nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2006‒06‒03
fifteen papers chosen by
Bernardo Batiz-Lazo
Bristol Business School

  1. Functional Demand Satiation and Industrial Dynamics - The Emergence of the Global Value Chain for the U.S. Footwear Industry By Alexander Frenzel Baudisch
  2. Evaluation of Uncertain International Markets: The Advantage of Flexible Organization Structures By Michael Christensen; Thorbjørn Knudsen
  3. Rethinking the Dutch Innovation Agenda: Management and Organization Matter Most By Volberda, H.W.; Bosch, F.A.J. van den
  4. Motivation and the theory of the firm By Gottschalg, Oliver; Zollo, Maurizio
  5. Knowledge management : a learning mix perspective By Moingeon, Bertrand; Perrin, Alexandre
  6. Strategic Delay and Rational Imitation in the Laboratory By Anthony Ziegelmeyer; Kene Boun My; Jean-Christophe Vergnaud; Marc Willinger
  7. Cooperative Networks: Theory and Experimental Evidence By Katinka Pantzy; Anthony Ziegelmeyer
  8. Industry R&D Location – the role of accessibility to university R&D and institutions of higher education By Andersson, Martin; Gråsjö, Urban; Karlsson, Charlie
  9. Integration of control relations in the problematic of competition between regions By Olivier Crevoisier; Frédéric Quiquerez
  10. Public participation in flood control areas - approaches to ‘sustainable’ communication strategies By Mike Duijn; Marc Rijnveld; Peter Van Rooy
  12. Clusters and Territorial-Industrial Complexes - Similar Approaches or Different Concepts? - first Evidence from Analysis of Development of Russian Regions By Igor Pilipenko
  13. A strategic investment game with endogenous absorptive capacity. By Anna Hammerschmidt
  14. Jamaica 2030: A Strategy For Developed Country Status By Peter W Jones
  15. Intra-Industry Spinoffs By Peter Thompson; Steven Klepper

  1. By: Alexander Frenzel Baudisch
    Abstract: Around 1940 Schumpeter draws on an analysis of the U.S. footwear industry as an exemplar case to formulate his famous hypothesis about the positive relation between market concentration and innovative activity. Starting in the 1970s the value chain of U.S. footwear producers disintegrates, eventually separating the process of product innovation from manufacturing in this industry. Studies testing Schumpeter’s hypothesis commonly do not account for the modularity and globalization of an industry’s value chain. Schumpeter having neglected the demand side in his theorizing, we argue that the separation of product innovation and manufacturing in the U.S. footwear industry is influenced by functional satiation effects on demand. If the functional requirements of consumers are met, their willingness to pay for ever more product varieties decreases. Since the early 1970s the ‘oversupply’ of new product varieties and the simultaneously decreasing price level drive market growth beyond functional satiation (Frenzel Baudisch, 2006b). In this paper we argue that this simultaneous price and innovation competition separates the product innovation process from manufacturing to gain economies in both of these processes simultaneously. Discussing the consumers’ motivations to buy products beyond their functional requirements offers a deeper qualitative understanding of the business practices revealed in the historical case of the U.S. footwear industry.
    Keywords: Industrial organization; Schumpeter hypothesis; Modular Value Chain; Consumer Behavior; Footwear Industry
    JEL: B25 F02 L11 L67 O10
    Date: 2006
  2. By: Michael Christensen; Thorbjørn Knudsen
    Abstract: The present article is concerned with organizational flexibility in transnational corporations (TNCs), i.e., larger firms that operate in multiple national markets. Contrasting prior research into entry modes (e.g. joint ventures, greenfield investments, or acquisitions), the present article examines the way the organization of evaluation teams can influence entry and exit decisions of business units. Empirical studies broadly support the claim that TNCs experiment with flexible organizational structures in response to increased levels of turbulence and uncertainty in international markets. However, these advances in the description of TNCs, and more generally in the literature on new organizational forms, have been largely ignored in our theories about evaluation of market opportunities in TNCs and multi-national corporations (MNCs). To address this gap in our knowledge, the present article examines the effects of flexible evaluation teams when TNCs assess the viability of international markets characterized by high levels of uncertainty. Remarkably, we show that TNCs employing flexible teams of (very) fallible evaluators can obtain profits at levels that asymptote optimality. Our main result supports the claim advanced in recent empirical studies. Structural flexibility can help TNCs employing (very) fallible evaluators achieve high levels of performance in conditions of turbulence and uncertainty.
