The diffusion/adoption of innovation in the internal market - Jordi

340 Pages·2009·4.03 MB·English

by  Jordi Suriñach

EUROPEAN
ECONOMY
Economic Papers 384| September 2009
The Diffusion/Adoption of Innovation
in the Internal Market
Jordi Suriñach, Corinne Autant-Bernard, Fabio Manca
Nadine Massard and Rosina Moreno
EUROPEAN COMMISSION
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KC-AI-09-384-EN-N
ISSN 1725-3187
ISBN 978-92-79-11195-2
DOI 10.2765/40088

© European Communities, 2009
The Diffusion/Adoption
of Innovation
in the Internal Market

This study was commissioned by Directorate-General Economonic and Financial Affairs
and carried out by
(1)
Jordi Suriñach ([email protected])
(2)
Corinne Autant-Bernard ([email protected])
(1)
Fabio Manca ([email protected])
(2)
Nadine Massard ([email protected])
(1)
Rosina Moreno ([email protected])

(1) Anàlisi Quantitativa Regional-IREA (AQR-IREA) – Universitat de Barcelona
(2) Centre de Recherches Economiques de l'Université De Saint-Etienne (CREUSET)
The Diffusion/Adoption of Innovation in the Internal Market

Table of Contents

Executive Summary……………………………………………………………………………i
Abstract………………………………………………………………………………………xv

Introduction, objectives and outline of the report.....................................................................9
Part I. Literature review and analytical framework to study innovation diffusion.................15
I.1. Review of theoretical and empirical studies............................................................16
I.1.1. Stylised facts in the process of diffusion of innovation..................................16
I.1.2. Demand models: Demand-side determinants of the diffusion of innovation.18
I.1.2.1 Theoretical and empirical evidence based on the demand models...............................18
I.1.2.2 Review of main determinants of innovation diffusion on the demand-side.................21
I.1.3. Supply models and Technology characteristics: Supply-side determinants of
the diffusion of innovation..............................................................................24
I.1.3.1 Theoretical and empirical evidence based on the supply models.................................24
I.1.3.2 Review of main determinants of innovation diffusion on the supply-side...................25
I.1.4. Review of the literature and the main determinants of innovation adoption as
a result of the interaction between supply and demand..................................26
I.1.5. Regulatory environment determinants: Emphasizing the role of IPRs,
integration and competition.............................................................................30
I.1.5.1 The role of IPR regimes...............................................................................................32
I.1.5.2 The role of integration and competition.......................................................................36
I.1.6. How innovation diffusion is formalised in empirical literature......................40
I.1.7. Conclusion......................................................................................................43
I.2. Internal Market and innovation diffusion/adoption.................................................45
I.2.1. The IM objectives...........................................................................................45
I.2.2. Why IM may impact on the drivers of innovation diffusion?........................46
I.2.2.1 IM and the awareness about new technologies............................................................47
I.2.2.2 IM and the ability to use and adapt the new technology..............................................48
I.2.2.3 IM and the profitability of adoption.............................................................................49
I.2.3. Conclusion......................................................................................................50
I.3. Theoretical model and empirical strategy...............................................................51
I.3.1. Setup of the basic model.................................................................................52
I.3.2.Endogenous technology...................................................................................52
I.3.3. Innovation diffusion/adoption and the role of the IM.....................................54
I.3.4. Empirical Approach........................................................................................58
I.3.4.1 On the IM approximation.............................................................................................58
I.3.4.2 Estimating the impact of the IM on innovation adoption.............................................59

Part II. Descriptive statistical analysis of the innovation diffusion in EU..............................62
II.1. Using innovation survey to account for innovation diffusion/adoption.................65
II.1.1. Innovation survey: a review .........................................................................65
II.1.2. Target population of the CIS.........................................................................68
II.1.3. Data collection in the CIS3............................................................................69
II.1.3.1 Unit non-response: sampling issues............................................................................69
II.1.3.2 Item non-response.......................................................................................................70
II.1.4. Characteristics of the data..............................................................................70
II.1.5. The database building....................................................................................72
II.1.5.1 CSI3 Macro and Micro data comparisons...................................................................72
II.1.5.2 A database built from Micro and Macro data.............................................................75
II.2. Measuring innovation adoption..............................................................................77
II.2.1. Definition and magnitude of innovation adoption based on CIS3................77
II.2.2. Magnitude of innovation adoption................................................................80
II.2.3. Nature of innovation adoption.......................................................................81
II.3. Descriptive statistics of innovation adoption in the EU.........................................83
II.3.1. Descriptive analysis of adoption rates: General strategies............................84
II.3.2. Descriptive analysis of innovation adoption by countries.............................85
II.3.3. Descriptive analysis of innovation adoption by sector..................................92
II.3.4. Sector compostion and country’s overall performance.................................95
II.4. Descriptive statistics of the potential determinants of innovation adoption in the
EU.............................................................................................................................96
II.4.1. Innovation inputs and adoption.....................................................................97
II.4.1.1 Sources of information for innovation: Different country profiles clearly identified but
not significatively related to the level of innovation adoption...................................98
II.4.1.2 Innovation expenditure nature and the adoption rate are not significantly
associated...................................................................................................................101
II.4.1.3 Human capital resources and adoption rate: a positive but non significant correlation
..................................................................................................................................106
II.4.1.4 A weak positive relationship between adoption rate and organizational changes.....109
II.4.1.5 A non significant correlation between adoption and cooperation in joint R&D........110
II.4.1.6 Conclusion on the relationship between innovation inputs and innovation
adoption......................................................................................................................114
II.4.2. Market features and innovation adoption rates............................................114
II.4.2.1 Competition and innovation adoption rates: no significant correlation.....................114
II.4.2.2 The innovation adoption rate seems to be not correlated with the level of trade
and negatively correlated with the barriers to trade................................................. 117
II.4.3. Regulatory environment and adoption rate ................................................121
II.4.3.1 Patents and other protection methods and adoption rate...........................................121
II.4.3.2 Internal Market and adoption rate.............................................................................127
II.5. Time profile of innovation adoption in EU countries..........................................133
II.5.1. Towards a more process oriented adoption ................................................134
II.5.2. Divergence in the evolution of the nature of adoption for product and process
innovation ...................................................................................................137
II.6. Conclusion: Typology of countries according to their innovation adoption patterns
.....................................................................................................................................140

