensive business services (KIBS). Despite their direct impact on social needs and individual desires, innovation in consumer-oriented services continues to be relatively under-theorized and under-researched. This paper brings into focus the sources and patterns of innovation in those innovative services that target human satisfaction and well-being as a final goal. We show evidence from a little-explored health industry, oral care. We address Malo Clinic, a company specialized in the most complex patient situations and a rare instance of an internationalized firm in the health services business. On the basis of a 20-year thread of corporate history, we find that a wide array of qualitative (interviews, newspaper coverage, marketing material) and quantitative evidence (papers, patents, trademarks) illuminates some of the features that may characterize a particular class of dynamic activities tending to consumers’ needs, expectations and quality of life. We argue that these key characteristics may be on course to become more general as the learning economy spreads to fully embrace the realm of the service sphere. One conclusion is that both the technological and non-technological capabilities underpinning more types of innovation are increasingly becoming coupled in consumer-relevant services.

Reducing inequality and social exclusion is a challenging task that will require a joint effort by all societal stakeholders, including not-for-profit and for-profit organizations. In order to develop and evaluate policy actions in this area, monitoring the contribution of these for-profit and not-for-profit organizations to a more inclusive society becomes crucial. This research note describes the development, cognitive pretesting, and large-scale empirical testing of a module that can be included in (inter)national innovation surveys. The module measures whether not-for-profits’ and for-profits’ innovation activities improve vulnerable groups’ access to basic provisions. It also provides insights in the main drivers for improving beneficiaries’ access to basic provisions through innovation and in the types and numbers of beneficiaries reached. The module was tested in the context of the Community Innovation Survey in Flanders, Belgium.