Publications
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PDF The production function of top R&D investors: Accounting for size and sector heterogeneity with quantile estimations
This paper investigates how top R&D investors differ in the production impact of their inputs and in their rate of… Show more 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. Show less
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PDF Knowledge Search versus Knowledge Deployment:How Foreignness can be both an Asset and a Liability for Firms
Many modern firms compete globally. However, research into whether foreignness is an asset or a liability in competition with domestic… Show more 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. Show less
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PDF Do KIBS make manufacturing more innovative? An empirical investigation for four European countries
The paper aims at estimating the innovation impact of the vertical integration of knowledge intensive business services (KIBS) into manufacturing.… Show more 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. Show less
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PDF The 2013 Survey on R&D Investment Business Trends
This report presents the findings of the eigth survey on trends in industrial R&D investment. It analyses the 172 responses… Show more of mainly large firms from a subsample of 1000 EU-based companies in the 2012 EU Industrial R&D Investment Scoreboard. These 172 companies are responsible for R&D investment worth € 62 billion, constituting around 41% of the total R&D investment by the 1000 EU Scoreboard companies. The main findings are as follows: The main conclusion is that, between 2013-15, the responding companies expect to increase their R&D investments by 2.6 % on average per year. Due to decreased expectations in the automobiles & parts sector, this is a third lower than in the previous survey. For some sectors, the expected R&D investment changes have increased compared to our previous surveys: electronic & electrical equipment (9 % p.a. over the next three years), general industrials (7 %), construction & materials (7 %), pharmaceuticals & biotechnology (4 %), and technology hardware & equipment (4 %). The responding companies carry out a quarter of their R&D outside the EU. Their expectations for R&D investment for the next three years show continued participation of European companies in the global economy, in particular growth opportunities in emerging economies, while maintaining an R&D focus in the EU. Two thirds of the European companies in the sample chose their home country as the most attractive location for R&D, and identified the US, Germany, China and India as the most attractive locations outside their home country. Knowledge-sharing, human resources, proximity to other company sites and market demand make countries attractive for R&D activities. Comparing the attractiveness for R&D activities of the surveyed companies among eight EU countries, quality of R&D personnel and knowledge-sharing opportunities with universities and public organisations are most frequently stated among the top three. Comparing the attractiveness of the EU to the US, geographic proximity is leading before knowledge sharing opportunities and R&D personnel. Comparing the attractiveness of the EU to the one of China and India, for the EU geographic proximity to other company sites and technology poles & incubators is a factor for attractiveness. For China and India proximity to suppliers is making these countries attractive. Show less
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PDF The 2013 EU Industrial R&D Investment Scoreboard
The 2013 EU Industrial R&D Investment Scoreboard (the Scoreboard) contains economic and financial data for the world's top 2000 companies… Show more ranked by their investments in research and development (R&D). The sample contains 527 companies based in the EU and 1473 companies based elsewhere. The Scoreboard data are drawn from the latest available companies' accounts, i.e. usually the fiscal year 2012. Show less
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PDF Bridging ideas with markets: the impact of training, marketing and design on innovation
This Policy Brief presents recent results on the impact of training, marketing and design expenditures on European firms' innovative performance.… Show more The new evidence drawn from recent JRC research suggests that these expenditures, in combination with R&D, are crucial drivers of innovation. Drawing on these results, policy implications for the European Research and Innovation Agenda are discussed and additional research questions identified. Show less
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PDF To what extent are knowledge-intensive business services contributing to manufacturing? A subsystem analysis
The rise of knowledge-intensive business services (KIBS) may be considered as one of the decisive trends of economic evolution of… Show more industrialised countries in recent decades. This paper uses the concept of vertical integrated sectors and the subsystem approach to input-output matrix analysis to study the vertical integration of knowledge-based business services into manufacturing sectors. The study covers Germany, France, Italy and the United Kingdom over the period 1995-2005. Results decisively support both the existence of structural differences among the countries considered, and a significant heterogeneity to the extent to which manufacturing outsources to knowledge-intensive business services. Show less
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PDF Projection of R&D Intensive Enterprises' Growth to the year 2020: Implications for EU policy?
The paper investigates how sector composition and magnitude of R&D investments in the EU may differ in year 2020 if… Show more top R&D-investing SMEs were assumed to be on a fast growth track while the top R&D-investing large companies continued to grow as before. Background is the emerging focus on SMEs - and in particular the fast growing among them - with regard to the "Europe 2020" policy strategy. Show less
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PDF The 2012 Survey on R&D Investment Business Trends
The report contains the main findings of the seventh survey on R&D investment business trends based on 187 responses of… Show more mainly large companies from the 1000 EU-based companies in the 2011 EU Industrial R&D Investment Scoreboard. These 187 companies are responsible for R&D investment worth almost €56 billion, constituting around 40% of the total R&D investment of the 1000 EU Scoreboard companies. The main findings are as follows: Companies expect to maintain robust R&D investment increases (average 4% p.a.) over the next three years. These expectations indicate a positive and stable trend for R&D investment growth as observed before the 2008 economic and financial crises. The responding companies report significant shares of sales coming from innovative products and services introduced in the past three years: from 33% to 10% in high and low R&D intensity sectors respectively.The average share of sales coming from new innovative products and services was 18%. Almost half of the respondents named themselves as the innovation leader in the sector. R&D within the company is the most important component of innovation, followed by market research related activities for new product introduction. Collaboration agreements were a more important way of knowledge sharing than licencing. For the impact of factors and policies on the company's innovation activities, national public support had the most positive effect. Labour costs and conditions of Intellectual Property Rights (enforcement, time and costs) continue to be perceived as negative factors for company innovations. This underlines the importance of an efficient IPR regime for the support of company innovations. The majority of R&D collaboration agreements with other companies are with customers or suppliers (vertical agreements), while less than 10% are made with competitors. More than one fifth of the respondents preferred Germany as the most attractive location for outsourcing R&D, mostly because of a very high share of statements from the home country, followed closely by the US. The US is the most attractive source of Intellectual Property Rights, followed by Germany. Among the types of Intellectual Property Rights (IPRs) licencing, licencing-in ranges before licencing-out. Favourable tax treatment of licencing revenue would encourage more licencing activity. High R&D intensive companies report the highest licencing-in expenditure and licencing-out revenues. Show less
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PDF R&D and Non-linear Productivity Growth in Heterogeneous Firms
The paper studies the relationship between R&D investment and firm productivity growth by explicitly accounting for non-linearities in the R&D-productivity… Show more relationship and inter-sectoral firm heterogeneity. In order to address these issues, we employ a two step estimation approach, and match two firm-level panel data sets for the OECD countries, which allows us to relax both the linearity and homogeneity assumptions of the canonical Griliches (1979) knowledge capital model. Our results suggest that: (i) R&D investment increases firm productivity with an average elasticity of 0.15; (ii) the impact of R&D investment on firm productivity is differential at different levels of R&D intensity – the productivity elasticity ranges from -0.02 for low levels of R&D intensity to 0.33 for high levels of R&D intensity; (iii) the relationship between R&D expenditures and productivity growth is non-linear, and only after a certain critical mass of R&D is reached, the productivity growth is significantly positive; (iv) there are important intersectoral differences with respect to R&D investment and firm productivity – high-tech sectors' firms not only invest more in R&D, but also achieve more in terms of productivity gains connected with research activities. Show less