Knowledge that Transforms

We develop a model of innovation that enables us to trace the interplay among three key dimensions of the innovation process: (i) demand of and (ii) supply for innovation, and (iii) technological capabilities available to generate innovation in the forms of products, processes, and services. Building on triple helix research, we use entropy statistics to elaborate an indicator of mutual information among these dimensions that can provide indication of reduction of uncertainty. To do so, we focus on the medical context, where uncertainty poses significant challenges to the governance of innovation. We use the Medical Subject Headings (MeSH) of MEDLINE/PubMed to identify publications within the categories “Diseases” (C), “Drugs and Chemicals” (D), “Analytic, Diagnostic, and Therapeutic Techniques and Equipment” (E) and use these as knowledge representations of demand, supply, and technological capabilities, respectively. Three case-studies of medical research areas are used as representative ‘entry perspectives’ of the medical innovation process. These are: (i) human papilloma virus, (ii) RNA interference, and (iii) magnetic resonance imaging. We find statistically significant periods of synergy among demand, supply, and technological capabilities (C-D-E) that point to three-dimensional interactions as a fundamental perspective for the understanding and governance of the uncertainty associated with medical innovation. Among the pairwise configurations in these contexts, the demand–technological capabilities (C-E) provided the strongest link, followed by the supply–demand (D-C) and the supply–technological capabilities (D-E) channels.

• NIH-funded research assistantships disproportionately support foreign students. • Graduate students’ funding mechanisms affect their early-career job choices. • Research assistants are more likely to take U.S. R&D jobs after graduation. A National Institutes of Health (NIH) taskforce recently recommended decreasing the number of graduate students supported on research assistantships, and instead favoring traineeship and fellowship funding mechanisms. Using instrumental variables estimation with survey data collected from U.S. PhD-granting biomedical sciences departments and their newly-minted PhDs, we find that increases in these programs’ NIH-funded traineeships and fellowships do significantly increase programs’ total graduate enrollments, particularly of female students. However, PhDs who were funded primarily as research assistants are significantly more likely to take research-focused jobs in the U.S. scientific workforce after they graduate, as compared to PhDs who were primarily supported as trainees or fellows. The suggested policy changes thus may have unintended, negative consequences for scientific workforce participation.

Gilbert and Katz (2006) (GK) show that allowing (pure) patent bundling increases the incentives for patent owners to enter into "long-term" patent licensing that commits them not to expropriate licensees' sunk costs in complementary assets with opportunistic licensing terms. We interpret RAND commitments as a form of long-term contracting, and extend their framework to analyze the tying of non-RAND-committed patents to RAND-committed patents. Pure patent bundling/tying is common and often has sound efficiency justifications, so we caution against prohibiting the pure bundling of RAND-committed and non-RAND-committed patents. Whether such a license honors a RAND commitment turns, however, on the licensing terms. We argue that including a non-RAND-committed patent (patent 2) in a bundle with a RAND-committed patent (patent 1) does not increase the license fee that honors the RAND commitment. If, however, the patent owner offers patent 1 separately at a RAND rate, its RAND commitment does not restrict what it charges for a bundle of patent 1 and patent 2.

Via a study of innovating and non-innovating German consumers, we explore links between the “Big Five” personality traits and successful accomplishment of three basic innovation process stages by consumer-innovators: (1) generating an idea for a new product or product improvement, (2) developing a prototype that implements that idea, and (3) diffusing the innovation to others. We find that personality traits are significantly associated with success differ at each stage. First, those who score higher on openness to experience are significantly more likely to have new product ideas. Second, being introverted and conscientious is significantly associated with successful prototyping. Third, those who possess high levels of conscientiousness are more likely to successfully commercially diffuse their innovations, whereas, in contrast, conscientiousness lowers the likelihood of successful peer-to-peer diffusion.

This paper highlights distinctive features of a neglected class of economic activity in the domain of medical innovation, namely the creation of testing regimes in clinical trials, asking how their nature might be expected to affect innovation of medical technology. It argues firstly that clinical trials are not simply about passively validating an already well-known technology and verifying its safety. Rather, clinical trials are part of a more active process of learning that allows pharmaceutical innovations to be useful outside the laboratory. It argues secondly that product development can proceed along a number of long and costly paths before a product’s behaviour in actual practice becomes clear, which can make selecting between alternative courses of action difficult. Thus, product choice and product development need to go hand-in-hand. To consider these arguments, the paper maps out four trajectories of polio vaccine development, tracing their paths through clinical trials since the 1950s, and describes some of the defining features of testing regimes for medical innovation. These include institutions that integrate knowledge and co-ordinate skills in testing processes, and capabilities for allocating testing resources, managing testability constraints, sharing knowledge and improving commensurability between testing communities.

Many scholars argue that workforce unionization leads to a reduction in R&D investment because unions appropriate a share of the returns to successful inventive efforts. On the other hand, it is widely acknowledged that unions may encourage investment in R&D because of increased cooperation between workers and management. Our empirical analysis on cross-country firm- level data from 23 emerging and developing countries reveals a negative association between workforce unionization and firms’ R&D investment. This association is particularly pronounced when unions are protected by strong collective relations laws, supporting the notion that strong unions ‘tax’ the returns to successful inventions. Our findings have implications for policy makers who seek to improve emerging countries’ chances of catching up to the technological frontier, and for firm leaders concerned about the appropriation of returns to their R&D investments.