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The Simple Economics of Basic Economic Research
... In general, such government interventions are justified by the belief that R&D activities are subject to market failure (Arrow, 1962;Nelson, 1959). Knowledge is frequently assumed to be a non-rivalrous and nonexcludable good (although this is debatable; see, for example, Witt et al., 2012), as the use of knowledge by one actor does not prevent its use by others and it is impossible to exclude others from using the knowledge. ...
... Consequently, actors investing in knowledge cannot fully appropriate all its benefits and, therefore, underinvest in it. Another reason for market failures is argued to be the high uncertainty inherent in knowledge production (Nelson, 1959). Uncertainty describes a condition under which actors in an economy must decide on inputs when the output is difficult to predict or even completely unknown. ...
This study investigated two major trends shaping contemporary technological progress: the growing complexity of innovation and the increasing reliance on government support for private research and development (R&D). We analyzed United States patent data from 1981 to 2016 using structural vector autoregressions and uncovered an indirect interplay between these trends. Our findings showed that government incentives and support played a crucial role in spurring private-sector innovation. This government-fueled innovation, in turn, paved the way for advancements in more intricate and sophisticated technological areas. Our study sheds light on the dual role of the United States' innovation policy over the past four decades; the policy has not only accelerated technological advancement but also steered it toward increasingly complex domains. While this trend presents opportunities for economic growth and technological breakthroughs, it also poses challenges, including the potential for further escalating R&D costs. This research has significant implications for policymakers and industry leaders, suggesting a need for a balanced approach to fostering innovation while considering the long-term economic and technological landscape.
... Moreover, adhering to the perspective of holistic analysis put forward by Oliver (1997), on the one hand, due to the external positive spillover of enterprise innovation, governments of all countries employ subsidy measures to correct such market failure (Czarnitzki et al., 2011;Nelson, 1959) to encourage enterprise innovation, whereas the empirical results produce different conclusions of crowding in (Gao et al., 2021) and crowding out effect (Marino et al., 2016;Wu et al., 2022). How government subsidies under EPU affect enterprise ambidextrous innovation is yet unknown. ...
... The theoretical basis of government subsidy promoting enterprise innovation lies in correcting market failure caused by positive externalities of enterprise ambidextrous innovation (Czarnitzki et al., 2011;Nelson, 1959), alleviating enterprise resource constraints (Chiappini et al., 2022), reducing enterprise risk aversion (Chapman & Hewitt-Dundas, 2018) and strengthening enterprise innovation incentives (Carboni, 2011). However, government subsidies may also have a negative impact on enterprise ambidextrous innovation (Marino et al., 2016;Wu et al., 2022), especially under the interaction of EPU and government subsidies. ...
Estimating the impact of economic policy uncertainty (EPU) on enterprise ambidextrous innovation can provide insight into firms’ current innovation choice orientation, but few studies systematically reveal the relationship between the two. We have developed a new investment valuation construct that includes three parts: the direct net present value, growth option value, and strategic preemption value. Based on this, we systematically expound the relationship between EPU and enterprise ambidextrous innovation and explore the moderating effect of government subsidies and managerial ownership. Using the patent text mining data of Chinese A-share listed companies in Shanghai and Shenzhen from 2010 to 2019 and exploiting the world average temperature as an instrument for EPU, we find that EPU promotes enterprise’s exploitative innovation and inhibits enterprise’s exploratory innovation through the redistribution of R&D investment in ambidextrous innovation. Government subsidies negatively moderate the relationship between EPU and enterprise exploitative innovation, but have no moderating effect on the relationship between EPU and enterprise exploratory innovation. While managerial ownership positively moderates the relationship between EPU and enterprise exploitative innovation, no evidence of a moderating effect was found in the relationship between EPU and enterprise exploratory innovation.
