Publications
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Investment expectations by vulnerable European firms
The sudden onset of the COVID shock has left European economies reeling, resulting in a sudden contraction of demand that… Show more has hit some vulnerable firms and sectors in a remarkably uneven way. There is a genuine interest from policymakers to learn about which types of firms have been left in vulnerable circumstances as a result of the crisis. In this paper, we present new evidence on the evolution of investment plans of certain groups of firms suspected of being vulnerable -young and small firms, High-Growth Enterprises (HGEs) and R&D investors. We applied a difference-in-differences approach on panel data regarding forward-looking investment expectations. The results show that all the vulnerable groups are pessimistic about the availability of internal and external finance, with HGEs suddenly expecting less of a positive change in investment, and R&D investors expecting a negative change in investment. Show less
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Top R&D investors, structural change and the R&D growth performance of young and old firms
This paper investigates the structural change of the major economies through the lens of the leading global corporate R&D investors.… Show more Moreover, we explore the relationship between R&D intensity, capital intensity and profitability and R&D investment growth for young and old firms. Contrary to common understanding, our results show that in the EU the R&D distribution between sectors has changed – similar to the USA; however, the USA has experienced a very strong shift towards ICT-related sectors, which makes its change more visible. Both the EU and the USA have experienced a slower pace of structural change than emerging economies. The results also indicate that capital and R&D intensity may have a complementary effect on long-term R&D performance, which can vary according to a firm’s age. The specific nature of the sample allows to link our results to the Schumpeterian waves of innovation and the changes of techno-economic paradigms rather than alternative interpretation of management literature. Policy implications are discussed accordingly. Show less
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PDF Industrial innovation for competitive sustainability: Science-for-policy insights
New scientific evidence points out key issues helpful to designing policies and understanding new challenges. This brief article holds the… Show more outcomes of the CONCORDi 2021 conference focused on ‘Industrial innovation for competitive sustainability’, and organised by the European Commission’s JRC in collaboration with EARTO, OECD and UNIDO. The brief introduces the key takeaways from the scientific research presented and a summary of key policy insights arising from the mentioned event. Show less
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PDF The 2021 EU Survey on Industrial R&D Investment Trends
This publication is a Science for Policy report by the Joint Research Centre (JRC), the European Commission’s science and knowledge… Show more service. It aims to provide evidence-based scientific support to the European policymaking process. The scientific output expressed does not imply a policy position of the European Commission. Neither the European Commission nor any person acting on behalf of the Commission is responsible for the use that might be made of this publication. For information on the methodology and quality underlying the data used in this publication for which the source is neither Eurostat nor other Commission services, users should contact the referenced source. The designations employed and the presentation of material on the maps do not imply the expression of any opinion whatsoever on the part of the European Union concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. Show less
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Patenting in 4IR technologies and firm performance
We investigate whether firm performance is related to the accumulated stock of technological knowledge associated with the Fourth Industrial Revolution… Show more (4IR) and, if so, whether the firm’s history in 4IR technology development affects such a relationship. We exploit a rich longitudinal matched patent-firm data set on the population of large firms that filed 4IR patents at the European Patent Office (EPO) between 2009 and 2014, while reconstructing their patent stocks from 1985 onward. To identify 4IR patents, we use a novel two-step procedure proposed by EPO (2020, Patents and the Fourth Industrial Revolution: The Global Technology Trends Enabling the Data-Driven Economy, European Patent Office), based on Cooperative Patent Classification codes and on a full-text patent search. Our results show a positive and significant relationship between firms’ stocks of 4IR patents and labor and total factor productivity. We also find that firms with a long history in 4IR patent filings benefit more from the development of 4IR technological capabilities than later applicants. Conversely, we find that firm profitability is not significantly related to the stock of 4IR patents, which suggests that the returns from 4IR technological developments may be slow to be cashed in. Finally, we find that the positive relationship with productivity is stronger for 4IR-related wireless technology and for artificial intelligence, cognitive computing, and big data analytics. Show less
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The 2021 EU Industrial R&D Investment Scoreboard
