Acknowledgements Acknowledgements

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APPENDICES

Appendix A.2.1: Hoechst R&D Day 1996: Innovations For Tomorrow's Markets 223-226 Appendix A.3.1: Supplementary available data items (extract) 226 Appendix A.3.2: International Patent Classification

(IPC-2 digit level or 118 technological classes and aggregation in 50 broader classes) 227 Appendix A.3.3: Number and distribution of patent applications

by IPC field - 50 technological fields 230

Appendix A.3.4: Concordance table ISIC (OECD and

SIC (Worldscope) and constructed industry sectors 232

Appendix A.4.1: Inadequacy of the linear adjustment of data 233 Appendix A.4.2: Poisson residuals’ variance against average lambda 234 Appendix A.5.1: Decomposition of variability - balanced sample S625 235 Appendix A.5.2: Alternative rates of depreciation of the R&D capital 236

Appendix A.6.1: Clustering results: inertia ratio 237

Appendix A.6.2: Percentage of total inertia explained against number of clusters 238 Appendix A.6.3: Additional percentage of total inertia explained from further increase in k 238 Appendix A.6.4: Correlation matrix of spillover components 239 Appendix A.6.5: Sensitivity to alternative clusterings

(partitions in k=16, 18, ..., 28; agglomerative hierarchical clustering method) 239 Appendix A.6.6: Spillovers and multiplicative distortion 240 Appendix A.6.7: Spillovers and logarithmic reciprocal distortion 241

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Appendices A.2.1 Appendix A.2.1

Hoechst R&D Day 1996: Innovations For Tomorrow's Markets

New active ingredients, new materials, improved processes - R & D in the Hoechst Group - Focus on biotechnology and genetic engineering

New York, September 12, 1996 - ″Innovation is the driving force of commercial success, future stability and social responsibility at Hoechst. ″ These were the words of Prof. Dr. Utz Hellmuth Felcht, member of the Board of Management of Hoechst AG and responsible for the Group's global R&D activities, in his opening address at the first ″Hoechst Research and Development Day″ in NewYork. Speaking at the World Trade Center to more than 140 journalists from all over the world, Felcht explained the significance of research and development.

Hoechst employs some 15 600 staff in a global research network aimed at securing the company's future. In 1995, Hoechst spent approximately DM 3.5 billion on R&D, over 99% of which was self-funded.

Precisely because research and development are decisive for the company's future, continued Felcht, Hoechst has to make use of its opportunities worldwide. ″Our only guide here is quality. We hire the best employees and collaborate with the leading universities and research institutes -wherever they may be located,″ Felcht stressed.

In return, Felcht said, Hoechst offers a modern, flexible form of project organization that significantly reduces the development time from the idea to product launch and allows young scientists to assume responsibility at an early stage.

Felcht emphatically dismissed the notion of research for research's sake, saying that this was the task of the universities. For Hoechst, he said, the key criterion was the future profit of the Group. ″All our R&D projects are constantly under scrutiny - the aim of R&D is to add value continually to all divisions and affiliates of the Group,″ Felcht emphasized. To achieve this, it was necessary to create an effective balance between commercial success, environmental compatibility and social acceptance. Expressed as 'sustainable development', this balance is the guiding principle of Hoechst's R & D efforts - from the initial conception of a project to the launch of the finished product.

Innovations for tomorrow's markets

Shaping the innovation process as effectively as possible with a permanent view to R & D issues of strategic importance to the Hoechst Group is the task of Corporate Research & Technology (CRT). According to Dr.

Richard Helmut Rupp, head of this unit, CRT has created an organization optimally designed to deal with these tasks.

In the field of methodical projects, for instance, the essential core technologies that are of importance to the Group are constantly updated in close cooperation with external partners, and ideas for new products and processes are fed into the innovation process. The essential thing here is to prove the feasibility of a project concept as quickly as possible and to develop the project to market maturity.

If a project is not taken over by a division or affiliate of the Hoechst Group, then the 'New Business Development' group within Corporate Research & Technology independently orchestrates the launch of the product. The service units in CRT support not only the Group's R & D projects but also all other units within the Group by offering their services at competitive prices. Process Engineering, Analysis and the Hoechst Biotech Service can also work for customers outside the Hoechst Group

Hoechst Marion Roussel: Two new active ingredients per year

Researchers at Hoechst Marion Roussel (HMR), the healthcare division of Hoechst, intend to provide the basis to have two new drugs approved each year. This is the goal that Dr. Frank Douglas, head of global pharmaceuticals research at HMR has set. Douglas said in New York that HMR can achieve this high rate of innovation by effectively using those competitive advantages made possible by the realignment of its research structure.

source: HOECHST (1996)

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Hoechst R&D Day 1996: Innovations For Tomorrow's Markets (con’t)

One of the competitive advantages that Douglas named wasa management process that combines a large number of internal resources and external alliances into a learning ‘virtual organization’ capable of creating knowledge and translating that knowledge into the development of new drugs.

The basis of this management process is currently formed by 15 top priority projects, three of which were presented by Douglas using examples: the ketolides are a new class of antibiotics that are based on a change in macrolides previously thought to have no effect. The ketolides also display superb efficacy in combating problematic bacterial strains that have become resistant to other drugs -particularly in the case of serious respiratory tract infections. Dopamine-4 antagonists are the result of cooperation with the Canadian biotech company Allelix. They have the potential to markedly improve the treatment of schizophrenia. Factor Xa antagonists are blood coagulation inhibitors. They were discovered with the help of combinatorial chemistry and are opening up new perspectives in thrombosis treatment.