... This report was presented to Presidents Roosevelt and Truman and formed the basis of the United States' strategy for scientific research and innovation throughout the postwar period. The development of these economies was also made possible thanks to the contribution of American economists, in particular, Nelson (1959) who emphasized the role of government in financing R&D and its relationship to the development of knowledge. Arrow, K., through two scientific publications in 1962, stressed the importance of directing funding towards knowledge and knowledge production activities and those related to human capital. ...
The knowledge economy drives growth. It increases overall productivity, affecting competitiveness, market share and, most importantly, economic growth. The objective of this research is to study the impact of the knowledge economy on economic growth in Morocco. It will also study and present the causes of the bottlenecks currently facing the Moroccan economy. Our starting point for this study is a literature review, which will constitute the anchor point of our project and will allow us to position ourselves in relation to these studies and to define the different concepts used in this research work. This part is necessary to present the contours of models of endogenous growth which constitutes an improvement of the first models developed by neoclassical theorists and will allow us to identify indicators and to present their impact on economic growth. The realisation of this study was based on neoclassical orthodoxy founded on a positivist approach employing hypothetical-deductive methods. From a methodological point of view, the approach employed will be a quantitative approach based on inferential statistics and particularly econometric studies of panel data. Our empirical findings indicate that the impact of human capital variable is not significant. Furthermore, the innovation variable shows a positive and insignificant impact on economic growth. In addition, information and communication technology has insignificant effect on Morocco’s economic growth. Finally, governance quality has a positive impact on economic growth. Our results explain the weak impact of the knowledge-based economy on Morocco's economic growth, and this weakness does not change regardless of the country's wealth level. This allows us to conclude that despite the multiple reforms and the enormous investment made by Morocco, they benefit little from the competitive advantage and the effects on growth that this economy make it possible to create.
... It is well known that firms tend to underinvest in knowledge and innovative activities, whether about technological creation or adoption, because they hardly appropriate the entirety of their investments' revenues due to the quasi-public nature of knowledge (Arrow, 1962;Nelson, 1959). Moreover, such investments are uncertain, risky and expensive (Knight, 1921;Schumpeter, 1942;Teece, 2018). ...
Industry 4.0 technologies radically change industrial processes. National governments have enacted innovation policies to support firms' investments in new technologies and increase productivity growth. The Italian Industry 4.0 Plan (II4.0 Plan) was implemented with this purpose in 2017 and consisted of a horizontal fiscal plan. Using a new methodology that relies on firms' financial accounts rather than survey data, we identify firms that benefited from the II4.0 Plan's incentives and extend the analysis to the population of Italian firms. The results from a Difference-inDifferences regression approach show that the investments spurred by the II4.0 Plan positively affect firms' labour productivity but heterogeneously among size classes, sectors and types of incentive. Hyper and super amortisation and the credit for innovation drive the results. We frame our policy evaluation into the most recent discussion about innovation policies, raising some criticisms on the appropriateness of horizontal policies to foster the digital transition.
... The establishment of IP model cities can serve as a valuable strategy to mitigate innovation externalities through government funding. Basic research often yields positive knowledge externalities [19,20], which can be enhanced by a robust property rights system that incentivizes innovation behavior [21,22]. The construction of IP pilot cities aims to improve IP administration, enhance IP protection, and provide great convenience for the creation, application, and protection of IP in universities. ...
Colleges and universities play a crucial role in fostering innovation, making it essential to explore effective strategies for promoting innovation at the institutional policy level. This paper focuses on the establishment of intellectual property model cities as a starting point and conducts an empirical analysis using innovation data from 234 cities and 942 colleges and universities between 2007 and 2017. By constructing a multi-temporal double-difference model, this study reveals that the establishment of intellectual property model cities effectively fosters innovation in colleges and universities. Further analysis demonstrates that this promotional effect is particularly significant in the western region, key cities, and key colleges and universities, as well as in the fields of invention and utility model patents. These conclusions withstand a series of robustness tests, confirming their validity. This study reveals that the national intellectual property pilot city policy has a significant influence on university innovation. It achieves this by encouraging investment in research and development and enhancing collaboration in innovation. The findings of this study provide important policy suggestions for maximizing the innovation potential of the intellectual property model city policy. This, in turn, can contribute to economic transformation, upgrading, and the promotion of innovation development in China.
