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Complementarities in Innovation Policy

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Author Info
Mohnen, Pierre
Röller, Lars-Hendrik

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Abstract

This Paper develops a framework for testing discrete complementarities in innovation policy using European data on obstacles to innovation. We propose a discrete test of supermodularity in innovation policy leading to a number of inequality constraints. We apply our test to two types of innovation decisions: to innovate or not, and if so, by how much. We find that industries display a considerable amount of complementarity, with some industries being complementary across all obstacles. We also find that the lack of internal human capital (skilled personnel) is complementary to all the other obstacles in almost all industries. In this sense, our results suggest that internal human capital is key to any innovation policy, insofar that it is complementary to all the other factors that might hamper innovation activities.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2712.

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Date of creation: Feb 2001
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Handle: RePEc:cpr:ceprdp:2712

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Related research
Keywords: Complementarity; Innovation; Supermodularity;

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Find related papers by JEL classification:
L5 - Industrial Organization - - Regulation and Industrial Policy
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives
O38 - Economic Development, Technological Change, and Growth - - Technological Change - - - Government Policy

This item is featured on the following reading lists:

  1. Socio-Economics of Innovation
References listed on IDEAS
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  1. Milgrom, Paul & Roberts, John, 1994. "Complementarities and systems: Understanding japanese economic organization," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 9(1), pages 3-42.
  2. Kodde, David A & Palm, Franz C, 1986. "Wald Criteria for Jointly Testing Equality and Inequality Restriction s," Econometrica, Econometric Society, vol. 54(5), pages 1243-48, September. [Downloadable!] (restricted)
  3. Arora, Ashish, 1996. "Testing for complementarities in reduced-form regressions: A note," Economics Letters, Elsevier, vol. 50(1), pages 51-55, January. [Downloadable!] (restricted)
  4. Cassiman, Bruno & Veugelers, Reinhilde, 2002. "Complementarity in the Innovation Strategy: Internal R&D, External Technology Acquisition and Cooperation," CEPR Discussion Papers 3284, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  5. Milgrom, Paul & Roberts, John, 1990. "The Economics of Modern Manufacturing: Technology, Strategy, and Organization," American Economic Review, American Economic Association, vol. 80(3), pages 511-28, June. [Downloadable!] (restricted)
  6. Dosi, Giovanni, 1988. "Sources, Procedures, and Microeconomic Effects of Innovation," Journal of Economic Literature, American Economic Association, vol. 26(3), pages 1120-71, September. [Downloadable!] (restricted)
  7. Ichniowski, Casey & Shaw, Kathryn & Prennushi, Giovanna, 1997. "The Effects of Human Resource Management Practices on Productivity: A Study of Steel Finishing Lines," American Economic Review, American Economic Association, vol. 87(3), pages 291-313, June. [Downloadable!] (restricted)
  8. Susan Athey & Scott Stern, 1998. "An Empirical Framework for Testing Theories About Complimentarity in Organizational Design," NBER Working Papers 6600, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. Cassiman, Bruno & Veugelers, Reinhilde, 2002. "Complementarity in the innovation strategy: Internal R&D, external technology acquisition, and cooperation in R&D," IESE Research Papers D/457, IESE Business School. [Downloadable!]
  10. Arora, Ashish & Gambardella, Alfonso, 1990. "Complementarity and External Linkages: The Strategies of the Large Firms in Biotechnology," Journal of Industrial Economics, Blackwell Publishing, vol. 38(4), pages 361-79, June. [Downloadable!] (restricted)
  11. Milgrom, Paul & Shannon, Chris, 1994. "Monotone Comparative Statics," Econometrica, Econometric Society, vol. 62(1), pages 157-80, January. [Downloadable!] (restricted)
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  12. Jacques Mairesse & Pierre Mohnen, 2001. "To Be or Not To Be Innovative: An Exercise in Measurement," NBER Working Papers 8644, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  13. Vives, Xavier, 1990. "Nash equilibrium with strategic complementarities," Journal of Mathematical Economics, Elsevier, vol. 19(3), pages 305-321. [Downloadable!] (restricted)
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  14. Richard C. Levin & Alvin K. Klevorick & Richard R. Nelson & Sidney G. Winter, 1988. "Appropriating the Returns from Industrial R&D," Cowles Foundation Discussion Papers 862, Cowles Foundation, Yale University. [Downloadable!]
