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Endogenous R&D Spillovers and Industrial Research Productivity

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  • James D. Adams

Abstract

This paper explores the implications of a simple model of learning and innovation by firms. In this model R&D spillovers are partly determined by firms, rather than by the given economic environment. According to this approach the full effect of spillovers on research productivity of firms exceeds the structural effect because it includes an active learning' response of firms to new information. Furthermore, effective spillovers grow faster or slower than potential spillovers, depending on the returns to scale of production processes for learning and invention. The empirical work is based on a sample of R&D laboratories in the chemicals, machinery, electrical equipment, and transportation equipment industries. I estimate negative binomial regressions for the number of patents as a function of academic and industrial spillover pools, learning expenditures and internal research expenditures. The findings are consistent with the view that learning expenditures transmit the effect of spillovers. I also perform tobit, ordered probit and grouped probit estimation of learning effort. I find that learning effort increases in response to industrial and academic R&D spillovers. Lastly, academic spillovers appear to have a more pervasive effect on R&D than do industrial spillovers. Overall these results suggest a sequence of events underlying learning and innovation, with learning responding to opportunities, innovation responding to learning and own R&D, and a stream of innovations leading to the accumulation of new product introductions that ultimately are reflected in the value of enterprise.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7484.

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Date of creation: Jan 2000
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Handle: RePEc:nbr:nberwo:7484

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  1. Adam B. Jaffe, 1986. "Technological Opportunity and Spillovers of R&D: Evidence from Firms' Patents, Profits and Market Value," NBER Working Papers 1815, National Bureau of Economic Research, Inc.
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  8. Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 99(397), pages 569-96, September.
  9. Adams, James D, 1990. "Fundamental Stocks of Knowledge and Productivity Growth," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 98(4), pages 673-702, August.
  10. Mansfield, Edwin, 1991. "Academic research and industrial innovation," Research Policy, Elsevier, Elsevier, vol. 20(1), pages 1-12, February.
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Cited by:
  1. James D. Adams & Eric P. Chiang & Katara Starkey, 2000. "Industry-University Cooperative Research Centers," NBER Working Papers 7843, National Bureau of Economic Research, Inc.
  2. Arora, Ashish & Ceccagnoli, Marco & Cohen, Wesley M., 2008. "R&D and the patent premium," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 26(5), pages 1153-1179, September.
  3. Gray, Richard S. & Malla, Stavroula & Tran, Kien C., 2005. "Pecuniary, Non-Pecuniary, and Downstream Research Spillovers: The Case of Canola," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark, European Association of Agricultural Economists 24776, European Association of Agricultural Economists.
  4. David, Paul A. & Hall, Bronwyn H. & Toole, Andrew A., 1999. "Is Public R&D a Complement or Substitute for Private R&D? A Review of the Econometric Evidence," Department of Economics, Working Paper Series, Department of Economics, Institute for Business and Economic Research, UC Berkeley qt1sz6g8bv, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  5. ATALLAH, Gamal, 2000. "Information Sharing and the Stability of Cooperation in Research Joint Ventures," Cahiers de recherche, Universite de Montreal, Departement de sciences economiques 2000-17, Universite de Montreal, Departement de sciences economiques.
  6. Jong-Rong Chen & Chih-Hai Yang, 2005. "Technological knowledge, spillover and productivity: evidence from Taiwanese firm level panel data," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 37(20), pages 2361-2371.
  7. Fu, Xiaolan, 2012. "How does openness affect the importance of incentives for innovation?," Research Policy, Elsevier, Elsevier, vol. 41(3), pages 512-523.
  8. Gamal Atallah, 2004. "The Protection of Innovations," Working Papers, University of Ottawa, Department of Economics 0402E, University of Ottawa, Department of Economics.
  9. Gray, Richard S. & Malla, Stavroula & Tran, Kien C., 2003. "An Empirical Analysis Of Public And Private Spillovers Within The Canola Biotech Industry," 2003 Annual meeting, July 27-30, Montreal, Canada, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) 22137, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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