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Taiwan's pharmaceuticals: A failure of the sectoral system of innovation?

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Abstract

The study investigates Taiwan's sectoral system of innovation in the pharmaceutical industry, which has failed to achieve international competitiveness, despite strong state support. Our investigations were designed and carried out in two stages. In the first stage, we developed a statistical method to measure the institutional drivers in Taiwan's pharmaceutical industry. This finding received strong support in our second stage of analysis, which involved the use of both: (1) inductive processes (through the use of interviews) and (2) deductive (i.e., mathematical) approaches to analyze the innovation performance in Taiwan's pharmaceutical industry. In particular, we compared patenting and publication activities in Taiwan versus those of India. The results of our study demonstrate that the intellectual property regime (i.e., patents and publications) is playing a critical role in linking actors and institutions and is highly associated with the effectiveness of the innovation system in the pharmaceutical sector.

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... Although these countries have confronted problems of resource-limitation-such as limited R&D expenditure and manpower-they were still able to quickly catch up to advanced countries in terms of production activities through a sophisticated establishment of connection between scientific research and production within their innovation systems. However, despite considerable state support-even more than that received by the Information and Communication Technology (hereafter ICT) sector in which Asian latecomers have appeared to be very successful (Industrial Technology Research Institute, 2009)the biopharmaceutical industry has not yet achieved international competitiveness or found its comparative advantages (Hu & Hung, 2014). This study thus aims to explore why is growth more difficult to achieve for biopharmaceutical latecomer firms than that of the ICTs firms when both are operating in a dynamic high-tech environment that shares a common national innovation system. ...
... This is done by collaborating with universities and research institutes, outsourcing R&D experiments and clinical R&D to small but specialised contract research organisations as well as outsourcing production activities to contract manufacturing organisations (Cockburn, 2004). The result of such change, from a closed towards an open innovation system, has enabled prosperous development in many latecomer countries that listed biotechnology (and especially biopharmaceuticals) as one of their strategic foci in 1990s, including India, Singapore, Korea, Taiwan and China (Hu & Hung, 2014;IMS Health, 2008). ...
... Since the 1990s, while the global outsourcing activity of large pharmaceutical companies was thriving, Taiwan's government has listed biotechnology as one of its national strategic foci with prioritisation given to the biopharmaceutical industry. Nevertheless, the total production value of Taiwan's pharmaceutical industry has not significantly increased since the 2000s (Hu & Hung, 2014). According to the White Paper released by the Development Center of Biotechnology in 2014, the total annual output of Taiwan's biopharmaceutical industry was around NT$80 billion (approximately US$2.3 billion) in 2013, which represented only 0.5 per cent of the global market share. ...
Article
This study examines why the growth of biopharmaceutical firms in latecomer countries such as Taiwan has been slower than that of information and communication technology (ICT) firms. Unlike prior studies which have focused on the industry-level driving forces, this study offers a firm-level perspective to examine factors driving industry growth. By utilising the DEcision-MAking Trial and Evaluation Laboratory (DEMATEL) method, we analyse data collected in questionnaires with the top managers of biopharmaceutical and ICT firms in Taiwan, both public and non-public. We then compared and contrasted our empirical findings to capture theoretical and practical insights. Our empirical results demonstrate that the entrepreneurial activities of Taiwan’s biopharmaceutical firms are weak in terms of adaptation to external institutions and the utilisation of resources while the primary drivers of growth in Taiwan’s biopharmaceutical firms are rather (internal) institutional factors than resource-based factors, especially in the emerging and early growth stages. We conclude that the challenge for the latecomers lies on the institutional entrepreneurship to enable and affect the circulation of strategic resources so as to bring the firms onto the growth and mature stages.
... In mainstream innovation studies, the innovation system literature has been focused on exploring how institutional settings and network compositions shape a system's innovation dynamics (Castellacci 2009;Teubal 2002). This literature has shown how, at the sectoral level, the characteristics of an innovation system-including its knowledge base, learning mechanisms, public-private linkages and relationships between firms-significantly influence the innovation performance and competitiveness of firms within the system context (Hu and Hung 2014;Kim and Lee 2008;Malerba 2004). As such, innovation system literature is able to provide a full understanding of the structural features leading to an 'innovative' system in terms of sectoral and national perspectives. ...
Book
This volume presents selected contributions from the 2018 conference of the International Schumpeter Society (ISS). The selected chapters in this volume reflect the state-of-the-art of Schumpeterian economics dedicated to the three conference topics innovation, catch-up, and sustainability. Innovation is driving catch-up processes and is the condition for a transformation towards higher degrees of sustainability. Therefore, Schumpeterian economics has to play a key role in these most challenging fields of human societies’ development in the 21st century. The three topics are well suited to capture the great variety of issues, which have the potential to shape the scientific discussion in economics and related disciplines in the years to come. The presented contributions show the broadness and high standard of Schumpeterian analysis. The ideas of dynamics, heterogeneity, novelty, and innovation as well as transformation are the most attractive fields in economics today and offer the most prolific interdisciplinary connections now and for the years to come when humankind, our global society, has to master the transition towards sustainable economic systems by solving the grand challenges and wicked problems with which we are confronted today. Therefore, the book is a must-read for scholars, researchers, and students, interested in a better understanding of innovation, catch-up, and sustainability, and Schumpeterian economics in general.
... Also Malerba and Nelson (2011) emphasized on the role of factors such as "firms learning," "access to foreign know-how" and "skilled human capital" in capability development and catch up in pharmaceutical sector across different countries. Finally, Hu and Hung (2014) concluded that the intellectual property regime is the main reason for failure of Taiwan's sectoral system of innovation in the pharmaceutical industry in comparison with India. These studies show that policy making for capability development through biopharmaceutical value chain needs a systemic approach and main pillars of a sectoral innovation system must be taken into account. ...
