nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2008‒10‒13
sixteen papers chosen by
Joao Jose de Matos Ferreira
University of the Beira Interior

  1. Cross your border and look around By Henry van der Wiel; Harold Creusen; George van Leeuwen; Eugene van der Pijll
  2. Globalization and the Need for Strategic Government-Industry Cooperation in the Philippine Automotive Industry By Aldaba, Rafaelita Mercado
  3. Intellectual Property Rights and the Knowledge Spillover Theory of Entrepreneurship By Zoltan J. Acs; Mark Sanders
  4. Growth Processes of Italian Manufacturing Firms By Alex Coad; Rekha Rao; Federico Tamagni
  5. Assessing Competition in Philippine Markets By Aldaba, Rafaelita Mercado
  6. Competitive Intensity as Driver of Innovation and Productivity Growth: A Synthesis of the Literature By Andrew Sharpe; Ian Currie
  7. Increasing Competitiveness through Strengthening Regional Industrial Clusters: Middle Tennessee Marketing Region By David A. Penn
  8. The development of Transistor Radio export from Japan -The contribution of Small and Medium firms in its formative stage- By Yuki Nakajima
  9. Increasing Competitiveness through Strengthening Regional Industrial Clusters: Middle Tennessee Marketing Region By David A. Penn
  10. Growth and Competition in a Model of Human Capital Accumulation and Research By Bianco, Dominique
  11. Organizational Member Learning and the Influential Factors: The Empirical Study of Thailand By Pruksapong, Mutarika
  12. A theoretical analysis of the relationship between social capital and corporate social responsibility: concepts and definitions By Lorenzo Sacconi; Giacomo Degli Antoni
  13. Enhancing technological progress in a market-socialist context:China's national innovation system at the crossroads By Gabriele, Alberto; Khan, Ali Haider
  14. SMEs in the Philippine Manufacturing Industry and Globalization: Meeting the Development Challenges By Aldaba, Rafaelita Mercado
  15. Organizational Innovations and Labor Productivity in a Panel of Italian Manufacturing Firms. By Federico Biagi; Maria Laura Parisi; Lucia Vergano
  16. Institutional Determinants of New Firm Entry in Russia: A Cross Regional Analysis By Bruno, Randolph Luca; Bytchkova, Maria; Estrin, Saul

  1. By: Henry van der Wiel; Harold Creusen; George van Leeuwen; Eugene van der Pijll
    Abstract: This document focuses on innovation, human capital, technology transfers and competition as potential sources of productivity growth for firms. It integrates the views of existing literature such as the two faces of R&D, the convergence debate and the existence of firm-level heterogeneity in productivity. Using firm-level data of 127 industries in the Netherlands, the document analyses which determinants are most relevant for a catch up to the global frontier and in that respect are important for the productivity performance of firms. Moreover, the document takes into account the potential importance of a national frontier. The frontier is defined as the highest productivity level at the national or global level respectively. The document provides econometric evidence that technology transfers matter, predominantly from the national frontier. Particularly, R&D encourages growth through technology transfers from the national frontier. This suggests that firms mainly conduct R&D in order to adopt existing technologies from other (domestic) firms. Competition on Dutch markets plays a role in productivity growth as well. Finally, human capital also seems to affect productivity growth.
    Keywords: Competition; human capital; technological frontier; R&D; productivity
    JEL: D40 L10 O31
    Date: 2008–09
  2. By: Aldaba, Rafaelita Mercado
    Abstract: The industry’s lack of competitiveness, absence of economies of scale and a weak supply base are the fundamental issues that must be addressed in order to strengthen the industry and integrate it with regional production networks of foreign automakers. The entry of cheap, smuggled second-hand vehicles has put tremendous pressure on the industry. Immediate government action to address smuggling and design a coherent set of policies and a comprehensive strategy to improve industry competitiveness is urgently needed. A temporary adjustment program is necessary to help both assemblers and parts makers face competition in the future and more importantly, in preparation for the implementation of zero tariffs under the AFTA in 2010. If smuggling continues and our competitiveness remains weak, the auto industry may just be a thing of the past as auto companies shift from CKD to CBU operations. This is the reality of doing business under the globalization age.
    Keywords: globalization, competitiveness, production networks, Philippine automotive industry
    Date: 2008
  3. By: Zoltan J. Acs; Mark Sanders
    Abstract: We develop a model in which stronger protection of intellectual property rights has an inverted U-shaped effect on innovation. Intellectual property rights protection allows the incumbent firms to capture part of the rents of commercial exploration that would otherwise accrue to the entrepreneurs. Stronger patent protection will increase the incentive to do R&D and generate new knowledge. This has a positive impact on entrepreneurship and innovation. However, after some point, further strengthening patent protection will reduce the returns to entrepreneurship sufficiently to reduce overall economic growth.
