Progress 10/01/08 to 09/30/09
Outputs
OUTPUTS: The new research project on external financing of startup companies was getting started during the reporting period. AEM PhD student Jiahong Zhang and I conducted a thorough literature review and developed a theoretical framework to begin the empirical analysis on external financing of innovation in emerging economies. During fall 2009, the first phase of empirical analyses was completed with very promising results. Our theoretical framework is proving to be empirically relevant and interesting. This work resulted in one working paper that has been presented in an international conference, in an invited seminar, and it will be submitted to the Academy of Management annual conference in January 2010. PARTICIPANTS: Jiahong Zhang, PhD student in Applied Economics and Management TARGET AUDIENCES: New York State and international development policymakers and entrepreneurs. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts
At this early stage of the research, we are happy to report that the conceptual work done initially is yielding interesting empirical results. Analyses of the World Bank data that we are using received a lot of interest in an international conference on innovation in Copenhagen, Denmark. This dataset enables highlighting the role played by informal external finance, such as that received from family and friends, in innovation. This is an area of innovation finance previously largely ignored in the literature, primarly because of lack of empirical data. We are currently working to extend our conceptual framework to deepen the analyses of informal finance. This will be the focus of our work when we shift to analysing the Kauffman data for New York and other states.
Publications
- No publications reported this period
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Progress 10/01/07 to 09/30/08
Outputs
OUTPUTS: Activities in this project included collaborative work with research assistant Xianzheng Kong (Applied Economics and Management), Prof. Carla Gomes (Applied Economics and Management; Computer and Information Science), and Yunsoong Guo (Computer and Information Science) to compile and organize a new dataset of the United States Patent and Trademark Office database combined with an existing dataset of standard-setting activities in the wireless telecommunication industry. This database will be used to analyze wireless telecom firms' patenting strategies, in particular, their strategies to search so called prior art (earlier inventions related to the current one being patented). There is reason to believe that firms strategically decide whether to reveal prior art, and this research contributes to this newly emerging stream of literature on the economics of innovation. New activities also included collection and analysis of a new dataset to analyze financing of innovation in Asian emerging economies, in collaboration with AEM PhD student Jiahong Zhang. This research builds on new enterprise surveys by the World Bank across dozens of Asian countries. The survey data were supplemented by country-level information about economic, human, and political development. Ongoing research activities continued to analyze the existing datasets of wireless telecommunications firms in an international standard-setting organization (joint work with Prof. Talia Bar, Department of Economics) and of small and innovating Finnish firms' strategies to protect their innovations and capture innovation profits with intellectual property (joint work with Prof. Markku Maula, Helsinki University of Technology and Prof. Ari Hyytinen, University of Jyvaskyla, Finland). Both ongoing research activities are nearing completion and resulting articles will be submitted to journals in early 2009. Dissemination strategies include outreach through consulting with private companies and collaboration with Central New York high technology business community in a new research project on commercialization of science-based inventions. PARTICIPANTS: Principal Investigator: Prof. Aija Leiponen, Applied Economics and Management, Cornell University. Research Assistant: Xianzheng Kong, PhD student, Applied Economics and Management, Cornell University. TARGET AUDIENCES: Nothing significant to report during this reporting period. PROJECT MODIFICATIONS: Not relevant to this project.
Impacts
These research activities have led to changes in knowledge on the part of the various participants: principal scientist, faculty collaborators, and graduate students. Students have learned technical skills and conceptual techniques while engaged in the research work. Faculty engaged in this research have discovered novel knowledge about the various topics. Through outreach and collaboration with industry, the results have also disseminated into the business communities both in Central New York and Finland. An additional participant in the research process has been the undergraduate students in an Applied Economics and Management elective course Innovation Strategy, which has been engaged in the collection of data through case study interviews with local technology entrepreneurs.
Publications
- Columnist at ITViikko (IT Week), a Finnish weekly newspaper focused on information technology industries, fall 2007.
- Leiponen A. (2007). The impact of contractual arrangements on innovation in Finnish knowledge-intensive business services. Pp. 163-176 in Business services in European economic growth by H. Kox and L. Rubalcaba (eds.). London: Palgrave-MacMillan.
- Leiponen A. (2007). Lisaako tutkimus- ja kehitystoiminnan hajauttaminen yritysten innovatiivisuutta (Does decentralization of R&D improve firms innovativeness). Pp. 129-138 in Kilpailu, innovaatio ja tuottavuus (Competition, Innovation, and Productivity) by M. Maliranta and P. Yla-Anttila (eds.). Helsinki: Taloustieto.