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Purpose Motivated by the huge potential of biosimilars in the near future and rapid growth of Iranian biosimilar producing firms in recent two decades, this paper aims to explore the positioning of these firms in biopharmaceutical value chain and their path of technological capability building to extract policy-relevant advice. Design/methodology/approach As part of a two-year research project, an online questionnaire was designed and sent to biopharmaceutical experts in Iran between May and October 2016. Respondents came from biopharmaceutical firms. Also, 12 semi-structured interviews were conducted to analyze the path of capability building in Iranian biosimilar-producing firms. Findings The findings show that Iranian biopharmaceutical firms (BPFs) are mostly concentrated on “pharmaceutical development,”, “drug manufacturing” and “ after-sales services’ activities.” The study also demonstrates that most BPFs in Iran are at the “assimilative” level of capability and a few of them have recently moved toward the “adaptive” level. Originality/value The findings show that Iranian BPFs are mostly concentrated on “pharmaceutical development,” “drug manufacturing” and “after-sales services” activities. The study also demonstrates that most BPFs in Iran are at the “assimilative” level of capability and a few of them have recently moved toward the “adaptive” level.
... As for the structure, the SIS is composed of three building blocks: 'knowledge and technologies, actors and networks, and institutions' (Malerba 2005). To provide a full understanding of industrial innovation activities, SIS has been adopted by some scholars (Hu and Hung 2014;García-Piqueres, Serrano-Bedia, and López-Fernández 2016;Intarakumnerd, Chairatana, and Kamondetdacha 2015;Andersen et al. 2014;McMahon and Thorsteinsdóttir 2013). Although the applicability of SIS has been widely acknowledged, there have been some suggestions for future study. ...
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This present paper studies the relationship between the industrial development environment (IDE) and the innovation efficiency (IE) of China’s high-tech industry. First, drawing upon insights from research on regional innovation systems and sectoral innovation systems, the paper proposes a definition of the IDE within which China’s high-tech industry exists. Then, by a factorial analysis, three main components reflecting the IDE are obtained: regional development conditions, regional consumption potential, and interactions between innovation actors. Furthermore, the impacts of various facets of the IDE on three kinds of IE are investigated through the DEA-Tobit regression approach. Based on the results, our analysis can provide information for policymakers to create a favourable environment for China’s high-tech industry.
... From the aspect of economics, Hu & Hung (2014) indicated that the fewer inputs but more outputs of a business revealed the better "performance" of the unit; and, "effi ciency" could be used as the evaluation standard to measure such performance. With the comparison of inputs and outputs, effi ciency could be defi ned as effi ciency = sum of weighted output /sum of weighted input. ...
Article
High-tech industry is facing the globally competitive situation that the development strategy for technology industry to integrate national power, combine international resources, and conform to the market trend is required for developing the internationally competitive high-tech industry in China. Following high customization and the development of product diversification to conform to various customer needs as well as short product life cycle, it becomes more important to understand the relative business performance of high-tech companies to the industry in China and evaluate the strengths and weaknesses in order to rapidly respond to customer needs and maintain high-quality products. Modified Delphi Method is utilized in this study for selecting inputs and outputs. The variable data used in this study are acquired from open statistical data of enterprises. Data Envelopment Analysis (DEA) is further used for evaluating the efficiency. The research results conclude that 1 DMU shows strong efficiency, with better operation efficiency, 4 DMUs present the operation efficiency between 0.9 and 1 that the operation efficiency can be more easily enhanced, and 5 DMUs appear the operation efficiency lower than 0.9, with obvious inefficiency. Furthermore, inputs and outputs are gradually removed in DEA for understanding the sensitivity to efficiency. Finally, suggestions are proposed according to the results, expecting to assist high-tech industry in China in the business development.
... In mainstream innovation studies, the innovation system literature has been focused on exploring how institutional settings and network compositions shape a system's innovation dynamics (Castellacci 2009;Teubal 2002). This literature has shown how, at the sectoral level, the characteristics of an innovation system-including its knowledge base, learning mechanisms, public-private linkages and relationships between firms-significantly influence the innovation performance and competitiveness of firms within the system context (Hu and Hung 2014;Kim and Lee 2008;Malerba 2004). As such, innovation system literature is able to provide a full understanding of the structural features leading to an 'innovative' system in terms of sectoral and national perspectives. ...
Chapter
It is great to launch these conference proceedings from the ISS 2018 conference held in Seoul, July 2–4, Korea. The theme of the ISS 2018 was “Innovation, Catch-up, and Sustainable Development. Keun Lee, one of the guest editors of this volume, served as the President of the Society (2016–2018) and also as the main host or Chairman of the Organizing Committee, for the Seoul conference. Actually, it took 26 years to return to Asia: the last ISS conference in Asia was held in Kyoto, Japan, in 1992. And it turned out to be a good decision for the International Schumpeter Society to return to Asia: About 380 papers were presented out of the 469 initial submissions from more than 50 nations around the world. Among these 380 presentations, there were about 90 papers presented by young scholars who are either graduate students or new Ph.D. students.
... Various industries (Finland) [16] Knowledge creation process, knowledge sharing A case of IT and multimedia business (Japan) [21] Knowledge sharing Mobile service (Nokia Group (Finland) [26] Knowledge sharing A case of food manufacturing company (Italy) [28] Social network -Networking Telecommunication projects (Multiple nations) [5] Social network Research institutes in Biomedicine (N/A) [30] Social structure Space industry (Multiple nations) [22] Communication, virtuality Electronic products (The Netherlands) [23] Goal definition Four cases (USA) [41] Goal definition A case in European electricity industry (N/A) [19] Goal definition -Creation mode Education (N/A) [1] Goal definition Denmark [11] Goal direction Eight cases in biotechnology industry (USA) [17] role of the creation process presented by the SECI is also explored. It should be noted that the current research did not consider the patent variable, although some of the reviewed literature used it to describe the CP in the context of Taiwan (Table 1) [46,48,49]. There are three reasons. ...
