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Recent policy initiatives in the EU aim at supporting so-called Young Innovative Companies (YICs). This paper provides empirical evidence from German CIS data on the innovative performances of this specific type of firms, supporting why they matter. We first characterize YICs in the sample of innovation active firms.We show that firms that combine newness, smallness and high R&D intensity, are rare in the sample of innovative firms, but achieve significantly higher innovative sales than other innovative firms, especially innovative sales that are new to the market. Not surprisingly, YICs view financial constraints, both internal and external, as an important factor hampering their innovation activities, significantly more so than other innovation active firms. This access to finance problem is an often used motive for government intervention. In our German sample, subsidies schemes for innovation are general and not particularly targeted at YICs. We empirically assess the effectiveness of these public funding schemes. We find that these are not effective to increase the innovative sales of YICs, unlike the average innovative firm in our sample.

The knowledge produced by academic scientists has been identified as a potential key driver of technological progress. Recent policies in Europe aim at increasing commercially orientated activities in academe. Based on a sample of German scientists across all fields of science we investigate the importance of academic patenting. Our findings suggest that academic involvement in patenting results in greater knowledge externalities, as academic patents appear to generate more forward citations. We also find that in the European context of changing research objectives and funding sources since the mid-90's, the "importance" of academic patents declines over time. We show that academic entrants have patents of lower "quality" than academic incumbents but they did not cause the decline, since the relative importance of patents involving academics with an existing patenting history declined over time as well. Moreover, a preliminary evaluation of the effects of the abolishment of the "professor privilege" (the German counterpart of the U.S. Bayh-Dole Act) reveals that this legal disposition led to an acceleration of this apparent decline.

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OR 0909 Non-technical summaryIt is largely documented that public science has a positive impact on industrial innovation. Previous studies, for instance, provide evidence for enhanced corporate patenting and improved new product and process development in the corporate sector through scientific research results. However, most of these empirical studies focus on the U.S.For the European Economic Area, scholars and policy makers are rather sceptical with respect to emphasizing a large impact of science on corporate innovation: it has been claimed for about a decade that a so-called "European Paradox" exists. It describes the phenomenon that EU countries play a leading global role in terms of top-level scientific output, but lag behind in the ability of converting this strength into wealthgenerating innovations in the business sector.In this paper, we investigate the nexus between science and industry in order to identify potential problems of technology transfer from academia to industry in the European area. Focusing on the "paper trail" from academia to industry in terms of patent applications, we compare academic inventions that are patented in the scientific domain with those that are directly transferred to industry and hence, although invented by an academic patented by a firm.Our analysis of a sample of more than 4000 academic inventions by German professors suggests that there is indeed potential for improving science-industry interactions in Europe. Concretely, our results show that academic inventions assigned to corporations are rather applied and associated with short-run profits, while academic inventions patented by the academic sector are rather complex and exhibit a higher long-term value. This suggests that firms miss the opportunity to invest in basic technologies that promise higher returns in the long run. We interpret this finding as a lack of absorptive capacity by corporations that do not succeed in identifying and exploiting basic university inventions. April 2009 Abstract Against the background of the so-called "European paradox", i.e. the conjecture that EU countries lack the capability to transfer science into commercial innovations, knowledge transfer from academia to industry has been a central issue in policy debates recently. Based on a sample of German scientists we investigate which academic inventions are patented by a scientific assignee and which are owned by corporate entities. Our findings suggest that faculty patents assigned to corporations exhibit a higher short-term value in terms of forward citations and a higher potential to block property rights of competitors. Faculty patents assigned to academic inventors or to public research institutions, in contrast, are more complex, more basic and have stronger links to science. These results may suggest that European firms lack the absorptive capacity to identify and exploit academic inventions that are further away from market applications. The Nexus Between