Events

Max Planck Institute for Innovation and Competition, Munich, Room E10

Fire and Mice: The Effect of Supply Shocks on Basic Science
Stefano Baruffaldi, Dennis Byrski, Fabian Gaessler
Speaker: Dennis Byrski

We study how a negative supply shock to research-related assets affects the production of scientific knowledge. In particular, we exploit the 1989 Morrell Park fire that destroyed a considerable share of the world’s largest mice breeding facility, the Jackson Laboratory, and killed approximately 400,000 mice. This fire led to an unforeseen and substantial supply shortage in mice for the North American biomedical research community, which we can isolate at the strain and scientist level based on proprietary archival data. Using difference-in-differences estimations, we find that the scientific productivity of affected scientists decreases when measured in simple publication counts, but much less so when we adjust for the publications’ quality. Moreover, affected researchers are more likely to initiate research that is unrelated to their previous work. This indicates that affected scientists switched research trajectories but maintained their scientific impact. In the aggregate, the temporary supply shortage of particular mice strains led to a permanent decrease in their usage among U.S. scientists. These results highlight the important role of supply chains in basic science.

Strategy Development in Project-Based Organizations
Speaker: Georg Windisch (TUM)

Research has established that learning at and across different level is of utmost importance for project-based organizations (PBOs) to identify and develop new strategies. At the same time, pbo’s face inherent weaknesses in exactly these areas: organizational learning and firm-level strategizing. Literature to date has created a large body of knowledge on learning and capability building in support or in consequence of pursuing new strategies, that is a new strategy is already defined and firms improve on executing it through vanguard (also called “innovative”) projects. Yet, apart from few conceptual attempts, a profound empirical analysis of learning mechanisms that lead to the identification and development of new strategies – as prerequisite to initiate innovative projects - is missing so far. Consequently, the question this study aims to answer is the following: How does learning in project-based organizations lead to the development of new strategies? We put particular emphasis on which learning mechanisms occur throughout strategy development and which obstacles might lead to the difficulties on organizational learning, as identified by previous research. To answer this question, the author conducted a 16-month ethnographic case study on a pbo in the rail transport industry that faced a fundamental change in its business environment and, over a period of almost two decades and with the extensive help of internal consultants, managed to successfully identify and develop a new strategy to adapt to its new competitive landscape. Building on this, we put forward the concept of a self-locking cycle, which hindered the firm to conduct strategy development by their own efforts. Further we identified three learning mechanisms conducted by the internal consultants that allowed to overcome this self-locking cycle in our focal firm and finally enabled successful strategy development: project-oriented, business environment-oriented, and organization-oriented learning.

Max Planck Institute for Innovation and Competition, Room E 10

Moderation: Ansgar Kaiser

Max Planck Institute for Innovation and Competition, Munich, Room 313

I study the relationship between the use of continuations and patent litigation in the United States. Continuations are applications that delay claim issuance, thereby providing another chance to obtain rejected claims, draft new claims and modify the scope of protection of issued patents. I show that patents from continuations are litigated more often and earlier than ordinary patents, even after controlling for patent and invention characteristics. Moreover, I exploit patent-family linkages and the relationship between the timing of continuation issuance and litigation to show that continuations likely lead to more litigation related to an invention.

Contact Person: Michael E. Rose

Max Planck Institute for Innovation and Competition, Munich, Room 313

This paper estimates the social returns to investments in innovation. The spillovers associated with innovation, including imitation, business stealing, and intertemporal spillovers, have made calculations of the social returns difficult.  Here we deploy the core ideas of economic growth to provide an economy-wide, average estimate that nets out the many spillover margins.  We further assess the role of diffusion delays, capital investment, productivity mismeasurement, health outcomes, and international spillovers in assessing the average social returns. Overall, our estimates suggest that the social returns are very large.  Even under conservative assumptions, $1 invested in innovation efforts produces at least $5 of benefits on average.

Contact Person: Rainer Widmann

Max Planck Institute for Innovation and Competition, Munich, Room 313

In this paper we investigate the effect of an unexpected increase in the availability of scientific articles on the follow-on scientific usage of the knowledge incorporated. We focus on the launch of Sci-Hub, a Kazakhstan-based website that provides free access to scientific literature, gathering data from the first three months of activity of the website (from September to December 2011). Then we link downloaded scientific articles to their corresponding bibliographical information retrieved from Web of Science. Finally we reconstruct the entire flow of citations pertaining to these scientific articles to measure the effects of a reduction in their access costs on their rate of usage within the scientific community. Our main hypothesis is that reducing the cost of accessing scientific knowledge lead to higher rates of knowledge usage by the scientific community. The introduction of Sci-Hub induced a large increase in citations to downloaded articles coming from scholars located in developing countries. This effect is persistent across article cohorts. As expected, the effect is absent when we consider citations whose scholars are located either in European developed countries or in the United States.

