This monthly selection of articles has been carried out by Philippe Gugler and Damiano Lepori, the Center for Competitiveness, University of Fribourg. The entire selection, carried out since 2013, can be consulted on the academic articles page of our web.

The effect of technological imitation on corporate innovation: Evidence from US patent data

By: H. Joong Im, J. Shon. Research Policy, Vol. 48, Iss. 9, 2019.

Abstract: “Technological imitation may play a crucial role in motivating firms to innovate. However, theoretical predictions and empirical findings on the role of imitation have not yet reached a consensus. One major gap in the previous studies is that the empirical tests are based on samples consisting of only one industry over a short period of time. This study uses a novel measure of industry-level technological imitation proxied by quick citations by competitors to examine the relationship between imitation and innovation. Using US patent data for the period 1977–2005, we find that there are inverted U-shaped relationships between the degree of industry-level technological imitation and industry-level innovation activities and between the degree of industry-level technological imitation and the value of firm-level innovation. Our results suggest that positive externalities from the interactions among firms during the innovation process outweigh the negative effects of free-riding concerns on firms’ innovation activities and incentives to innovate up to a high degree of technological imitation, while free-riding concerns outweigh the positive externalities when the level of technological imitation is extremely high. The sector-by-sector analyses show that the relationship between technological imitation and the quantity and market value of innovation are not very different across Pavitt sectors. A comparative analysis on the role of imitation between agglomerated and non-agglomerated industries suggests that the positive effect of a moderate level of imitation and the negative effect of an excessive level of imitation are more pronounced for agglomerated industries. The results suggest that creating innovation clusters, such as Silicon Valley in the United States and Shenzhen City in China, and allowing different innovators to cooperate, imitate and compete with each other would be very effective in promoting corporate innovation. However, an excessively high level of technological imitation is more detrimental for firms in innovation clusters because it lowers those firms’ incentives to innovate more radically.” [ABSTRACT FROM AUTHORS]

Clusters and internationalization: the role of lead firms’ commitment and RIS proactivity in tackling the risk of internal fractures

By: M. D. Parrilli. European Planning Studies, DOI: 10.1080/09654313.2019.1635087, 2019.

Abstract: “In this paper, we discuss the growth potential of clusters and industrial districts (CIDs) in international markets. Over the past two decades, CIDs have gone under increasing competitive pressure while markets have progressively globalized. Lead companies, either foreign or home-grown multinationals, have globalized their operations while often reducing their commitment (e.g. investments) within CIDs. As a result, a number of second, third and fourth-tier suppliers disconnect from global value chains coordinated by lead companies, leaving the cluster fractured and jeopardizing local development prospects. Only a few firms in the CID cope with globalization. This situation represents a challenge that CIDs need to take on. In this paper, we inquire about the importance of two factors that may represent crucial conditions for the upgrading of CIDs within global markets. The long-term commitment of lead companies with the local economy, together with the dense interaction between the regional innovation system and the lead companies and their new global innovation network, are found to be crucial elements for the resilience of CIDs and their small firms. A few successful CIDs are considered vis-à-vis others that face higher risks of internal fracture. Relevant cases in Spain, Italy, and Costa Rica are analysed here.” [ABSTRACT FROM AUTHOR]

Tales of the City: What Do Agglomeration Cases Tell Us About Agglomeration in General?

By: G. Faggio, O. Silva, W. C. Strange. CEP Discussion Paper N. 1619, 2019.

Abstract: “This paper considers the heterogeneous microfoundations of agglomeration economies. It studies the co-location of industries to look for evidence of labor pooling, input sharing, and knowledge spillovers. The novel contribution of the paper is that it estimates single-industry models using a common empirical framework that exploits the cross-sectional variation in how one industry co-locates with the other industries in the economy. This unified approach yields evidence on the relative importance of the Marshallian microfoundations at the single-industry level, allowing for like-for-like cross-industry comparisons on the determinants of agglomeration. Using UK data, we estimate such microfoundations models for 97 manufacturing sectors, including the classic agglomeration cases of automobiles, computers, cutlery, and textiles. These four cases – as with all of the individual industry models we estimate – clearly show the importance of the Marshallian forces. However, they also highlight how the importance of these forces varies across industries – implying that extrapolation from cases should be viewed with caution. The paper concludes with an investigation of the pattern of heterogeneity. The degree of an industry’s clustering (localization), dynamism, incumbent firm size, and worker education are shown to contribute to the pattern of heterogeneous microfoundations.” [ABSTRACT FROM AUTHORS]

Do firms exchange knowledge through complementary or substitutive routes of diffusion?

By: A. Maghssudipour, L. Lazzeretti, F. Capone. DISEI - Università degli Studi di Firenze, Working Paper N. 1/2019, 2019.