    Keywords: Multinational corporations; entry modes
    JEL: F23 D81
    Date: 2006
  3. By: Volberda, H.W.; Bosch, F.A.J. van den (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: In this essay, we challenge the present dominant emphasis in the Dutch Innovation Debate on the creation of technological innovations, the focus on a few core technologies, and the allocation of more financial resources. We argue that managerial capabilities and organizing principles for innovation should have a higher priority on the Dutch Innovation Agenda. Managerial capabilities for innovation deal with cognitive elements such as the capacity to absorb knowledge, create entrepreneurial mindsets, and facilitate managerial experimentation and higher-order learning abilities. These capacities can only be developed by distinctive managerial roles that enhance hierarchy, teaming and shared norms. Utilizing these unique managerial capabilities requires novel organizing principles, such as managing internal rates of change, nurturing self-organization and balancing high levels of exploration and exploitation. These managerial capabilities and organizing principles of innovation create new sources of productivity growth and competitive advantage. The dramatic fall back of the Netherlands in the league of innovative and high productivity countries of the World Economic Forum-Report can be mainly attributed to the present lack in the Netherlands of these key managerial and organizational enablers of innovation and productivity growth. We provide various levers for building unique managerial capabilities and novel organizing principles of innovation. Moreover, we describe the necessary roles that different actors have to play in this innovation arena. In particular, we focus on the often neglected but important role of strategic regulations that speed up innovation and productivity growth. They are the least expensive way to boost innovation in organizations in both the Dutch private and public sector. Finally, we discuss the implications for the Dutch Innovation Agenda. It should start with setting a challenging ambition, namely the return of The Netherlands within the WEF- league of the top-ten most innovative and productive countries of the world. Considering the under-utilization of available knowledge stemming from technological innovations, managerial and organizational determinants of innovation should receive first priority. These determinants have a high strategic relevance and should receive more public recognition. We suggest to organize an annual innovation ranking of the most outstanding Dutch firms, to develop an innovation audit that measures firms? non-technological innovation capacity, and to create an overall innovation policy for fast diffusion of new managerial capabilities and adequate organizing principles throughout the Dutch private and public sector. In conclusion, we add five new items to the Dutch Innovation Agenda: 1. Prioritize administrative innovations Investments in management and organization determinants of absorption of knowledge and its successful application (administrative innovation) should have a higher priority than investments in technological innovations. 2. Build new managerial capabilities and develop novel organizing principles For these administrative innovations to succeed, firms have to build managerial capabilities (broad knowledge-base, absorptive capacity, managerial experimentation, higher-order learning) and various management roles (hierarchy, teaming, shared norms) to increase the assimilation of external knowledge and the utilization for innovation. Moreover, they have to develop novel organizing principles that increase internal rates of change, nurture self-organization and synchronize high levels of exploration and exploitation. 3. Set levers of innovation by creating selection environments that favor innovation and by redefining the roles of key actors Management has to create a proper organizational context to foster entrepreneurship and innovation (internal selection environment). Governmental agencies have to focus on innovation and productivity enabling strategic regulations (external selection environment). Moreover, research institutes, business schools, and consulting firms should not only focus on technological knowledge, but also on managerial and organizational knowledge for innovation. In the end, private small and large firms and public institutions have to recognize that they all must contribute to the national goal of increasing innovation and productivity growth. 4. Create a new challenging national ambition: return of the Netherlands within the top-10 The Netherlands has to return to the top-ten most innovative and productive countries in the world as reflected in international rankings such as the World Economic Forum?s Global Competitiveness Index. 5. Proliferate an awareness and passion for innovation: Create public awareness and recognition of the societal relevance of outstanding managerial capabilities and organizing principles to innovation and productivity growth: o Initiate a Dutch innovation ranking in terms of management and organization; o Develop proper assessment tools for innovations in management and organization; o Enhance reporting on the progress on managerial and organizational innovation as part of modern corporate governance and as part of outstanding annual reports. These issues may contribute to rethinking the fundamental sources of innovation, productivity growth and sustainable competitive advantage of the Dutch economy.
