Valuation of innovation: The case of iPhone

Korkeamäki, Timo and Takalo, Tuomas (2010): Valuation of innovation: The case of iPhone. Unpublished.

Abstract:

We estimate the private value of Apple’s iPhone by observing abnormal stock market reactions to news announcements and patent publications related to the innovation. Our estimate of the lower bound on the market valuation of iPhone is fairly high, at minimum 30 billion U.S. (event day) dollars. We find that patentable technology explains about 25% of that total value. We also find a weak negative reaction among Apple’s rivals to the news about iPhone but no significant reaction to the publication of patent documents concerning iPhone can be observed. The evidence suggests that the value of iPhone primarily stems from Apple’s management and marketing abilities and efforts rather than from underlying "hard" technologies and intellectual property.

January 5th Links

1. For those interested in maximum likelihood estimation techniques, Vincent Granville discusses the method of steepest ascent in relation to Google's search algorithm.

2. The Economist: "Only a few fast-developing countries, such as Brazil and China, now seem short of PhDs."

3. U.S. Council of Graduate Schools: The Ph.D. Completion Project

4. Yesterday it was announced that Irish property prices fell back to 2002 levels in 2010, according to reports from MyHome.ie and Sherry Fitzgerald; so it is interesting to read this SSISI paper (2007) by P.J. Drudy which "argues that Ireland’s housing problems stem in part from a particular philosophical orientation which supports the 'commodification' of housing".

5. The (U.K.) Royal Statistical Society "Get Stats" Campaign: 'giving everyone the skills and confidence to use numbers well'.

6. Researchers at Harvard have found a way of using the iPhone to measure people’s moods and have found a correlation between daydreaming and unhappiness.

7. The new Happiness Index to gauge Britain's national mood.

8. The regional impacts of Northern Irish HEIs.

9. Tom McKenzie and Dirk Sliwka: Universities as Stakeholders in their Students' Careers: On the Benefits of Graduate Taxes to Finance Higher Education.

10. CNN Money: Should companies offer sabbaticals?

11. Damien Mulley: "Failure" and Enterprise Culture in Ireland.

Upcoming Talks on Science, Innovation and the Economy

10th November: Panel Discussion: What's Smart about Ireland's Smart Economy in 2010?
A panel discussion with Dick Ahlstrom (chairman), Science Editor of the Irish Times; Professor John FitzGerald, ESRI; Dr Brian Kelly, CEO of Celtic Catalysts; Karlin Lillington, Technology journalist, Sean O’Driscoll (CEO Glen Dimplex) and Ferdinand von Prondzynski, former President of Dublin City University.

Organisers: Royal Irish Academy and the Irish Times
Admission is free but booking is essential.

11th November: The Long Debate: Debate on the Innovation Taskforce Report
Taking place in the NDRC on the 11th of November, the debate will draw on the findings of the Innovation Taskforce report.

Launched in March 2010, the report sets out recommendations for developing Ireland into an International Innovation Hub. Members of the Taskforce, including some of Ireland’s leading economic commentators, industry and government members, academics, creatives and entrepreneurs will be in attendance to discuss the nature of innovation within Ireland.

Organisers: Inventorium
Debate: 19.00-22.00
NDRC, Crane St, Digital Hub, Dublin 8
Registration for this event is essential.

17th November: Panel Discussion: Can Science be a Business?
A panel discussion with Dick Ahlstrom (chairman), Science Editor of the Irish Times; Professor Luke O’Neill, TCD; Dr Ena Prosser, Fountain Healthcare Partners; Professor Mark O’Malley, UCD; Professor Emmeline Hill (UCD).

Organisers: Royal Irish Academy and the Irish Times
Admission is free but booking is essential.

Assorted Links: 7th September 2010

1. The Hewlett Packard Social Computing Lab focuses on 'methods for harvesting the collective intelligence of groups of people in order to realise greater value from the interaction between users and information'.

2. "The agony and the ecstasy: the history and meaning of the Journal Impact Factor" (Garfield and Sher, 2005).