... Green innovations are regarded as an essential way to address environmental exchange and achieve sustainable development (Greco et al., 2022;Stojcic, 2021;Wang et al., 2023). Market failures, however, may result from underinvestment in innovation activities, such as unpriced knowledge spillover and financing constraints for innovation (Hall & Lerner, 2010;Nelson, 1959). In addition to market failures, firms also have less incentive to develop green innovation because using green technology in production can increase cost, given the higher price of many renewable energy resources and technologies (Roe et al., 2001). ...
Can all types of tax burdens negatively affect corporate innovation activities? The Chinese Environmental Protection Tax Law provides a chance to investigate the impact of environmental taxes on corporate green innovation. Using a large sample of Chinese listed firms for the 2015–2019 period and the difference-in-difference method, this paper finds that environmental taxes promote corporate green innovation. This result is robust to a battery of sensitivity tests and is more prominent for firms facing intense product market competition, firms with more financial constraints, and firms located in lower marketization regions. Mechanism tests find that firms engage in green innovation to cater to government environmental governance. Additional analyses find that environmental taxes have a significant effect on green innovation efficiency and green utility model innovation but fail to impact green invention innovations. Our study provides new and different evidence of the impact of taxes on corporate innovation and has important policy implications.
Using a panel of manufacturing firms in China for the period 2006 to 2015, this study investigates how the adoption of industrial robots, as a technological disruption, affects firm patent activities through intra‐industry interactions (robot adoption by peer firms in the same industry) and inter‐industry input–output linkages (robot adoption by upstream suppliers or downstream customers). We also test how these impacts are shaped by firms' absorptive capacity and external intellectual property right (IPR) protection. Our findings suggest that downstream robot adoption significantly drives firms' patent activities, whereas the impacts of robot adoption by peer firms and upstream suppliers are not statistically significant. Furthermore, the impact of robot adoption by downstream customers is magnified when firms have greater absorptive capacities and benefit from stronger IPR protection. We also exploit a policy change in 2012 related to high‐end intelligent equipment manufacturing as a quasi‐natural experiment to identify the effects of robot adoption as a form of technological disruption through different channels. Our study contributes to the literature on how technological disruption and associated uncertainties in the intra‐ and inter‐industry linkages affect firms' patent activities.
China’s rapid rise and spectacular growth in science capacity reopens a discussion about the relationship between science and the nation-state. Literature suggests that science thrives within a democratic system and that scientific activities tend to have a liberalizing effect on governments. Neither of these phenomena appears evident in China’s case. Three policies, present in the earliest days of the growth of modern science, ones in common with other nations, factor into China’s science policy: (1) policies enabling protection of intellectual property, (2) encouraging mobility and skills development, and (3) government procurement of science and technology, especially through military purchases. Using Graham’s interactionist model, I suggest that policies instituted by the state-created conditions for emergence of modern science.
Academic freedom is a critical norm of science. Despite the widely postulated importance of academic freedom, the literature attests to a dearth of research on the topic. Specifically, we know little about how academic freedom relates to indicators of societal progress, such as innovation. We address this research gap by empirically assessing the impact of academic freedom on the quantity (patent applications) and quality (patent citations) of innovation output using a comprehensive sample of 157 countries over the 1900–2015 period. We find that improving academic freedom by one standard deviation increases patent applications by 41% and forward citations by 29%. The results are robust across a range of different specifications. Our findings constitute an alarming plea to policymakers: global academic freedom has declined over the past decade for the first time in the last century and our estimates suggest that this decline poses a substantial threat to the innovation output of countries in terms of both quantity and quality.