    Keywords: strategy innovation;dynamic capabilities;organizing pinciples;srategic rgulation;mANAGEMENT;knowledge transfer;mindsets;exploration;exploitation;
    Date: 2004–01–27
  4. By: Gottschalg, Oliver; Zollo, Maurizio
    Abstract: This paper proposes to revisit the debate on the theory of the firm using motivation theory as the primary analytical tool.
    Keywords: theory of the firm; motivation theory
    JEL: L21 L25
    Date: 2006–02–08
  5. By: Moingeon, Bertrand; Perrin, Alexandre
    Abstract: How can an organization define policy for managing its knowledge ? In this article, an integrative model is proposed : the Learning Mix. It consists of 4 interacting facets: Information Technology, Learning Structure, Knowledge Portfolio and Learning Identity.
    Keywords: knowledge management; learning; learning model
    JEL: D83
    Date: 2006–01–01
  6. By: Anthony Ziegelmeyer; Kene Boun My; Jean-Christophe Vergnaud; Marc Willinger
    Abstract: This paper investigates market failures due to strategic delays. We test experimentally a discrete model of dynamic investment, where two privately informed agents have an option to invest at the time of their choice in the presence of waiting costs. The equilibrium outcome of our experimental game is characterized by efficient imitation but complete revelation of information is time consuming. In accordance with the equilibrium solution, subjects better informed take investment decision before subjects who are less informed and subjects’ decisions exhibit rational imitation. Still, subjects do not play exactly in accordance with the equilibrium sequence and we interpret their deviations from equilibrium play as an attempt to internalize the information externalities.
    Keywords: Information Externalities, Social Learning, Strategic Delay, Experiments
    JEL: C91 D82
    Date: 2006–05
  7. By: Katinka Pantzy; Anthony Ziegelmeyer
    Abstract: We consider a modified pure public good game characterized by a pre-play negotiation stage, on which pairs of players can form binding cooperation commitments. As the introduced mechanism only supports pairwise rather than more inclusive commitments, it does not implement the efficient outcome. We theoretically derive the incentive compatible and efficient cooperative networks and evaluate the behavioral efficacy of the suggested mechanism to promote and stabilize cooperation. We present the results of two separate experiments. The first experiment serves to provide necessary methodological prerequisites and establishes that neither repetition with an unknown end nor voluntary costly monitoring are behaviorally sufficient to induce cooperative outcomes. In the second experiment we introduce the pairwise commitment mechanism. We show that the mechanism induces aggregate cooperation rates not only beyond the rates observed under the voluntary contribution mechanism operationalized in the first experiment, but also beyond the rate which is supported by the formation of incentive compatible networks. We observe a large heterogeneity between groups: while some groups converge to full cooperation by managing to coordinate on the formation of efficient networks over time, both networks and cooperation rates unravel in other groups. An extended version of our theoretical setting with inequity averse players in the form suggested by Fehr and Schmidt (1999) captures the stylized facts of both experiments.
    Keywords: Strategic formation of networks, Social dilemma, Positive externalities, Experiments
    JEL: C92 D85 H41 Z13
    Date: 2006–05
  8. By: Andersson, Martin (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Gråsjö, Urban (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Karlsson, Charlie (
    Abstract: The rapid globalization in recent years has created a radically new competitive situation for the rich industrialized countries. Newly industrialized countries and not least China have become more and more successful in penetrating the markets in the rich industrialized countries with increasingly more advanced export products. This has generated a discussion in the rich industrialized countries on how to meet this increased international competition. In some countries demands for various protective measures have been raised while in others the discussion has mainly focused on how to develop a competitive strategy mainly concentrating on making the own products more sophisticated by increasing their knowledge content. This is by no means since the direct product development is controlled to a high extent by multinational firms, which to an increasing degree are foreign owned. Governments mainly have to rely on indirect measures, such as increasing the volume of higher education and public, mainly university R&D. This raises the question: how responsive is private industry to these kinds of indirect measures. Against this background, the purpose of this paper is to analyze to what extent that the location and the extent of higher education and university R&D, respectively, influence the location and the extent of industry R&D in Sweden using an accessibility approach. After an extensive literature survey, we develop a simple theoretical model for the location of R&D from the perspective of a multinational enterprise. From this theoretical model, we then deduce our empirical model, which we then estimate in the form of a Tobit model using data from Swedish labour market regions and municipalities. We show that the location of industry R&D in Sweden can be partly explained by the intra-municipal accessibility to students in higher education, while the accessibility to university R&D turned out to be insignificant
