National Innovation, Indicators and Policy

National Innovation, Indicators and Policy

New Horizons in the Economics of Innovation series

Edited by Louise Earl and Fred Gault

This book takes stock of what is known about the process of innovation and its effects, and the policy interventions that influence both. It provides insights into future research required to support evidence-based policy-making and makes clear the need to take a systems approach to the analysis of innovation, its outcomes and its impacts.

Chapter 4: Innovation in Enterprise Clusters: Evidence from Dutch Manufacturing

Bert Diederen, Pierre Mohnen, Franz C. Palm and Sybrand Schim van der Loeff

Subjects: economics and finance, economics of innovation, international economics, innovation and technology, economics of innovation, innovation policy


* Bert Diederen, Pierre Mohnen, Franz C. Palm, Wladimir Raymond and Sybrand Schim van der Loeff INTRODUCTION The innovation survey data collected by Statistics Netherlands for the Community Innovation Survey (CIS) pertain to enterprises. However, enterprises are, in fact, often subsidiaries, daughter or sister enterprises, or part of a conglomerate. When the associated legal entities are majoritycontrolled by a group leader, it is likely that key decisions will be taken with a view to benefiting the whole group. A model of optimizing behaviour that is appropriate at the group level may be inadequate to describe the decisions taken at the component level. When it comes to key issues like research and development (R&D), even legally independent firms may form networks, R&D joint ventures or technological alliances, in which part of the R&D is conducted jointly for reasons of cost sharing, risk sharing and complementarities. There is, therefore, justification for asking how appropriate it is to relate the characteristics of enterprises to their R&D or innovation decisions, as is usually done using innovation survey data. Would it not make more sense to relate innovation outcomes to determinants measured at the group level? For example, suppose an enterprise is established in the Netherlands and has a subsidiary in China and another in the United States. The R&D is conducted mainly at the home base, but much of the product sales originating from this R&D investment is done in foreign markets through the Chinese and US...

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