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This study proposes and empirically examines a research model that incorporates the knowledge creation mode and social networking mode to describe knowledge creation performance. The mediation effect of the knowledge creation process is explored in terms of socialization, externalization, combination, and internalization (SECI). The data collected from the manufacturing and service industries in Taiwan were analyzed. The goal-driven mode and web topology are found to be significantly associated with product or service creation primarily because of the creation efficacy aspect. The SECI with web topology has a mediation function when the goal-driven mode is adopted. Implications and suggestions are also provided.
... Recent years saw the framework of sectoral innovation system being widely applied to studies of different fields, such as the automotive sector in Thailand, 16 the animal monitoring technologies in Germany, 17 and solar innovation system in United Arab Emirates. 18 Furthermore, it has also been applied in the field of medicine such as the sector of tradition Chinese medical health food in China, 19 pharmaceutical industry in Taiwan, 20 biopharmaceutical sector in China, 21 and the antidepressants in traditional Chinese medicine. 22 As medical device sector is multidisciplinary and diversified in essence and largely contingent on changes of technology as well as policy, the framework of sectoral innovation system that emphasizes the dynamic development of an industry is deemed to be appropriate for studying the sectoral innovation. ...
Article
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Objectives This article aimed to discuss the emergence of medical device sector in China from a sectoral innovation system perspective, to explore the drivers and barriers to the successful building of an innovation system of medical devices, and to highlight the policy implications and suggestions for sustainable innovation of medical devices. Methods A theoretical framework of sectoral systems of innovation was applied in the analysis of data, and materials were collected from multiple sources with particular attention paid to the evolutionary phases, structure, and function of the innovation system. Results The evolution of medical device sector in China could be divided into four phases: initialization (1960s–1970s); exploration (1980s); steady growth (1990s); and rapid growth (since 2000). Through analyzing the innovation system’s structural components of technology, actors, and networking, as well as institutions, this study indicated that the government policy decision was the most important driver that affected the virtuous cycle of the Chinese medical device innovation system, followed by market demand and entrepreneurial activities. However, barriers against the innovation cycle such as knowledge base development and diffusion, legitimacy, and resource mobilization still remained. Conclusion In its endeavor to build an innovation system, the Chinese medical device sector had made some progress in meeting the local medical demands and improving its industrial competence. Although a Chinese innovation system for medical devices was initiated under the guidance of the government, knowledge advancement and diffusion had become the main challenges for the sustainability of innovation in this sector. The future development depends on China’s effort and ability to establish education and health research systems specific to medical devices.
... In mainstream innovation studies, the innovation system literature has been focused on exploring how institutional settings and network compositions shape a system's innovation dynamics (Castellacci 2009;Nelson 1993;Teubal 2002). This literature has shown how, at the sectoral level, the characteristics of an innovation system-including its knowledge base, learning mechanisms, public-private linkages and relationships between firms-significantly influence the innovation performance and competitiveness of firms within the system context (Hu and Hung 2014;Kim and Lee 2008;Malerba 2004). As such, innovation system literature is able to provide a full understanding of the structural features leading to an 'innovative' system in terms of sectoral and national perspectives. ...
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Taking Southeast Asian emerging economies as an empirical case, this study explores how the reverse salients that have emerged during the transitional process may be overcome efficiently and effectively. In particular, three action-oriented case studies derived from a heuristic research approach are presented to show how Taiwan is empowering its universities and public research institutes to act as innovation niche seeders for Southeast Asian economies, thereby compensating for the weakness of their socio-technical systems (i.e. the reverse salients). Presently, the government-led policies of Southeast Asian countries are largely oriented towards incentivizing foreign multinational corporations to lead the development of domestic production networks. This strategy allows these countries to acquire the necessary resources for an economic transition in the era of digitalization, although at the expense of developing their own innovation niches. This study presents the urgency of a need for a new approach, and a new avenue for emerging countries to develop an effective and efficient governance model. The proposed model would allow external institutional mechanisms, such as universities and public research institutes, to act as critical intermediaries providing an alternative solution for the dilemmas faced by small and medium-sized enterprise-centric emerging countries. Policy implications for building sustainable socio-technical regimes in Southeast Asia’s transitional emerging countries are also discussed.
... Knowledge management is mainly focused on connecting people, processes, and technology to expand corporate knowledge (Gonzalez et al., 2014). The main characteristics of a sector, including its knowledge, its capabilities, its stakeholders, its interactions, and its particular institutions, form the essential elements that can help understand innovation activities in terms of their locations, and national and global dimensions (Hu & Hung, 2014;Raymond, Bergeron, Croteau, & St-Pierre, 2016). Thus, knowledge needs to be managed within the organizational structure, given the importance of this resource for maintaining competitiveness (Gonzalez et al., 2014). ...
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Objective of the study: This study aims to analyze scientific production about absorptive capacity and innovation in such a way as to make it possible to identify study trends and the theoretical bases on which they are based.Methodology / Approach: We performed bibliographic coupling, co-citation, and social network analysis on a sample of 3,698 articles, considering 2,778 articles from Web of Science and 920 articles from Scopus.Originality / Relevance: In a preliminary search, only two bibliometric works were identified that focused on absorptive capacity and innovation. However, since 2015, more than 1,500 articles have been published, with new perspectives, advancing studies on this topic.Main results: The coupling analysis resulted in six factors showing the trends of future studies. The co-citation analysis presented three factors, representing the intellectual structure arising from the coupling analysis. The network analysis provided insight into how these studies connect. The results point to trends in future studies that can fill the research gaps on absorptive capacity and innovation. In addition, we also indicate the theoretical fronts that can be used to explore these trends. Finally, we present a model that summarizes our findings and shows how they can contribute to the advancement of research based on the seminal model of Zahra and George (2002).Theoretical / Methodological contributions: We present a mapping of the theme that provides a clearer view of which seminal works are used to approach each theme to be explored in future studies, associating the results of the bibliometric techniques used.