3. Measurement of administrative burden imposed on Irish business by Central Statistics Office inquiries

4. http://www.bundle.com: Track your spending

5. DIT School of Computing launches a new master's programme in data analytics

6. A story on the OECD's Education at a Glance 2010, in today's Irish Independent: "For every €7 spent on a primary pupil, nine is spent on second level and 12 is spent on third level".

7. Another Irish Independent story: the mechanics of random selection in the CAO application process

8. Bloomberg Businessweek: The World's 50 Most Innovative Companies

9. Below is a video from the OECD showing the importance of tax credits for understanding government funding of research and development (R&D). When tax credits are taken into account, Korea spends the most (as a percentage of GDP) on R&D. Canada spends ten times more on R&D tax credits than it does on direct funding for R&D.

R&D Links: 3rd August 2010

1. The mission of the Science Coalition is to expand and strengthen the (U.S.) federal government’s investment in university-based scientific, medical, engineering and agricultural research. Their latest report, Sparking Economic Growth, examines how federally funded research has led to the creation of new companies and jobs.

2. SPRU (Science and Technology Policy Research at the University of Sussex) is a research centre focused on science, technology, and innovation policy, including innovation management in firms, technological competition in industries, societal impacts of technologies and their regulation, and the positive contributions of innovation to solving societal and economic policy problems.

3. The (U.S.) Congressional Budget Office Microeconomic Studies Division conducts applied research in a number of areas, including Labor, Welfare, Healthcare, Stimulus and Science and R&D. Research output in the area of Science and R&D includes a 2007 publication on Federal Support for Research and Development.

4. In the book, The Venturesome Economy: How Innovation Sustains Prosperity in a More Connected World, Amar Bhide argues that "know-how developed abroad enhances--not diminishes--prosperity at home, and why trying to maintain the U.S. lead by subsidizing more research or training more scientists will do more harm than good."

5. The White House Office of Science and Technology Policy. "Congress established the Office of Science and Technology Policy in 1976 with a broad mandate to advise the President and others within the Executive Office of the President on the effects of science and technology on domestic and international affairs."

6. The Society for Social Studies of Science (4S) is a nonprofit, professional association. It was founded in 1975 and now has an international membership of over 1200.

7. Technopolis (2009): Bridging Research and Policy through Outcome Evaluation: U.K. Department for Environment, Food and Rural Affairs Research Report WR0808.

8. The Integrated Information System on European Researchers (IISER) project is undertaken in cooperation and with the support of Directorate General for Research. It aims at setting up a sustainable European-wide information system to provide a dynamic overview of researchers' stocks, flows, mobility career development and motivations.

9. Science and Engineering Indicators, published by the (U.S.) National Science Board, provides a broad base of quantitative information on the U.S. and international science and engineering enterprise.

10. Sourafel Girma, Holger Görg and Aoife Hanley: R&D and Exporting: A Comparison of British and Irish Firms, Review of World Economics, Volume 144, Number 4 / December, 2008.

R&D and Ireland - Links: 27th July

1. Comparing Academic Entrepreneurship in Europe: The Case of Sweden and Ireland (Magnus Klofsten and Dylan Jones-Evans: Small Business Economics 14: 299–309, 2000)

2. National innovation policy and performance: Comparing the small island countries of Taiwan and Ireland (Grace T.R. Lin, Yung-Chi Shena and James Choua: Technology in Society Volume 32, Issue 2, May 2010, Pages 161-172)

3. Contribution of basic research to the Irish national innovation system (Arnold E. and Thuriaux B.: Science and Public Policy, Volume 28, Number 2, 1 April 2001 , pp. 86-98(13))

4. Ireland's National Innovation System: An Exploratory Study of Supporting Institutions and Dynamic Actors (Dimitrios Pontikakis; Thomas McDonnell; Will Geoghegan: Prometheus, Volume 24, Issue 1 March 2006 , pages 37 - 58)

5. Science: Celtic Strength: Science in Ireland

6. Paul Tansey: Productivity: Ireland’s Economic Imperative

7. Publicly Funded R&D and Economic Development in Northern Ireland (Northern Ireland Economic Council: Report 133: December 1999)

Links: 23rd July. Special Focus: Emigration.