Well positioned in the drug development race

Working faster, better, and more effectively than the competition is the goal of Hoechst Marion Roussel in the race to develop new drugs. The first example presented by Dr. Rotraut Labs, head of global drug development, in NewYork was the recently approved allergy drug containing the active ingredient fexofenadine. Thanks to a both focused and flexible project organization, this non-sedating antihistamine was developed in only 31 months. The industry average is over 10 years.

The Hoechst Marion Roussel research pipeline is well-stocked with development products. Following the approval of fexofenadine and the antidiabetic agent glimepiride, four other products are due to be approved shortly. The documentation on propentofylline is to be submitted to the European approval authorities this year.

Propentofylline has displayed efficacy in treating not only vascular but also degenerative dementia, explained Dr. Labsin New York.

The development compound with the laboratory code ‘Hoe642’, an entirely new therapeutic principle in cardiology, was presented by Dr. Labs as one of nine top development projects. It inhibits a process used by the heart muscle cells to exchange sodium and hydrogen ions (protons). As a result, ‘Hoe 642’ delays or even prevents the death of the cardiac tissue caused by an oxygen deficiency in the heartmuscle. Clinical trials involving around 9000 patients worldwide with acute coronary syndrome, are scheduled to begin in early 1997.

AgrEvo: Plant biotechnology helps safeguard harvests

AgrEvo, a joint venture between Schering AG (40%) and Hoechst (60%), is one of the world's largest research- based crop protection and environmental health companies. Its research efforts focus on crops with good potential for market growth, particularly corn, canola andrice. With the help of biotechnological processes, AgrEvo is attempting to match crops and active ingredients so that fungii and insect infestation can be combated with maximum effect and minimal active ingredient quantities. This offers not only cost benefits in the form of higher yields, but also environmental benefits. In Canada, AgrEvo is marketing genetically engineered canola that is resistant to the herbicide Liberty. The ‘Liberty Link System’ is expected to be launched in the US in 1997 and in Europe in 1998, said Maurice Delage, head of AgrEvo's North American business.

By acquiring the Dutch-Belgian biotechnology company Plant Genetic Systems International in August of this year, AgrEvo has considerably expanded its biotechnology research arm and is now among the market leaders in this sector, Delage explained in New York.

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Hoechst R&D Day 1996: Innovations For Tomorrow's Markets (con’t)

″We want to seize this opportunity and use our strong position in Europe to gain market share in the US and Asia,″ said Dr. Karl- Heinz Doessel, Head of R&D at Herberts, speaking in New York about his company's involvement outside of Europe: ″In the next five years we are expecting market shares for waterborne paints of 70 percent in Europe, 30 percent in the US and 10 percent in Japan,″ For this purpose Herberts commissioned the world's largest plant for waterborne paints in June 1995.

Production processes undergoing tests

No new products, but improved production processes -that is the task that Professor Dr. Michael Bruns of Hoechst Corporate Research & Technology, has set himself. His specialty is the production process of the intermediate product ketene. Every year Hoechst produces more than 240,000 metric tons of this compound, which is used to make acetic acid, - in eight plants on four continents. Hoechst is by far the biggest producer of ketene.

Brun's job is to identify the optimal operating conditions for ketene production. To this end, he employs the latest process optimization methods that are based on model calculations. For this reason, it is necessary to be familiar with all the individual steps in the reaction and all the accompanying physical and chemical conditions of the reaction.

With this data basis, models can be developed which accurately describe the behavior of the plant in all operating conditions. If this model is used to control the production plant, raw materials and energy can be deployed as economically and efficiently as possible by the process computer. This sophisticated technique is to be tried out at Hoechst for the first time with ketene. For the chemical industry, this kind of high-performance process modeling and control is something quite new. Until now, comparable methods have only been used in the petrochemical sector.

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Lite database: supplementary available data items (extract)

Description Type Data frequency

Closely held shares (stock data) Num. Yearly Cost of goods sold (excl depreciation) Num. Yearly dividend per share (stock data) Num. Yearly Earnings before interest and taxes Num. Yearly

Exports Num. Yearly

External financing Num. Yearly

Income bef. extra items & pref. dividends Num. Yearly

Interest expenditures Num. Yearly

Long term debt Num. Yearly

Major Shareholder (stock data) Char. Last fiscal year Market capitalization (current) (stock data) Num. Yearly

Market current price (+date) (stock data) Num. Yearly Market price - year to date high (stock data) Num. Yearly Market price - year to date low (stock data) Num. Yearly

Market Value Num. Yearly

Net assets from acquisition Num. Yearly

Operating income Num. Yearly

Salaries and benefits expenses Num. Yearly Selling, general & administrative expenditures Num. Yearly

Summary business description Char. Last fiscal year

Total Assets Num. Yearly

Total current assets Num. Yearly

Total current liabilities Num. Yearly Type of share (stock data) Char. Last fiscal year

(6)

International Patent Classification

(IPC-2 digit level or 118 technological classes and aggregation in 50 broader classes)

50 classes

IPC 2 digit

level

Technological Classe

C1 A01 AGRICULTURE; FORESTRY; ANIMAL HUSBANDRY; HUNTING; TRAPPING;AGRICULTURE;

C2 A21 BAKING; EDIBLE; DOUGHS

A22 BUTCHERING; MEAT TREATMENT; PROCESSING POULTRY OR FISH BOUCHERIE;