Innovation is change. Change that generates value. Change can be of different nature—e.g., technological, social, organisational, cultural; value(s) generated by such changes can be of different natures too—e.g., financial, economic, social, personal, organisational, educational, institutional, societal. Often—but not necessarily—enabled by and / or rooted in technology, innovation is a socio-anthropological phenomenon that has characterised human lives since its appearance. Scholars and practitioners have conceived—and acted upon—innovation as a process, a strategy as well as an attitude of mind, a posture towards reality. Connecting distant disciplinary domains to gain a novel perspective may help develop the basis for a grammar of innovation.
Technology spillovers, understood as knowledge flows across technology domains, are an important mechanism for innovation, as progress in one technology area can lead to unexpected benefits in other technology areas. Despite the importance of technology spillovers in theories of recombinant innovation, significant gaps remain in our understanding of how spillovers across knowledge domains occur, what factors enable or affect spillovers, or how much consideration should be given to technology spillovers in research and innovation policy and management. In this paper, we develop and demonstrate novel conceptual and methodological tools to address these knowledge gaps. Specifically, we introduce a conceptual framework that views technology spillovers as a dynamic process of micro-level knowledge transfer across technological domains that drives recombinant innovation in a knowledge-receiving domain. We use this framework to develop a process-tracing methodology for identifying and analyzing individual micro-level technology spillovers. We demonstrate the application of our framework and methodology in a case of three important innovations in crystalline silicon solar photovoltaics by reconstructing a detailed history of how technology spillovers have played a critical role in enabling and driving these three innovations over time. We show how our approach generates important insights relevant to public policy and R&D management that aim to harness spillovers for accelerating innovation.
Competition and cooperation are not always at odds and contributions to public goods are almost never one‐off one‐shot temporally isolated events. We examine voluntary contribution in a new public good experiment where “self‐love” competitive motivations and time dynamic interdependencies are simultaneously considered. The competitive motivations are manipulated via subjects competing in each group (intragroup competition) for higher return factors on their public expenditure, whereas time dynamic interdependencies are modeled by letting returns from previous periods available for future contributions to public goods (CG). We ran two control conditions where intragroup competition (C) and time dynamic interdependencies (G) are separately implemented. Our findings showed that shares of endowment contributed were significantly greater and increasing over time when endowments growth and heterogeneous returns factors were simultaneously introduced. This effect can be attributed to return factors obtained in previous periods. Accordingly, wealth exponential growth has been greatly accelerated relative to our control condition. Distributive equity concerns have been also documented. Although Gini coefficients were significantly lower in the presence of heterogeneous return factors and endowments growth, inequality trends seemed to converge at control condition values in the long term.
Some companies invest in fundamental research, but many struggle when developing novel in‐house scientific knowledge and integrating it into their new inventions. While the literature advocates revised approaches to better understand this phenomenon, we investigate the processes that lead to Simultaneous Discovery–Invention (SDI). By adopting an abductive process, we propose a model that highlights the mechanisms of SDI. Notably, we reveal that teams must preserve independence in creative exploration during scientific knowledge creation and invention generation while maintaining intensive original knowledge exchange among them. We also demonstrate that anomaly detection and peer validation mechanisms are mandatory for SDI. We evaluate our model with a case study in the food industry: the discovery that CRISPR–Cas9 is an adaptative defense immune system of bacteria and the associated innovations in this industry. Finally, we discuss the insights provided by our model and the implications of our case study.
Technological know-how in a country shapes its growth potential and competitiveness. Scientific publications, patents, and international trade data offer complementary insights into how ideas from science, technology, and production evolve, combine, and are transformed into capabilities. Analyzing their trajectories enables a more comprehensive and multifaceted understanding of the whole innovation process, from generating ideas to internationally commercializing products. We analyze the production patterns in these three domains, documenting the differences between advanced and emerging market economies. We find that future income, patenting, and publishing growth correlate with the economic complexity indices calculated from these domains. Capabilities embedded in the country also shape future diversification opportunities and make the innovation process path dependent. Lastly, we also show that diversification opportunities can be inferred across innovation domains.