    Keywords: industry R&D; university R&D; higher education; region; municipality; location; accessibility; Tobit model; Sweden
    JEL: O30 O38 O52 R11 R12 R32
    Date: 2006–05–31
  9. By: Olivier Crevoisier; Frédéric Quiquerez
    Abstract: The aim of this paper is to integrate control relations in the analysis of regional production systems (RPSs). Financial economy aspects are often neglected in the analysis of classical and also regional economists. However, many studies show that this financial dimension is far from neutral and that it has a considerable impact on the real economy.During the twenty last years, Swiss regions have grown according to different rhythms, compromising the convergence process of per capita incomes. The approach in terms of RPSs used by Crevoisier, Corpataux and Thierstein (2001) explains a considerable part of these different evolutions. For the authors, the Swiss economy is made up of eleven RPSs strongly specialised in activities like chemistry, textile, microtechnic, tourism, administration and finance. The RPSs specialised in traditional activities have had poor performances while the financial systems has grown rapidly. The result of these different trajectories is a clear dualisation of the Swiss economy (Corpataux and Crevoisier, 2001). The RPS approach is mainly focused on endogenous phenomenons and considers that competitiveness of regions can be explained by the history of interactions between the actors and the institutions of the RPSs. In this paper, we propose to complete this approach by measuring the level of decision-making autonomy. In respect with the theory of spatial division of labour, the idea is to take into account the existence of multilocation firms or of groups, implying a distribution of the firm functions, but also a concentration of the strategic decisional power. In addition to that, we integrate another crucial aspect for the Swiss case, that is the fiscal federalism. In the opinion of Maillat and Quiquerez (2003), the fiscal competition explains a great part of the evolution of disparities. The great differences between regions’ taxing rates clearly influences firm behaviour. Our main hypothesis is that the allocation of strategic establishments is not homogenous and that these headquarters are located in the RPS specialised in financial activities, reminiscent of what Sassen (1991) describes. But this situation is mitigated by the communities’ fiscal competition. To show that, we use data on participations and on property of establishments. The aim is to measure the intensity of cross-regional relations and also to evaluate the autonomy degree of each RPSs. Results show that there are significant disparities in terms of control. Some regions are highly dependent of other: an important share of their economy is controlled by firms located in other regions. Financial centres are at the top of this hierarchy. Beside this domination, few cantons succeed in using the fiscal tool. The spatial division of labour approach and these results about control relations in RPSs complete the analysis done considering the Swiss regions specialisations. More than that, it reinforces the idea of a dualisation of the Swiss economy. Indeed, authors like Zimmerman (1995) and Dupuy and Gilly (1995) agree to say that the embededdness (anchorage) of non autonomous firms is precarious compared to independent SMEs. Concentration of strategic jobs, with highest wages, is a factor of regional divergence. This factor is reinforced by the weak embededdness (anchorage) of the secondary units, poorly implicated in the regional economic circuit and at risk of being partially or completely relocated. Moreover, and that will be the hypothesis for our next research, we think that possessions and subsidiaries finance the headquarters, breaking out the local accumulation networks. This situation may distort the competition between regions. Bibliography CORPATAUX J. et CREVOISIER O., 2001, « Place financière ou économie de production ? Les mécanismes de la dualisation économique et spatiale de la Suisse (1975-2000) », Géographie, Economie, Société, vol. 3, n°1, pp. 3-30. CREVOISIER O., CORPATAUX J. et THIERSTEIN A., 2001, Intégration monétaire et régions : des gagnants et des perdants, Paris, L’Harmattan. Dupuy C. et Gilly J.-P., 1995, « Les stratégies territoriales des grands groupes », in Rallet A. et Torre A. (éd.), Economie industrielle et économie spatiale, Economica, Paris. Maillat D. et Quiquerez F., 2003, « L’évolution des disparités régionales en Suisse », Contribution au XXXIXème colloque de l’ASRDLF : concentration et ségrégation, dynamiques et inscriptions territoriales, Lyon, 1-3 septembre. Sassen S., 1991, The global City : New York, London, Tokyo, Princeton University Press, Princeton. Zimmermann J.B., 1995, « Dynamiques industrielles: le paradoxe du local », in Rallet A. et Torre A. (éd.), Economie industrielle et économie spatiale, Economica, Paris.