1. Adam Jaffe: Building Program Evaluation Into The Design Of Public Research Support Programs

2. NSF Survey of Federal Funds for Research and Development

3. Greg Mankiw discusses the U.S. Council of Economic Advisers' "impossible job": measuring how many jobs were created by the American Recovery and Reinvestment Act of 2009. Here's a link to the CEA document.

4. Marginal Revolution flags a recent paper by Weber and Castillo from Yahoo! Research: The Demographics of Web Search. "How does the web search behavior of 'rich' and 'poor' people differ? Do men and women tend to click on different results for the same query?"

5. David McWilliams on emigration out of Ireland: "The ESRI predicts that 120,000 will leave the country in the next 18 months, on top of the 100,000 who have already gone in the past 18 months."

6. It was last year that the CSO reported that for the first time since 1995 more people left Ireland than moved here. That is, there was net outward migration.

7. Overall, the ESRI commentary warns that 200,000 people may be forced to emigrate between now and 2015 if unemployment does not abate.

8. In addition, a new Eurobarometer survey shows more than one fifth of Irish people are thinking of moving abroad for work. It also shows that 35% of Irish people feel employment prospects are better in other countries.

9. This Irish Times article states that current statistics show "Irish people are moving to both Canada and Australia in increasing numbers to escape the economic recession but are largely shunning traditional emigration routes to Britain and the US."

10. A companion article by the same journalist (Jamie Smyth) considers whether time abroad could end up as permanent emigration: "...if the Irish economy does not rebound in the next few years and create job opportunities for the next generation of graduates and school-leavers it seems very likely that a year spent working abroad will lead to longer term and more permanent emigration." To quote an old Pogues song, (hundreds of) thousands are "sailing".

Academic Research: is it of any value to the taxpayer?

This is the title of a debate to be held later this evening in TCD. Might be of interest to those following recent developments in the debate about public investment into R&D in Ireland. Details below.

The debate will be led by Professor Poul Holm (TCD), Dr Declan Jordan (UCC) and Professor Luke O'Neill (TCD)

Time: 6.00 p.m - 7.30 p.m.

Date: Tuesday 1 December 2009.

Venue: Robert Emmet Theatre, Arts Building, Trinity College Dublin

Measuring International Technology Spillovers and Progress Towards the European Research Area

This is the title of a new ESRI WP by Iulia Siedschlag. "The objective of this paper is to contribute to the development of an evidence-based system to monitor progress towards the European Research Area (ERA) and a knowledge-based economy."

Do Universities Generate Agglomeration Spillovers? Evidence from Endowment Value Shocks

Shawn Kantor, Alexander Whalley (August, 2009): NBER Working Paper No. 15299

Excerpt:

"...We use the fact that universities follow a fixed endowment spending policy based on the market value of their endowments to identify the causal effect of the density of university activity on labor income in the non-education sector in large urban counties. Our instrument for university expenditures is based on the interaction between each university's initial endowment level at the start of the study period and the variation in stock market shocks over the course of the study period. We find modest but statistically significant spillover effects of university activity. ... As the implied elasticity is no larger than what previous work finds for agglomeration spillovers arising from local economic activity in general, university activity does not appear to make a place any more productive than other forms of economic activity. We do find, however, that the magnitude of the spillover is significantly larger for firms that are technologically closer to universities in terms of citing patents generated by universities in their own patents and sharing a labor market with higher education."

What’s Smart About Ireland’s Smart Economy?

This is the title of an RIA event to be held at City Hall, Dame Street, Dublin 2 on Wednesday, 14 October 2009, at 6pm. More details are available on the RIA website here (scroll down to #4). The event is sponsored by the Higher Education Authority and is part of Innovation Dublin Week 2009. It is jointly organised with Dublin City Council.

Chair: Professor Michael Cronin MRIA

Panellists: Professor Peter Clinch, Taoiseach’s special adviser on the smart economy, David O’Meara, Managing Director of Havok, Jim Barry, CEO, National Toll Roads, Professor Frances Ruane, MRIA, Director of the Economic and Social Research Institute and Tom Boland, CEO of the Higher Education Authority