A23 OTHER FOODS OR FOODSTUFFS

A24 TOBACCO; CIGARS; CIGARETTES; SMOKERS' REQUISITES

C3 A41 WEARING APPAREL

A42 HEADWEAR A43 FOOTWEAR

A44 HABERDASHERY; JEWELERY A45 HAND AND TRAVELLING ARTICLES A46 BRUSHWARE

C4 A47 FURNITURE; DOMESTIC ARTICLES OR APPLIANCES; COFFEE MILLS; SPICE MILLS; SUCTION CLEANERS;

CARBON MONOXIDE; CARBON DIOXIDE TOBACCO PLANTS; TOBACCO PLANT; DOUGH-EXTRUDING;

RADIALLY-WORKING; AXIALLY-WORKING; OXYGEN-GENERATING; BLOOD-COLLECTING; BLOOD- STIRRING; FISH-ROLLING WITH ADDITION OF COFFEE EXTRACT; COFFEE EXTRACT; CHOCOLATE- REFINING; CANDY-PULLING; CREAMING

A63 SPORTS; GAMES; AMUSEMENTS

C5 A61 MEDICAL AND VETERNIANRY SCIENCE; HYGIENE A62 LIFE-SAVING; FIRE-FIGHTING

C6 B01 PHYSICAL AND CHEMICAL PROCESSES AND APPARATUS

C7 B02 CRUSHING, PULVERISING, OR DISINTEGRATING; PREPARATORY TREATMENT OF GRAIN FOR MILLING B03 SEPARATION OF SOLID MATERIALS USING LIQUIDS OR USING PNEUMATIC TABLES OR JIGS; MAGNETIC

OR ELECTROSTATIC SEPARATION

B04 CENTRIFUGAL APPARATUS OR MACHINES FOR CARRYING-OUT PHYSICAL OR CHEMICAL PROCESSES B05 SPRAYING OR ATOMISING IN GENERAL; APPLYING LIQUIDS OR OTHER FLUENT MATERIALS TO

SURFACES, IN GENERAL

B06 GENERATING OR TRANSMITTING MECHANICAL VIBRATIONS IN GENERAL B07 SEPARATING SOLIDS FROM SOLIDS; SORTING

B08 CLEANING

B09 DISPOSAL OF SOLID WASTE

C8 B21 MECHANICAL METAL-WORKING WITHOUT ESSENTIALLY REMOVING MATERIAL; PUNCHING METAL B22 CASTING; POWDER METALLURGY

C9 B23 MACHINE TOOLS; METAL-WORKING NOT OTHERWISE PROVIDED FOR C10 B24 GRINDING; POLISHING

B25 HAND TOOLS; PORTABLE POWER-DRIVEN TOOLS; WORKBENCH DEVICES; MANIPULATORS B26 HAND CUTTING TOOLS; CUTTING; SEVERING

B27 WORKING OR PRESERVING WOOD OR SIMILAR MATERIAL; NAILING OR STAPLING MACHINES IN GENERAL

B28 WORKING CEMENT, CLAY, AND STONE

C11 B29 WORKING OF PLASTICS; WORKING OF SUBSTANCES IN A PLASTIC STATE, IN GENERAL; WORKING OF SUBSTANCES NOT OTHERWISE PROVIDED FOR

C12 B30 PRESSES

B31 MAKING PAPER ARTICLES; WORKING PAPER B32 LAYERED PRODUCTS

C13 B41 PRINTING

B42 BOOKBINDING; ALBUMS; FILES; SPECIAL PRINTED MATTER B43 WRITING AND DRAWING APPLIANCES; BUREAU ACCESSORIES B44 DECORATIVE ARTS

C14 B60 VEHICLES IN GENERAL

C15 B61 RAILWAYS

B62 LAND VEHICLES FOR TRAVELLING OTHERWISE THAN ON RAILS B63 SHIPS OR OTHER WATERBORNE VESSELS; RELATED EQUIPMENT B64 AIRCRAFT; AVIATION; COSMONAUTICS

C16 B65 CONVEYING; PACKING; STORING; HANDLING THIN OR FILAMENTARY MATERIAL B66 HOISTING; LIFTING; HAULING

B67 LIQUID HANDLING B68 SADDLERY; UPHOLSTERY C17 C01 INORGANIC CHEMISTRY

C06 EXPLOSIVES; MATCHES

C18 C02 TREATMENT OF WATER, WASTE WATER, SEWAGE, OR SLUDGE C19 C03 GLASS; MINERAL AND SLAG WOOL

C04 CEMENTS; CERAMICS, ETC.; SOUND OR THERMAL INSULATING MATERIALS C20 C05 FERTILISERS; MANUFACTURE THEREOF

C07 ORGANIC CHEMISTRY

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(2 digit level or 118 technological classes and aggregation in 50 broader classes) (con’t)

50 classes

IPC 2 digit

level

C21 C08 ORGANIC MACROMOLECULAR COMPOUNDS; THEIR PREPARATION OR CHEMICAL WORKING-UP;

COMPOSITIONS BASED THEREON

C22 C09 DYES; PAINTS; POLISHES; NATURAL RESINS; ADHESIVES; MISCELLANEOUS COMPOSITIONS;

MISCELLANEOUS APPLICATIONS OF MATERIALS

C23 C10 PETROLEUM, GAS AND COKE INDUSTRIES; TECHNICAL GASES CONTAINING CARBON MONOXIDE;

