Responsible research and innovation: a global perspective

Based on the paper presented at the Doctorate Conference on Technologogy Assessment in July 2013 at the University Nova Lisboa, Caparica campus

Decisions of technology innovation: the role of indicators

This work presents research conducted to understand the role of indicators in decisions of technology innovation. A gap was detected in the literature of innovation and technology assessment about the use and influence of indicators in this type of decision. It was important to address this gap because indicators are often frequent elements of innovation and technology assessment studies. The research was designed to determine the extent of the use and influence of indicators in decisions of technology innovation, to characterize the role of indicators in these decisions, and to understand how indicators are used in these decisions. The latter involved the test of four possible explanatory factors: the type and phase of decision, and the context and process of construction of evidence. Furthermore, it focused on three Portuguese innovation groups: public researchers, business R&D&I leaders and policymakers. The research used a combination of methods to collect quantitative and qualitative information, such as surveys, case studies and social network analysis. This research concluded that the use of indicators is different from their influence in decisions of technology innovation. In fact, there is a high use of indicators in these decisions, but lower and differentiated differences in their influence in each innovation group. This suggests that political-behavioural methods are also involved in the decisions to different degrees. The main social influences in the decisions came mostly from hierarchies, knowledge-based contacts and users. Furthermore, the research established that indicators played mostly symbolic roles in decisions of policymakers and business R&D&I leaders, although their role with researchers was more differentiated. Indicators were also described as helpful instruments to conduct a reasonable interpretation of data and to balance options in innovation and technology assessments studies, in particular when contextualised, described in detail and with discussion upon the options made. Results suggest that there are four main explanatory factors for the role of indicators in these decisions: First, the type of decision appears to be a factor to consider when explaining the role of indicators. In fact, each type of decision had different influences on the way indicators are used, and each type of decision used different types of indicators. Results for policy-making were particularly different from decisions of acquisition and development of products/technology. Second, the phase of the decision can help to understand the role indicators play in these decisions. Results distinguished between two phases detected in all decisions – before and after the decision – as well as two other phases that can be used to complement the decision process and where indicators can be involved. Third, the context of decision is an important factor to consider when explaining the way indicators are taken into consideration in policy decisions. In fact, the role of indicators can be influenced by the particular context of the decision maker, in which all types of evidence can be selected or downplayed. More importantly, the use of persuasive analytical evidence appears to be related with the dispute existent in the policy context. Fourth and last, the process of construction of evidence is a factor to consider when explaining the way indicators are involved in these decisions. In fact, indicators and other evidence were brought to the decision processes according to their availability and capacity to support the different arguments and interests of the actors and stakeholders. In one case, an indicator lost much persuasion strength with the controversies that it went through during the decision process. Therefore, it can be argued that the use of indicators is high but not very influential; their role is mostly symbolic to policymakers and business decisions, but varies among researchers. The role of indicators in these decisions depends on the type and phase of the decision and the context and process of construction of evidence. The latter two are related to the particular context of each decision maker, the existence of elements of dispute and controversies that influence the way indicators are introduced in the decision-making process.

Optimal technology policy: subsidies versus monitoring

We analyze the optimal technology policy to solve a free-riding problem between the members of a RJV. We assume that when intervening the Government suffers an additional adverse selection problem because it is not able to distinguish the value of the potential innovation. Although subsidies and monitoring may be equivalent policy tools to solve firms' free-riding problem, they imply different social losses if the Government is not able to perfectly distinguish the value of the potential innovation. The supremacy of monitoring tools over subsidies is proved to depend on which type of information the Government is able to obtain about firms' R&D performance.

Innovation, R&D spillovers and productivity: the role of knowledge-intensive services

This paper analyses the performance of companies’ R&D and innovation and the effects of intra- and inter-industry R&D spillover on firms’ productivity in Catalonia. The paper deals simultaneously with the performance of manufacturing and service firms, with the aim of highlighting the growing role of knowledge-intensive services in promoting innovation and productivity gains. We find that intra-industry R&D spillovers have an important effect on the productivity level of manufacturing firms, and the inter-industrial R&D spillovers related to computer and software services also play an important role, especially in high-tech manufacturing industries. The main conclusion is that the traditional classification of manufactured goods and services no longer makes sense in the ‘knowledge economy’ and in Catalonia the regional policy makers will have to design policies that favour inter-industrial R&D flows, especially from high-tech services.

