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Industrial R&D and national innovation policy: an institutional reappraisal of the US national innovation system
[Public policy to promote entrepreneurship: a call to arms]

Author

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  • Ibrahim A Shaikh
  • Krithika Randhawa

Abstract

Studies highlight how the once envied US national innovation system (NIS) is now showing signs of slowing down. In this article, we unpack this issue from an industrial R&D perspective. First, we highlight that open innovation (OI) practices (i.e., external sources and markets for technologies) have increased the rate of inventive activity in the current wave of industrial R&D, but financialization skews the firms’ focus on short-term profits and shareholder value maximization. When OI intersects with an institutional context that propagates such shareholder-centric governance of R&D, three social costs are incurred by the US NIS: (i) irrational relationship between risks and rewards, (ii) weak antitrust and intellectual property (IP) rights that result in a lack of business dynamism, and (iii) austerity and weak demand-side policies. We contend that these social costs tilt the R&D trajectory toward incremental R&D at the expense of the blue-sky science needed to retain US leadership in technological innovation. Second, we document three social benefits that public-sector R&D agencies generate for the US NIS: (i) undertaking a technology brokerage role, (ii) creating radical R&D markets, and (iii) embracing stakeholder governance. We emphasize how a hidden “entrepreneurial network state” subtly creates and shapes breakthrough R&D and markets for private sector firms but cannot recoup the rewards for society due to political rhetoric that favors incumbent market power. Third, we recommend both incremental and radical policies to drive institutional reforms that promote a stakeholder-centric form of R&D governance so that the future wave of industrial R&D creates value for society. Overall, we draw attention to the role politics plays in industrial R&D and the US NIS and how small adjustments in institutional dimensions and governance modes can impact the US R&D trajectory and competitiveness.

Suggested Citation

  • Ibrahim A Shaikh & Krithika Randhawa, 2022. "Industrial R&D and national innovation policy: an institutional reappraisal of the US national innovation system [Public policy to promote entrepreneurship: a call to arms]," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 31(5), pages 1152-1176.
  • Handle: RePEc:oup:indcch:v:31:y:2022:i:5:p:1152-1176.
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    File URL: http://hdl.handle.net/10.1093/icc/dtac019
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    Citations

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    Cited by:

    1. Feng-Shang Wu & Hong-Ji Huang, 2024. "Why Do Some Countries Innovate Better than Others? A New Perspective of Science, Technology, and Innovation Policy Regimes and National Absorptive Capacity," Sustainability, MDPI, vol. 16(7), pages 1-30, March.
    2. Ye Zhu & Minggui Sun, 2022. "The Enabling Effect of Intellectual Property Strategy on Total Factor Productivity of Enterprises: Evidence from China’s Intellectual Property Model Cities," Sustainability, MDPI, vol. 15(1), pages 1-19, December.

    More about this item

    JEL classification:

    • O36 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Open Innovation
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada

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