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In this paper, we argue that the ability of a firm to recognize the value of new, external information, assimilate it, and apply it to commercial ends is critical to its innovative capabilities. We label this capability a firm's absorptive capacity and suggest that it is largely a function of the firm's level of prior related knowledge. The discussion focuses first on the cognitive basis for an individual's absorptive capacity including, in particular, prior related knowledge and diversity of background. We then characterize the factors that influence absorptive capacity at the organizational level, how an organization's absorptive capacity differs from that of its individual members, and the role of diversity of expertise within an organization. We argue that the development of absorptive capacity, and, in turn, innovative performance are history- or path-dependent and argue how lack of investment in an area of expertise early on may foreclose the future development of a technical capability in that area. We formulate a model of firm investment in research and development (R&D), in which R&D contributes to a firm's absorptive capacity, and test predictions relating a firm's investment in R&D to the knowledge underlying technical change within an industry. Discussion focuses on the implications of absorptive capacity for the analysis of other related innovative activities, including basic research, the adoption and diffusion of innovations, and decisions to participate in cooperative R&D ventures.
Article
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India has pursed a policy of economic growth with technological self-reliance right through the 1950s when she embarked on a planned form of development. Two industries that were targeted especially was the manufacturing of drugs and telecommunications equipments. However the final outcomes have been very different. The drug industry has become self sufficient, has emerged as net exporter and has a strong patenting record abroad while the telecommunications industry has increasingly become dependent on MNCs and imports and the industry does not have many patents to boast of. I argue that although the broad external environments obtaining to both industries are roughly similar, the differences in outcomes could be explained by the differences in their sectoral systems of innovation (SSI). The SSI of the pharmaceutical industry presents an ideal picture where private sector business enterprises occupy the central stage. They have been supported very well by a conducive intellectual property regime, which enabled them to reverse engineer known technologies, and thereby emerge as incremental innovators. On the contrary, a public laboratory dominates the SSI of the telecoms industry and the production enterprises in the system did not have much innovation capability: the enterprises were completely dependent on the public laboratory. The government too did not support the laboratory adequately and very often the public technology procurement- the main instrument pursued by the state supposedly to support domestic technology generation through the laboratory was actually against it. Consequently most of the enterprises constituting the SSI of the telecoms industry have become mere traders- distributing products manufactured elsewhere. The analysis thus brings out important but practical policy prescriptions. The paper is structured into four sections. Section 1 will outline the framework for analysis, which is essentially the sectoral system of innovation propounded by Malerba (2004). The second section provides some numbers on the innovative performance of the two industries. The third section undertakes a detailed mapping out of the sectoral system of innovation of two high tech in the Indian context, namely the pharmaceutical and telecom equipment industries. India’s pharmaceutical industry is one of the most innovative industries in the country’s manufacturing sector. The innovation system of the industry has three strong pillars: very pro active government policy regime especially with respect to intellectual property right, strong government research institutes and private sector enterprises which have invested in innovation. The TRIPS compliance of the intellectual property right regime making it mandatory for pharmaceutical products to be patented has not reduced the innovation capability of the industry although it has not made them work on R&D projects that may lead to the discovery of drugs for neglected diseases of the developing world. Although the innovation system has the capability to develop new chemical entities the two main components of the innovation system, namely the enterprises and the Government Research Institutes does not appear to be having all the requisite capabilities to bring a new drug to the market. Although the state has been very proactive with respect to this industry, this is an area where public policy support is still required. On the contrary in the case of the telecom equipment industry, India followed a very rigid policy of indigenous development of domestic technologies by establishing a stand-alone public laboratory that developed state-of-the-art switching technologies. These were then transferred to manufacturing enterprises in both public and private sectors. The enterprises themselves did not have any in-house R&D capability. The public laboratory was also not given any strategic direction, even though it was technologically speaking, very competent. Consequently the country, despite possessing good quality human resource was unable to keep pace with changes in the technology frontier and the equipment industry has now become essentially dominated by affiliates of MNCs. and by imports. The fourth and last section contrasts the two SSIs within the same national system of innovation and draws out the policy implications. Presented at the GLOBELICS 2006 conference in India during 4-7 October 2006. Session I-2: Sectoral innovation systems
Article
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This paper addresses the question of how Indian pharmaceutical firms have transformed themselves from reverse-engineering firms focused on the domestic market to research-driven firms with global presence. It analyses the crucial and changing role of national, then international, innovation and regulatory policies and their impact on growth, performance and technology evolution of Indian pharmaceutical firms. The paper argues that although public policy increased market turbulence, it also provided new opportunities for firms to expand and build new technology, knowledge and market capabilities. From the 1950s Indian firms have pursued a variety of research, marketing and internationalization strategies to tackle changes prompted by policy, markets and knowledge complexities. The paper traces firm strategies that vary both in time and by firm, and argues that the successful firms have evolved substantively towards knowledge-based strategies. The paper then attempts to identify future directions for strategy, knowledge and markets.
Article
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The recognition of the rights attached to some forms of intellectual property is a contested domain in legal frameworks, such as the Trade Related Aspects of Intellectual Property Rights Agreement. The same can be said of economic frameworks, such as accounting which attempt to recognise and value intellectual property for the purposes of providing information for decision making. In this paper we explore the discourse of accounting in the recognition of intellectual property as an asset according to the new International Accounting Standards. We then contrast the legal and accounting discourses in which intellectual property rights are acknowledged, concluding that these discourses are not necessarily aligned. The effects and implications of the development of a global regime for accounting for intangibles may eventually harmonise the accounting treatment for intellectual property but does not resolve the contentious issue of the inconsistencies in the recognition of intellectual property rights under different frameworks and the implications for economic decision making.
