Prior research shows returns are positive when firms meet or beat analysts’ consensus forecasts but negative when firms miss. Past studies also show managers frequently cut R&D expenses in order to meet the consensus forecast. Despite these findings, there is limited evidence about how the market responds when firms beat the forecast by cutting R&D. This study shows the stock market penalizes firms that use R&D cuts to manage earnings and exacts a discount to the market reward if beating the forecast requires cutting R&D. The discount is only partial and firms are still better off doing so in the short run. Furthermore, this study shows the R&D cuts used to manage earnings are concentrated in specific industries and are likely temporary, as firms tend to increase R&D spending in the subsequent period. Investors appear to recognize these short-term cuts and treat them similar to accruals. / 10000-01-01

Canada has long been a proponent of free trade while at the same time defending the current supply management system that protects the dairy industry from import competition. In the most recent Doha Development Round of talks amongst nations belonging to the World Trade Organization, the validity of Canada's protectionist position has been questioned and it is conceivable that Canada may have to make significant changes in the dairy industry to allow more liberal trade policies to be enacted. The key purpose of this study is to find out how free trade will affect the research and development (R&D) incentives of Canadian dairy farmers. On one hand they may be induced to perform more R&D due to competition effects in order to lower costs and achieve a competitive advantage over the main competitor, the United States. On the other hand they may be induced to perform less R&D due to the spillover effect, which allows the Canadian R&D efforts to be used by the United States at no additional cost. It is found that the outcome of these two opposing forces depends on the market scale effect. If Canada is a net importer when the border opens the spillover effect may dominate and Canadian dairy producers may invest less into R&D than under the current protectionist policies. These results however will switch if Canada is found to be the net exporters. The results also depend on the level of the quota currently in place. If the current quota is chosen at a quantity relatively close to the amount supplied at the monopolistic level, a free trade regime may promote R&D efforts more so than supply management. On the other hand, if the current quota level in Canada is closer to the quantity that would be supplied in a competitive industry, Canadian dairy producers may invest less heavily in R&D efforts under a free trade regime than a supply management system. / Land and Food Systems, Faculty of / Graduate

Using data from the Kauffman Firm Survey (KFS), this thesis explores the effects that innovation activities has on the survival of new firms. The KFS follows 4,928 American start-ups from 2004 to 2011. A probit model is used to examine the relationships that may exist between a number of different variables relating to innovation and survival. The results indicate that firms that invest in research and development (R&D) and machinery and equipment persistently are more likely to survive than those that do not, or those that only invest once in these types of innovative business activities. Also, with regards to intellectual property (copyrights, trademarks and patents), firms that hold these types of intellectual property have a better chance of survival than those that do not hold any intellectual property.

Chapter 1: Tradable Permits under Environmental and Cost-reducing R&D: This chapter models simultaneous investments in both environmental and cost-reducing R&D by asymmetric Cournot duopolist. Pollution rights (emission permits) are allocated by the regulator and can be traded between firms. Both R&D competition and cooperation are considered. In a three-stage game, firms first invest in R&D, then trade permits, and then compete in output. The strategic interaction between different types of R&D investments is analyzed. It is found that giving more permits to one firm induces it to conduct more cost-reducing but less environmental R&D. The second-best optimal allocation of pollution rights is also analyzed. This allocation matters for social welfare under R&D competition, but is irrelevant under R&D cooperation. Moreover, the optimal allocation depends on R&D spillovers. This paper also studies the grandfathering of permits based on historical output. Compared with the second-best optimal allocation, the higher the emissions reduction level, the more likely that grandfathering allocates too few permits to the large firm and too many permits to the small firm. Adding an R&D budget constraint leads firms to under-invest in cost-reducing R&D relative to environmental R&D. Chapter 2: Tradable Permits under Environmental R&D between Upstream and Downstream Industries: This chapter models the simultaneous investments in environmental R&D by both downstream and upstream industries, with two symmetric firms within each industry competing à la Cournot. Pollution rights are allocated by the regulator, and firms can trade permits. R&D competition, intra-industry (horizontal), inter-industry (vertical) and both intra- and inter-industry (generalized) R&D cooperations are considered. In a four-stage game, firms first invest in R&D, then trade permits, then upstream firms compete in intermediate good production, and finally downstream firms compete in final food production. The strategic interactions between R&D investments are analyzed. It is found that an increase in either vertical or horizontal R&D spillovers reduce the permit price but increase production, but the spillover effects on R&D investments are ambiguous and they depend on the number of permits that a firm receives from the government. However, firms undertake more R&D under generalized cooperation than vertical cooperation, irrespective of spillovers and the allocation of permits, and this results in higher social welfare under generalized cooperation than vertical cooperation. The optimal allocation of pollution rights by the regulator is also considered. This allocation matters for social welfare under R&D competition and horizontal cooperation, but is irrelevant under vertical and generalized cooperations. Chapter 3: Is There a Principle of Targeting in Environmental Taxation?: This chapter studies whether the "principle of targeting", which is referred to by Dixit (1985) as the tax formulae for dirty goods have "additivity property" (Sandmo 1975) and externality-generating sources should be directly targeted (Bhagwati and Johnson 1960), can be applicable in the presence of a uniform commodity tax with an additional emissions tax. We consider three perfectly competitive markets, one of them produces a non-polluting good and the other two produce polluting goods. The regulator chooses optimal taxes on all three markets to maximize social welfare and finances an exogenous public expenditure. First all, it is found that the additivity property does not hold under differentiated taxes, and is even further weakened with a uniform commodity tax. It is also shown that the Pigouvian tax is unlikely to apply on the top of the uniform commodity tax. Furthermore, if there is only tax instrument available -- i.e. either the uniform commodity tax or the emissions tax -- then the uniform commodity tax (emissions tax) induces higher social welfare when marginal social damage is low (high).

