Science and innovation in small countries: speculation and research agenda

Adam B. Jaffe*, Motu Economic and Public Policy Research, New Zealand

Abstract
The phenomenon of “spillovers” of R&D means that small countries can benefit from the research and innovation investment of larger countries, but also need a strategy for capturing locally the benefits of local research and innovation investments. The Science of Science Policy provides models, measurement tools and insights to inform this process.

Keywords: innovation policy

Understanding innovation better: an intangible investment approach

Jonathan Haskel*, Imperial College, CEPR and IZA

Abstract
We set out a way of understanding innovation using the intangible asset approach. It attempts to set out a framework that is married to national accounts and understands innovation and its consequences in particular where innovation might not be patented.

Does the expansion of Chinese state-owned enterprises affect
the innovative behavior of private enterprises?

Lei Cheng*, U.C. Berkeley, USA
Zhen Lei, Pennsylvania State University, USA

Abstract
State-owned enterprises (SOEs) have expanded rapidly in China since 2003. Through an empirical study using Chinese Industrial Enterprises Database and Patent Application Database from 2004 to 2007, we found that the expansion of SOEs negatively affected the innovation of private enterprises. Chinese private enterprises usually do not have extensive assets or strong ability to obtain debt financing, and thus are less likely to maintain investments in R&D when SOEs expand. Considering private enterprises are the main contributors of innovation in China, it is important to note the negative effect of the expansion of SOEs on the innovation of private enterprises. We further distinguished the SOEs along two dimensions: holding type and affiliation type. Based on the first dimension, we divided the SOEs into absolutely controlled SOEs (ASOEs) and relatively controlled SOEs (RSOEs); based on the second dimension, we divided the SOEs into those belonging to higher level governments (central or provincial) (HSOEs) and those belonging to lower level governments such as municipal governments (LSOEs). We found that only RSOEs and LSOEs expanded rapidly from 2004 to 2007, and that it is the expansion of RSOEs and LSOEs that led to a decrease in innovation of private enterprises. Moreover, we found that the expansion of SOEs increased the average interest rate faced by private enterprises and that the increase in average interest rate was the primary reason for the decrease in innovation of private enterprises.

Keywords: Innovation; SOEs; Private Enterprises; Expansion; Patents, Interest Rate

Enforcement of Essential Patents and Industry Standards:
More Economic or Innovative Approach?

Su-Hua Lee*, National Taipei University, Taiwan

Abstract
This paper analyzes the interface between industry standards and enforcement of patent rights. When a patent is incorporated into a standard, the patent holder has economic power to exclude its competitors from the markets and increase prices of products and services deliberately. Under this circumstance, competition laws provide effective remedy against the anticompetitive practice. Nevertheless, this paper asserts that an innovative perspective and the incentive to innovate might need to be taken into consideration.

Keywords: Patent, Property Rights, Antitrust Law, Anticompetitive Practice, FTC

From Mass-Production to Complex Production:
Case of the Korean Telecom Equipment Sector

Tae-Young Park and Illyong Ji*, Hanyang University, Korea

Abstract
This study addresses the following question: why did Samsung and LG fail to transition from the mass-produced goods sector production to complex product system sector production? In general, there are four necessary factors to facilitate successful operation in complex product systems: research and development capability, organic networking among various actors, the capability to leverage suitable support from government and the establishment of a large demand base. Samsung and LG has strong R&D capabilities and engaged in useful networking and their failure to succeed in the complex product system sector can be attributed to inappropriate support from government and their failure to establish a large demand base. We conclude that technological factors are necessary but insufficient to facilitate the successful transition from a mass-produced goods sector to a complex product system.