This paper presents a critical comparison of the developmental state and the entrepreneurial state, contributing to the existing literature by highlighting the advantages and necessity of an entrepreneurial state over a developmental state through the connection between public institutions and spinoffs. It is widely acknowledged that the state plays a significant role in the economy and development of both developed and emerging countries. While there is ongoing debate regarding the role of the state in the United States compared to Europe and Asia, it is important to recognize the hidden role of US public institutions in technological advancement and innovation. The paper begins by categorizing factors related to research, technology, and innovation into basic-applied research, technological innovations, and incremental innovations. Subsequently, the concepts of the entrepreneurial state and developmental state are defined in relation to technology, innovation, and competition. In the final section, a comparison is made between the entrepreneurial state and the developmental state, demonstrating that theoretically, the entrepreneurial state is essential and offers numerous advantages over the developmental state.
Despite the proliferation of national environmental science worldwide, the erosion of environmental sustainability presents a problem for advanced economies with a substantial volume of scientific output. The worsening state of the natural environment presents a profound conundrum at the intersection of science and sustainability, characterised by conflicting pathways for the world’s nations. In this study, I confront this predicament by examining whether the influence of national culture moderates the transition of domestic scientific research into tangible CO 2 emissions reduction. Drawing on a dataset spanning 30 nations renowned for their high scientific productivity over a 24-year period, I use a panel data model that incorporates lag time to analyse the nuanced impact of national cultures on sustainability. My findings reveal distinctive outcomes: those cultures characterised by high Power Distance (e.g., Eastern European) contribute to increased CO 2 emissions via an industrial innovation pathway that prioritises economic growth, while those with high Individualism and high Uncertainty Avoidance (e.g., Western European) facilitate a reduction in CO 2 emissions through the translation of scientific knowledge into public science that stimulates a societal innovation pathway and sustainability. In addition to these moderating effects, my investigation exposes that Gross Domestic Product (GDP) per capita exerts a direct positive influence on CO 2 emissions, while an increase of GDP allocated to military expenditure (e.g., USA, China, Israel, South Korea) has detrimental effects on CO 2 emissions, potentially hampering Net Zero aspirations. These findings hold significant implications for both theory and policymaking in the environmental arena.
The quest for technological development as a solution for sustainable development is the genesis of the multidimensional conflict between sustainability, competitive innovation and technological progress. Albeit persistent cognisance for appropriate technology solutions for a specific issue, the debate on the choice between short-run solutions and sustainability, local or global development, awareness and consumption, political gains, and citizens’ benefits remains inconclusive. This paper argues that the debate stems from misunderstanding the term sustainability and the strategic misrepresentation of technology for political gain. Concurrently, the inability of the market failure rationale to choose appropriate technology to minimise the divergence between the private and social benefit makes the policy formulation problem more intricate. Furthermore, despite increasing awareness regarding the environmental status, failure to alter their consumption pattern to reduce the energy requirement exacerbates the issues. These multidimensional aspects can obscure possibilities for true sustainability and socially deliberate technological futures.
While there is strong evidence that becoming an exporter increases a firm’s productivity, underlying mechanisms that explain such a relationship remain largely unexplored. This paper analyses the contribution of the complementarity between exporting and investment in technology as a potential driver of export-related productivity gains. We employ firm-level data on production and trade combined with information on new products in the French dairy industry to conduct a causal mediation analysis between exporting, innovation investment, innovation output and productivity. Our estimation result show that starting exports increase the productivity by eight percentage points. Our mediation analysis reveals that innovation (investment and output) explains 31 per cent of this productivity growth.