    Date: 2004–08
  10. By: Mike Duijn; Marc Rijnveld; Peter Van Rooy
    Abstract: Global warming causes heavy rainfall and rising sea levels. These climate effects prove to be a strong motivation for looking differently at issues of water management and safety in estuaries. For decades, the only answer to hazardous situations (e.g. flooding by increased river discharges or by incoming storm water) was to strengthens dikes and dams. This led to damage in the natural water system, a declining biodiversity and destruction of the unique estuary and river landscapes. Nowadays, different approaches are more frequently implemented, with creating more space for the rivers as a guiding principle. Instead of stemming and rapid discharge, water is contained in estuary and catchment areas. The alternative approach to water management contributes to a more sustainable development of the estuary, protecting the natural and ecological values. However, estuaries are often densely populated areas, accommodating several (conflicting) spatial and economical functions, such as residential areas, ports and harbors, industrial zones, farming and recreational facilities. Creating more space for water management (i.e. retention areas, flood planes and wash lands) leaves less space available for other spatial developments. As a consequence, stakeholders will be affected in their interests; e.g. cities cannot grow unrestrained and farming will have to be downsized. Concepts as ‘multiple land use’ and ‘societal cost – benefit evaluation’ come to mind to characterize the challenge for transforming the designated areas into more sustainable, multi-functional retention basins. Governmental agencies are often acting as project executives in these transformations. They are faced with various stakeholders who are all trying to defend or strengthen their specific interests. A vital question is how to communicate with these stakeholders in the different stages of the transformation process. What communication strategy applies to what situation? And equally important, if a communication strategy is developed, how should it be instrumented? What will the message be, how are the target groups identified and addresses, which mediums should be applied? And, more important, what kind of public participation is required to enable cooperation and avoid opposition to the transformation process? In general, four basic communication strategies can be identified: co-knowing, co-thinking, co-working and co-deciding. Each of these strategies apply to different situations, following the cultural and historic context in the area, the established relationship between the ‘governor and the governed’, and of course, the preferred style of governance. In a research assignment from four governmental agencies in The Netherlands, the UK and Belgium we have evaluated the applied communication strategies in six flood control areas in the EU. For this assignment, an evaluative framework was developed. The evaluation shows the suitability of the applied communication strategy in each of the reviewed areas. Moreover, lessons are drawn on the question in what situation, which type of communication strategy is most suitable. Also, the review gives examples of good practice and inspiration for ‘sustainable’ communication efforts in future transformation processes.
    Date: 2005–08
  11. By: Arzu Basaran
    Abstract: Rapid growth of urban areas and their development problems in industrializing countries has had major impacts on the environment. Water, the main source of life on earth is under the threat of various types of pollution. These threats have been forceful in demonstrating the necessity of the management and planning of drainage basins. The importance of the evaluation of the total economic value of the water resources and aquatic ecosystems of drainage basins has not yet been accepted in the current planning system of Turkey. In Turkey a total number of 36 public agencies take part in the decision making process within a drainage basin. Decisions taken by these agencies with respect to the use of land and water affect the quality and sustainability of water as a natural resource. These agencies act under a legal structure comprising 105 different laws and regulations related to the environment and this creates additional confusion in planning practice. The situation calls for the organization of special drainage management institutions for drainage basins. The aim of this study is to explore the use of game theory to analyze the roles and actions of different interest groups (players) and develop a better understanding of the decision making process and its consequences on a drainage basin. In this study, we use the case of a river sub-basin from the north-western region of Turkey: the Nilüfer Watershed that contains fertile agricultural lands and the third biggest industrial city in Turkey. The Nilüfer Stream is deeply polluted by industrial, agricultural and domestic wastewater. There are 1 metropolitan municipality, 20 district municipalities and 8 provincial authorities of central government within the watershed. All players have strategies about environment and planning such as land use decision, waste water standard and discharge permitting etc. Some strategies conflict the other players’ strategies. Game theory, which aims to explain the interactive decision making process with more than one decision maker, has developed as a theory of human strategic behavior based on an idealized picture of rational decision making (Binmore, 1996; Eichberger, 1992). The game theory has been applied to social sciences especially to economy, international relations, politics, which are in the state of making decisions in non-cooperative conditions. Although there is limited in number the game theory applications in planning, they are very important studies on location problem in spatial planning such as Stevens, (1961), Isard and Reiner, (1962), Isard, (1967). There are