2013 Working Papers Series on Corporate R&D and Innovation 2013 Working Papers Series on Corporate R&D and Innovation

Do KIBS make manufacturing more innovative? An empirical investigation for four European countries

Authors: Daria Ciriaci, Sandro Montresor, Daniela Palma
No. 04/2013

The paper aims at estimating the innovation impact of the vertical integration of knowledge intensive business services (KIBS) into manufacturing. By referring to the vertically integrated sectors of an economy, the innovative knowledge, which is transferred directly and indirectly from KIBS to manufacturing in an embodied way, is measured. Its impact on manufacturing innovation is then estimated. By merging OECD data on sectoral R&D and input-output tables with sectoral patent applications from the Pastat dataset, a panel of 18 manufacturing sectors is built up for the 4 largest European countries – France, Germany, Italy and UK – spanning from the mid-90s to the mid-00s. The more innovative sectors are actually those making more intensive and extensive use of R&D embodied into KIBS production flows. In policy terms, strengthening the bridge between KIBS and manufacturing appears as crucial as supporting KIBS activities and service innovations as such.


Knowledge Search versus Knowledge Deployment:How Foreignness can be both an Asset and a Liability for Firms

Authors: Jörg Zimmermann and Wolfgang Sofka
No. 03/2013

Many modern firms compete globally. However, research into whether foreignness is an asset or a liability in competition with domestic firms is inconclusive. We argue that foreign MNC subsidiaries are not per se advantaged or disadvantaged. We suggest that the distinction originates from the nature of the subsidiary's activity in the host country. We focus on two activities: knowledge search and knowledge deployment. We predict theoretically that domestic firms have advantages when they search for knowledge due to their embeddedness in the host country. However, this increased embeddedness reduces the degree of novelty of their knowledge pool. Foreign MNC subsidiaries therefore have advantages in knowledge deployment because they draw from a richer, international knowledge pool. However, these advantages accrue to both foreign and domestic MNCs. We test and support these predictions for a longitudinal dataset of 2900 firm observations in Spain. We develop recommendations for research and practice based on these findings.

The production function of top R&D investors: Accounting for size and sector heterogeneity with quantile estimations

Authors: Antonio Vezzani and Sandro Montresor
No. 02/2013

This paper investigates how top R&D investors differ in the production impact of their inputs and in their rate of technical change. We use the EU Industrial R&D Investment Scoreboard and perform a quantile estimation of an augmented Cobb-Douglass production function for a panel of more than 1,000 companies, covering the period 2002-2010. The results for the pooled sample are contrasted with those obtained from the estimates for different groups of economic sectors. Returns to scale are bounded by the initial size of the firm, but to an extent that decreases with the technological intensity of the sector. The output return of knowledge capital is the most important, irrespective of firm size, but in high-tech sectors only. Elsewehere, physical capital is the pivotal factor, although with size variations. The investigated firms appear different also in their technical progress: embodied in mid-high and low/mid-low tech sectors, and disembodied in high-tech sectors.

Innovation and Job Creation. A sustainable relation?

Authors: Daria Ciriaci, Pietro Moncada-Paternò-Castello and Peter Voigt
No. 01/2013

This study compares the employment growth patterns of innovative and non-innovative firms focusing on whether there are systematic differences in the persistence of the jobs created. Using data from a unique longitudinal dataset of 3,300 Spanish firms over the years 2002−2009, obtained by matching different waves of the "Encuesta sobre Innovación en las Empresas españolas" and adopting a semiparametric quantile regression approach, we examine employment serial correlation.

The empirical results of the study indicate that the jobs created by innovative firms generally appear to be rather persistent over time whereas those created by non−innovative firms do not. Among declining firms, non-innovators tend to deteriorate faster in terms of economic performance. In addition, among those firms experiencing high organic employment growth, smaller and younger innovative firms grow more on average than larger innovative firms. Overall, evidence suggests that being innovative supports and stabilises a firm's organic employment growth pattern and being smaller and younger seems to be a sufficient condition to experience high employment growth, i.e. − with regard to the latter − it is not necessary to have a comparably high R&D spending / being an R&D intensive company.