The document discusses national innovative capacity and its determinants. It analyzes the impact of endogenous factors and exogenous influences like international technology diffusion. The authors develop a network autocorrelation perspective to simultaneously consider domestic determinants and global networking effects. They find evidence that disembodied technology diffusion through channels like patent citations more effectively influences innovative capacity than embodied diffusion through trade. Structural equivalence proximity in global networks also significantly impacts innovative capacity compared to cohesion effects.

1. PICMET ‘‘10 Conference Phuket, Thailand
PICMET 10 Conference Phuket, Thailand
10R0142
Constructing National Innovative
Capacity in Globalization:
The Network Autocorrelation
Perspective
Lawrenzo Hung-Chun Huang
Shin-Yu Shih
Ya-Chi Wu
National Chi Nan University, Taiwan

2. PICMET’10 Constructing National Innovative Capacity in Globalization: The Network Autocorrelation Perspective
Globalization!
Global Supply chain,
International
Global outsourcing , Technology
Global R&D Diffusion
National
Innovative Global Network Structure
Capacity

3. PICMET’10 Constructing National Innovative Capacity in Globalization: The Network Autocorrelation Perspective
National innovative capacity
National innovative capacity has been defined as the
institutional potential of a country to sustain innovation and a
suitable measure based on patenting rates.
Endogenous determinants
Common Innovation Cluster-Specific
Infrastructure Environment
National
Innovative
Capacity
Quality
of
patenting Linkages
rates
Furman, J. L., M. E. Porter, et al. (2002). "The determinants of national innovative
capacity." Research Policy 31(6): P906.

4. PICMET’10 Constructing National Innovative Capacity in Globalization: The Network Autocorrelation Perspective
1.Endogenous fully determine ?
Endogenous
determinants
?
National
Exogenous Innovative
affect Capacity
Furman, J. L., M. E. Porter, et al. (2002). "The
determinants of national innovative capacity."
Research Policy 31(6): P906.
Can an endogenous
perspective fully determine
national performance in
terms of innovative
capacity?

5. PICMET’10 Constructing National Innovative Capacity in Globalization: The Network Autocorrelation Perspective
2.Exogenous environments?
International
Technology
Diffusion Endogenous
determinant
Global National s
Network affect Innovative Furman, J. L., M. E. Porter,
Structure Capacity
et al. (2002). "The
determinants of national
innovative capacity."
Research Policy 31(6): P906.
What kinds of
international relationships
have a greater effect?

6. PICMET’10 Constructing National Innovative Capacity in Globalization: The Network Autocorrelation Perspective
3.Exogenous influence;
International Technology Diffusion
International
Technology
Diffusion
Endogenous
determinant
affect National s
Innovative Furman, J. L., M. E. Porter,
Capacity
et al. (2002). "The
determinants of national
innovative capacity."
Research Policy 31(6): P906.
What difference of the alternate channels of ITD ?
Are their differential impact on NIC?

7. PICMET’10 Constructing National Innovative Capacity in Globalization: The Network Autocorrelation Perspective
Related theory for
new perspective
1.Network Autocorrelation Model (Leenders,2002)
2.The flows of international Technology Diffusion
(Griliches, 1989)
3. Interactive effect,
social contagion theory of innovation
(Burt, 1986 etc.)

8. PICMET’10 Constructing National Innovative Capacity in Globalization: The Network Autocorrelation Perspective
1.Network Autocorrelation
Model (Leenders,2002)
Simultaneously considers both endogenous determiners
and exogenous influence on national innovative capacity.
Global Networking
Environments
Interactive
Effects
National
Domestic Factor
Innovative
Performance
Individual Local Capacity
diligence Effects

9. PICMET’10 Constructing National Innovative Capacity in Globalization: The Network Autocorrelation Perspective
2.Flows of International
Technology Diffusion Griliches,1980
Embodied Technology→ Rent Spillover
eg. direct investment, trade flows
(eg. Grossman & Helpman, 1991; Smith &White, 1992; Coe & Helpman,1995; Xu & Wang,
1999,2000; Eaton & Kortum, 2001. Nemeth &Smith, 1985; Kick & Davis, 2001)
Disembodied Technology→ Pure Knowledge
Spillover
eg. licensing, outsourcing agreement, patent
citations
(eg. Griliches,1980; Austin,1993; Kong & Lin, 2003)