also new studies that use the game theory in planning. Sharing problem of river as a natural resource is the main study area in planning (Dinar and Wolf, 1994; Kilot, 1994; Kucukmekmetoglu and Guldman, 2002; Rogers, 1993). Game theory applications on environmental problems started in 1990s. Environmental problems such as transfrontier pollution (air or water) are often multilateral, and they affect all the agents in the economies of countries. There are studies in which air pollution problem is analyzed by the game theory with the cooperation of neighbor countries such as Ray (2000), Maler and Zeeuw (1998), Barret (1998). In this research an in depth analysis is made to understand the preferences and attitudes of different players taking part within the Nilüfer watershed. Players generally make independent decisions without any form of cooperation situation. Therefore, non-cooperative game is used in this analyze. The decision making process of the players are analyzed through a scenario in two-player games. The scenario is about strategies of environmental protection and industrial development in the watershed. We explore Nash equilibrium in game which represents present condition. Nash (1950) proved the existence of a strategic equilibrium for non-cooperative games. The main outcome of the paper will be to point to new directions in the planning process and to open to discussion the use of game theory in planning. Game theoretic approach will make it easier for the agents to cooperate if the conflicts in the planned area are clearly defined. It is possible to achieve cooperative bargaining solutions where all agents are winners. Actually, this is the target of planning because sustainable development of the river basin depends on bargaining where all agents are winners.
    Date: 2005–08
  12. By: Igor Pilipenko
    Abstract: The cluster concept has been attracting a special attention of scholars and policymakers since almost 15 years due to considerable contribution of its theoretical results to practical rising of national and regional competitiveness. The concept of territorial-industrial complex (TIC) elaborated by Soviet regional economists and economic geographers in 1920-1980s realised the idea of optimisation of industrial production within a certain territory in the planning economy according to its endowments of natural and labour resources. At the first sight, these two concepts have many things in common, but in reality they have many differences. First, they were elaborated in different economic systems, which have various aims of economic activity. Secondly, clusters and TICs have different genesis, because in case of TICs theoretical and applied research resulted in practical construction of TICs, while clusters are generally forming themselves as a result of the market “invisible hand”. Thirdly, clusters and TICs are normally located in different types of regions: clusters tend to form in within agglomerations, while TICs were constructed mainly in newly developed regions with low population density. Fourthly, they differ also in terms of their structure. Clusters are groups of companies from one or related in industries often connected to R&D institutions and government structures, but TICs are inter-industrial complexes that involve production chains between different industries. Fifthly, cluster firms specialise in production of buyer-oriented good and services, while TICs' plants and factories represented producer-oriented heavy industries and machinery. Sixthly, the role of information flows between cluster SMEs and their staffs makes one of key distinctions between these two concepts. Seventhly, higher wages in cluster labour pools and higher productivity in cluster firms lead to raising of regional competitiveness while in the concept of TICs people are considered to be one of factors of TIC's development as well as natural resources, infrastructure, etc. A general weak development of SMEs in Russia restricts so far the development of regional/local clusters, but nevertheless some examples of local clusters can be found. One of them is an expanding cluster of small and medium IT-enterprises in Novosibirsk (Western Siberia) that has been developing since the beginning of 1990s in the region that inherits its original industrial specialization from TICs. The cluster firms have tight connections to R&D institutions from Akademgorodok (Science city), Novosibirsk State University, and Technopark Novosibirsk; the intensive information flows and exchange of know-how can be observed between cluster firms and their staffs; the productivity and wages within cluster are higher than in surrounding districts. Development of clusters of SMEs makes differences between clusters and TICs more obvious. The further development of Russian economy may lead to its dual spatial structure – combination of big and medium plants established within TIC concept till the end of 1980s and clusters of SMEs developing since the beginning of 1990s in agglomerations.
    Date: 2005–08
  13. By: Anna Hammerschmidt (Department of Economics, Vienna University of Economics & B.A.)
    Abstract: R&D plays a dual role: First, it generates new knowledge and second, it develops a firm's absorptive capacity. Most of the existing strategic investment game models neglect, however, the second role of R&D. The aim of this paper is to incorporate the absorptive capacity hypothesis in such a model by endogenizing the spillover. A two-stage game is established and subsequently solved, looking for the subgame perfect Nash equilibria. Considering the comparative static properties of the model as well as the simulation results, a new effect appears: The "free-rider effect" of the models with exogenous spillover, which deteriorates the higher the spillover becomes, is now counteracted by the "absorptive capacity effect". It is found that firms will invest more in R&D to strengthen absorptive capacity when the spillover parameter is higher.
