The Sources of Biological Innovation in Agriculture: Comparative Advantages of Public, Entrepreneurial, and Corporate R&D

This empirical study seeks to reconcile evolutionary economic theories on how naturally heterogeneous technologies tend to emerge over time along technological trajectories with the predictions of theory that organizations in different sectors of the agricultural R&D economy should specialize in inventions with different qualitative characteristics arising at different phases in the evolution of a new technology. This idea of specialization by R&D sectors in is tested using U.S. patent data on biological inventions with relevance for crop agriculture categorized into subsets that are estimated to capture the most significant technological trajectories emerging during these formative years of the agricultural biotechnology industry. Established citations-based indices proxy for a patent's heterogeneous economic qualities such as value, originality, generality, and appropriability. Assignee designations on the patents are used to identify what type of organization generated each invention—whether a government laboratory, a university, a non-profit research organization, an individual inventor, an entrepreneurial startup firm, or an established corporate firm. The data are consistent, both before and after controlling for innovations' places within technological trajectories, with systematic differences in innovation across sectors as predicted by my broad interpretation of the linear hypothesis. At the same time, these preliminary results reemphasize warnings made in the literature against assuming a simple one-to-one relationship between basic and applied innovation, and provide a more realistic picture of the innovation process in agricultural biotechnology in which public sector researchers do the most original work, and do it a bit earlier. Entrepreneurs consistently make entry in the private sector with high value technology that promises to be highly appropriable, and they build on it. Corporations do the most innovating, in terms of generating sheer numbers of patents of moderate appropriability, but with many quite low in value.