FUELS; LUBRICANTS; PEAT

C24 C11 ANIMAL AND VEGETABLE OILS, FATS, FATTY SUBSTANCES AND WAXES; FATTY ACIDS THEREFROM;

DETERGENTS; CANDLES

C25 C12 BIOCHEMISTRY; BEER; SPIRITS; WINE; VINEGAR; MICROBIOLOGY; ENZYMOLOGY; MUTATION OR GENETIC ENGINEERING

C13 SUGAR OR STARCH INDUSTRY C26 C21 METALLURGY OF IRON

C22 METALLURGY; FERROUS OR NON-FERROUS ALLOYS; TREATMENT OF ALLOYS OR NON-FERROUS METALS

C27 C23 WORKING OR TREATMENT OF METALS, OTHER THAN BY MECHANICAL MEANS; COVERING MATERIALS WITH METALS; INHIBITING CORROSION OR INCRUSTATION IN GENERAL

C28 C25 ELECTROLYTIC OR ELECTROPHORETIC PROCESSES; APPARATUS THEREFOR C30 CRYSTAL GROWTH

C29 D01 NATURAL OR ARTIFICIAL THREADS OR FIBRES; SPINNING

D02 YARNS; MECHANICAL FINISHING OF YARNS OR ROPES; WARPING OR BEAMING D03 WEAVING

D04 BRAIDING; LACE-MAKING; KNITTING; TRIMMINGS; NON-WOVEN FABRICS D05 SEWING; EMBROIDERING; TUFTING

D06 TREATMENT OF TEXTILES, ETC.; LAUNDERING; FLEXIBLE MATERIALS NOT OTHERWISE PROVIDED FOR D07 ROPES; CABLES OTHER THAN ELECTRIC

C14 SKINS; PELTS; LEATHER

C30 D21 PAPER-MAKING; PRODUCTION OF CELLULOSE

C31 E01 CONSTRUCTION OF ROADS, RAILWAYS, OR BRIDGESE 01 C CONSTRUCTION OF, AND SURFACES FOR, ROADS, SPORTS GROUNDS, OR THE LIKE;

E02 HYDRAULIC ENGINEERING; FOUNDATIONS; SOIL-SHIFTING HYDRAULIQUE;

E03 WATER SUPPLY; SEWERAGE E04 BUILDING

C32 E05 LOCKS; KEYS; WINDOW OR DOOR FITTINGS; SAFES

E06 DOORS, WINDOWS, SHUTTERS, OR ROLLER BLINDS, IN GENERAL; LADDERS C33 E21 EARTH DRILLING; MINING

C34 F01 MACHINES OR ENGINES IN GENERAL; ENGINE PLANTS IN GENERAL; STEAM ENGINES F02 COMBUSTION ENGINES; HOT-GAS OR COMBUSTION-PRODUCT ENGINE PLANTS

F03 MACHINES OR ENGINES FOR LIQUIDS; WIND, SPRING, WEIGHT, OR MISCELLANEOUS MOTORS;

PRODUCING MECHANICAL POWER OR A REACTIVE PROPULSIVE THRUST, NOT OTHERWISE PROVIDED FOR

F04 POSITIVE-DISPLACEMENT MACHINES FOR LIQUIDS; PUMPS FOR LIQUIDS OR ELASTIC FLUIDS C35 F15 FLUID-PRESSURE ACTUATORS; HYDRAULICS OR PNEUMATICS IN GENERAL

F16 ENGINEERING ELEMENTS OR UNITS; GENERAL MEASURES FOR PRODUCING AND MAINTAINING EFFECTIVE FUNCTIONING OF MACHINES OR INSTALLATIONS; THERMAL INSULATION IN GENERAL F17 STORING OR DISTRIBUTING GASES OR LIQUIDS

C36 F21 LIGHTING

F22 STEAM GENERATION

F23 COMBUSTION APPARATUS; COMBUSTION PROCESSES F24 HEATING; RANGES; VENTILATING

F25 REFRIGERATION OR COOLING; MANUFACTURE OR STORAGE OF ICE; LIQUEFACTION OR SOLIDIFICATION OF GASES

F26 DRYING

F27 FURNACES; KILNS; OVENS; RETORTS F28 HEAT EXCHANGE IN GENERAL

C37 F41 WEAPONS

F42 AMMUNITION; BLASTING C38 G01 MEASURING; TESTING

C39 G02 OPTICS

C40 G03 PHOTOGRAPHY; CINEMATOGRAPHY; ELECTROGRAPHY; HOLOGRAPHY

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(2 digit level or 118 technological classes and aggregation in 50 broader classes) (con’t)

50 classes

IPC 2 digit

level

C41 G04 HOROLOGY

G05 CONTROLLING; REGULATING

C42 G06 COMPUTING; CALCULATING; COUNTING C43 G07 CHECKING-DEVICES

G08 SIGNALLING

G09 EDUCATING; CRYPTOGRAPHY; DISPLAY; ADVERTISING; SEALS G10 MUSICAL INSTRUMENTS; ACOUSTICS

G12 INSTRUMENT DETAILS C44 G11 INFORMATION STORAGE

C45 G21 NUCLEAR PHYSICS; NUCLEAR ENGINEERING C46 H01 BASIC ELECTRIC ELEMENTS

C47 H02 GENERATION, CONVERSION, OR DISTRIBUTION OF ELECTRIC POWER C48 H03 BASIC ELECTRONIC CIRCUITRY

C49 H04 ELECTRIC COMMUNICATION TECHNIQUE

C50 H05 ELECTRIC TECHNIQUES NOT OTHERWISE PROVIDED FOR source: D'Agostini (1997)