    JEL: O31 L13 C72
    Date: 2006–05
  14. By: Peter W Jones (Economic development Institute,Jamaica)
    Abstract: In order for Jamaica to transition from a Developing Country to a Developed Country it will be highly necessary to create a Knowledge based society, the inability to seriously overcome this challenge will mean Jamaica will be in transition to a developed country for an infinite number of years. The thinking here is nothing new as the Newly Industrialized Countries (NIC<92>s) of S. E. Asia discovered this 15-20 years ago and much of their successes can be accredited to the building of strong Knowledge based economies, they have now mastered the Knowledge Based concept and their societies are now moving in the direction of Network societies- the latest 21st century paradigm. In Jamaica, the government speaks to this in a limited way in their Public Sector Modernisation Vision And Strategy 2002-2012 September 2002, by outlining their approach over a ten-year period as follows: In order to achieve good governance the government have set the following strategic objectives: Creation of a Knowledge Society, which is fundamental to informed decision-making and concerted action, by: · Facilitating access to information through all available media. Publishing better designed and user-friendly brochures on policy, procedures and government services · Putting in place systems and structures to effectively implement the requirements of the Access to Information Act. Appointing dedicated liaison officers to provide information to the public in all departments and other agencies. However, to complement this a similar commitment from the Private sector in Jamaica will be necessary. At this time this is not self-evident. The concept of the Knowledge society needs to be better articulated by the Information Ministry Of The Government and as such one could draw the conclusion the Information Ministry itself is not truly aufait with the concept and as such they enunciate but they need to articulate strongly in order to facilitate rapid progress in this area. Economic research on knowledge comes in various forms. For example, there has been much research on the importance of human capital, in terms of education and/or skills, to economic growth. Similarly, research has been conducted on innovation and research and development (R&D) that lead to new technology, which ultimately leads to increases in output per capita. In addition, there has been some focus on the effects of information and communication technologies (ICTs) on the flow of knowledge and information and its ultimate effect on economic growth The literature speaks to four preconditions that lead to knowledge becoming an effective engine of growth. These are: An economic and institutional regime to provide incentives for the efficient use of existing and new knowledge and the flourishing of entrepreneurship. An educated and skilled population to create, share, and use knowledge well. A dynamic information infrastructure to facilitate the effective communication, dissemination, and processing of information. An efficient innovation system of firms, research centers, universities, consultants, and other organizations to tap into the growing stock of global knowledge, assimilates and adapt it to local needs, and create new technology. However, in order to satisfy these preconditions a seven(7) point strategy will have to be adopted as follows: · Social Development · The Environment · Poverty · Sustainable Economic Development · Competitive Strategy · Modernization Of State · Regional Integration Strategy This document will examine this 7-point strategy as it applies to Jamaica. Realistically, if Jamaica were to adopt this seven-point strategy in 2005, we would not achieve Developed Country status until 2030. As such, Jamaica would not become a developed country until 2030. Political independence was achieved in 1962. The final step, Economic Independence can be achieved by 2030.
    Keywords: Jamaica 2030, Jamaica Development,Jamaica,Jamaica,Jamaica,Development strategy
    JEL: O P
    Date: 2005–02–20
  15. By: Peter Thompson (Department of Economics, Florida International University); Steven Klepper (Department of Social and Decision Sciences, Carnegie Mellon University)
    Abstract: A growing empirical literature on spinoff formation has begun to reveal some striking regularities about which firms are most likely to spawn spinoffs, when they are most likely to spawn them, and the relationship between the quality of the parent firm and its spinoffs. Deeper investigations into the causes of spinoffs have highlighted the impor-tance of strategic disagreements in driving some employees to resign and found a new venture. Motivated by this literature, we construct a new theory of spinoff formation driven by strategic disagreements, and show how the theory can explain the emerging empirical regularities.
    Keywords: Spinoffs, learning, strategic disagreement
    JEL: L2 D70 D83
    Date: 2006–06

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