    Keywords: Intellectual Property Rights, Endogenous Growth, Entrepreneurship, Incentives, Knowledge Spillovers, Rents
    JEL: J24 L26 M13 O3
    Date: 2008–09
  4. By: Alex Coad; Rekha Rao; Federico Tamagni
    Abstract: We propose a multidimensional empirical analysis of the growth processes of firms, focusing on the coevolution of employment growth, sales growth, growth of profits and labour productivity growth. Based on firm level data about Italian manufacturing firms, 1989-1997, we apply a reduced-form vector autoregression model to analyze the lead-lag associations between the different dimension of firm growth. Findings suggest that employment growth precedes sales growth and growth of profits, and that sales growth is also associated with subsequent profits growth. There appears to be little feedback of either sales or profits on employment growth, however, and there is no clear association of employment, sales or profits growth with subsequent changes in labour productivity. Productivity growth, in turn, is more strongly associated with subsequent growth of profits than it does with subsequent growth of either employment or sales. Growth of profits, therefore, tends to represent the absorbing dimension of the overall processes of firm growth. Quantile regressions reveal asymmetries between growth processes for growing and shrinking firms.
    Keywords: Household Consumption Expenditure, Budget Shares, Sum of Log-Normal Distributions
    Date: 2008–10–02
  5. By: Aldaba, Rafaelita Mercado
    Abstract: <p>This paper reviews the current empirical literature on competition and market structure of Philippine industries. It shows that weak competition is one of the fundamental factors that explain limited growth, productivity, and employment in the economy. Philippine experience has shown that reforms such as trade liberalization, deregulation, and privatization, while necessary, are not sufficient to foster effective competition. The success of these reforms depends on the creation of a competitive domestic market environment, which is in turn determined by the interplay of behavioral, regulatory, and structural constraints along with the broader aspects of competitive infrastructure.</p>
    Keywords: competition, market structure, regulation
    Date: 2008
  6. By: Andrew Sharpe; Ian Currie
    Abstract: The objective of the report is to survey and assess the existing economic theoretical literature and empirical evidence on the linkages between open and competitive markets (competitive intensity) and innovation and productivity growth. The report is divided into three main parts. The first part examines the state of economic theory on the relationship between competitive intensity, innovation and productivity. The second section examines relevant empirical work that has been done on the role of firm dynamics in sustaining a competitive environment. The third section surveys evidence of linkages provided by the international case studies of the effects of open and competitive markets on innovation and productivity. The report concludes that the weight of the evidence indicates that competitive intensity has a strong positive effect on innovation and productivity. Accordingly, Canada should pay closer attention to the competitive implications of public policy than has been the case in the past. The international experience provides strong support for this conclusion. While there can be negative implications for certain groups from such policy changes, the evidence shows that they are often smaller than anticipated. Restrictions on competition should only be allowed when it can be demonstrated that they are needed to achieve overriding societal interests.
    Keywords: Competition, Competition policy, competitive intensity, innovation, productivity, firm dynamics, empirical work, case studies
    JEL: O20 O33 O38 O47
    Date: 2008–06
  7. By: David A. Penn
    Abstract: The Complete Study: After reviewing the broader socioeconomic dynamics and workforce issues in the Middle Tennessee Marketing Region, this study, commissioned by Middle Tennessee Industrial Development Association in Nashville, identifies regional industrial clusters and provides a detailed assessment of target industry clusters to present a detailed roadmap for the competitive regional economic development initiatives.
    Date: 2008–09
  8. By: Yuki Nakajima (Faculty of Business Administration, Toyo University.)
    Abstract: In a postwar high-growth period, some Japanese industries which were classified as a glight machinery industryh appeared and contributed for acquisition of foreign exchange, especially American dollar. As a case study of these industries, this paper examined the development of Transistor radio industry. Not only some major Japanese electronics companies like Matsushita, SONY and so on, but also a lot of SMEs played a very important roll to open up its American Market. In its early stage, Japanese companies had an advantage of price competition over American companies, but were criticized itsf poor-quality. To improve it, MITI imposed an export restraint which gave favorable allotment to exporters which was dealing high quality goods and had a long term and exclusive contract with American importers. Middle class companies which was at a disadvantage against big companies in past export record utilized the system to secure their quota and was strongly motivated to improve their product. On the other hand, the companies shipping low quality goods had to leave the market. Consequently, by the middle of 1960fs, the industry was reorganized.