- Leiponen, A. (2008). Competing Through Cooperation: Standard-Setting in Wireless Telecommunications. Management Science 54(11), 1904-1919.
- Leiponen, A. (2008). Control of Intellectual Assets in Client Relationships: Implications for Innovation. Strategic Management Journal 29, 1371-1394.
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Progress 10/01/06 to 09/30/07
Outputs
OUTPUTS: This project carried out activities in all three subprojects. A new dataset of patents for wireless telecommunications firms was developed in a cross-campus collaboration with professors Talia Bar and Carla Gomes. These data and their analyses build on the work earlier started on firms' Intellectual Property Rights strategies and the work on technical standardization in wireless telecommunications. In the standard-setting project, a symposium was organized at the Academy of Management to disseminate and discuss leading-edge research on the topic. In the firms' long-term innovation patterns project, new data on the effects of firms' international activities on their innovation success were collected and organized. Earlier research in this stream of research was presented in another Academy of Management symposium on the effects of multilocation (geographic disperson) of firms' research and development activities on innovation outcomes.
PARTICIPANTS: PI: Aija Leiponen Graduate research assistant: Xianzheng (Shawn) Kong, AEM PhD student Partner organization: ETLA -- The Research Institute of the Finnish Economy
TARGET AUDIENCES: Target audiences include policymakers in the areas of innovation, R&D, standards, and small firm administration. Dissemination methods included submission and publication of articles in policy-oriented journals.
PROJECT MODIFICATIONS: Major changes in approach include newly gained access to the patent network database compiled by professor Carla Gomes. While this database has been under construction for a few years, it is now becoming available for joint research projects. This opened up opportunities to address new policy-relevant research questions.
Impacts
1. Research results indicated that small firms' modes of external funding are intricately linked with their intellectual property rights strategies. In particular, venture capital financing does influence the incidence of patenting. In a previous study, we found that small firms do not rely much on patenting, which suggested that the patent system does not really support small firms' innovation activities. The new results imply that access to funding may be driving the earlier results. This research contributes to the ongoing policy debate on the patent system. 2. Other recent analyses show that firms react to their positions in the standard-setting social network. They seek to enhance their connectivity through the choices of committees, in order to become more influential in the standardization process. Connections are shown elsewhere to be a source of power in standard-setting negotiations. These research results help scholars and policymakers better understand the
cooperative standardization process and its implications for competition and economic efficiency. 3. Our main finding from the R&D multilocation study suggested that there are benefits to be gained from access to embedded knowledge in different geographic locations. The new research adds the international dimension to the analysis of location and innovation. Preliminary analyses will be carried out in the summer of 2008.
Publications
- Leiponen A. and Drejer, I. 2007. What Exactly are Technological Regimes? Intra-industry Heterogeneity in the Organization of Innovation Activities. Research Policy 36, 1221-1238.
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Progress 01/01/06 to 12/31/06
Outputs
1. Knowledge intensive business services. A new paper is under third review in Strategic Management Journal and thus should appear in print in 2007. A chapter in an edited book is also in progress. After these publications, the project using the business service dataset is winding down, but I continue to study some of the research questions that emerged in the project with a new dataset. The new sample has data from about 1 000 Finnish small, mostly technology-intensive firms. This dataset enables studying issues related to the protection of small firms intellectual assets and innovation output. From this new sample, a first working paper is finished and submitted. It found that patenting is not a very useful strategy for innovative small firms, particularly if they cooperate vertically with clients or suppliers. Cooperating small firms prefer speed to market: launching innovative products ahead of the competition. This raises questions regarding intellectual property
policies that emphasize patents as the primary means of protection and source of societal incentives for innovation. Next, I have started to explore in collaboration with two Finnish colleagues the effects of small firms ownership structures on their strategies to protect innovations and intellectual property. 2. Collaborative standard setting. A new paper examines the effects of firms consortium and alliance activities on standard-setting success in a longitudinal setup. It is under second review in Management Science. The main results are that working with peers in external industry consortia helps firms to make contributions to new standard specifications, while connections in the specification development process enable firms to become influential players. These results indicate that if firms wish to influence standard setting, they should have a broad cooperative strategy and connect with as many peers as possible. Theoretical modeling of firms' standard-setting coalition
behavior is also in progress in collaboration with Prof. Talia Bar (Cornell Department of Economics). 3. Long term patterns of innovation in manufacturing firms. A paper co-authored with Constance Helfat (Dartmouth College) examined the effects of geographic decentralization of firms' R&D activities on their innovation performance was written and submitted to Organization Science. We found that limited decentralization promotes innovation and suggest that the underlying reason is that geographic decentralization enables access to a more diverse set of localized information and knowledge, which are important inputs into innovation activities. A new collaborative project with Constance Helfat and her colleagues in Dartmough College focuses on the international dimension of firms' knowledge sourcing strategies. In particular, we examine the effects of exports, foreign subsidiaries, and international R&D collaboration on firms' innovation performance. Additional funding for all three
subprojects has been obtained from Finnish sources, including the Research Institute of the Finnish Economy, Academy of Finland, National Technology Agency, and a group of Finnish wireless telecommunications firms.