Resumo O objetivo deste artigo é entender os determinantes para o processo de fragmentação produtiva em Cadeias Globais de Valor (CGV) e quais são as contribuições da economia política para a compreensão do fenômeno. A economia neoclássica e o marco teórico das CGV enfatizam as razões técnicas ou tecnológicas para explicar o surgimento das CGV. Alternativamente, este artigo propõe uma interpretação da economia política das CGV. Desse modo, a interpretação sugerida é a de que três palcos de disputa pelo poder e pelo capital estimulam o desenvolvimento das CGV, a qual é fruto da competição interestatal (pela hegemonia e pelo domínio de regiões periféricas), intercapitalista (entre empresas dentro e fora das cadeias) e entre as classes, de modo a reduzir a barganha do trabalho e aumentar o poder do capital. JEL: F12, F60, L23, O34.
Public intellectuals were once honest and knowledgeable academics who engaged in critical debate and spoke truth to power, but seem today rather to be celebrities who make vast amounts of money from selling an oversimplified message to policymakers and the public. This chapter discusses the role of the new public intellectuals for the rise of oversimplified and misguided innovation policy, both in the wider context of the recent spread of the ideology of “innovationism” and with specific attention to the sociological mechanisms involved. With the help of a conceptual discussion and some key examples, the chapter issues some warnings of what might happen when public intellectuals give up essential virtues of academic work in favor of fame and fortune, and the role they can then come to play in the spread of “innovationism” and misdirected innovation policy agendas.
Academic engagement with industry is now practiced by more scientists than ever before. Despite broad consensus regarding the positive effect on senior and successful scientists' research productivity , its effects on early career scientists have remained insufficiently investigated. Utilizing a novel dataset drawn from both awardees and nominees in the case of high-tech enterprises' Ph. D. funding programs from 2010 to 2017, we combine difference-indifferences estimation and data mining to explore the future research impact (research productivity and direction) of industrial Ph.D. funding. We find that awardees granted industrial Ph.D. funding outperform nominees in terms of both the quantity and quality of subsequent scientific production, with a more salient improvement of research performance in developing countries. Such discernible improvement in scientific production does not come at the cost of altering the research direction of beneficiaries. The results are robust to different specifications and measurements. Practical and policy implications are discussed for entrepreneurs and science policymakers to favor scientific knowledge production and transfer by strengthening science-industry relations between high-tech enterprises and early career scientists.
This paper contributes to an emerging debate on open innovation ecosystems and knowledge sharing in the innovation environment, by sharing insights on the role of trust in open innovation collaboration. Systematization of the state of art literature on the innovation networks show that trust is crucial for improving competition among Polish companies, yet its seems to have not an important place in the innovation environment. The main purpose of the research is to determine the role of personal traits, including trust, in the initiation of the potential open innovation collaboration. The study applies the qualitative survey method and shares up-to-date empirical evidence from Polish high- and high-mid-tech small and medium-sized enterprises (SMEs). The study was conducted using the computer-assisted telephone interviewing (CATI) method, in collaboration with the ARC Rynek i Opinia company, from January to April 2021. The study covers 100 SMEs active in advanced technology industries. The results reflect the opinions of middle- to high level managers. The study findings show that there is a need for a deeper understanding of the factors behind trust-embedded open innovation collaboration, and the perception of open innovation as a win-win game for all the partners. Better understanding of these factors will ensure more effective communication in developing an open innovation environment in Polish SMEs. The study findings also indicate the need for an active role of key stakeholders and intermediary agents in facilitating formal and informal networks stimulating mutual trust, as well as the importance to build the educational system enabling the strengthening of the creativity, and the diffusion of innovations.