    Keywords: KeywordsFJapanese Business History, High-growth era, Small and medium enterprises, Export restraint policy, Transistor radio
    Date: 2008–07
  9. By: David A. Penn
    Abstract: Final Presentation Summary of the Entire Study: After reviewing the broader socioeconomic dynamics and workforce issues in the Middle Tennessee Marketing Region, this study, commissioned by Middle Tennessee Industrial Development Association in Nashville, identifies regional industrial clusters and provides a detailed assessment of target industry clusters to present a detailed roadmap for the competitive regional economic development initiatives.
    Date: 2008–09
  10. By: Bianco, Dominique
    Abstract: The aim of this paper is to analyze the relationship between competition and growth in a model of human capital accumulation and research by disentangling the monopolistic mark-up in the intermediate goods sector and the returns to specialization in order to have a better measure of competition. We find that the steady-state output growth rate depends on the parameters describing preferences, human capital accumulation technology and R&D activity. We also show that the relationship between competition and growth is inverse U shaped. This result that seems to be in line this empirical results (Aghion and Gri±th (2005)) is explained by the resource allocation effect.
    Keywords: Endogenous growth; Horizontal differentiation; Technological change; Imperfect competition; Human capital
    JEL: L16 O41 J24 O31 D43
    Date: 2008–10–06
  11. By: Pruksapong, Mutarika
    Abstract: Based on the literatures of organizational learning and change, this research continues to focus on the individual level of learning in organization. Individual learning comprises of at least the cognitive and behavioral aspects as the two represent two different phenomenon and complementary to each other. A questionnaire survey was conducted with employees of corporations in Thailand with an attempt to seek for factors in which influence the level of learning in individuals in both cognitive and behavioral contexts. Among the three influential factors, perceived negative impact from change hinders the cognitive buy-in of change initiative the most, while the general understanding of the necessity of organizational learning and change depicted as the strongest factor in inducing individual’s participative cooperation to change projects. Additionally, the overall results suggest that organizations in which are involved in organizational change movement should pay attention in educating their employees to be highly aware of the importance of organizational learning and change in general, as well as, creating more of the direct positive impact and less of the direct negative impact from any specific change movement, in order to be able to gain employees’ cognitive understanding of and behavioral cooperation to the change.
    Keywords: Organizational Member Learning; Organizational Learning; Organizational Change; Thailand
    JEL: M19 M12 M10
    Date: 2008–10–07
  12. By: Lorenzo Sacconi; Giacomo Degli Antoni
    Abstract: The paper studies the relationship between social capital (SC) and Corporate Social Responsibility (CSR) by investigating the idea of a virtuous circle, between the level of SC and the implementation of CSR practices, that fosters socio-economic development by generating social inclusion and social networks based on trust and trustworthiness. Following the literature on SC that stresses its multidimensional character, both a cognitive and a structural idea of SC are considered. The first one essentially refers to the dispositional characters of agents that affect their propensity to behave in different ways. The latter refers to social networks connecting agents. With regard to the concept of CSR, a contractarian approach is adopted and CSR is considered as an extended model of corporate governance, based on the fiduciary duties owed to all the firm’s stakeholders. Among stakeholders, a original distinction between “strong” and “weak” stakeholders is introduced. The key element that allows to distinguish between strong and weak stakeholders concerns the consequences that the break in the relationship with the firm produces both on the stakeholder and on the firm. Both these two categories have made specific investments in the firm. However, strong stakeholders are precious for the firm because they bring in strategic assets. On the contrary, weak stakeholders do not bring strategic assets into the firm and firms have material incentives at defecting in the relationship with them. Considering the notions of cognitive and structural SC, a contractarian approach to CSR and the distinction between weak and strong stakeholders, the paper shows that: a) the level of cognitive SC plays a key role in inducing the firm to adopt and observe CSR practices that respect all the stakeholders; b) the decision of adopting formal instruments of CSR contributes to create cognitive SC that is endogenously determined in the model; c) the level of cognitive SC and the decision of adopting CSR practices creates structural SC in terms of a long term relationship between the firm and the weak and strong stakeholders.
    Keywords: Social capital, Corporate Social Responsibility, Social network, Ideal utility, Cooperation, Trust.