Abstract: “Studies on firms’ relationships and network structures have attracted more and more attention from several scholars, but surprisingly little is known about the role played by heterogeneous knowledge ties among the same set of actors and to what extent they follow overlapping or different routes of exchanging knowledge. In this vein, an investigation of multiple knowledge networks in clusters is a fundamental approach to interpret the reasons for innovation and economic performance. With an original dataset comprised of data collected by surveys directly administered in local wineries in the Montefalco wine region of Italy, this paper aims to analyse the roles played by different local knowledge ties, within a sector that is critically driven by the exchange of knowledge among economic actors. Social Network Analysis and Exponential Random Graph Modelling were applied in order to investigate the driving forces of the knowledge flows. The empirical results show that different kinds of relationships positively impact the spread of knowledge, but they are different in magnitude, and they follow complementary routes of exchange rather than overlapping ones.” [ABSTRACT FROM AUTHORS]

The birth and development of the Italian automotive industry (1894-2015) and the Turin car cluster

By: A. Enrietti, A. Geuna, C. R. Nava, P. P. Patrucco. University of Torino, Department of Economics and Statistics “Cognetti de Martiis”, Bureau of Research on Innovation, Complexity and Knowledge, Working paper series, ISSN: 2039‐4004, 2019.

Abstract: “By discussing the relation between the traditional Marshallian/Jacobian approach and Klepper’s concept of spinoffs and their role, this paper tries to explain the early genesis and later evolution of the Italian automotive industry, based on the formation of the Torino’s car cluster from the late nineteenth century. Historical analysis and econometric models are integrated to identify key factors that enabled the creation and success of the automotive industry in Turin. Specifically, we investigate agglomeration economies, the role of spinoffs and institutional factors such as the level and importance of local education. Based on original archival research, we built a new database of all Italian automobile companies. Replication of Klepper’s (2007) and Boschma and Wenting’s (2007) models shows no particular influence of the Turin cluster and no early entry advantages. Our model, which integrates and extends previous contributions, confirms the existence of a spinoffs effect, and in particular the positive effect of inherited technical skills embedded in pilots. We find support also, for positive agglomeration effects at the regional level and inter industry externalities from aeronautics, a metropolitan cluster effect and the significance of metropolitan education.” [ABSTRACT FROM AUTHORS]

Do low skilled workers gain from high- tech employment growth? High technology multipliers, employment and wages in Britain

By: N. Lee, S. Clarke. Research Policy, Vol. 48, Iss. 9, 2019.

Abstract: “Do low-skilled workers benefit from the growth of high-technology industries in their local economy? Policymakers invest considerable resources in attracting and developing innovative, high-tech industries, but there is relatively little evidence on the distribution of the benefits. This paper investigates the labour market impact of high-tech growth on low and mid-skilled workers, using data on UK local labour markets from 2009–2015. It shows that high-tech industries – either STEM-intensive ‘high-tech’ or digital economy – have a positive jobs multiplier, with each 10 new high-tech jobs creating around 7 local non-tradeable service jobs, around 6 of which go to low-skilled workers. Employment rates for mid-skilled workers do not increase, but they benefit from higher wages. Yet while low-skilled workers gain from higher employment rates, the jobs are often poorly paid service work, so average wages fall, particularly when increased housing costs are considered.” [ABSTRACT FROM AUTHORS]

Enterprise R&D investments, product innovation and the regional industry structure

By: J. Aarstad, O. A. Kvitastein. Regional Studies, DOI: 10.1080/00343404.2019.1624712, 2019.

Abstract: “This paper studies if the context of the regional industry structure moderates the link between enterprise research and development (R&D) investments and product innovation performance. Cross-level analyses from Norway show that the regional industry structure moderates the link, as the innovation performance from enterprise R&D investments is stronger in regions with a specialized structure than in regions with a diversified structure. The paper accordingly demonstrates that the regional industry structure influences the conversion of enterprise R&D resources into innovative products or services. In particular, it shows that a specialized (diversified) regional industry structure is favourable (unfavourable) for enterprise R&D investments concerning product innovation performance.” [ABSTRACT FROM AUTHORS]

Wishing thinking? Towards a more realistic role for universities in regional innovation policy

By: L. Kempton. European Planning Studies, DOI: 10.1080/09654313.2019.1628183, 2019.

Abstract: “The past 30 years has seen an escalating interest in the potential role of universities in contributing to their regional economies, reflected in the increasing trend for regional innovation strategies to ascribe a central role for universities, particularly in peripheral, institutionally thin places. The global economic crisis and subsequent austerity measures implemented in many developed economies have put further pressure on universities from national and regional policymakers to become more explicitly involved in contributing to their local economies in order to justify their public funding. This paper will draw on the academic literature to consider how justified this focus is by questioning whether universities are willing or even able to play the roles expected of them in contributing to regional innovation. It will critique an approach to policymaking that often views universities as homogenous actors in the regional innovation system and places an over reliance on imitating success stories from other places without sufficient consideration of the specificities of local conditions. It will argue for a more realistic and nuanced approach to involving universities in regional innovation policy, concluding with key insights for both universities and policymakers.” [ABSTRACT FROM AUTHOR]

The centrality of regions in corporate knowledge flows and the implications for Smart Specialisation Strategies

By: M. Dosso, D. Lebert. Regional Studies, DOI: 10.1080/00343404.2019.1619923, 2019.

Abstract: “This study examines the structural and geographical patterns of knowledge flows in order to investigate the centrality of regions. It exploits patent citations and combines social networks analysis and graphs theory to assess the importance of regions as places for knowledge sourcing and creation from the perspective of firms. It offers a novel applied approach to help regions position themselves in a technological space and integrate micro-economic insights into the design of strategies for Smart Specialisation. The analysis includes more than 400 worldwide regions and the patent applications of 1000 research and development-leading firms at the European Patent Office.” [ABSTRACT FROM AUTHORS]