Innovation, R&D Efficiency and the Impact of the Regulatory Environment: A Two-Stage Semi-Parametric DEA Approach

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. 1 Abstract This paper assesses the relative efficiency of knowledge production in the OECD using a nonparametric DEA approach. Resources allocated to R&D are limited and should therefore be used efficiently given the institutional and legal constraints. This paper presents efficiency scores based on an intertemporal frontier estimation for the period 1995 to 2004 and analyzes the impact of the regulatory environment using the single bootstrap procedure suggested by Simar and Wilson (2007). The empirical evidence supports the hypothesis that barriers to entry, aimed at reducing competition, lower research efficiency by attenuating the incentive to innovate and to allocate resources efficiently. Terms of use: Documents in

Production of output and ideas: efficiency and growth patterns in the United States

“…The former is positively correlated with the share of high-tech industries while innovation efficiency is affected positively by the degree of economic development, the share of business research and the strength of intellectual property protection. By means of a two-stage non-parametric DEA approach, Cullmann et al (2012) study R&D efficiency differences among OECD countries focusing on the role of regulatory environment. A more recent study that of Franco et al (2016) examines cross-industry (cross-country) efficiency levels in knowledge production focusing on the role played by the institutional framework regulating the functioning of upstream markets, i.e.…”

“…30 To our knowledge, empirical evidence, based at aggregated or disaggregated level analysis of either production or innovation efficiency in the US, has been extremely thin. Only a handful of studies that have performed comparative cross-country studies of either production or knowledge efficiency and include the US (Koop et al, 1999;Henderson and Zelenyuk, 2007;Wang and Huang, 2007;Cullmann et al, 2012). The study of Thomas et al (2011) is among the very few attempts that examines innovation efficiency of the US at the state level for the period 2004-2008.…”

“…Second, our modeling approach treats the frontier as stochastic through the inclusion of the error term ν it , which accommodates noise in the data and, therefore, allows for statistical inference. In this respect, it fundamentally differs from other (non-parametric) frontier analyses (Wang, 2007;Cullmann et al, 2012) that do not allow for random shocks around the frontier. 9…”

“…These studies evaluate innovation performance of a number of, mainly OECD, countries and rank them according to their efficiency scores. A number of subsequent studies, perform similar analysis controlling also for socio-economic factors, institutions, and regulations (Wang, 2007;Wang and Huang, 2007;Cullmann et al, 2012;Franco et al, 2016). 4 The literature, thus far, has studied separately the production of output and ideas and the possible waste in the use of their inputs.…”

“…The latter, has been one of the leading and most prolific nations in innovation research, production of new ideas, which are patented, and also among the most developed countries in terms of output production. Extant cross-country research on either production or knowledge efficiency has considered the US as a homogeneous entity and has not focused on the sub-national level (Koop et al, 1999;Henderson and Zelenyuk, 2007;Wang and Huang, 2007;Cullmann et al, 2012), there is no study hitherto that performs regional (state-level) analysis for the US. While cross-country efficiency analyses have their relevance, the study of efficiency performance at regional level offers valuable insights.…”