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Appendices A.3.4

Appendix A.3.3

Number and distribution of patent applications by IPC field - 50 technological fields

total # of patent Distribution of patent applications:

applications total by geographic area by industry sector E

U J P

R W

U S

A I R C

C H E M

C O M P

C O N S

D R U G

E L E C

E T R O

F A M P

F O O D

I N S T

M A C H

M E T A

N F E R

N M M P

O T H E

P A P E

P E T R

R U B B

S O F T

T E X T

V E H I

W O O D

# of firms 625 101 133 13 378 17 77 44 7 54 25 78 25 19 67 58 21 15 10 2 19 16 12 14 7 31 7

c1 1846 1.1 1.5 0.5 0.8 1.1 0.1 2.3 0.0 0.0 2.1 0.2 0.0 0.3 1.3 0.2 6.1 0.0 0.5 0.4 0.0 0.8 1.0 0.4 0.0 1.6 0.2 0.0 c2 1125 0.7 0.9 0.2 0.2 0.7 0.0 0.5 0.0 0.5 2.0 0.0 0.0 0.0 18.9 0.2 0.0 0.1 0.5 0.1 0.0 0.9 0.1 0.2 0.0 0.7 0.0 0.0 c3 219 0.1 0.1 0.1 0.0 0.2 0.0 0.2 0.0 0.2 0.1 0.0 0.0 1.0 0.2 0.3 0.0 0.0 0.0 0.1 33.3 3.4 0.2 0.0 0.0 1.6 0.1 0.0 c4 548 0.3 0.4 0.3 0.0 0.3 0.1 0.2 0.1 0.0 0.1 0.8 0.4 0.3 1.7 0.2 1.2 0.1 0.0 0.3 0.0 2.6 0.1 0.2 0.0 0.4 0.2 31.1 c5 7445 4.4 4.3 3.4 1.2 5.0 1.7 4.2 0.6 0.2 10.4 3.9 0.7 2.4 12.0 12.9 3.5 2.7 2.8 0.4 0.0 17.5 0.8 1.4 0.0 6.8 0.2 0.0 c6 3527 2.1 2.2 1.1 1.2 2.5 1.8 4.0 0.3 4.8 1.7 0.6 0.2 1.1 2.0 1.5 5.9 1.3 6.9 2.6 0.0 1.3 7.7 0.8 0.0 5.7 0.7 1.1 c7 1091 0.6 0.6 0.3 1.8 0.9 0.4 0.7 0.3 0.2 0.3 0.6 0.3 1.2 0.5 0.6 3.7 0.6 0.6 0.8 0.0 1.7 1.2 0.3 0.0 0.5 0.6 1.1 c8 1169 0.7 0.9 0.8 0.5 0.5 1.7 0.3 0.3 0.0 0.0 0.4 0.1 10.1 0.3 0.1 5.3 7.8 1.8 0.2 0.0 0.0 0.3 0.2 0.0 1.2 1.7 2.2 c9 1060 0.6 0.5 0.6 0.2 0.7 2.4 0.2 0.5 0.0 0.0 1.5 0.3 1.8 0.1 0.2 2.9 3.0 1.5 0.4 0.0 0.4 0.1 0.0 0.0 0.0 1.7 0.0 c10 1112 0.7 0.5 0.5 1.0 0.9 1.0 0.2 0.5 0.5 0.2 1.2 0.3 7.9 0.2 0.8 3.3 0.5 0.3 5.2 0.0 1.0 0.1 0.3 0.0 0.2 0.8 11.1 c11 1728 1.0 1.1 0.7 0.2 1.2 3.4 1.7 0.2 0.0 1.0 0.4 0.2 0.8 0.3 0.7 1.9 1.5 1.9 0.7 0.0 2.0 1.7 11.9 0.0 0.7 1.1 2.2 c12 980 0.6 0.5 0.4 1.0 0.8 0.6 1.1 0.1 0.0 0.6 0.3 0.0 0.7 0.5 0.4 0.4 1.1 0.6 2.1 0.0 5.5 1.7 1.2 0.0 0.9 0.1 3.3 c13 3057 1.8 1.1 2.6 0.2 2.0 0.1 0.8 5.1 0.0 0.2 1.6 1.3 1.0 0.3 3.8 2.2 0.1 0.4 0.7 66.7 6.7 0.4 0.2 2.5 0.9 0.1 1.1 c14 2372 1.4 1.8 0.7 0.2 1.4 4.4 0.2 0.2 0.2 0.1 0.8 0.2 1.8 0.0 0.1 3.7 3.2 0.2 0.6 0.0 0.1 0.3 24.0 0.0 0.0 19.6 2.2 c15 1149 0.7 0.9 0.3 0.3 0.7 10.4 0.1 0.1 0.0 0.0 0.5 0.2 2.3 0.0 0.1 2.9 0.4 0.1 0.4 0.0 0.0 0.1 0.7 0.0 0.0 4.8 0.0 c16 2260 1.3 1.3 0.8 1.2 1.7 1.2 1.6 1.2 0.5 0.9 0.8 0.3 3.1 7.2 1.8 3.0 1.6 1.0 1.2 0.0 11.3 1.0 2.4 0.0 1.6 1.0 14.4 c17 1938 1.1 1.7 0.5 3.0 1.0 0.6 2.2 0.1 0.5 1.9 0.2 0.3 2.6 1.5 0.1 0.7 1.0 5.6 0.5 0.0 0.0 3.8 0.0 0.0 0.7 0.3 0.0 c18 447 0.3 0.5 0.1 0.2 0.2 0.4 0.5 0.0 0.7 0.3 0.1 0.0 0.0 0.5 0.1 1.4 0.1 0.9 0.6 0.0 0.3 0.2 0.0 0.0 0.0 0.0 0.0 c19 2108 1.2 1.1 1.9 1.3 1.0 1.2 1.2 0.6 2.7 0.9 0.9 1.0 3.4 0.4 0.6 0.5 7.3 4.8 24.4 0.0 2.1 0.7 0.4 0.0 3.1 1.4 0.0 c20 22830 13.4 21.4 8.6 11.4 9.3 2.3 27.1 0.3 1.0 43.8 0.7 0.1 2.1 6.2 6.1 1.6 0.5 12.6 2.8 0.0 3.7 14.6 6.7 0.0 11.0 0.1 0.0 c21 15126 8.9 10.8 6.0 2.1 9.0 9.6 23.0 0.6 1.2 12.2 6.5 0.2 2.1 2.3 4.2 1.7 1.5 6.3 7.8 0.0 6.5 20.2 23.7 0.0 15.4 1.2 0.0 c22 4535 2.7 4.5 1.4 0.2 1.8 0.8 6.7 0.9 3.1 4.5 0.4 0.4 0.8 0.3 2.7 0.6 0.4 4.2 5.3 0.0 3.3 2.7 1.0 0.0 0.9 0.4 0.0 c23 1661 1.0 0.6 0.2 0.5 1.8 0.1 1.3 0.1 0.2 0.3 0.1 0.0 0.0 0.7 0.1 0.7 0.7 1.3 0.0 0.0 0.1 12.0 0.1 0.0 0.5 0.2 0.0 c24 2052 1.2 2.0 0.2 0.0 1.1 0.2 2.5 0.0 0.0 2.3 0.0 0.0 0.0 28.3 0.1 0.1 0.0 1.1 0.0 0.0 0.9 0.1 0.0 0.0 0.0 0.0 0.0 c25 2841 1.7 1.8 1.7 0.2 1.6 0.2 2.1 0.1 0.0 5.6 0.0 0.0 0.0 9.2 1.7 0.1 0.4 2.2 0.6 0.0 0.0 2.0 0.1 0.0 9.2 0.0 0.0 c26 1270 0.7 0.6 1.1 3.5 0.6 1.6 0.5 0.3 0.0 0.3 0.8 0.0 9.6 0.0 0.1 1.9 12.4 4.0 0.4 0.0 0.0 0.3 0.0 0.0 3.1 0.8 0.0

