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Innovations, Patents and Cash Flow

Author

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  • Geroski, Paul A
  • Van Reenen, John
  • Samiei, Hossein

Abstract

In this paper we estimate a dynamically recursive model of the relationship between innovations, patents and cash flow. Our results suggest that: (i) lagged patents are significant predictors of current innovation, but lagged innovations do not affect the conditional expectation of current patents; (ii) patents are influenced primarily by advances in the science base as measured by R&D intensity and spillovers, while innovations are more sensitive to cash flow and demand shocks; (iii) innovations have a greater impact on cash flow than patents; and (iv) both patents and innovations show strong history dependence. We use our model to simulate the effects of spending £500m on any one of three different types of traditional government policies designed to support innovative activities of firms (non-discretionary R&D subsidies, cuts in corporate tax and stimulation of macroeconomic demand growth). These simulations suggest that the role for state intervention in promoting technological advance is decidedly limited.

Suggested Citation

  • Geroski, Paul A & Van Reenen, John & Samiei, Hossein, 1996. "Innovations, Patents and Cash Flow," CEPR Discussion Papers 1432, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:1432
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    1. is not listed on IDEAS
    2. Czarnitzki, Dirk & Licht, Georg, 2004. "Die Rolle der Innovationsförderung im Aufholprozess Ostdeutschlands," ZEW Discussion Papers 04-68, ZEW - Leibniz Centre for European Economic Research.
    3. William Griffiths & Elizabeth Webster, 2004. "The determinants of research and development and intellectual property usage among Australian Companies, 1989 to 2002," Centre for International Economic Studies Working Papers 2004-15, University of Adelaide, Centre for International Economic Studies.
    4. Francesco Daveri & Maria Laura Parisi, 2010. "Experience, innovation and productivity. Empirical evidence from Italy's slowdown," Working Papers 1009, University of Brescia, Department of Economics.
    5. Daniel Gonçalves & Ana Martins, 2016. "The Determinants of TFP Growth in the Portuguese Manufacturing Sector," GEE Papers 0062, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Nov 2016.
    6. Paul H. Jensen & Elizabeth Webster, 2004. "Examining Biases in Measures of Firm Innovation," Melbourne Institute Working Paper Series wp2004n10, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    7. William Griffiths & Elizabeth Webster, 2009. "What Governs Firm-Level R&D: Internal or External Factors?," Melbourne Institute Working Paper Series wp2009n13, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    8. Santos, David Ferreira Lopes & Basso, Leonardo Fernando Cruz & Kimura, Herbert & Kayo, Eduardo Kazuo, 2014. "Innovation efforts and performances of Brazilian firms," Journal of Business Research, Elsevier, vol. 67(4), pages 527-535.

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    Keywords

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    JEL classification:

    • N2 - Economic History - - Financial Markets and Institutions
    • O0 - Economic Development, Innovation, Technological Change, and Growth - - General
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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