INNOVATION COOPERATION AND INNOVATION ACTIVITY Firm level evidence from Slovenia

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INNOVATION COOPERATION AND INNOVATION
ACTIVITY Firm level evidence from Slovenia

• Andreja Jaklic, Matija Rojec, Joe P. Damijan
• Zagreb, november 2008

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Motivation

• Innovation cooperation increasingly an element of
  innovation strategy (Powell et al., 2005)
• Sourcing versus making in every slice of value
  chain
• (Veugelers, Cassiman, 1997, 1999)
• Cooperation an important part of spillovers
  (outsourcing experience)
• Open source boom

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Interesting!

• Market
• ?Innovation cooperation
• Hierarhies

Long term Information intensive
Transaction costs Knowledge creation Risk
Diversification Incomplete contracts
Asimetrical

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Relevant

• Innovation performance confirmed, essential for
  sustainable growth
• Increasing internationalization of RD activities
  (Le Bas, Siera, 2002, WIR 2005)
• Innovation cooperation almost sine qua non for
  innovation activity /(incremental permanent
  innovation)
• Variety of disciplines currently try to examine
  the phenomenon from different perspectives
• Innovation networks

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For exTE/nEUms relevance

• CEE innovation modest compared to developed EU
  economies
• Followers, unintentional (laggards), (a few firms
  succeed in preserving own RD unit, innovation
  groups under pressure to be dismissed)
• No (poor) national innovation systems, slow
  home-grown innovation
• From big bang innovation to small/modest
  innovation that accumulates over time (CS most
  VA), crucial for followers
• From informal cooperation (institutions) to
  formal
• The importance of external/global/international
  v. national/domestic (PRELIMINARY RESULTS)
• How important are MNEs/FDI for local
  cooperation?
• CIS data available!
• Slovenia among top 3 in innovation cooperation
  (CIS 2004)

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Objectives

• THE SCOPE, RELEVANCE and EFFICIENCY of innovation
  cooperation
• How important is the external innovation
  cooperation for innovation activity?
• What kind of innovation cooperation exist, which
  is most productive?
• Does a location of partner involved in innovation
  cooperation matter?
• Are MNEs different?

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Relations explored

• 1. External innov. cooperation v. own RD
• (Veugelers, Cassiman, 1997, 1999)
• Transaction costs literature (Coase, 1937, Arrow,
  1962) - substitutes
• Recent studies stress complementary
• Absoption capacity needed
• Sophisticated buyer (Radnor, 1991), transfer of
  knowledge possible only if you have own RD

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• 2. International versus domestic innovation
  spillovers
• 3. Inter-firm (and intra-firm) cooperation versus
  cooperation with RD institutes and universities
• 4. Public versus private partners in innovation
  cooperation

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Data sources limitations

• Country study - Slovenia
• CIS from 1996 to 2004,
• financial statements collected by Agency of the
  Republic of Slovenia for Public Legal Records and
  
• Related Services (AJPES) and information on FDI
  status (parent company or foreign affiliate)
• Unballanced data, pooled sample, (not panel)

Above 3000 firms targeted, gt80 response
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Types of external partners

• Research institutes
• Private/ Comercial labs and RD institutes
• Public RD institutes
• Universities

• Inter-firm
• Customers,
• Suppliers
• Competitors
• Consultants
• Other firms

Location

• Domestic (SLO)

• Foreign (EUEFTA, new EUm/CEECs, USA, Japan,
  other)

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Evidence from descriptives

• Table 1 Innovation activity and innovation
  cooperation of Slovenian firms by type of
  ownership, 2000-2004 (in )

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Location of innovation partner(s)

• domestic partners more frequent than
  international cooperation the extent of
  international cooperation falls with the distance
  larger among manufacturing than services
  enterprises

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THE IMPACT TO INNOVATION ACTIVITYProbability to
be innovative firm

• Mit matrix of operational characteristics of
  firms
• RD/sales, the size (and existence) own RD
  department, innovation activity in the past
• export intensity, inward FDI
• Controls size, capital intensity, relative
  productivity, technological intensity, skill
  intensity
• Innovation cooperation(total, domestic-internation
  al, public private, Technological intensity of
  sectors is also included

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Firms probability to innovate (Results of a
probit model)
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Firms probability to innovate (Results of a
probit model)
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The efficiency of innovation cooperationdprobitd
F/dx is for discrete change of dummy variable
from 0 to 1
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Concluding remarks policy and managerial
implications

• INNOVATION STRATEGY should consider
• Innovation cooperation contributes to innovation
  activity important channel for enhancing
  home-grown innovation
• Own RD expenditures, own RD activity organized,
  past innovation most important predictors the
  role of absorption capacity in using external
  innov. coop.
• Foreign ownership non-significant, outward
  investment robustly significant? MNEs important,
  yet IFDI not sufficient

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Concluding remarks (2)

• Both domestic and international innovation
  cooperation important for innovation performance
• Closer regions more important
• Cooperation with firms more important, ? many
  tasks for universities RD institutes
• Governments, universities and local business will
  have to work together to improve environment for
  innovation

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Further research

• Determinants of innovation cooperation, relations
  within different types of cooperation
• Firm-level determinants
• National innovation systems (mesures, clusters,
  technological networks, ...)
• Innovation cooperation and RD spending How does
  innov. cooperation influence internal RD
  (expenditures/organization/platform)?
• Innovation cooperation and outsourcing
• Effects on productivity
• Optimum innovation cooperation strategy?

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... future firm level research...

• Observing domestic case studies
• Elan, Kolektor, Gorenje, ST
• Learning (by mistakes and success) is faster,
  cheaper, the volume of merchandised ideas larger
• Inn. coop. brings broader scope economies of
  scope
• Innovation in advertising (targeting), financing,
  ICT use, e-business
• The role of SMEs in innovation networks
• Explore the implementation of organizational
  structure incentive scheems into daily
  bahaviour