Article
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We compare the geographic location of patent citations with that of the cited patents, as evidence of the extent to which knowledge spillovers are geographically localized. We find that citations to domestic patents are more likely to be domestic, and more likely to come from the same state and SMSA as the cited patents, compared with a “control frequency” reflecting the pre-existing concentration of related research activity. These effects are particularly significant at the local (SMSA) level. Localization fades over time, but only very slowly. There is no evidence that more “basic” inventions diffuse more rapidly than others.
Article
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This article examines a paradox. India has received worldwide recognition as a low-cost producer of high-quality drugs. This has contributed to accessibility of drugs abroad and reflects strong innovative capabilities developed in India. Yet at home, most Indian people do not have regular access to essential medicines. The contrast between the success of Indian industrial policy in developing the industry and the failure of Indian health policy in ensuring access to drugs demonstrates starkly the need for integration of industrial and health policies if safe universal access to essential medicines is to be achieved. Cet article analyse un paradoxe. L'Inde est connue pour sa capacité à produire des médicaments de bonne qualité à bas prix. Cela a contribué à rendre ces produits plus accessibles aux populations de différents pays. Cependant, les populations indiennes ont des difficultés à accéder aux médicaments essentiels. Le contraste entre l'agressivité de la politiqueindustrielle et l'incapacité des services de santé à fournir un accès équitable aux médicaments montre le besoin d'intégrer ces deux dimensions si l'on veut plus d'équité en matière d'accès aux soins.
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This paper examines the impact of stronger protection for intellectual property on the exports of a technologically imitative country such as India. The Indian experience in pharmaceutical exports can further add to the existing literature, which is otherwise largely limited to the experience of OECD countries and the USA. The empirical analysis suggests that even an imitative developing country's exports need not be negatively affected by strengthening patent regime globally, and in fact, in the case of pharmaceuticals, India stands to benefit from market expansion effects. However, this finding in the case of pharmaceutical products cannot be argued to hold for other sectors of the Indian economy, and any generalization on overall impact of stronger patent regime on aggregate exports from the Indian economy must be based on further sectoral studies.
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This article examines the relationship between the technological regime and the technological catch-up, using US patent data. This study first extends the notion of technological regimes as more appropriate for the catching-up context before it goes on to develop the quantitative expressions of technological regime variables. Then, it investigates in which technological classes technological catch-up tends either to occur or not to occur and what affects the speed of the catch-up. This study has found that catching-up is more likely to happen in those technological classes with shorter technological cycle time and more initial stock of knowledge and that among those candidate classes the actual speed of catch-up varies depending on appropriability and knowledge accessibility. This implies that the factors that determine the occurrence of catch-up and the speed of catch-up are different. Comparing the level of technological capability of the advanced and catching-up economies, the article has found that catching-up countries tend to achieve high levels in the technological sectors with shorter cycle time, easier access to knowledge, and higher appropriability, whereas the advanced countries show the exactly opposite performances. The study also confirms the organizational selection hypothesis such that the firms of different organizations and strategies show divergent degrees of fitness in the different environment or technological regime. We find that the Korean firms find themselves more fitted to technological regimes featured by low appropriability and high cumulativeness (persistence), whereas the Taiwanese firms are more fitted to technological regimes featured by high appropriability and low cumulativeness (persistence). Our findings are consistent with the following characterization of the firms in Korea and Taiwan. The Korean firms, dominated by the so-called Chaebols especially in patent registrations, are characterized as less flexible, large diversified conglomerates and pursing more independent R&D and learning strategies. The Taiwanese firms are characterized as more flexible, network-based, specialized firms and pursuing more cooperative R&D and learning strategies. Copyright 2006, Oxford University Press.
Article
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The authors assume that firms invest in R&D not only to generate innovations, but also to learn from competitors and extraindustry knowledge sources (e.g., university and government labs). This argument suggests that the ease of learning within an industry will both affect R&D spending, and condition the influence of appropriability and technological opportunity conditions on R&D. For example, they show that, contrary to the traditional result, intraindustry spillovers may encourage equilibrium industry R&D investment. Regression results confirm that the impact of appropriability and technological opportunity conditions on R&D is influenced by the ease and character of learning. Copyright 1989 by Royal Economic Society.
Book
Innovation and technological change follow markedly different pathways depending on the sector in which they take place. Contributions from eighteen experts in their fields consider the framework of sectoral systems of innovation to analyze the innovation process, factors affecting innovation, the relationship between innovation and industry dynamics, changing boundaries and transformation of sectors, and the determinants of the innovation performance of firms and countries in different sectors. © Cambridge University Press, 2004 and Cambridge University Press, 2009.
Article
This article briefly discusses the previous literature on differences across sectors in innovation and then puts forward the concept of sectoral systems of innovation. It also discusses the basic building blocks of sectoral systems: knowledge, technological domains, and sectoral boundaries; actors, relationships, and networks; and institutions. Furthermore, this article examines the dynamics and transformation of sectoral systems. Finally, it discusses some policy implications and the challenges ahead. This article looks at a large number of sectors that are highly innovative and technologically advanced and have strong links with science, which nevertheless organize innovation very differently: computers, semiconductors, telecommunication equipment and services, software, chemicals, pharmaceuticals and biotechnology, and machine tools. The role of innovation in the dynamics and transformation of these sectors is highly diverse.
