Complementarities in innovation policy

Abstract

This paper develops a framework for testing discrete complementarities in innovation policy using European data on obstacles to innovation. We propose a discrete test of supermodularity in innovation policy leading to a number of inequality constraints. We apply our test to two types of innovation decisions: to innovate or not, and if so, by how much. We find that industries display a considerable amount of complementarity, with some industries being complementary across all obstacles. We also find that the lack internal human capital (skilled personnel) is complementary to all the other obstacles in almost all industries. In this sense, our results suggest that internal human capital is key for any innovation policy, insofar that it is complementary to all the other factors that might hamper innovation activities. We like to thank Dietmar Harhoff, Bernard Sinclair-Desgagne, and David Soskice for their detailed comments. We also like to thank Susan Athey, Astrid Jung, and Jacques Mairesse, as well as the participants of the WZB-Cirano workshop on "Innovation and Supermodularity", June 15-17, Montreal.

Using Innovation Surveys for Econometric Analysis

“…Both should be removed jointly. The results from Mohnen and Röller (2005) suggest that governments should adopt a mix of policies to foster innovation, for instance by easing access to finance, allowing firms to cooperate with other firms and technological institutions, increasing the amount of skilled personnel and reducing the regulatory 26 burden. Complementarity between obstacles to innovation has also been investigated for Canada (Mohnen and Rosa, 2002) and for France (Galia and Legros, 2004).…”

Service innovation in manufacturing firms: Evidence from Spain

“…Statistical evidence also points to the importance of human capital for innovation in a wide range of manufacturing industries and countries (Mohnen and Röller, 2001). Walsworth and Verma (2007) show that training appears to have a positive impact on both product and process innovations.…”

Human resource management practices and learning for innovation in developing countries: pharmaceutical firms in Mexico

“…Alternatively public policies compensate for system failures, including coordination and the nature of linkages among agents in systems of innovation (Smith 2000). Adoption of an evolutionary perspective hints at the capacity of public policy: (i) to adapt and adjust through sequencing and packaging of policy interventions (Kuruvilla et.al, 2002); and, (ii) to allow for the complementary actions needed to impact on performance, motivations and reactions of the agents involved (Metcalfe 1994;Mohnen and Roller 2005).…”