Competition and innovation behaviour

Tang, Jianmin

doi:10.1016/j.respol.2005.08.004

Cited by 235 publications

(160 citation statements)

References 17 publications

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“…a few firms dominate the market). The results confirm previous studies which showed that firms in oligopolistic or monopolistic environments face less market uncertainty, and can more easily appropriate the benefits of R&D (Kamien and Schwartz, 1982;Tang, 2006). In line with the previous theoretical discussion however, this relationship is reversed in the case of spillovers.…”

supporting

confidence: 91%

“…The results support Tang (2006) who argued that firms with significant market power can better finance their R&D activities because of the supranormal profits arising from such power. They are also in line with the results of Greenhalgh and Rogers (2006) who found that a higher market share increases the market valuation of patent activity.…”

supporting

confidence: 76%

“…Although the relationship between competition and innovation has been examined for more than six decades, it is still a subject for debate (Tang, 2006). Schumpeter (1942) suggested and many others argued similarly (e.g.…”

Section: The Role Of Competitionmentioning

confidence: 99%

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Under what conditions do firms benefit from the research efforts of other organizations?

Kafouros

Buckley

2008

Research Policy

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Although R&D spillovers play a key role in the battle for technological leadership, it is unclear under what conditions firms build on and benefit from the discoveries of others. The study described here empirically examines this issue. The findings indicate that, depending on technological opportunities, firm size and competitive pressure, the net impact of R&D spillovers on productivity can be either positive or negative. Specifically, we find that although spillover effects are positively associated with the technological opportunities that a firm faces, this relationship is reversed when firm size is considered. Whilst external R&D affects large self-reliant firms negatively, its impact on the productivity of smaller firms (who usually introduce incremental innovations that are characterized by a strong reliance on external technologies) is positive, and even higher than that of their own R&D. We also demonstrate that the economic payoff for firms' own R&D is lower when they face intense competition. In cases of low-appropriability however, spillover effects are more positive, allowing firms to increase their performance using the inventions of others. INTRODUCTIONIt has been recognized that industrial Research and Development (R&D) may affect not only the productivity performance of the organization that undertakes such activities (Griliches, 1986;Hall and Mairesse, 1995), but also the performance of other firms.Empirical research confirms the existence of R&D spillovers, indicating that the productivity achieved by a firm depends on the pool of scientific knowledge accessible to it (Adams and Jaffe, 1996;Geroski, 1995;Griliches, 1992;Scherer, 1982). However, past empirical results are conflicting: even though many studies find the impact of R&D spillovers to be both positive and high (Bernstein, 1988; Branstetter, 1996;Raut, 1995), for reasons that are often unclear, other studies find that spillovers have negligible or even negative consequences for firm performance (Antonelli, 1994; Geroski, 1991;Wakelin, 2001). Although it is known that in order to unlock their economic potential, companies must actively search for and exploit external ideas and technologies (Chesbrough, 2003;2007), there is a question that remains unanswered. When do firms utilize successfully external knowledge to create additional value, and when do they fail to do so?This study extends previous research by addressing the above question and indicating that the reason for previously conflicting results may be an incomplete understanding of the factors influencing the spillovers-performance relationship. Put differently, drawing on theories of innovation and knowledge externalities, it examines the conditions under which a firm benefits from the technological achievements and research discoveries of other firms. Specifically, the study focuses on three factors that may influence the assets, resources and market positions of companies and in turn, the impact that spillovers have on their productivity performance. Initially, we ...

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confidence: 91%

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confidence: 76%

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Under what conditions do firms benefit from the research efforts of other organizations?

Kafouros

Buckley

2008

Research Policy

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“…This is an argument traditionally known as the Schumpeterian effect, which postulates the existence of a negative relationship between the degree of competition in an industry and the R&D intensity of firms (Geroski 1990;Nicoletti and Scarpetta 2004;Tang 2006). If this effect holds, then we should arguably expect firms' propensity to apply to a tax credits programme (n j / N j ) and the average additionality ratio (α j ) to be lower in a highly competitive industry than in an oligopolistic market.…”

Section: A Framework For Future Researchmentioning

confidence: 99%

Do the effects of R&D tax credits vary across industries? A meta-regression analysis

2015

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This paper presents a survey of the micro-econometric literature on the effects of R&D tax credits on firms' innovation activities. We focus on one specific aspect that has not received sufficient attention in previous research: the sectoral dimension. Our meta-regression analysis (MRA) sets up a new database collecting a large number of firm-level studies on the effects of R&D tax credits and investigates the factors that may explain differences in the estimated effects that are reported in the literature. The main result of the MRA analysis is indeed that sectors matter. Micro-econometric studies that have focused on a sub-sample of high-tech industries have on average obtained a smaller estimated effect of R&D tax credits. The paper proposes a simple framework to investigate why the effects of R&D tax credits vary across sectors and points out new directions and hypotheses for future research.JEL codes: O1, O3, O4

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“…Practically, the relationship between innovation and competition is considerably complex. In empirical aspect, Tang (2006) showed that the relationship could be positive or negative depending on specifi c competition perception and specifi c innovation activity. Patel and Ward (2011) recently estimated competition in innovative market based on the patent citation patterns.…”

Section: Introductionmentioning

confidence: 99%

Innovation Under Spatial Duopoly

Nie¹

2013

Prague Economic Papers

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Abstract:Innovation is an important topic in economics. This paper highlights duopoly innovation under the Hotelling model with game theory approaches. This paper argues that market power, as measured by the cost advantage of a dominant fi rm over its rival, serves to enhance the incentive to innovate in a Hotelling model of spatial competition. This result implies that a fi rm with cost advantage will have a larger incentive than its rivals to further its cost advantage as new opportunities for innovation arise thereby implying that innovation increases concentration. This result is in contrast to the result obtained by Holmes et al. (2012) who use the Betrand model to show that "market power" lowers the incentive to innovate. We think that the inelastic demand causes this economic phenomenon.

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Competition and innovation behaviour

Cited by 235 publications

References 17 publications

Under what conditions do firms benefit from the research efforts of other organizations?

Under what conditions do firms benefit from the research efforts of other organizations?

Do the effects of R&D tax credits vary across industries? A meta-regression analysis

Innovation Under Spatial Duopoly

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