Article
Transitions of socio-technical systems imply the reconfiguration of institutions and politics making made evident the need to understand and intervene in existing patterns of growth and socio-technical practices in more sustainable directions. In recent decades, theories of transitions have been introduced, which include the multi-level approach indicating ways to govern transitions through understanding the interactions between niches, regimes and landscapes. An alternative approach is suggested, which takes its outset in arenas of development and increased awareness of actors and their way of interpreting context and performing interventions.Building on three cases covering aspects of transitions since the 1970s, the article compares the two approaches based on three concerns in relation to transition studies. The first concern reflects that conflicts are important elements of change helping actors to navigate. The second concern builds on the observation that actors engage at all levels in society including visions, institutions, and innovations. The third concern addresses the role of academic theories and advice regarding governance of transition processes in which they function as entrenched actors.The article ends by emphasising the need to help actors navigate in a field in flux. The study of arenas of development may help interpret transitions in the making, and provide a background of information about how different actors can navigate and perform strategic interventions that support sustainable transitions.
Article
'Over the past decade there has been a dramatic increase in the quantity and quality of research focused on the processes through which technological capabilities are acquired by countries significantly behind the economic frontier, and the institutions that effectively support the catching up process. This book is a splendid contribution to this literature. The concept of a "sectoral innovation system" is well suited for framing studies of these kinds of questions, and serves well to unify the many interesting empirical studies in the book. Some of those studies are success stories, others of less successful cases. Readers new to this body of research will find this book a great introduction. All readers will learn a lot from it about what is required for and involved in economic development.' - Richard R. Nelson, Columbia Earth Institute, US and University of Manchester, UK.
Article
Governments in Western Europe are currently assigning responsibilities for functions of high societal importance to private groups under the slogan ‘Deregulation and privatization’. Identical principles are applied in former communist countries in Eastern Europe, based on the thesis that only freemarket mechanisms will guarantee most benefits for all groups of society. Against this thesis, governments in most industrialized states have established so-called ‘national innovation systems’, formed by government-owned or -supported research institutions and measures supporting the innovation abilities of companies, since competition in innovation has become the most important kind of competition on company level and between national economies.The main aims of the article are to reach an understanding of mechanisms and responsible actors for generation and diffusion of innovation within a society and (national) economy; to demonstrate problems and impacts of unreflected deregulation and privatization on society and national economy; to show that unreflected deregulation and privatization is not in conformity with, but opposed to, economic theory as founded by Adam Smith; and to derive consequences and measures necessary for coordination within an economically developed society. The research methodology includes the use of an explanatory model, demonstration of examples, partly based on our own research, exegesis, and logical final conclusion.
Article
We shall argue that the notion of ‘national systems of innovation’ is a useful one, since it treats explicitly what was ignored in earlier models of technical change: namely, deliberate ‘intangible’ investment in technological learning activities that involve a variety of institutions (principally business firms, universities, other education and training institutions, and governments), links amongst them and associated incentive structures and competencies. Considerable diversity–indeed divergence–exists amongst OECD countries in the level and sectoral pattern of business investments in technological learning, and in the quality of support structures in basic research and workforce skills. Some of this international ‘diversity’ is not economically and socially desirable: in particular, persistently low investment in business R & D and related technological activitics, and in associated workforce skills, which help determine both long-term economic growth rates, and the level of national demand for basic research and associated training activities. Other elements of international ‘diversity’ can be seen as inevitable or desirable: in particular, differing national patterns of technological specialisation that reflect cumulative and localised paths of technological learning, and that strongly influence patterns of structural change and comparative advantage in trade.
Article
This paper investigates the adoption of Open Innovation in the bio-pharmaceutical industry, studying through which organisational modes it is put into practice and how these modes are interwoven with the different phases of drug discovery and development process. Two rounds of interviews with industry experts were carried out to develop a model describing the adoption of Open Innovation by bio-pharmaceutical companies. This framework was then applied to an extensive and longitudinal empirical basis, which includes data about the adoption of Open Innovation by the top 20 worldwide industry players, in the time period 2000–2007. The paper provides a thorough discussion of how bio-pharmaceutical firms have used different organisational modes (i.e. licensing agreements, non-equity alliance, purchase and supply of technical and scientific services) to enter into relationship with different types of partners (i.e. large pharmaceutical companies, product biotech firms, platform biotech firms and universities) with the aim to acquire (Inbound Open Innovation) or commercially exploit (Outbound Open Innovation) technologies and knowledge. The implications of the study for Open Innovation research and possible avenues for future investigation are discussed at length in the paper.
Article
This is an edited version of a monograph first published in 1986. The study provides an historical perspective on the emergence of Engineering Research Associations (ERAS) in Japan in the late 1950s and early 1960s as an institutional means of promoting and facilitating collaborative research in industry. The ERAS were put to efficient use by MITI as vehicles for Japan's technological catch-up efforts. The study examines 71 ERAS, including the best known VLSI programme, which ran from 1976 to 1979 and is widely credited with lifting Japan to world leadership in the memory chips industry in the 1980s.
Article
This survey examines the role of industry policy in the industrialisation of East Asian economies since the early 1980s. The first section outlines the neoclassical' model and the interventionist literature that has arisen to challenge it. It distinguishes three strands in this literature: the ‘structuralist’ and the ‘strategic’ trade models and the ‘fair trade’ argument. The following sections evaluate the empirical evidence for Northeast and Southeast Asian economies, discuss the analytical and empirical validity of the interventionist literature and in conclusion draw attention to the diminished relevance of industry policy, given the rapid market-driven integration taking place in the Asian-Pacific region.
Book
Innovation and technological change, long recognized as the main drivers of long-term economic growth, are elusive notions that are difficult to conceptualize and even harder to measure in a consistent, systematic way. This book demonstrates the usefulness of patents and citations data as a window on the process of technological change and as a powerful tool for research on the economics of innovation. Patent records contain a wealth of information, including the inventors' identity, location, and employer, as well as the technological field of the invention. Patents also contain citation references to previous patents, which allow one to trace links across inventions. The book lays out the conceptual foundations for such research and provides a range of interesting applications, such as examining the geographic pattern of knowledge spillovers and evaluating the impact of university and government patenting. It also describes statistical tools designed to handle methodological problems raised by the patent and citation processes. The book includes a CD with complete data on 3 million patents with more than 16 million citations and a range of author-devised measures of the importance, generality, and originality of patented innovations.