10. PICMET’10 Constructing National Innovative Capacity in Globalization: The Network Autocorrelation Perspective
3.Interactive Effects,
a major engine of diffusion network
Cohesion mechanism
(e.g.. Burt, 1991 Berelson et al., 1954; Koka et al. 1999, Shih, 2006)
communication
Structural equivalence mechanism
(eg. Galaskiewicz & Burt, 1991; Harkola & Greve, 1995; Koka et al.,
1999; Shih, 2006)
comparison
ego alter
alter
ego

11. PICMET’10 Constructing National Innovative Capacity in Globalization: The Network Autocorrelation Perspective
Conceptual framework & Data collection
Communication Cohesion
Diffusion Interactive
Effect
Comparison Structural Equivalence
Exogenous -
ITD
Embodies Trade Flow
Technological
Intermediates diffusion
Disembodies Patent Citation
Common Innovation
Infrastructure
Furman Cluster-Specific
Endogenous Local Effect
Model Environment
Quality of Linkages
National
Innovative Patents Output
Capacity
Data collection

12. PICMET’10 Constructing National Innovative Capacity in Globalization: The Network Autocorrelation Perspective
Data Collection
Samples: 42 countries
(form Global Competitiveness Index of the World Competitiveness
Databank top 42 Countries)
Periods:1997-2005
Variable:
Innovative Output International patents granted (form USPTO)
Aggregate R&D Expenditure Total R&D expenditures (from IMD)
Embodied technology trade flows (from GTI)
Disembodied technology patent citations (from NBER)

13. PICMET’10 Constructing National Innovative Capacity in Globalization: The Network Autocorrelation Perspective
Result & Finding
Discussion Part 2 Discussion Part 3
Cohesion Cohesion
Embodies Disembodies
Structural Tech. Tech. Structural
Equivalence Equivalence
NIC
Performance
Domestic
Discussion Part 1, 4

14. PICMET’10 Constructing National Innovative Capacity in Globalization: The Network Autocorrelation Perspective
Result Existing exogenous effect?
Endogenous
determinants Furman’s Model R2=0.96
NIC Significant Support
Performance
Endogenous determinants
However…Exist serious
Deletes variables muliticollinearity problem
with collinearity
Furman’s Model
insignificant Support
Endogenous determinants R2=0.50

15. PICMET’10 Constructing National Innovative Capacity in Globalization: The Network Autocorrelation Perspective
Result Existing exogenous effect?
Adjusted R2
1 Furman Model ied
Disembod
y
Embodied Technolog
0.8 y Co+SE
Technolog
el
Structural
od
0.6 Cohesion
Equivalence
ll M
Co+SE
Structural
Deleted Cohesion
Fu
Equivalence
collinearity
0.4
0.2
0
4
6
8
1
2
7
3
5
9
el
el
el
el
el
el
el
el
el
od
od
od
od
od
od
od
od
od
M
M
M
M
M
M
M
M
M

16. PICMET’10 Constructing National Innovative Capacity in Globalization: The Network Autocorrelation Perspective
Finding 1
Exogenous effects NIC ?
Replace Furman Model’s collinearity variables with
interactive variables.
Global Networking
Interactive
Effects Autocorrelation Model
NIC
Domestic Factor Performance Significant Support
Local
Effects

17. PICMET’10 Constructing National Innovative Capacity in Globalization: The Network Autocorrelation Perspective
Finding 2
What kinds of international relationships
have a greater effect?
Global Networking
Interactive
Effects
NIC
VS. ego
ego alter
alter Performance
Structural Local Effects
Cohesion
Equivalence
Cohesion - Cohesion -
Embodies Disembodies
Tech. NIC Tech. NIC
Structural Structural
+ +
Performance Performance
Equivalence Equivalence