  15. North, Douglass C, 1994. "Economic Performance through Time," American Economic Review, American Economic Association, vol. 84(3), pages 359-68, June.
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Massimiliano Mazzanti & Roberto Zoboli, 2006. "Examining the Factors Influencing Environmental Innovations," Working Papers 2006.20, Fondazione Eni Enrico Mattei. [Downloadable!]
  2. Susanna Mancinelli & Massimiliano Mazzanti, 2009. "Innovation, networking and complementarity: evidence on SME performances for a local economic system in North-Eastern Italy," The Annals of Regional Science, Springer, vol. 43(3), pages 567-597, September. [Downloadable!] (restricted)
  3. Christian Rammer & Dirk Czarnitzki & Alfred Spielkamp, 2009. "Innovation success of non-R&D-performers: substituting technology by management in SMEs," Small Business Economics, Springer, vol. 33(1), pages 35-58, June. [Downloadable!] (restricted)
    Other versions:
  4. Lee, Lena & Wong, Poh Kam, 2009. "Firms’ Innovative Performance: The Mediating Role of Innovative Collaborations," MPRA Paper 16193, University Library of Munich, Germany. [Downloadable!]
  5. F. Galia & D. Legros, 2004. "Research and Development, Innovation, Training, Quality and Profitability : Evidence from France," Working Papers ERMES 0411, ERMES, University Paris 2. [Downloadable!]
  6. Cassiman, Bruno & Veugelers, Reinhilde, 2002. "Complementarity in the Innovation Strategy: Internal R&D, External Technology Acquisition and Cooperation," CEPR Discussion Papers 3284, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  7. Daniele Cerrato & Mariacristina Piva, 2007. "The Internationalization of Small and Medium-sized Enterprises: the Effect of Family Management, Human Capital and Foreign Ownership," DISCE - Quaderni del Dipartimento di Scienze Economiche e Sociali dises0748, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE). [Downloadable!]
  8. Lim, Ee Shiang & Shyamala, Nagaraj, 2007. "Obstacles to innovation : evidence from Malaysian manufacturing firms," MPRA Paper 18077, University Library of Munich, Germany. [Downloadable!]
  9. Pablo D'Este & Simona Iammarino & Maria Savona & Nick von Tunzelmann, 2008. "What hampers innovation? Evidence from the UK CIS4," SPRU Electronic Working Paper Series 168, University of Sussex, SPRU - Science and Technology Policy Research. [Downloadable!]
  10. Savignac, F., 2007. "The impact of financial constraints on innovation: What can be learned from a direct measure?," Documents de Travail 169, Banque de France. [Downloadable!]
  11. Belderbos, René & Carree, Martin & Lokshin, Boris, 2006. "Complementarity in R&D cooperation strategies," Research Memoranda 013, Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization. [Downloadable!]
    Other versions:
  12. Mohnen, Pierre & Palm, Franz & Schim van der Loeff, Sybrand & Tiwari, Amaresh, 2008. "Financial Constraints and Other Obstacles: Are they a Threat to Innovation Activity?," UNU-MERIT Working Paper Series 006, United Nations University, Maastricht Economic and social Research and training centre on Innovation and Technology. [Downloadable!]
    Other versions:
  13. Boris Lokshin & Rene Belderbos & Martin Carree, 2006. "Internal and external R&DF complements or substitutes? Evidence from a dynamic panel data model," Hi-Stat Discussion Paper Series d06-163, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
  14. Lokshin,Boris & Carree,Martin & Belderbos,René, 2004. "Testing for complementarity and substitutability in case of multiple practices," Research Memoranda 002, Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization. [Downloadable!]
  15. Verena Bikar & Michele Cincera & Henri Capron, 2006. "An Integrated Evaluation Scheme of Innovation Systems from an Institutional Perspective," Working Papers DULBEA 06-09.RS, Université libre de Bruxelles, Department of Applied Economics (DULBEA). [Downloadable!]
    Other versions:
  16. Massimiliano Mazzanti & Giulio Cainelli & Roberto Zoboli, 2008. "The Relationship Between Environmental Efficiency and Manufacturing Firm’s Growth," Working Papers 2008.99, Fondazione Eni Enrico Mattei. [Downloadable!]
  17. Simona Iammarino & Francesca Sanna-Randaccio & Maria Savona, 2007. "The perception of obstacles to innovation. Multinational and domestic firms in Italy," Working Papers of BETA 2007-12, Bureau d'Economie Théorique et Appliquée, ULP, Strasbourg. [Downloadable!]
  18. Squicciarini, Mariagrazia & Loikkanen, Torsti, 2008. "Going Global: The Challenges for Knowledge-based Economies," MPRA Paper 9663, University Library of Munich, Germany. [Downloadable!]
  19. Agustí Segarra-Blasco & José García-Quevedo & Mercedes Teruel-Carrizosa, 2007. "Barriers to innovation and public policy in Catalonia," Working Papers 2007/6, Institut d'Economia de Barcelona (IEB). [Downloadable!]
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