Article
To what extent would the rate of development and introduction of inventions decline in the absence of patent protection? To what extent do firms make use of the patent system, and what differences exist among firms and industries and over time in the propensity to patent? These questions are in need of much more study. This paper, which reports the results of an empirical investigation based on data obtained from a random sample of 100 U.S. manufacturing firms, provides new findings bearing on each of these questions.
Article
Collaborative research programs have a significant impact on the structure of national innovation systems by creating and strengthening networks which are essential for breeding innovation clusters. These networks involve both technology and market stakeholders and are extended to include industry, research and technology producers. Network activities have resulted in setting priority in research and linking research fields that have high potential to coalesce into distinct technological clusters.This paper examines the processes by which innovation clusters are formed in research collaborations by analysing the work programs of 51 Australian Cooperative Research Centres (CRCs). The paper also provides an analytical framework to determine the direction of national research setting through cluster analysis. The author employs a methodology called ‘co-occurrence of words’ in cluster construction. It is argued that the iterative process of innovation cluster formation is an effective form of organizing a national system of innovation. These clusters enable public policy makers to identify complementarities between generation, acquisition and diffusion of knowledge across a range of innovations rather than a single innovation.
Article
The protection of pharmaceutical innovations is being dramatically extended as much of the developing world introduces patent protection for new drug products. This change in intellectual property rights may lead to more research on drugs to address developing country needs. We use new survey data from India, the results of interviews, and measures of research and development (R&D) constructed from a variety of statistical sources to determine trends in the allocation of research to products specific to developing country markets. There is some, although limited, evidence of an increase in the mid- to late 1980s which appears to have leveled off in the 1990s.The picture presented provides a “baseline” against which future patterns in research activity can be compared.
Article
The innovative performance of companies has been studied quite extensively and for a long period of time. However, the results of many studies have not yet led to a generally accepted indicator of innovative performance or a common set of indicators. So far the variety in terms of constructs, measurements, samples, industries and countries has been substantial. This paper studies the innovative performance of a large international sample of nearly 1200 companies in four high-tech industries, using a variety of indicators. These indicators range from R&D inputs, patent counts and patent citations to new product announcements. The study establishes that a composite construct based on these four indicators clearly catches a latent variable ‘innovative performance’. However, our findings also suggest that the statistical overlap between these indicators is that strong that future research might also consider using any of these indicators to measure the innovative performance of companies in high-tech industries.
Article
The dynamics of national innovation systems (NISs) are a source of considerable academic and policy interest, especially when to address new competitive challenges they involve changing institutions and relationships within successful systems. This paper examines the case of Taiwan which is embarking on a new phase in its approach to building its national innovative capacity through creating the infrastructure for a biotechnology industry. By examining the process and mechanisms by which new biotechnology innovation networks are being created, and contrasting their development with existing networks, we analyse the dynamics of Taiwan's NIS. The paper reviews the prospects for this new phase in Taiwan's transition from ‘imitation’ to ‘innovation’. The paper aims to add to the understanding of how innovation systems evolve. It is concerned with the contributors, processes and challenges of NIS evolution and the form and meaning of its dynamic changes.
Article
The article explores a novel extension of the R&D-productivity literature. It puts forward an empirical model where sectoral productivity growth is related to the characteristics of technological regimes and a set of other industry-specific economic features. The model is estimated on a cross-section of manufacturing industries in nine European countries for the period 1996–2001. The econometric results provide basic support for most of the hypotheses put forward by the model. They show, in particular, that sectoral differences in productivity growth in Europe are related to cross-industry differences in terms of the following main factors: (i) appropriability conditions; (ii) levels of technological opportunities; (iii) education and skill levels; (iv) the degree of openness to foreign competition; and (v) the size of the market.
Article
Over the last decade the Indian pharmaceutical industry has emerged as a leading supplier of generic drugs to both developing and developed countries. The movement of the Indian pharmaceutical industry along the R&D value chain represents a remarkable shift from an importer to an innovator of drugs. The Indian government’s industrial and technology policies along with changes in Intellectual Property Rights regulation played a crucial role in shaping this development of R&D capability. Using the ‘capability creation model’ this paper discusses the learning processes and stages involved in this dramatic accumulation of technological capability. This analysis shows that the Indian pharmaceutical industry has followed a trajectory from duplicative imitation to creative imitation to move up the value chain of pharmaceutical R&D. Finally as a result of changes in patent law the industry is learning to develop capabilities in innovative R&D. The basic and intermediate technological capabilities gained from imitative learning gave these firms a solid base for development of competence in advanced innovative R&D. These finding have implications for government policies as well as firm strategies in other developing countries albeit with some limitations due to global harmonisation of patent laws being promoted by the World Trade Organisation
Article
This article analyses the impact of the implementation of the 'Agreement on Trade-Related Aspects of Intellectual Property Rights' (TRIPS) on various segments of the Indian pharmaceutical industry. In particular, it focuses on the conditions under which a strong patent system can create benefits for a developing country's pharmaceutical industry. The theoretical analysis suggests that the greater the technological capabilities of the Indian pharmaceutical industry the greater are its chances to benefit from the introduction of stronger intellectual property rights (IPRs). The evidence presented paints a generally positive picture of the state of the Indian pharmaceutical industry, with the existence of strong and growing technological competencies that can be used as a platform for further expansion. These conclusions are dependent on India's worldwide success in the industry and cannot be automatically applied to other developing countries, especially if their pharmaceutical industry is not strong at the moment of the transition to a stronger IPR regime.