Contact Person: Michael E. Rose

Max Planck Institute for Innovation and Competition, Room 313

Max Planck Institute for Innovation and Competition, Munich, Room 313

It is by now well-documented that performance pay has positive effort and selection effects in routine, easy to measure tasks, but its effect in knowledge creation is much less understood. This paper studies the effect of performance pay on knowledge creation through effort and selection effects using the introduction of performance pay in German academia as a natural experiment. To this end, I consolidated information from various, unstructured data sources to construct a data set that encompasses the affiliation history and publication records of the universe of academics in Germany. The performance pay reform introduced attraction and retention bonuses, as well as relatively weaker on-the-job performance bonuses that take effect at a later point in time. I estimate the pure effort effect of these performance pay incentives in a difference-in-differences framework, comparing changes in research productivity of a treated cohort of academics, who receive performance pay because they started their first tenured position after the reform, with a control cohort that receives flat wages because they started their first tenured position just before the reform. I find a positive effort effect of performance pay that is economically large; amounting to a 12 to 16% average increase in research productivity. This increase manifests itself most robustly as an increase in research quantity and persists for a number of years. The effort response is strongest and most robust for less productive academics, with increases in pure quantity as well as quality-adjusted research output, while the average impact of the work of top quartile academics decreases. Performing textual analysis on paper abstracts to construct novelty and impact metrics, I find that the novelty of the work of top quartile academics declines. This work however does find more follow-on research in subsequent papers in the same field and is thus more impactful. I estimate the selection effect by analyzing the rate at which academics of different productivity levels switch to the performance pay scheme. I use the fact that the old and new wage schemes compare differently for academics at different ages, which gives rise to selection incentives that are inversely related to age. Exploiting this variation in a difference-in-differences framework, I find that more productive academics are more likely to select into performance pay. Hence, performance pay increases research output in academia through both effort and selection effects. However, because the effort effect is strongest for relatively less productive academics, while relatively more productive academics select into performance pay, the selection effect partially counteracts the impact of the effort effect.

Contact Person: Marina Chugunova

Max Planck Institut for Innovation and Competition, Munich, Room 313

The increasing use of algorithms in legal and economic decision-making has led to calls for a “right to explanation” to be given to the subjects of automated decision-making. A growing literature in computer science has proposed a vast number of methods to generate such explanations. At the same time, legal and social science scholars have discussed what characteristics explanations should have to make them legally and ethically acceptable. These debates suffer from two shortcomings. First, very little connection exists between these two strands of literature. Second, we do not know what effects such explanations would have on the behavior of decision subjects and on their perception of decision-making algorithms. In this field experiment, we aim to address these gaps by empirically testing how different types of explanations affect the subjects’ attitude towards decision-making algorithms. Distilling various factors that constitute a good explanation of algorithmic decision-making, we collect data on which factors are useful to decision subjects: local or global explanations, explanations which are selective, contrastive and/or are displayed as conditional control statements versus correlations. In the setting of a scholarship awarded by a machine learning algorithm to promising students, our experiment thus investigates which kind of explanations can lead to increased acceptance of algorithmic decision-making.

Contact Person: Dr. Marina Chugunova

Max Planck Institute for Innovation and Competition, Munich, Room 313

Strategic behavior can not only affect effort in contests but also undermine their selection function. We investigate two forms of strategic behavior of contestants with heterogeneous ability in large contests: Sabotage and self-promotion. We test predictions from a simple theoretical model in a large dataset of more than 38 million peer-ratings by 75,000 individuals. We find a) that strategic behavior influences outcomes in 25% of close contests, b) that self-promotion is the dominant form of strategic behavior of low-ability contestants, and c) that high-ability contestants are both culprits and targets of sabotage. We leverage two natural experiments to rule out alternative explanations.

Contact Person: Klaus Keller, M.A.

Max Planck Institute for Innovation and Competition, Munich, Room 313

Japan counts as the third largest market for medical devices after the US and the EU, and displays an exceptionally high number of certain technologies per capita (e.g. CT and MRI). Surprisingly, most appliances are imported to Japan nowadays pointing to a drop in innovation activities since the 1990s. A change can be observed rather recently under PM Abe by integrating the field of medical devices into the scheme of the Japan Revitalisation Strategy (Abenomics), which aims at “renkei” ni yoru “jitsuyōka” (market cultivation through partnerships) between medical centres, academia and manufacturing companies (METI 2016). Against this backdrop, this paper sheds light on which factors lead to this situation by focusing particularly on disciplinary boundaries. What is more, the presentation highlights current efforts on medtech partnerships, cluster policies and matching-hubs to cross these boundaries and to encourage innovation activities in the field of medical devices in Japan. The paper mainly draws on insights from research literature and preliminary findings from two case studies. Based on these findings it can be said that regional authorities and municipalities promote R&D activities by offering subsidies to small and medium-size enterprises (SME) and organising matching-hubs for ikō renkei (medtech partnership) such as in Tokyo, Kobe, Kyushu, Fukushima and Shizuoka but with varying degrees of success.

Contact Person: Dr. Marina Chugunova