18. PICMET’10 Constructing National Innovative Capacity in Globalization: The Network Autocorrelation Perspective
Finding 2
What kinds of international
relationships have a greater effect?
Adjusted R2
1 ied
Disembod
y
0.8 Embodied Technolog Co+SE
y
Technolog
el
od
Structural
0.6 Cohesion
ll M
Co+SE Equivalence
Cohesion Structural
Fu
Equivalence
0.4
0.2
0
4
6
8
1
2
7
3
5
9
el
el
el
el
el
el
el
el
el
od
od
od
od
od
od
od
od
od
M
M
M
M
M
M
M
M
M

19. PICMET’10 Constructing National Innovative Capacity in Globalization: The Network Autocorrelation Perspective
Finding 3
What difference of the alternate channels of ITD ?
Are their differential impact on NIC?
Comparison for dis/embodied technology diffusion
Embodies Domestic Disembodies
Tech. Pure Tech.
NIC
Rent
knowledge
spillover
Performance spillover
Productivity Technical
efficiency change
Difference in spillover rigidity
“rent spillover” are more rigidity than “Pure knowledge
spillover”

20. PICMET’10 Constructing National Innovative Capacity in Globalization: The Network Autocorrelation Perspective
Finding 3
What difference of the alternate channels of ITD ?
Are their differential impact on NIC?
Adjusted R2
i ed
1 Disembod
Embodied y
0.8 Technolog
y
Technolog Co+SE
el
Structural
od
0.6 Cohesion
Equivalence
ll M
Cohesion
Structural Co+SE
Fu
Equivalence
0.4
0.2
0
4
6
8
1
2
7
3
5
9
el
el
el
el
el
el
el
el
el
od
od
od
od
od
od
od
od
od
M
M
M
M
M
M
M
M
M

21. PICMET’10 Constructing National Innovative Capacity in Globalization: The Network Autocorrelation Perspective
Conclusion
1.national innovative capacity simultaneously determiner by local effect
(domestics factor) and influence by interactive effect (global
environments).
2.the important differences between the alternate channels of ITD on NIC
show that disembodied technology diffusion more effectively
replenishes the indigenous technology environments than embodied
technology does. Therefore, this channel differential provides policy alternatives in
national science and technology development.
3.In a global network context, differential interactive proximity effects
differentiate national innovative capacity.
• The cohesion proximity negatively affects NIC, merely utilizing the technology of a
cohesion partner will less contribute for innovations.
• The structural equivalence proximity significantly influence NIC. That is, countries
become more inclined to take competitors as a paradigm via international
technology diffusion based on the environment in which they are developing.
4.National innovative capability is more significantly affected by
foreign disembodied technology. Consequently, acquiring competitor
countries’ disembodied technology is more effective to influence on innovative
capability gain.

22. PICMET’10 Constructing National Innovative Capacity in Globalization: The Network Autocorrelation Perspective
Thank you
Hung-Chun Huang
Shin-Yu Shih
Ya-Chi Wu
National Chi Nan University,
Taiwan

23. PICMET’10 Constructing National Innovative Capacity in Globalization: The Network Autocorrelation Perspective
Countries of International Technology diffusion
Argentina Australia Austria
Belgium Brazil Canada
Chile China Colombia
Denmark Finland France
Germany Greece Hong Kong
Hungary Iceland India
Indonesia Ireland Italy
Japan Malaysia Mexico
Netherlands New Zealand Norway
Philippines Poland Portugal
Russia Singapore South Africa
South Korea Spain Sweden
Switzerland Taiwan Thailand
Turkey United Kingdom United States

24. PICMET’10 Constructing National Innovative Capacity in Globalization: The Network Autocorrelation Perspective
Methodology & Hypotheses
Methodology
International technology diffusion
ITD ij = wij × RD i
Contagion effects
⎛
⎜
⎝ j
⎞
y i = ρ ⎜ ∑ wij y j ⎟ + ε
⎟
⎠ j≠i
yi = ρ y + ε ( ) *
i j≠i

25. PICMET’10 Constructing National Innovative Capacity in Globalization: The Network Autocorrelation Perspective
Collinearity statistics
Dependent variable=(PATENTS)j,t+3
Collinearity
Statistics
Toleran
VIF
ce
GDP per capita 0.560 1.787
GDP 0.012 84.574
R&D personnel
0.368 2.716
(FTE)
R&D $ 0.012 82.324