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Appendices A.3.4

Appendix A.3.3

Number and distribution of patent applications by IPC field - 50 technological fields (con’t)

total # of patent Distribution of patent applications:

applications total by geographic area by industry sector E

U J P

R W

U S

A I R C

C H E M

C O M P

C O N S

D R U G

E L E C

E T R O

F A M P

F O O D

I N S T

M A C H

M E T A

N F E R

N M M P

O T H E

P A P E

P E T R

R U B B

S O F T

T E X T

V E H I

W O O D

# of firms 625 101 133 13 378 17 77 44 7 54 25 78 25 19 67 58 21 15 10 2 19 16 12 14 7 31 7

c27 1333 0.8 0.7 0.7 1.0 0.9 1.3 0.8 1.0 1.0 0.3 0.8 0.7 1.8 0.0 0.5 0.7 3.5 2.2 0.9 0.0 0.1 0.6 0.2 0.0 0.2 0.7 0.0 c28 1205 0.7 0.9 0.6 1.3 0.6 0.7 1.0 0.4 0.0 0.6 0.7 0.5 5.8 0.0 0.2 0.2 4.4 2.7 0.5 0.0 0.0 0.7 0.2 0.0 0.2 0.4 0.0 c29 2411 1.4 2.0 0.9 0.0 1.2 2.0 2.9 0.0 0.0 1.7 0.3 0.3 0.5 1.0 0.7 3.6 1.4 0.0 0.9 0.0 7.9 3.8 2.6 0.0 14.9 0.3 0.0 c30 641 0.4 0.5 0.1 0.5 0.4 0.1 0.6 0.0 0.0 0.4 0.0 0.0 0.1 0.3 0.2 2.0 0.0 0.8 0.4 0.0 10.3 0.4 0.0 0.0 10.7 0.0 3.3 c31 569 0.3 0.3 0.3 0.2 0.4 0.2 0.3 0.1 6.0 0.2 0.2 0.1 1.3 0.3 0.3 2.3 1.2 0.3 2.8 0.0 0.7 0.1 0.7 0.0 0.5 0.3 11.1 c32 230 0.1 0.2 0.0 0.0 0.1 0.2 0.0 0.0 0.5 0.0 0.4 0.0 0.5 0.0 0.0 0.3 0.0 0.0 0.7 0.0 0.0 0.0 0.2 0.0 0.2 1.3 0.0 c33 658 0.4 0.2 0.0 2.3 0.7 0.1 0.1 0.0 58.2 0.1 0.1 0.0 0.2 0.0 0.0 2.1 0.7 0.0 0.0 0.0 0.1 2.1 0.2 0.0 0.0 0.0 0.0 c34 3012 1.8 1.7 1.8 0.2 1.8 8.8 0.2 1.4 1.2 0.1 2.4 0.6 0.9 0.0 0.4 6.1 0.8 0.4 3.3 0.0 0.1 0.0 0.0 0.0 0.0 17.2 1.1 c35 3463 2.0 2.2 0.9 0.2 2.5 7.3 0.5 0.6 0.7 0.2 1.5 0.4 4.1 0.1 0.8 11.8 1.2 1.7 2.0 0.0 0.1 0.4 14.1 0.0 0.0 20.4 0.0 c36 1759 1.0 1.1 1.0 0.0 1.0 1.3 0.8 0.6 1.9 0.2 2.0 0.8 3.8 0.6 0.9 3.6 1.0 1.6 2.6 0.0 1.4 0.8 0.8 0.0 0.0 2.4 2.2 c37 283 0.2 0.2 0.0 0.3 0.2 2.1 0.1 0.0 0.0 0.0 0.4 0.1 2.0 0.0 0.3 0.1 0.0 0.0 0.1 0.0 0.0 0.1 0.1 0.0 0.0 0.2 0.0 c38 8143 4.8 4.2 4.4 3.1 5.6 10.2 1.5 