Non-R&D innovation of manufacturing firms: theory and evidence from the third European Community Innovation Survey

Can Huang, UNU-MERIT

Non-R&D innovation is a prevalent economic phenomenon, though R&D has been the central focus of policy making and scholarly research in the field of innovation. The third European Community Innovation Survey (CIS-3) shows that more than half of the European innovative firms did not conduct intramural or extramural R&D. Instead of investing in R&D, they acquired advanced machinery, purchased patents and licenses or carried out training and marketing activities to develop product or process innovations. In this paper we develop a two-stage non-cooperative game to model the decisions of firms with regard to the allocation of their budgets between R&D and non-R&D innovation activities. We demonstrate in the model that firms would choose to engage in the more effective activities in terms of production cost reduction, given the risk of the activities and their technological opportunities, resources and experiences. In light of the theoretical arguments, we examine the CIS-3 data to provide supportive empirical evidences.

About the speaker
Co-authors: Anthony Arundel (UNU-MERIT) and Hugo Hollanders (UNU-MERIT)

Venue: UNU-MERIT conference room

Date: 21 January 2009

Time: 12:00 - 13:00  CET