The main objective of the EU Industrial R&D Investment Scoreboard (the Scoreboard) is to benchmark the performance of EU innovation-driven… Show more industries against major global counterparts and to provide an R&D investment database that companies, investors and policymakers can use to compare individual company performances against the best global competitors in their sectors. The 2021 edition of the Scoreboard analyses the 2500 companies that invested the largest sums in R&D worldwide in 2020. These companies, with headquarters in 39 countries, and more than 800k subsidiaries all over the world, each invested over €36 million in R&D in 2020. The total investment across all 2500 companies was €908.9bn, an amount equivalent to 90% of the world’s business-funded R&D. The top 2500 includes 401 companies based in the EU, accounting for 20% of the total, 779 US companies (38%), 597 Chinese companies (16%), 293 Japanese companies (12%) and 430 from the rest of the world (RoW, 14%). The RoW group comprises companies from South Korea (60), Switzerland (57), UK (105), Taiwan (86) and companies based in a further 15 countries. This report analyses companies' R&D, patents and other financial performance indicators over recent years, focusing on the comparative performance of EU companies and their global counterparts. Moreover, it includes a patent-based analysis showing the positioning of the EU in green technology for energy intensive industries; and a study exploring the role of the Scoreboard companies in achieving the UN’s sustainable development goals (SDGs). In 2020, the pandemic hit global business hard causing a significant drop in companies’ sales, profits and capital expenditures. However, overall R&D investment was sustained by increases in sectors positively affected by the crisis, namely ICT services and Health industries while most other sectors decreased R&D investment, particularly the transport-related industries that have been most strongly affected by the lockdown. The results of this report highlight the challenges and opportunities facing the EU as it seeks to improve its R&D capability and reinvigorate its industrial base, in line with the priorities of the new industrial and innovation EU policy, particularly in the context of the digital and green transitions. Show less
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PDF Background Note CONCORDi 2021
This background note describes five core global disruptions affecting the world economy in the context of industrial innovation for competitive… Show more sustainability. It discusses how scientific evidence presented at the 8 th CONCORDi conference proposes to tackle some of these disruptions, and concludes by highlighting the policy-relevant issues. This resonates with CONCORDi’s science-to-policy objective - from the four conference organisers JRC, EARTO, OECD and UNIDO. The note is addressed to the participants of CONCORDi 2021 as well as to a wider audience interested in the main themes of this conference. Show less
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PDF World corporate top R&D investors: Paving the way for climate neutrality
The current fourth edition of this biennial report on the innovative activity of the world’s top corporate R&D investors is… Show more the result of a long-standing and fruitful collaboration between the European Commission’s Joint Research Centre (EC-JRC) and the Organisation for Economic Co-operation and Development (OECD). It focuses on the role that these companies can play in reaching climate neutrality by developing, owning and commercialising low-carbon technologies. It does so by presenting and analysing data on their patent and trademark portfolios, with particular emphasis on intellectual property rights related to climate change mitigation and adaptation. Show less
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Capacity constraints as a trigger for high growth
High-growth enterprises (HGEs) have a large economic impact but are notoriously hard to predict. Previous research has linked high-growth episodes… Show more to the configuration of lumpy indivisible resources inside firms, such that high capacity utilisation levels might stimulate future growth. We theorize that firms reaching critically high capacity utilisation levels reach a “trigger point” involving either broad-based investment in further growth or shrinking back to previous levels. We analyze EIBIS survey data (matched to ORBIS) which features a question on time-varying capacity utilisation. Overcapacity is a transitory state. Firms enter into overcapacity after a period of the rapid growth of sales and profits, and the years surrounding overcapacity have higher employment growth rates. Firms operating at overcapacity make incremental investments (e.g. capacity expansion, process improvements and modern machinery) rather than investing in R&D and new product development. We find support for the “fork in the road” hypothesis: for some firms, overcapacity is associated with launching into massive investments and subsequent sales growth, while for other firms, overcapacity is negatively related to both investments and sales growth. Show less
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PDF HOW INNOVATIVE EU FIRMS FACED THE COVID-19 DOWNTURN
-The Covid-19 pandemic has triggered many challenges, but also opportunities, for businesses across Europe. -We examine how the innovation and growth… Show more of firms in the EU have been affected by the Covid-19 pandemic, and how as “European Innovation Champions”, SMEs reacted to the resultant shock. -We find that compared to non-innovative firms, the economic performance of innovative firms in the EU has been considerably less affected by the pandemic. 1. Pandemic effects for business innovators… an exceptional context with little evidence in the literature -We also identify five different paradoxical behaviours of ‘European Innovation Champions” during the peak of the Covid-19 pandemic. -Industrial policies targeting SMEs should be flexible and allow companies to adapt their investment plans in line with the evolving conditions to preserve and succeed through the crisis. -EU instruments, such as the Recovery and Resilience Facility and Horizon Europe, offer wide opportunities for firms to exit from the Covid-19 crisis and boost their future competitiveness. Show less