Impacts
This research project generates management and policy recommendations as well as contributes to the theory of the firm regarding how to support productive and efficient innovation and collaboration processes among firms. The most novel empirical context in which these issues are studied within this project involves cooperative technical standardization, the results of which will be of interest to telecommunications firms and policymakers. Understanding the creation of information and communication technology standards is critical in the evolving information society in order to keep the information infrastructure open for access and competition. Another highly policy-relevant question studied in this project involves the role of small firms in the current system of intellectual property rights.
Publications
- Leiponen, A. 2006. Managing Knowledge for Innovation: The Case of Business-to-Business Services. Journal of Product Innovation Management 23, No. 3 (May), 238-258.
- Leiponen, A. 2006. Organization of Knowledge Exchange - An Empirical Study of Knowledge-Intensive Business Service Relationships. Economics of Innovation and New Technology 15 (4-5).
- Leiponen, A. 2006. National styles in the setting of global standards - The relationship between firms standardization strategies and national origin. Pp. 350-372 in How Revolutionary was the Revolution? National Responses, Market Transitions, and Global Technology in the Digital Era by A. Newman and J. Zysman (eds.). Stanford University Press.
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Progress 01/01/05 to 12/31/05
Outputs
Knowledge intensive business services First, the latest paper developed from the current dataset focuses on the effects of employment contractual arrangements on innovation in business service firms. It is found that non-monetary incentives induce more innovation than monetary rewards. This finding is provocative in light of recent research and managerial emphasis on aligning monetary incentives with the firms business objectives through profit-sharing schemes. Second, I have recently obtained a new survey dataset concerning IPR arrangements in Finnish small and medium enterprises (SMEs). Descriptive results suggest that small firms tend to prefer speed over patents as a means to protect returns to innovation, in contrast to earlier studies of firms of all sizes. Additionally, firms that cooperate vertically in their innovation activities are found to avoid secrecy as a method of appropriability. Next, I will focus on the characteristics of SMEs client relationships
and associated IPR arrangements. Collaborative standard setting The first publication from this subproject found that cooperative arrangements towards technical standardization employed by companies differ depending on firms national origins (Asian, North American or European). Another new result suggests that active membership in various kinds of industry consortia improve firms standardization prospects in terms of getting to influential positions in formal standard-setting organizations. Next, longitudinal analyses and theoretical modeling of firms standard-setting coalition behavior will be carried out in collaboration with Prof. Talia Bar (Cornell Department of Economics). Long term patterns of innovation in manufacturing firms A paper that evaluates the heterogeneity of innovation strategies in different industries, co-authored with Professor Ina Drejer from Aalborg University (Denmark), was submitted to a peer reviewed journal. The next stage in this subproject involves
longitudinal analyses of innovation behavior. First, how do firms choices regarding geographic decentralization of R&D activities impact their innovation performance? Second, what causes firms to make substantial changes in innovation strategy? These questions are studied in collaboration with Constance Helfat and Ina Drejer, respectively. Additional funding for all three subprojects has been obtained from Finnish sources, including the Research Institute of the Finnish Economy, Academy of Finland, National Technology Agency, and a group of Finnish wireless telecommunications firms.
Impacts
This research project generates management and policy recommendations as well as contributes to the theory of the firm regarding how to support productive and efficient innovation and collaboration processes among firms. The most novel empirical context in which these issues are studied within this project involves cooperative technical standardization, the results of which will be of interest to telecommunications firms and policymakers. Additionally, new insights into management of intellectual property and cooperation in small firms are expected.
Publications
- Leiponen, Aija. 2005. Skills and Innovation. International Journal of Industrial Organization 23: 303-323.