We build a two-stage stochastic R&D portfolio model for climate policy analysis. This model can help policy makers allocate a limited R&D budget to minimize the total social cost. We develop several methods, including genetic programming and a greedy algorithm, to deal with the computational challenges of the model that arise due to the inclusion of uncertainties. From the R&D model, we have several key results. First, the optimal portfolios are robust against the climate risks. Second, policy makers should put most of their investment into Carbon Capture and Storage (CCS) projects when the R&D budget is relatively low. We further show Fast Reactor (FR) and 3rd generation PV are the two most unattractive technologies in the portfolio. Finally, more sophisticated expert elicitations on climate change energy technologies should be done in the future, because the potential benefit can be up to 11 billion dollars.

Background: As the global pharmaceutical industry continues to generate significant wealth, the demand for equitable access to medicine remains at the forefront of political and grassroots agendas. In recent years, poor drug coverage coupled with unaffordable drug prices have contributed to access issues for a growing number of Canadians (Morgan et al, 2015). Although the industry cites various reasons for an increase in cost, such as high-risk research, lengthy clinical trials and significant advances in technology (DiMasi et al., 2016; Ridley, 2005), there is a growing body of research that is contradictory to the industry’s reasoning for higher drug costs (Kohler et al., 2016; Siddiqui & Rajkumar, 2012; Light & Warburton, 2011). Whereas other initiatives to date focus on drug coverage, this work proposes the Canadian Government investigate the feasibility of the public production and distribution of pharmaceuticals. Thus, the research question addresses whether successful publicly funded pharmaceutical research and development initiatives, including production and distribution, could be applicable in the Canadian pharmaceutical sector where inequity is an issue. A scoping review was conducted to draw in all relevant literature on publicly funded research models pertaining to the research and development of pharmaceuticals. Methods: The research undertaken for this thesis is exploratory and comprised of qualitative work that is guided by the Arksey & O’Malley (2005) scoping review methodological framework. The data collected for the scoping review was analyzed with the thematic analysis method. Findings: Following the thematic analysis, three key themes were identified: Local Production, Public Private Sector and National Production. Although there have been some successes in low to middle income countries with regard to the local production of medicine, the likelihood of success is contingent on whether there is a need to import active pharmaceutical ingredients (API). With regard to the public and private sector, the pre-competitive sphere serves as the typical space for collaboration. The public sector typically conducts research, whereas the private sector oversees drug development. The national production of medicine is underpinned by government intervention, which is evidenced by the varied measures taken to increase access to medicine. The preliminary literature review revealed that an Advisory Council was created to assess the viability of Pharmacare 2020. This council may be used to conduct the necessary research to assess the feasibility and strategy of publicly producing pharmaceuticals in Canada. Conclusions: Healthcare inequity that is linked to unaffordable medicine is exacerbated by poor drug coverage. The findings revealed that considerable investment into infrastructure, a strong civil society that pressures the government to act, and a pharmaceutical sector characterized by high prices may encourage a government to produce medicine when faced with a health crisis. Further findings revealed that API production may prevent a country from feasibly producing medicine. Considering Canada’s standing as an industrialized and developed nation with access to state-of-the-art public infrastructure, in addition to a pharmaceutical market characterized by high drug prices and a strong civil society sector, the Canadian Government is in a likely position to produce medicine. However, the necessary research must be conducted to assess whether such an endeavour is feasible. / Thesis / Master of Science (MSc) / As the global pharmaceutical industry continues to generate significant wealth, the demand for equitable access to medicine remains at the forefront of political and grassroots agendas. In recent years, poor drug coverage coupled with unaffordable drug prices have contributed to access issues for a growing number of Canadians (Morgan et al, 2015). Although the industry cites various reasons for an increase in cost, such as high-risk research, lengthy clinical trials and significant advances in technology (DiMasi et al., 2016; Ridley, 2005), there is a growing body of research that is contradictory to the industry’s reasoning for higher drug costs (Kohler et al., 2016; Siddiqui & Rajkumar, 2012; Light & Warburton, 2011). Whereas other initiatives to date focus on drug coverage, this work proposes the Canadian Government investigate the feasibility of the public production and distribution of pharmaceuticals. Thus, the research question addresses whether successful publicly funded pharmaceutical research and development initiatives, including production and distribution, could be applicable in the Canadian pharmaceutical sector where inequity is an issue. A scoping review was conducted to draw in all relevant literature on publicly funded research models pertaining to the research and development of pharmaceuticals.