Industrial district effects and innovation in the Tuscan shipbuilding industry

The aim of the present work is to investigate innovative processes within a geographical cluster, and thus contribute to the debate on the effects of industrial clusters on innovation capacity. In particular, we would like to ascertain whether the advantages of industrial districts in promoting innovation, as already revealed by literature (diffusion of knowledge, social capital and trust, efficient networking), are also keys to success in the Tuscan shipbuilding industry of pleasure and sporting boats. First, we verify the existence of clusters of shipbuilding in Tuscany, using a specific methodology. Next, in the identified clusters, we analyse three innovative networks financed in a policy to support innovation, and examine whether the typical features of a cluster for promoting innovation are at work, using a questionnaire administered to 71 actors. Finally, we develop a performance analysis of the cluster firms and ascertain whether their different behaviours also lead to different performances. The analysis results show that our case records effects of industrial clustering on innovation capacity, such as the important role given to trust and social capital, the significant worth put in interfirm relations and in each partner’s specific competencies, or even the distinctive performance of firms belonging to a cluster.

Market-Based Instruments for ecosystem services: institutional innovation or renovation?

Recent years have seen widespread experimentation with market-based instruments (MBIs) for the provision of environmental goods and ecosystem services. However, little attention has been paid to their design or to the effects of the underlying pro-market narrative on environmental policy instruments. The purpose of this article is to analyze the emergence and dissemination of the term "market-based instruments" applied to the provision of environmental services and to assess to what extent the instruments associated are genuinely innovative. The recommendation to develop markets can lead in practice to a variety of institutional forms, as we show it based on the example of payments for environmental services (PES) and biodiversity offsets, two very different mechanisms that are both presented in the literature as MBIs. Our purpose is to highlight the gap between discourse and practice in connection with MBIs.

Innovation or Imitation? The effect of spillovers and competitive pressure on firms' R&D strategy choice

This article provides a theoretical and empirical analysis of a firm's optimal R&D strategy choice. In this paper a firm's R&D strategy is assumed to be endogenous and allowed to depend on both internal firms. characteristics and external factors. Firms choose between two strategies, either they engage in R&D or abstain from own R&D and imitate the outcomes of innovators. In the theoretical model this yields three types of equilibria in which either all firms innovate, some firms innovate and others imitate, or no firm innovates. Firms'equilibrium strategies crucially depend on external factors. We find that the efficiency of intellectual property rights protection positively affects firms'incentives to engage in R&D, while competitive pressure has a negative effect. In addition, smaller firms are found to be more likely to become imitators when the product is homogeneous and the level of spillovers is high. These results are supported by empirical evidence for German .rms from manufacturing and services sectors. Regarding social welfare our results indicate that strengthening intellectual property protection can have an ambiguous effect. In markets characterized by a high rate of innovation a reduction of intellectual property rights protection can discourage innovative performance substantially. However, a reduction of patent protection can also increase social welfare because it may induce imitation. This indicates that policy issues such as the optimal length and breadth of patent protection cannot be resolved without taking into account specific market and firm characteristics. Journal of Economic Literature Classification Numbers: C35, D43, L13, L22, O31. Keywords: Innovation; imitation; spillovers; product differentiation; market competition; intellectual property rights protection.

Policy Options for New Student Contributions in Higher Education - Report to the Minister

The Government’s Framework for Sustainable Economic Renewal- Building Ireland’s Smart Economy, launched by the Taoiseach in late 2008, establishes Ireland’s ambition to become internationally renowned as an Innovation Island. At the core of achieving this ambition will be our capacity for producing highly skilled graduates and fostering a climate of creative thinking and advanced research and development. This relies on the quality of undergraduate provision right across the sciences, arts and humanities in our third level institutions. The development of a new national strategy for higher education is now underway. The strategy will aim to identify a vision and objectives for the development of the sector over the next twenty years. Leading higher education systems internationally are characterised by wide revenue sources that, in many cases, include a form of direct student contribution through a tuition fee or student loans system. If Ireland’s higher education system is to develop and meet future demands in an environment of increasingly tight public resources, then it is appropriate that the sector’s level of dependence on Exchequer funding should come under review.