Part III. Econometric Analysis of the Impact of the Internal Market on Innovation Adaption
across EU countries.................................................................................................147
III.1. Introduction.........................................................................................................148
III.2. First Stage analysis: the impact of IM regulations on the transmission channels of
Innovation Adoption...........................................................................................150
III.2.1. Introduction to the first stage.....................................................................150
III.2.2. Trade channel.............................................................................................151
III.2.3. Cooperation transmission channel.............................................................155
III.2.4. Competition channel..................................................................................158
III.3. Second stage estimates: the impact of the Transmission Channels of Innovation
Adoption..............................................................................................................163
III.3.1. Total Innovation Adoption results .............................................................164
III.3.2. Product Innovation Adoption.....................................................................167
III.3.3. Process Innovation Adoption.....................................................................169
III.4. Additional disaggregation of Innovation Adoption ...........................................170
III.4.1. Product Innovation Adoption made in Cooperation.........................................170
III.4.2. Product Innovation Adoption made in Isolation........................................170
III.4.3. Process Innovation Adoption made in Cooperation...................................172
III.4.4. Process Innovation Adoption made in Isolation........................................173
III.5. Additional estimations on the second stage equation: Innovation Adoption
equation using micro data...................................................................................174
III.6. Conclusions ........................................................................................................178

Part IV. Analysis of the effects of innovation diffusion/adoption on productivity growth..181
IV.1. Introduction .......................................................................................................182
IV.2. Empirical verification of the relationship between innovation adoption and
productivity.........................................................................................................182
IV.2.1. Empirical verification of the relationship between innovation adoption and
productivity at the global level...............................................................................183
IV.2.2. Empirical verification of the relationship between innovation adoption and
productivity at the sectoral level.............................................................................188
IV.3. Empirical verification of the relationship between innovation adoption and
productivity growth...............................................................................................................191

Part V. Policy recommendations...........................................................................................199
V.1. Identifying the determinants of innovation adoption...........................................201
V.1.1. The transmission channels at the macro level......................................................201
V.1.2. Micro-economic determinants of innovation adoption.....................................203
V.1.3. Role of IPR.....................................................................................................................205
V.2. Identifying the IM regulations likely to boost the channels of innovation adoption.
.....................................................................................................................................206
V.3. Dealing with the diversity of national profiles....................................................210
V.4. Suggestions for future implemention of CIS data and questionnaries.................212
References.............................................................................................................................214

Appendices of Part I..............................................................................................................231
Appendix I.1. Deeper analysis of the authors with main contributions to the literature
on innovation diffusion in the demand-side models.............................231
Appendix I.2. Deeper view of the forces that influence the diffusion of innovation
according to the supply models.............................................................233
Appendix I.3. IPRs and the level of development of the economy and the endowment
of other factors......................................................................................236
Appendix I.4. Different paths for the diffusion/adoption of innovation......................239

Appendices of Part II.............................................................................................................243
Appendix II.1. Problem of double counting from macro dataset and its
implications..........................................................................................243
Appendix II.2. Innovation Adoption by sectors..........................................................247
Appendix II.3. Robustness check of our indicator of Innovation Adoption and
discussion of alternative indicators......................................................260
Appendix II.4. Principal Component Analysis (PCA) concerning sources of information
for innovation.......................................................................................265
Appendix II.5. Factorial Correspondence Analysis (FCA) and additional descriptive
statistics concerning innovative expenditure......................................268
Appendix II.6. Principal Component Analysis (PCA) concerning invention protection
methods................................................................................................271
Appendix II.7. Descriptive statistics by country and sector........................................274
Appendix II.8. Typology of EU countries…………………………………………….278
Appendix II.9. Summary of the variables used in part II............................................280
Appendix II.10. Product and Process Innovation Adoption correlation matrices.......283
Appendices of Part III...........................................................................................................287
Appendix III.1. Determinants of trade.........................................................................287
Appendix III.2. Determinants of Cooperation.............................................................288
Appendix III.3. Determinants of Competition.............................................................289
Appendix III.4. Some explanations about variables used in Part III and their
definitions............................................................................................290
Appendix III.5. Determinants of Innovation and Innovation Adoption at micro
level ..................................................................................................295
Appendix III.6. Summary of the variables used in part III..........................................314

List of Tables.........................................................................................................................318
List of Figures.......................................................................................................................320