Le travail de recherche que nous présentons dans ce document porte sur la dynamique des centres de R&D industriels implantés à l'étranger. Comme Ronstadt (1978), Asakawa (2001) et Asakawa & Som (2008), nous constatons que la mission et la position des centres de R&D dans le réseau interne d'innovation de la firme évoluent. Nous avons modélisé cette évolution en quatre phases distinctes : l'implantation du centre, la double phase de la construction de son identité grâce à son intégration au réseau interne d'innovation de la firme et à la construction de son réseau externe d'innovation et enfin la maturité du centre.Nous avons ensuite cherché à comprendre comment le centre passait de sa phase d'implantation,durant laquelle il n'a pas encore d'identité propre, à sa phase de maturité, où il est parvenu à se spécialiser et à devenir un élément clé du réseau interne d'innovation de la firme. Nous avons caractérisé chacun des moments de l'évolution du centre par les types de relations entre le centre,son réseau interne d'innovation et son environnement local. Pour y parvenir, nous nous sommes appuyée sur la littérature sur les clusters qui s'est intéressée aux types de liens nécessaires à l'échange de savoirs et de savoir-faire et à la construction de rapports de confiance entre plusieurs organismes au-delà de la seule considération de leur proximité géographique. Cette littérature apporte un outil peu mobilisé dans la littérature sur la globalisation de la R&D : les proximités (Boschma,2005). Nous avons utilisé six types de proximités pour comprendre et analyser de quelle manière un centre de R&D implanté à l'étranger évoluait : les proximités géographique, institutionnelle organisée, institutionnelle inorganisée, structurelle, cognitive et sociale. Il ressort de nos travaux que chacune des phases de l'évolution du centre se caractérise par une architecture de proximités spécifique entre le centre, son réseau interne d'innovation et son environnement local.Pour parvenir à ces résultats et pour les valider, nous avons combiné plusieurs outils méthodologiques : 1/ nous avons construit et animé pendant deux ans un focus group composé de managers de la R&D industrielle sur le thème de la globalisation de la R&D, 2/ nous avons étudié les centres de R&D implantés à Bangalore de quatre entreprises multinationales : ABB, AkzoNobel,Procter & Gamble et Siemens, 3/ enfin, nous nous sommes appuyée sur un grand nombre de « minicas», recueillis lors d'entretiens informels ou de réunions relatives à la question de la globalisation de la R&D. L'ensemble de ce travail empirique a été fait dans le cadre d'une thèse CIFRE avec l'association européenne pour le management de la recherche industrielle (EIRMA). / This thesis addresses the question of the dynamics of foreign industrial R&D centres.Just as Ronstadt (1978), Asakawa (2001) and Asakawa & Som (2008) did before us, we notice thatthe mission and the position of the R&D centres in their internal innovation network are changing over time. We have identified four different phases in these dynamics: 1/ the setting up of the centre, 2/ the double phase during which the centre builds up its own identity, thanks to its integration into its internal innovation network and the creation of its external innovation network, 3/ its maturity.One of the key questions was then to understand how the centre was able to rise from its first phase, during which it did not have its own identity, to its maturity phase, where it has its own speciality and is recognized as one of the key elements of its internal innovation network. In order to answer this question, we have identified the types of relationships between the centre, its internal innovation network and its local environment during each phase of its dynamics. We used the academic literature on clusters which tried to determine the types of relationships other than geographical proximity that make the exchanges of knowledge and know-how, as well as the creation of confidence between organisms possible. To answer this question, it introduces a concept which is not widely used in the academic literature on the globalisation of the R&D: the concept of proximities (Boschma 2005). Weused six types of proximities in order to understand the dynamics of the foreign R&D centres: the geographical proximity, the formal and informal institutional proximities, the organisational, cultural and social proximities. The results of our study show that each phase of the evolution of the foreign R&D centre can be characterised by an architecture of proximities between the centre, its internal innovation network and its local environment.Our results come from several empirical observations: 1/ we have built and organized a focus groupon the globalisation of R&D during two years. This focus group was made of several industrial R&Dmanagers, 2/ we have studies the Indian foreign R&D centres of four multinational companies: ABB,AkzoNobel, Procter & Gamble and Siemens, 3/ we have used several short case studies gatheredduring informal interviews and professional meetings on the globalisation of R&D. This empirical work has been realized in the framework of a public-private partnership between our laboratory and the European Association for Industrial Research Management (EIRMA).