5.2 9.4 1.7 9.1 5.3 3.6 2.0 10.6 4.0 6.0 3.8 6.8 0.0 1.0 5.8 1.9 4.2 1.9 5.4 1.1 c39 2678 1.6 1.1 2.5 5.8 1.4 1.2 0.5 2.3 0.0 0.2 2.1 3.0 0.5 0.0 3.7 0.2 6.1 4.1 4.1 0.0 0.1 0.5 0.0 0.0 0.2 0.8 0.0 c40 5828 3.4 1.8 4.0 0.0 4.6 0.1 2.0 7.0 0.0 1.5 0.8 1.4 0.1 0.0 16.1 0.2 0.7 0.1 0.7 0.0 2.1 4.2 0.0 0.0 0.7 0.2 0.0 c41 1340 0.8 0.6 1.0 0.0 0.8 2.1 0.1 1.1 0.5 0.0 1.7 1.2 1.0 0.0 1.3 1.3 0.7 0.0 0.3 0.0 0.0 0.2 0.1 0.0 0.2 1.4 0.0 c42 8588 5.1 1.4 5.7 3.1 7.8 2.2 0.1 18.4 1.2 0.0 4.3 8.9 0.7 0.1 4.4 0.4 1.1 0.2 0.4 0.0 0.3 0.4 0.6 60.8 0.0 0.9 0.0 c43 2488 1.5 1.1 1.9 1.7 1.5 1.3 0.1 3.6 0.5 0.1 2.7 2.8 1.0 0.2 1.6 1.2 0.5 0.3 0.5 0.0 1.3 0.1 0.2 10.0 0.5 0.5 5.6 c44 6621 3.9 1.1 10.3 1.2 2.7 0.1 1.2 9.9 0.0 0.2 1.6 14.9 0.0 0.0 3.4 0.2 0.4 0.5 1.8 0.0 0.0 0.2 0.2 4.2 0.0 0.1 0.0 c45 1030 0.6 0.4 0.4 0.0 1.0 0.1 0.0 0.5 0.0 0.0 4.5 0.1 1.3 0.0 0.1 0.2 0.2 0.0 0.5 0.0 0.0 0.2 0.0 0.0 0.0 0.0 0.0 c46 14794 8.7 5.9 13.1 14.4 8.6 4.9 1.4 16.7 0.7 0.4 17.8 19.5 10.4 0.0 6.4 1.9 17.8 13.2 9.3 0.0 1.8 4.8 0.6 0.0 2.1 6.5 0.0 c47 2606 1.5 1.8 1.6 1.7 1.3 4.1 0.0 2.0 0.2 0.0 6.5 2.0 0.7 0.0 0.9 0.7 0.3 1.5 0.3 0.0 0.0 0.1 0.1 0.0 0.0 2.1 4.4 c48 3845 2.3 1.7 3.0 6.1 2.3 1.2 0.0 4.6 0.5 0.0 4.0 8.3 0.2 0.0 1.8 0.1 1.4 0.0 0.5 0.0 0.1 0.1 0.0 2.5 0.0 0.7 0.0 c49 8731 5.1 4.1 9.4 23.1 3.4 1.0 0.1 10.1 0.2 0.0 9.4 19.6 0.8 0.0 4.8 0.2 1.2 1.4 0.3 0.0 0.0 0.2 0.0 13.3 0.0 0.6 0.0 c50 2068 1.2 1.2 1.2 2.0 1.2 1.0 0.2 1.7 0.5 0.2 3.1 2.7 2.0 0.2 1.1 0.6 0.9 2.5 1.6 0.0 0.3 0.8 0.7 2.5 0.9 0.6 1.1

Herfindhal index

0.05 0.07 0.06 0.10 0.05 0.06 0.14 0.10 0.36 0.23 0.07 0.12 0.05 0.15 0.07 0.04 0.07 0.06 0.09 0.56 0.08 0.10 0.15 0.40 0.09 0.12 0.15 total 169820 60066 39694 606 69454 3794 31274 29824 414 25997 17532 16714 969 2134 11814 6019 2686 2034 1371 3 764 8278 899 120 426 6664 90

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Concordance table ISIC (OECD) and SIC (Worldscope) and constructed industry sectors