Article
Growth in this model is driven by technological change that arises from intentional investment decisions made by profit-maximizing agents. The distinguishing feature of the technology as an input is that it is not a conventional good or a public good; it is a nonrival, partially excludable good. Because of the noconvexity introduced by a nonrival good, price-taking competition cannot be supported. Instead, the equilibrium is one with monopolistic competition. The main conclusions are that the stock of human capital determines the rate of growth, that too little human capital is devoted to research in equilibrium, that integration into world markets will increase growth rates, and that a large population is not sufficient to generate growth. Copyright 1990 by University of Chicago Press.
Article
This paper argues that the 'scale effects' prediction of many recent R&D-based models of growth is inconsistent with the time-series evidence from industrialized economies. A modified version of the Romer model that is consistent with this evidence is proposed, but the extended model alters a key implication usually found in endogenous growth theory. Although growth in the extended model is generated endogenously through R&D, the long-run growth rate depends only on parameters that are usually taken to be exogenous, including the rate of population growth. Copyright 1995 by University of Chicago Press.
Article
This paper provides a survey on studies that analyze the macroeconomic effects of intellectual property rights (IPR). The first part of this paper introduces different patent policy instruments and reviews their effects on R&D and economic growth. This part also discusses the distortionary effects and distributional consequences of IPR protection as well as empirical evidence on the effects of patent rights. Then, the second part considers the international aspects of IPR protection. In summary, this paper draws the following conclusions from the literature. Firstly, different patent policy instruments have different effects on R&D and growth. Secondly, there is empirical evidence supporting a positive relationship between IPR protection and innovation, but the evidence is stronger for developed countries than for developing countries. Thirdly, the optimal level of IPR protection should tradeoff the social benefits of enhanced innovation against the social costs of multiple distortions and income inequality. Finally, in an open economy, achieving the globally optimal level of protection requires an international coordination (rather than the harmonization) of IPR protection.
Article
This paper provides a survey on studies that analyze the macroeconomic effects of intellectual property rights (IPR). The first part of this paper introduces different patent policy instruments and reviews their effects on R&D and economic growth. This part also discusses the distortionary effects and distributional consequences of IPR protection as well as empirical evidence on the effects of patent rights. Then, the second part considers the international aspects of IPR protection. In summary, this paper draws the following conclusions from the literature. Firstly, different patent policy instruments have different effects on R&D and growth. Secondly, there is empirical evidence supporting a positive relationship between IPR protection and innovation, but the evidence is stronger for developed countries than for developing countries. Thirdly, the optimal level of IPR protection should tradeoff the social benefits of enhanced innovation against the social costs of multiple distortions and income inequality. Finally, in an open economy, achieving the globally optimal level of protection requires an international coordination (rather than the harmonization) of IPR protection.
Article
Regional economic growth in Portugal has mainly been studied from the perspective of convergence with data ending by the early 2000’s. The country as a whole has stopped converging to the output levels of the richest European countries by this period and has also become one of the most unequal EU member-states in terms of income distribution in the meantime. It is thus important to analyze the growth performance at the regional level in a more recent period, 1995-2007, emphasizing regional disparities in inequality as explanatory factors. This study examines the relationship between inequality and regional growth in Portugal at NUTS III level exploring the explanatory power of earnings and education inequality measures computed with data from the Quadros de Pessoal database. The results point to a positive relationship between initial inequality and regional growth, stronger for education than for earnings inequality, but with earnings inequality measures revealing a higher explanatory power. Moreover, there is evidence that it is inequality at the top of the distribution that is the relevant to explain regional growth, a result that reinforces the higher propensities to save of the richer and the incentives mechanisms of transmission from inequality to growth. Additionally, the evidence does not support the existence of convergence among Portuguese NUTS III regions during the period under analysis. These findings are robust to the introduction of most additional control variables and the consideration of alternative measures of earnings and education inequality.
Article
The authors examine the interface between for-profit and publicly funded pharmaceuticals. Firms access upstream basic research through investments in absorptive capacity in the form of in-house basic research and 'propublication' internal incentives. Some firms also maintain extensive connections to the wider scientific community, which they measure using data on coauthorship of scientific papers between pharmaceutical company scientists and publicly funded researchers. 'Connectedness' is significantly correlated with firms' internal organization, as well as their performance in drug discovery. The estimated impact of connectedness on private research productivity implies a substantial return to public investments in basic research. Copyright 1998 by Blackwell Publishing Ltd
Article
Exxon Mobil and ConocoPhillips stock price has been predicted using the difference between core and headline CPI in the United States. Linear trends in the CPI difference allow accurate prediction of the prices at a five to ten-year horizon.
Beyond Late Development: Taiwan's Upgrading Policies Organizational modes for open innovation in the bio-pharmaceutical industry: an exploratory analysis
  • A H Amsden
  • W W Chu
Amsden, A.H., Chu, W.W., 2003. Beyond Late Development: Taiwan's Upgrading Policies. MIT Press, Cambridge, MA. Bianchi, M., Cavaliere, A., Chiaroni, D., Frattini, F., Chiesa, V., 2011. Organizational modes for open innovation in the bio-pharmaceutical industry: an exploratory analysis. Technovation 31 (1), 22–33.
Cooperative Research in US. Manufacturing: Assessing Policy Initiatives and Corporate Strategies
  • A N Link
  • L L Bauer
Link, A.N., Bauer, L.L., 1989. Cooperative Research in US. Manufacturing: Assessing Policy Initiatives and Corporate Strategies. Lexington Books, Lexington, MA.
National Systems of Innovation: Towards a Theory of Innovation and Interactive Learning. Printer Public Policy and Industrial Dynamics: An Evolutionary Perspective
  • B A Lundvall
Lundvall, B.A., 1992. National Systems of Innovation: Towards a Theory of Innovation and Interactive Learning. Printer, London. Malerba, F., 1997. Public Policy and Industrial Dynamics: An Evolutionary Perspective. Report for sub-project