While the positive influence of external knowledge on firm innovation is widely recognized, our understanding of the interplay between the quest for external knowledge and internally conducted research and development (R&D) remains incomplete. Previous research has identified certain conditions that shape the synergy between internal and external knowledge, such as the institutional origin of the external knowledge and the overall scale of the firm's internal R&D activities. In this study, we focus on an important but not yet considered dimension and analyze whether the returns from external knowledge sourcing are contingent upon a firm's internal involvement in basic or applied research as opposed to development . We argue that engaging in research, while supporting a firm's absorptive capacity, leads overall to lower benefits from seeking external knowledge because of knowledge crowding out and spillover effects. We test our predictions using a representative panel dataset from Spain (Panel de Innovación Tecnológica [PITEC]) and show that the benefits of external knowledge decrease for higher shares of internal research investment. This substitution effect is particularly pronounced in settings where sector‐level appropriability is limited and in nonhigh‐tech sectors. We contribute to the innovation literature by underscoring the important role of the nature of internal R&D efforts in shaping firms' capacity to benefit from external knowledge sources.
How does common ownership affect creative destruction? What are the underlying mechanisms? Do the effects of increased common ownership vary among different customer segments? Using product-level data, we show that, on average, firms with greater common ownership introduce new products at a faster rate and discontinue existing products at a similar pace. The observed economic impacts intensify over time, reflecting the gradual nature of knowledge spillovers and the learning curve. Subsequent to an increase in common ownership, portfolio firms tend to both add and drop products that are dissimilar to those of their rival firms, with the net effect of decreasing between-firm product dissimilarity. We also find that the effects are more relevant for product modules with greater technological likeness, lower barriers to market entry, and greater numbers of product market players. Product variety is substantially greater in product lines catering to higher-income households. Overall, the result highlights the procompetitive effects of increased common ownership.
The electricity sector is in the midst of structural changes accelerated by current trends such as digitalisation, decarbonisation, and decentralisation. This phenomenon led companies to explore new ways of innovating. However, some experts and practitioners argue that the current R&D regulation may limit strategic advancements. This paper aims to analyse the current R&D policy on the electricity sector in light of digital innovation efforts. The study focuses on the Brazilian regulatory framework for R&D activities, which has been evolving since the early 1990s. Therefore, the study presents a multiple case analysis of different projects aimed at innovation through digitalisation, highlighting the main bottlenecks and their relationships with the regulatory structure. The paper contributes by presenting a timeline of R&D regulatory changes within the Brazilian electricity sector, discussing the recent innovation movements, and detailing an organised structure on regulatory constraints and practical consequences, which could be useful when developing new policies and practices on innovation for energy sectors.
This paper advances a general and unified framework to explain the patterns of entry in an industry. The specificity of a type of entrant is examined based on the match between the entrant’s prior experience, in terms of knowledge endowment, and the target industry context. The knowledge endowment is analyzed by focusing on its content—market, technological, organizational, and scientific—and its generic and specific nature. The target industry context is examined by looking at four basic dimensions: the stage of development of the target industry (the time dimension); the specific technological regime and related innovation patterns (the technological dimension); the demand regime (the demand dimension); and the institutional regime (the institutional dimension). These dimensions moderate the matching between the knowledge endowment of the type of entrants and the features of the industrial contexts. Our newly proposed taxonomy offers a more systematic and nuanced explanation of how the complex relationship between pre-entry experience and knowledge, entrants and the chosen target industry evolves over time.
In this paper, we study the role played by different dimensions of knowledge agglomeration as determinants of public subsidies to business R&D. For the analysis, we use firm-level information from the Spanish Panel of Technological Innovation (PITEC) and combine these data with information from other sources at the sector-al–regional level, obtaining an unbalanced panel of 28,082 observations of Spanish firms. Our results suggest that knowledge agglomeration affects both the probability of participation in subsidy programs and the subsidy amount awarded to supported firms. This effect is heterogeneous depending on the dimension of knowledge agglomeration considered (technological relatedness, regional specialization, intrasectoral or upstream knowl-edge pool, technological cooperation) and the level (regional, national, or European) of governance of public agencies.
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