La littérature économique défend l'existence d'aides publiques à la R&D privée du fait des nombreuses externalités et distorsions qui conduiraient les firmes à sous-investir en R&D. La multiplication de ces aides à différents échelons territoriaux et l'apparition d'éléments plus contrastés concernant leur justification soulignent un besoin accru d'analyse de ces politiques et de leurs conséquences territoriales. L'objet de cette thèse est d'apporter de nouveaux éléments concernant la rationalité, les effets et l'efficacité des aides financières à la R&D privée.Le premier chapitre propose une discussion de la rationalité des aides financières à la R&D à partir de la littérature sur la croissance endogène et ses raffinements incluant une dimension géographique. Le décalage entre les approchesthéoriques et les approches empiriques concernant les origines et l'ampleur du sous-investissement des firmes en R&D fait plutôt ressortir l'hypothèse d'un sous-investissement limité et spécifique.Les chapitres 2 et 3 fournissent des analyses théoriques des effets dynamiques et spatiaux d'une politique centralisée de subvention à la R&D. Les résultats montrent que cette politique renforce la croissance économique, réduit les inégalitésterritoriales et améliore le bien-être global. Les bienfaits de ce type de politique sont non seulement dépendants de l'hypothèse retenue concernant les rendements de la R&D mais surtout des options retenues concernant le financement et l'allocation géographique des subventions. Le chapitre 4 fournit une analyse empirique de la capacité des aides financièresà la R&D à stimuler l'investissement privé en R&D, à partir d'un panel de pays de l'OCDE. Les résultats indiquent une sensibilité plus forte des investissements privés en R&D aux aides indirectes (incitations fiscales) qu'aux aides directes (subventions) et suggèrent l'existence d'effets de substitution entre ces deux types d'aides. / The economie literature largely defends the existence of financial supports to private R&D owing to the numerous externalities and distortions that lead firms to underinvest in R&D. The proliferation of these supports at different territorial levels and the recent emergence of more constrasting arguments concerning their rationale underline an increasing need for the analysis of these policies and the ir territorial impacts. The purpose of this PhD thesis is to provide new elements regarding the rationale, the effects and the effectiveness of financial supports to private R&D.The first chapter proposes a discussion on the ratio na le of financial supports to business R&D following the endogenous growth literature and its refinements including a geographical dimension. Divergences in the theoretical and empirical approaches concerning the origins and the magnitude of the private underinvestment in R&D eventually leads to the hypothesis of a limited and specifie private underinvestment in R&D.Chapters 2 and 3 provide theoretical analyses of the spatial and dynamics effects of a centralized subsidy policy for R&D. The results show that this policy strengthens economie growth, reduces territorial inequalities while improving the global welfare. The benefits of such policy are not only dependent on the chosen assumption about returns to R&D but more importantly on its design in terms of funding and geographical allocation of subsidies.Chapter 4 provides an empirical analysis of the capacity of financial supports to R&D to stimulate private investment in R&D from a panel of OECD countries.The results indicate a greater sensitivity of private investment in R&D to indirect supports (fiscal incentives) than to direct supports (grants and subsidies) and suggest the existence of substitution effects between these two forms of support.

