Knowledge that Transforms

We analyse all the major sources of direct and indirect research and development (R&D) support to the business enterprise sector in a single country, Norway, for the period 2002–2013, treating the financial support for R&D from several instruments as a multivariate dose exposure. The output additionality of support to incumbent firms that regularly perform R&D (R&D-incumbents), which obtain about 65 per cent of all R&D support to business enterprises, is insignificant for any instrument or policy mixture. However, the estimated additionality of support to R&D-starters (firms without prior R&D activity), which obtain about 30 per cent of all R&D support, is generally positive. In this firm category, the main instruments for direct R&D support in Norway generate significantly less output and economic activity per NOK 1 million in support than do tax credits, despite the fact these instruments manage large project portfolios at considerable administrative costs. We do not identify positive effects of R&D support on labour productivity or the return on assets for any of the instruments. Our main policy implication is that R&D instruments for the business enterprise sector should be designed in favour of R&D-starters over R&D-incumbents, that is, shifting the focus from the intensive to the extensive margin.

Given the investment of public resources for supporting entrepreneurial growth, it is important to know whether such programs truly benefit innovative ventures. While prior research has indicated some benefits for growth outcomes, there is no clear consensus about the conditions for program effectiveness. We attribute this to the complex set of selection and treatment mechanisms associated with how programs navigate interlocking tradeoffs to maximize outcomes with their limited resources. To circumvent these challenges, policymakers often default to a “picking winners” approach based on past performance indicators. We develop and implement a carefully designed empirical strategy to determine whether this approach leads innovative ventures to achieve growth milestones and properly accounts for various observed and unobserved selection issues. We analyze data from the Small Business Development Center (SBDC), a government-sponsored program in the United States. Using a potential outcomes framework to investigate over 1,700 ventures that enrolled in SBDC advisory services from 2011 to 2016, we observe that treatment design is more crucial than selection for innovative firms to achieve growth. We found that treatment time and a client's willingness to learn collaboratively from their advisors are vital indicators of growth. Since treatment effectiveness is driven by support allocation, programs that desire to boost innovation outcomes must at a minimum formally prioritize innovation criteria to ensure these businesses receive sufficient support to address their growth objectives. Beyond this, we demonstrate that support effectiveness additionally depends on a willingness of participants to learn collaboratively by socializing their growth objectives with their advisors. Since even winners need to learn, programs must wrestle with the selection tradeoffs more acutely early on to ensure that the most promising clients can receive lengthier learning opportunities for growth.

How gender diversity affects the innovation performance under different innovation contexts has been a complex and unsolved puzzle in the innovation literature. This study aims to examine the effect of gender diversity within research and development (R&D) teams on firms’ innovation efficiency, which is defined as their capability to generate new product sales per unit of R&D investment. We argue that gender diversity in R&D teams can promote innovation efficiency by providing informational and social benefits throughout the innovation process. More importantly, we propose that this positive effect will be enhanced when task intensity or complexity is high as well as when market competition or market uncertainty is high. With a unique dataset of manufacturing firms in a coastal province of China from 2009 to 2013, we find strong empirical evidence for our theoretical framework. Ultimately, our study provides several managerial and policy implications to the issues related with female R&D employees.

It is crucial that patent offices grant protection only to those inventions that are novel and non-obvious. In 2004, the European Patent Office (EPO) made the unique move to systematically extend its prior art database by including documents shared among members of standard-setting organisations, but not made available to the general audience. This paper investigates the effects of this policy change. We find that it worked thanks to a significant reduction in granting rates rather than reducing the scope of granted patents. Our study demonstrates how a targeted approach can improve the quality of the patent granting process.

This paper responds to the need in innovation research for conceptual clarity and solid theory on social innovation (SI). The paper conceptualizes SI as changing social relations, involving new ways of doing, knowing, framing and organizing, and theorizes transformative social innovation (TSI) as the process of SI challenging, altering, or replacing dominant institutions in a specific social-material context. Three advances towards TSI theory are proposed. First, we reflect epistemologically on the challenges of theory-building, and propose an appropriate research design and methodology. Middle-range theory is developed through iteration between theoretical insights and comparative empirical study of 20 transnational SI networks and about 100 associated initiatives. Second, we synthesize various innovation theories and social theories into a relational framework that articulates the distributed agency and institutional hybridization involved. Third, we formulate twelve propositions on the emergence of SI initiatives, on the development of SI ecosystems, on institutionalization processes, and on the historical shaping of SI. The paper ends with a critical assessment of the advances made, also identifying further challenges for TSI theory and practice.

Innovation adoption and diffusion by firms are key pillars for the EU strategy on resource efficiency and the development of a circular economy. This paper presents new EU evidence regarding the role of environmental policy and green demand drivers to sustain the adoption of resource efficiency-oriented eco-innovations. Using a large cross-section dataset of EU firms and accounting for sample selection and endogeneity, the results strongly support the idea that environmental policy and demand-side factors are both significant in driving the adoption of innovations that promote recycling, reduce waste and decrease the use of materials. The paper provides a relevant piece of new, quantitative-based knowledge, which complements the large case study-based evidence on sound management and policy strategies for the circular economy.

This research note reports upon the first survey of household sector innovation in China. Compared to previous survey studies we add two first-of-kind variables and related findings. First, we include data on individual income, a resource-related antecedent of household sector innovation. We find that higher individual incomes are strongly associated with increased frequency of both household sector innovation and innovation diffusion. When we combine personal income effects with the positive impact of educational levels and technical training (both competence-related antecedents), it appears that increases in national development are associated with increases in household sector innovation - a very useful public policy finding. Second, in this survey we included household sector innovations motivated by personal need and additional motivations related to learning, fun, helping others and selling/commercialization. This has a major impact on estimated household sector innovation frequencies - raising them by a factor of approximately 1.4. Reanalysis of data obtained in two earlier national surveys suggests that similar adjustment factors hold in those nations too. This finding shows that prior surveys have significantly underestimated household innovation. For many research purposes, such as national accounting, the total amount and value of household sector innovation is what is of interest, independent of motivations that may drive the activity.

Inventors generally know more about their inventions than what is written down in patent applications. Because they possess this tacit knowledge, inventors may need to play an active role when patents are commercialized. We build on Arora (1995) and model firm-inventor cooperation in the commercialization of a given invention. Tacit knowledge warrants inventor activity. However, imperfect IPRs may reduce inventors’ incentives to engage in the commercialization process. We analyze when first-best inventor activity is achieved in a two-stage contract. In the empirical part, we analyze when inventor activity is important for the successful commercialization of patents by using a detailed patent database. The database contains unique information on inventor activity, patent commercialization modes and the profitability of commercialization. In the empirical estimations, we find that inventor activity has a strong positive correlation with profitability when a patent is sold or licensed to another firm. When a patent is sold or licensed in the second phase, it is still inventor activity in the first phase that matters for profitability. Thus, our interpretation is that tacit knowledge and close cooperation between inventors and external firms are often crucial for the successful commercialization of patents.

Despite the emergent importance of liquidity events (IPOs and trade sales) as performance indicators for VC-backed academic spin-offs, empirical research on the drivers of liquidity events relating to such spin-offs has been limited. In adopting a search perspective, we analyze how different alliance types impact on VC-backed academic spin-offs’ chances of realizing a liquidity event. We find that market search alliances increase a spin-off's likelihood of a liquidity event, whereas technology search alliances reduce this likelihood. However, the latter effect is mitigated when the spin-off has a founding team with prior market experience. We explore the implications for practice and policy of the development and success of VC-backed academic spin-offs.