- Leiponen, Aija. 2006. National styles in the setting of global standards: The relationship between firms standardization strategies and national origin. Forthcoming in How Revolutionary was the Revolution? National Responses, Market Transitions, and Global Technology in the Digital Era by A. Newman and J. Zysman (eds.). Stanford University Press.
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Progress 01/01/04 to 12/31/04
Outputs
Knowledge intensive business services: Two articles previously submitted to peer reviewed journals have advanced towards publication in 2005 (Industry and Innovation and Journal of Product Innovation Management). A third article has been prepared for submission to Research Policy. This latter article examines the role of intellectual property rights (IPRs) in knowledge-intensive Business-to-Business service provision. In particular, IPRs matter in terms of generating incentives for innovation and service improvement. If service clients retain rights to all intellectual property arising in supply relationships with service providers such as engineering, consulting, or R&D services, they risk stifling innovation, which in the long term would be detrimental to both companies. New survey data on IPR arrangements in small and medium sized Finnish software and other technology companies has recently become available. I plan to spend July and August 2005 analyzing these data
and comparing the results with the current business service dataset. Additional areas of intellectual property, such as copyrights, can be assessed with the new data. Collaborative standard setting: First analyses using the new dataset have been carried out and presented at the Academy of Management meeting 2004 and in a research workshop with UC Berkeley and Finnish industrial economics scholars. Preliminary results suggest that cooperative arrangements towards technical standardization employed by companies differ depending on firms national origins (Asian, North American or European) and that these arrangements matter for firms standardization outcomes: success or failure to get technological solutions incorporated in industry standards. A book chapter focusing on the first result is accepted and forthcoming in an edited Stanford University Press volume. A paper discussing the second result has been presented in research seminars on Cornell campus and will be submitted to a peer
reviewed journal in 2005. In the next step of the project, longitudinal analyses of the dataset will be carried out in 2005. Long term patterns of innovation in manufacturing firms: A paper coauthored with Professor Helfat from Dartmouth College on the breadth of firms innovation approach is under review in Strategic Management Journal. Additionally this paper was presented in the Academy of Management, 2004. A second paper that compares patterns of technological change in service and manufacturing industries was also presented at the Academy of Management and will be submitted to a peer reviewed journal (Research Policy) during 2005. The dataset was expanded in June 2004 through a visit to Statistics Finland. Now longitudinal analyses of collaborative innovation and its management are enabled. This analysis will be done jointly with a group of researchers at Dartmouth College and a university in the United Kingdom and will focus on comparative analysis of Finnish and UK innovation
survey data on objectives and sources of innovation in manufacturing firms.
Impacts
This research project generates management and policy recommendations as well as contributes to the theory of the firm regarding how to support productive and efficient collaboration processes among firms. The most novel area in which these issues are studied within this project involves cooperative technical standardization, the results of which will be of interest to telecommunications firms and policymakers. For example, tentative results indicate that standardization is dominated by large and technologically advanced companies, but with smart cooperative strategies, smaller companies can succeed as well.
Publications
- Leiponen, Aija. 2004. Knowledge Services in the Finnish Innovation System. In Schienstock, G. (ed.): Embracing the Knowledge Economy. Edward Elgar: Cheltenham UK.
- Leiponen, Aija. 2005. Organization of Knowledge Exchange: An Empirical Study of Knowledge-Intensive Business Service Relationships. Economics of Innovation and New Technology.
- Leiponen, Aija. 2005. Innovation in Business Services. Industry and Innovation.
- Leiponen, Aija. 2005. Core Complementarities of the Company? Organization of an Innovating Firm. Managerial and Decision Economics.
- Leiponen, Aija. 2005. Where you are from is how you play: The relationship between technical standardization strategies and national origins of firms. Newman, A. and J. Zysman (eds.): Divergence or Convergence - European and US perspectives to future communications. Stanford University Press.