Le travail porte sur une nouvelle vision de l’analyse de l’internationalisation de la R&D dans les pays émergents. Nous redéfinissons les liens entre R&D et innovation ou R&D et technologie en mettant de l’avant le postulat que la technologie issue de l’activité de R&D est un facteur de production. Par la suite, la théorie de l’internationalisation est passée aux cribles, afin de trouver des réponses sur l’absence de prédiction de l’internationalisation de la R&D. Notre modèle du comportement de la multinationale est par la suite développé pour montrer comment les avantages O et I seuls suffisent à motiver la décision de la multinationale à internationaliser la R&D dans tout pays. La particularité de l’internationalisation dans les pays émergents est aussi ressortie avec l’absence de complémentarité qui apparaît lors de l’analyse empirique entre l’internationalisation de la R&D et celle des activités productives dans le cas de ces pays. Enfin, nous appliquons le modèle de croissance logistique dans le but de décrire la trajectoire technologique de la Chine et projeter son impact probable sur les unités de R&D des FMNs qui sont de nature exploratoire. / This research report deals with the subjects of the extension of foreign investments into emerging countries. the particularity nowaday is the internationalisation of strategic activity such as R&D. Many inquiries can be rise since, multinational technology activities are not anymore limited to simple adaptation activity. Emerging countries like China are emplementing their own technology trajectories, so as to attract more and more foreign R&D. This has to do with a change in the behavior of the foreign multinational because the conventional model not only cannot predict the internationalisation of R&D into emerging countries, but even when it does so, it assumes that the suitable technology activies into emerging countries are those limited to adapt home technology. I explain foreign multinational behavior by extending HEWITT (1981) model of internationalisation of R&D. I found that most of the R&D going to emerging countries is for development and adaptation. But the question still remains to know why some multinationals are extending their innovative activities into emerging countries and create regional innovation hubs (choosing one country to play the role of main regional innovation hub). I assume that multinational are both technology exploiting and technology explorer, their motivation are more than sharing their technology with emerging countries, but they aim at exploring technology opportunities in other for them to differentiate and innovate and stay a breath of what the competition is doing. In this part the research all the statistics and indicators show that China is playing the leading role with a technology trajectory above those of the three others countries. This seems to explain why China instead of India is the most attractive destination of foreign investment in production and in R&D.

Dans la littérature, plusieurs études et enquêtesont été menées dans le but d’identifier les besoinsinformationnels des investisseurs. Ces travauxconcluent à l’émergence d’informations de nature nonfinancière, relatives aux actifs immatériels détenus parles entreprises. Parmi ces actifs immatériels figurentles activités de R&D.A partir d’un échantillon d’entreprises quicomposaient l’indice SBF250 en 2005 et 2006, nousnous sommes posé la question de l’utilité desinformations non financières divulguées dans ledomaine de la R&D. En d’autres termes, est-Ce que ladivulgation de ces informations permet auxinvestisseurs d’évaluer les projets de R&D?Ce qui renvoi à l’étude d’associations entre cesinformations non financières et les valeurs de marché(prix et rendements des actions). Les résultats obtenusmontrent que les informations non financières sur laR&D sont associées négativement et de façonsignificative avec les valeurs de marché. / Among published writings, several studies and researches were carried out in order to determine the investors’ information needs. These works concluded to the emergence of non-Financial information relating to companies’ intangible assets. R&D activities are ones of those. Using the SBF250 index for years 2005 and 2006 as sample, we raised the question about the usefulness of non-Financial information disclosed within the framework of R&D. In other words, does communicating on this information enable investors to assess R&D projects?This question leads us to study the link (using the value relevance approach) between this nonfinancial information and market values (prices and returns). The results show that non-Financial information about R&D is unfavorably and meaningfully linked to market values