May Menachem (p), Raphael Bar-El

Marcus Dejardin

The objective of this paper is to test the influence of national and international links on innovation, in developed countries as compared with less developed ones.

Although many studies focus on the impact of specific networks or collaborations on innovation, at the firm or at the industry level, there is a lack of quantitative studies that deal with these issues at a cross-national level. In addition, so far, no quantitative evidence has been found about the difference between developing and developed countries regarding the effect of various national and international links on innovation.

This study uses hierarchical polynomial regressions, based on the data of the Global Innovation Index (GII) for 2017 on 127 countries. It focuses on one specific aspect of innovation, the creation of knowledge, as measured in the GII by international patent applications filed under the Patent Cooperation Treaty (hereinafter: PCTs) and by national patent applications (both measured per the GDP of each country).

Other measures of knowledge creation (such as publications and business models) are not included, as well as other aspects of innovation (such as knowledge impacts, as measured by high-tech manufacturing, productivity growth, and employment creation).

The independent variable, which is used as an indicator of national links, is the extent of collaborations between universities and industries in research and development. The independent variables, which indicate international links, are telecommunications, computers, and information services imports, high-tech imports, intellectual property payments (each measured as a percentage of the country's total trade) and the number of joint ventures and strategic alliances of domestic firms with foreign firms (per the GDP of each country).

The main finding for all countries regardless of their income levels shows that the most significant link for the enhancement of both national patent applications and PCTs is university-industry collaboration.

However, in a separate estimation of high-income countries, university-industry collaboration increases national patent applications, while international alliances between firms decrease national patent applications. Furthermore, international alliances between firms have an inverted U shape relationship to PCTs. But in an estimation of low-income countries, high-tech imports are those which increase PCTs.

Hence, this study brings researchers and policy-makers one step closer to the formulation of effective public policies for promoting innovation in developed and less developed countries.

Dylan Jong (p)

Marcus Dejardin

See extended abstract

Min Zhang (p)

Marcus Dejardin

This paper assesses how quality of government institutions shape firms’ innovative performance by focusing on the impact of government institutions in five dimensions (rule of law, government effectiveness, corruption, regulatory quality, and political stability) on Chinese privately-owned firms. The results suggest a higher probability for private firms to achieve innovation success and earn productive innovation output in regions where the rule of law is impartial and the government is effective. Interestingly, it is found that firms are more likely to achieve innovation in corrupted regions with a lower regulatory quality, but in those regions the innovative output firms can reap is less. Meanwhile, in regions where more time is used to deal with government regulations, firms present better innovative performance. All these findings allude a fact that the private sectors in China have long been plagued with prevalence of corruption and inadequate regulations imposed by the government, thus Chinese private firms have learnt how to live through poor institutions to conduct knowledge production activities, but this will not change the fact that firms’ innovative capacity has been undermined by poor government institutions. The findings in this paper, therefore, highlight the significance of efforts devoted to improving the quality of government institutions in various dimensions for the private sectors in China to realize better innovative performance.