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Progress 01/01/03 to 12/31/03
Outputs
1) Knowledge intensive business services: Two articles from this research subproject have been submitted to peer reviewed journals (Journal of Product Innovation Management and Industry and Innovation), and these papers were also presented at the annual meetings of the Academy of Management. The first article examines the relationship between management of knowledge and innovation outcomes in business service firms, and finds that it pays for firms to transform knowledge and skills so as to make them collectively held and accessed, as opposed to individually held. In other words, practices that generate team based knowledge and shared routines support innovation, as do practices that codify and articulate tacit knowledge into intellectual property. However, these two kinds of practices produce different types of innovation, and this result is the main contribution of this paper. Team practices support more radical innovation than codification practices. The second
submitted article provides an overview of innovation activities of knowledge-intensive business service firms, with a focus on their external knowledge sourcing practices. It finds that internalizing knowledge from external providers such as customers and competitors helps firms make more significant innovations than practices relying on incremental learning within the company. 2) Collaborative standard setting: The database in this subproject is still in progress, and additional progress has been made in starting preliminary analyses. A chapter discussing the research question using descriptive analysis of the data was invited for submission in an international edited volume of competition in the wireless telecommunications in the US and in Europe. 3) Long term patterns of innovation in manufacturing firms: A paper coauthored with Professor Helfat from Dartmouth College was submitted to the peer reviewed journal Management Science. This paper was also presented in an international
conference on innovation. The main results suggest that breadth in innovation activities matters for innovation success. Patterns of sourcing external information have been studied in the literature, and we show that the diversity of external sources used improves innovation success. The novel aspect is that the diversity of innovation objectives (or projects) has a strong significant effect as well. In other words, firms that engage in a larger number of different innovation projects are more likely to succeed in the highly uncertain process innovation. A second paper that compares patterns of technological change in service and manufacturing industries was presented in a European workshop on innovation studies. This paper will also be submitted to a peer reviewed journal during 2004. The next data collection phase starts in June 2004, when I plan to extend the datasets used in the two papers mentioned above. These new data will enable longitudinal analyses of the research questions
already examined with cross-sectional approaches.
Impacts
This research project generates management and policy recommendations as well as contributes to the theory of the firm regarding how to support productive and efficient collaboration processes among firms. The most novel area in which these issues are studied within this project involves cooperative technical standardization, the results of which will be of interest to telecommunications firms and policymakers.
Publications
- No publications reported this period
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Progress 01/01/02 to 12/31/02
Outputs
Knowledge intensive business services Findings from a study of how intellectual assets are divided between knowledge-intensive business service suppliers suggest that the nature of the knowledge exchange between the supplier and the client matter. If the service supplier provides pure 'expert services' to the client, then the client is likely to obtain the ownership of intellectual assets, but if the service supplier provides service solutions where increasing returns to service development are present, then the service supplier is likely to obtain the rights to intellectual assets. This supports extending the theory of the firm to include variables related to firms' knowledge accumulation. In another paper, control rights to intellectual assets are used to explain innovation output of service suppliers. These rights are shown to generate incentives to innovate. Therefore, if the service supplier obtains the rights, it is more likely to innovate. This result has
implications for the management of supply relationships and strategic alliances. Sometimes client should let suppliers control intellectual assets arising from joint projects. This is in contrast to extant strategic management research which advocates strong control of all intellectual property in external relationships. The last study examines knowledge assets of business service firms in more detail. Here we find that service firms that codify their knowledge base or support collective knowledge creation and utilization are more innovative. Relying on tacit and individual-based expert skills is not conducive to service innovation. This result is in line with existing conceptual and theoretical work in organization studies, but empirical operationalization has previously been a challenge. Collaborative standard setting Progress has been made here in compiling a new database of firms' involvement in standards development organizations in wireless telecommunications and carrying out
preliminary analyses of firm strategies toward collective standard selection. Preliminary results indicate that in order to be an influential player, it is important for firms to engage in alliances and networks outside of the main decision-making forum. In 2003, we will collect more data in order to be able to do more comprehensive empirical analyses and complete case studies of three different standards promoting organizations. Long term patterns of innovation in manufacturing firms This subproject will start in summer of 2003 when I get access to the newly collected innovation data in Statistics Finland. Meanwhile, two collaborative studies are under way. First one examines the role of diversity of innovation inputs and objectives for innovation performance. A paper is being coauthored with Professor Constance Helfat from Dartmouth College. The second study investigates technological regimes in service industries. The collaboration partner here is Dr. Ina Drejer from Aalborg
University.
Impacts
This research program aims at contributing to our understanding of knowledge-based collaboration among firms. As innovation is becoming an increasingly important basis for competition, and as a result, strategic alliances becoming an important mode of innovation, organization and management of these interfirm relationships are now key tasks of strategic management. However, economic research of organization and R&D alliances has not kept up with the pace of change. This research project attempts to generate both management and policy recommendations as well as contribute to the theory of the firm as to how to support productive and efficient collaboration processes among firms.
Publications
- No publications reported this period
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