    Date: 2008
  13. By: Gabriele, Alberto; Khan, Ali Haider
    Abstract: This paper analyzes the available evidence of China's S&T, R&D, and innovative capabilities, to provide an assessment of the effectiveness and potentialities of its national system of innovation (NSI) ), and to formulate some preliminary policy suggestions aimed at improving China's overall innovation strategy. Our approach focuses particularly on the evolving relationship between China's NSI and the country's overall market socialist social and economic system - both of which are developing fast and undergoing deep qualitative changes - and on related policy challenges. China's innovation strategy aims at embodying world-class best practices from technological world leaders and successful late industrializers, but is also peculiarly Chinese in at least two crucial aspects. The first is China's sheer size, which has allowed her to leapfrog to rank 2 worldwide in terms of the absolute quantitative magnitude of its NSI, at a stage when it still far lags behind all technological leaders in terms of per capita educational, technological, and research achievements. The second is China's specific form of market socialism, which has the potential of conferring her leaders an outstanding advantage in the crucial area of strategic planning, i.e. the capability to master national resources and to earmark them towards key goals accordingly to a clear set of priorities. China's goal is to engineer in a relative short period a decisive qualitative leap in her NSI, developing a systemic ability to generate world-class indigenous innovations. In addition to fostering technical progress, China's development strategy shall also take into account the challenge of establishing a model of innovation compatible with an equitable pattern of income distribution and environmental sustainability, thereby paving the way to the eventual evolution towards a higher and more developed form of socialism. This is the expressed aim of the Chinese leadership. However, the simple NSI approach is not necessarily sensitive to these strategic requirements, and therefore there is a need for more advanced analytical and planning tools. In this context, we propose to consider the utility of nonlinear models of the POLIS (positive feed back loop innovation system) class, which are suitable to chart strategically the market socialist course, as their internal logic is consistent with China's unique catch up strategy.
    JEL: P36 P27 O33
    Date: 2008–09–22
  14. By: Aldaba, Rafaelita Mercado
    Abstract: <p>In recognition of their substantial contribution to the economy both in terms of number of enterprises and workers, the Philippine government has put in place a number of policies and programs designed specifically to boost SME productivity and competitiveness in the country. However, the performance of SMEs in the last decade has not been vigorous enough to boost the Philippine manufacturing industry. As such, the deepening of high technology industries in terms of the creation of backward linkages has remained weak. While the country’s exports of high technology products have grown rapidly, the value added of these exports is very low due to the limited links of large domestic and foreign companies to the domestic economy. Rapid changes in the international trade and the growing complexity of global production system, pose a significant challenge to Filipino SMEs.</p> <p>This paper reviews existing government SME policies as well as recent developments in the manufacturing sector, within the context of the emerging global production network. The paper draws on the findings of a survey interview of SMEs in the automotive, electronics, and garments sectors. The paper highlights the importance of creating a separate government office that would coordinate SME policies and programs to support the integration of SMEs in the global production chain.</p>
    Keywords: globalization, small and medium enterprises
    Date: 2008
  15. By: Federico Biagi; Maria Laura Parisi; Lucia Vergano
    Abstract: We study determinants of the probability of introducing an organizational innovation using three large cross sections of Italian manufacturing firms in the period 1995-2003. We analyze the effect and complementarity of other types of investments, like ICT, R&D, human and physical capital and the adoption of product or process innovations. Furthermore, we estimate the effect of introducing organizational innovations and indirectly technical innovations on the growth rate of labor productivity for the unbalanced panel of firms. Disembodied technological change is well represented by OIs, while product innovations seem to heve an effect on the efficiency of capital inputs only (capital stock-embodied technical change). Process innovations do not have a statistical impact as an indirect input-efficiency driving force, in our data.
    Date: 2008
  16. By: Bruno, Randolph Luca (University of Bologna); Bytchkova, Maria (London School of Economics); Estrin, Saul (London School of Economics)
    Abstract: We analyse a three-year panel data set of Russian firms spanning from 2000 to 2002 and we investigate the effect of regional institutional and economic factors on entry rates across time, industries and regions. The paper builds on a novel database and exploits inter-regional variation in a large number of institutional variables. We find entry rates in Russia are not especially low by international standards and are correlated with natural entry rates, institutions and firm size. Furthermore, industries that ─ for scale and technological reasons ─ are characterised by higher entry rates will experience lower entry within regions affected by higher business risk. In other words industries that naturally have low entry barriers are most affected by business constraints.
    Keywords: entry rate, business environment, Tobit model
    JEL: D21 L26 P31
    Date: 2008–09

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