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Evaluating the Black Box of Innovation

PhD Programme in Economics
University of Rome La Sapienza

Supervisors: Prof. Guido Cozzi versity of Macerata), Prof. Mario Pianta (University of Urbino)

May 2006

Abstract
In the spirit of Schumpeter innovation view we try evelop an empirical and theoretical evaluation of the Black Box of inno on. Specially in last two decades, there have been more theoretical than rical contributions. Thus, we have firstly preferred to empirically analyze dierent aspects of the innovation process: in particul e have studied the espionage problem, its law of motion and complexi nd the inter-industrial knowledge flows, basing the analysis on l three decades patents data set. The aim of first chapter is to show the role of the UTSA iform Trade Secret Act) and the EEA (Economic Espionage Act), issued in 1985 and 1996 respectively on the contemporary U.S. innovation ivity. That is why we first proceed building the historical series of granted patents for each U.S. manufacturing industry, using the NBER patent a file (1963-1999). Based on this new dataset we link the trend of the patents of each sector with the historical series of the total R&D expenditure and we get finally a permanent relation, showing that there is a 4-5 years lag between R&D
expenditure and the granted patents in each sector, except for th chemical and computer & electronics, where there is a 1 year lag. The we proceed making a Chow test focused on the UTSA and EEA promulgation dat from which come out that in both years there happened a structural break on the parameters of the model, except for the traditional sectors concluding that
the acts eects are limited on the ‘new’ sectors. Then we try to observe in which way the parameters of the model have changed after the 1985 and we obtain an increase of the R&D expenditure parameter (growth eect) in these sectors.
In second chapter we inquire on the existence of a innovation proces law of motion. To do that we model that movement observing the patent possible applications after its publication. We firstly sup that the law follows an independent Poisson process and, thus, we ob that the researcher prob-ability on finding a possible application depends on a partic parameter
that we define as the complexity index. Once we have define at model, we proceed estimating that parameter by U.S. manufacturing secto Then we approach each industry analysis starting from the NBER patent data set (63 99) using the patent mean forward citations lag data as the variable able to estimate the model and, in particular, its complexity parameter. We con-
firm that, in each industry, the number of the patent forward citatio grows until a point from which it starts to decade. Once we have eliminated the lag truncation problem using the fixed eect we finally obtain the complexity index historical series in each industrial sector. Thus we conclude sustaining that the innovation process follows the particular law of motion we have supposed in our model in each manufacturing or; moreover we derive that, in particular, the complex index (obtained evaluating a spillover parameter) is naturally increasi specially in “new” sectors. The aim of third chapter is to empirically evaluat e U.S. interindustry knowledge spillover using the NBER patents data file 63-1999). Reputing the patent backward citations as a good proxy of the ent’s knowledge spillover, we proceed by building the time series t ch U.S. manufacturing industry patent citations and their lags. Then we generate the time series of the external and the internal knowledge flow indexes, showing that traditional sectors are more technological dependent from the others than the new one. Here, in the spirit of Pavitt (1984), we derive a new taxonomy of innovation focusing on the ideas instead of the goods production in order o obtain the innovation linkage and trajectories. Once we have determined that each sector most cited patents are typically belong to the “new” sectors, we evaluate the high and low tech sectors innovation e ect on the whole economy innovation process. Confirming that the high tech one, and its R&D expenditures, are the most import we conclude that it is the giant's shoulders substance of the whole economy.

Contact details
Dr. Francesco Schettino
Università degli Studi di Roma “La Sapienza”
francesco_schettino@yahoo.it

Additional information
This thesis is written in English and is listed also in sections Economics, English and in the Chronological archive.

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