Innovation and new business through mutually beneficial collaboration and proactive procurement

ABSTRACT This dissertation focuses on new technology commercialization, innovation and new business development. Industry-based novel technology may achieve commercialization through its transfer to a large research laboratory acting as a lead user and technical partner, and providing the new technology with complementary assets and meaningful initial use in social practice. The research lab benefits from the new technology and innovation through major performance improvements and cost savings. Such mutually beneficial collaboration between the lab and the firm does not require any additional administrative efforts or funds from the lab, yet requires openness to technologies and partner companies that may not be previously known to the lab- Labs achieve the benefits by applying a proactive procurement model that promotes active pre-tender search of new technologies and pre-tender testing and piloting of these technological options. The collaboration works best when based on the development needs of both parties. This means that first of all the lab has significant engineering activity with well-defined technological needs and second, that the firm has advanced prototype technology yet needs further testing, piloting and the initial market and references to achieve the market breakthrough. The empirical evidence of the dissertation is based on a longitudinal multiple-case study with the European Laboratory for Particle Physics. The key theoretical contribution of this study is that large research labs, including basic research, play an important role in product and business development toward the end, rather than front-end, of the innovation process. This also implies that product-orientation and business-orientation can contribute to basic re-search. The study provides practical managerial and policy guidelines on how to initiate and manage mutually beneficial lab-industry collaboration and proactive procurement.

A fractionally integrated approach to monetary policy and inflation dynamics

This paper relaxes the standard I(0) and I(1) assumptions typically stated in the monetary VAR literature by considering a richer framework that encompasses the previous two processes as well as other fractionally integrated possibilities. First, a timevarying multivariate spectrum is estimated for post WWII US data. Then, a structural fractionally integrated VAR (VARFIMA) is fitted to each of the resulting time dependent spectra. In this way, both the coefficients of the VAR and the innovation variances are allowed to evolve freely. The model is employed to analyze inflation persistence and to evaluate the stance of US monetary policy. Our findings indicate a strong decline in the innovation variances during the great disinflation, consistent with the view that the good performance of the economy during the 80’s and 90’s is in part a tale of good luck. However, we also find evidence of a decline in inflation persistence together with a stronger monetary response to inflation during the same period. This last result suggests that the Fed may still play a role in accounting for the observed differences in the US inflation history. Finally, we conclude that previous evidence against drifting coefficients could be an artifact of parameter restriction towards the stationary region. Keywords: monetary policy, inflation persistence, fractional integration, timevarying coefficients, VARFIMA. JEL Classification: E52, C32

Competing engines of growth: Innovation and standardization

We study a dynamic general equilibrium model where innovation takes theform of the introduction of new goods whose production requires skilled workers.Innovation is followed by a costly process of standardization, whereby these newgoods are adapted to be produced using unskilled labor. Our framework highlightsa number of novel results. First, standardization is both an engine of growth anda potential barrier to it. As a result, growth is an inverse U-shaped function ofthe standardization rate (and of competition). Second, we characterize the growthand welfare maximizing speed of standardization. We show how optimal protection of intellectual property rights affecting the cost of standardization vary withthe skill-endowment, the elasticity of substitution between goods and other parameters. Third, we show that, depending on how competition between innovatingand standardizing firms is modelled and on parameter values, a new type of multiplicity of equilibria may arise. Finally, we study the implications of our model forthe skill-premium and we illustrate novel reasons for linking North-South trade tointellectual property rights protection.

Drug innovation, prices and health

This article tries to reconcile economic-industrial policy with health policy when dealing with biomedical innovation and welfare state sustainability. Better health accounts for an increasingly large proportion of welfare improvements. Explanation is given to the welfare losses coming from the fact than industrial and health policy tend to ignore each other. Drug s prices reflecting their relative relative effectiveness send the right signal to the industry rewarding innovation with impact on quantity and quality of life- and to the buyers of health care services.The level of drug s public reimbursement indicates the social willingness to pay of the different national health systems, not only by means of inclusion, or rejection, in the basket of services covered, but especially establishing the proportion of the price that is going to be financed publicly.Reference pricing for therapeutic equivalents as the upper limit of the social willingness to pay- and two-tiered co-payments for users (avoidable and inversely related with the incremental effectiveness of de drug) are deemed appropriate for those countries concerned at the same time with increasing their productivity and maintaining its welfare state. Profits drive R&D but not its location. There is no intrinsic contradiction between high productivity and a consolidated National Health Service (welfare state) as the European Nordic Countries are telling us every day.