ISIC ISIC SIC SIC Constructed

sectors 1500-

1700

General Building Contractors,

Heavy Construction CONS

3000 Total manufacturing

2000-

3999 Manufacturing

3100 Food, beverages & tobacco 2000 Food and kinred products FOOD

2100 Tobacco products 3200 Textiles, apparel & leather 2200 Textile mill products

2300 Apparel and other textile products TEXT

3100 Leather and leather products

3300 Wood products & furniture 2400 Lumber and wood products WOOD

2500 Furniture and fixtures

3400 Paper products & printing 2600 Paper and allied products PAPE

2700 Printing and publishing 3500 Chemical products

3510 Industrial chemicals 2810Industrial Inorganic Chemicals 2860Industrial Organic Chemicals 3520 Other chemicals

3522Drugs & Medicines 2830Drugs DRUG

3529Chemical products nec. 2820Plastics Materials and Synthetics

2840Soap, Cleaners, and Toilet Goods CHEM

2850Paints and Allied Products 2870Agricultural Chemicals 2890Miscellaneous Chemical Products

3530 Petroleum refineries 2900 Petroleum and coal products PETR

3540 Petroleum and coal products

3550 Rubber products 3000 Rubber and miscellaneous plastics products RUBB

3560 Plastic products, nec

3600 Non-metallic mineral products 3200 Stone, clay, and glass products STON

3700 Basic metal industries

3710 Iron & Steel 3300 Primary metal industries

3310Blast Furnace and Basic Steel Products META

3320Iron and Steel Foundries

3720 Non-ferrous metals 3330Nonferrous Metals

3800 Fabricated metal products

3810 Metal products 3400 Fabricated metal products FABR

3820 Machinery nec. 3500 Industrial machinery and equipment

3825Office & computing equipment 3570Computer and Office Equipment COMP

3829Machinery & equipment, nec. 3510Engines and Turbines 3520Farm and Garden Machinery 3530Construction and Related Machinery

3540Metalworking Machinery MACH

3550Special Industry Machinery 3560General Industrial Machinery 3580Refrigeration and Service Machinery 3590Industrial Machinery, (not elsewhere classified) 3830 Electrical machinery 3600 Electronic and other electric equipment

3832Radio,TV & communication equip. 3650Household Audio and Video Equipment ETRO 3660Communications Equipment

3839Electrical apparatus, nec 3610Electric Distribution Equipment 3620Electrical Industrial Apparatus

3630Household Appliances ELEC

3640Electric Lighting and Wiring Equipment 3670Electronic Components and Accessories 3690Miscellaneous Electrical Equipment & Supplies

3840 Transport equipment 3700 Transportation equipment

3841Shipbuilding & repairing 3730Ship and Boat Building and Repairing TRAN

3842Railroad equipment 3740Railroad Equipment

3843Motor vehicles 3710Motor Vehicles and Equipment VEHI

3844Motorcycles and bycicles 3750Motorcycles, Bicycles, and Parts

3845Aircraft 3720Aircraft and Parts AIRC

3849Other transport equipment 3760Guided Missiles, Space Vehicles, Parts 3790Miscellaneous Transportation Equipment

3850 Professional goods 3800 Instruments and related products INST

3900 Other manufacturing 3900 Miscellaneous manufacturing industries OTHE

7370Computer and Data Processing services SOFT

9999Nonclassifiable establishments MISC

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Patent-R&D relationship: Inadequacy of the linear adjustment of data

0 1 2 3 4 5 6 7

0 1 2 3 4 5 6 7 8 9

Ln (Pit)

ln (Rit)

(13)

Patent-R&D relationship: Poisson residuals’ variance against average lambda

( )

ln σ^²_i

-4 -2 0 2 4 6 8 10 12 14

0 1 2 3 4 5 6 7

ln(mean) = ln(variance) best fit line

( )

ln λ

In order to examine the validity of the Poisson specification, we adopt the same approach as HHG (1984). The authors begin by defining the residuals of the Poisson models as:

( )

u_it = P_it −λ_it (4.29)

and the standardized residuals as:

( )

ε_it = P_it −λ_it λ_it (4.30)

Then the authors consider the variance property of the Poisson model, i.e. the equality between its first two conditional moments. To this end, they show a log-log plot of:

( )

( ) ⁽ ⁾

σ_i _it _i

t

T u u

² = 1 −1 ∑ − ² where ^ui ( )^T it

t

= 1 ∑ε (4.31)

against

( )

λ_i λ_it

t

= 1T ∑ (4.32)

The authors conclude to a failure of the Poisson model since they do not find the expected one-to-one relationship. A similar conclusion arise from the above figure.

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Decomposition of variability¹⁶² - balanced sample S625 level

of the variables

annual growth rate of the variable

VARb VARw VARb VARw

ln (Sd1) 98.4 1.6 ∆ln (S) 17.9 82.1

ln (L) 98.6 1.4 ∆ln (L) 16.3 83.7

ln (C) 98.1 1.9 ∆ln (C) 16.4 83.6

ln (K) 98.6 1.4 ∆ln (K) 21.4 78.6

where VARb = between (or inter-firms) variability

= [T x Σ{i=1 to N}(yi.-y..)²] x 100/VARt VARt = total variability

= Σ{i=1 to N} Σ{t=1 to T}(yit-y..)² yi. = [Σ{t=1 to T} yit]/T

y.. = [Σ{i=1 to N} yi.]/N

T = number of time period, i.e. 8

N = number of cross-sectional units, i.e. 625 firms VARw = within (or intra-firm) variability

= 1 - VARb

162