nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2009‒12‒19
seventeen papers chosen by
Joao Jose de Matos Ferreira
University of the Beira Interior

  1. Selectivity in search strategies for innovation: from incremental to radical, from manufacturing to services By Köhler, Christian; Sofka, Wolfgang; Grimpe, Christoph
  2. Drivers for international innovation activities in developed and emerging countries By Schmiele, Anja
  3. Building Absorptive Capacity to Organise Inbound Open Innovation in Low Tech Industries By A. SPITHOVEN; B. CLARYSSE; M. KNOCKAERT
  4. Does professional knowledge management improve innovation performance at the firm level? By Czarnitzki , Dirk; Wastyn, Annelies
  5. Do we really need regional innovation agencies? Some insights from the experience of an Italian region By Annamaria Fiore; Maria Jennifer Grisorio; Francesco Prota
  6. The Global Networks of Multinational Firms By Laura Alfaro; Maggie Chen
  7. When do firm-technology intermediary interactions result in cognitive capacity additionality By M. KNOCKAERT; A. SPITHOVEN
  8. International R&D cooperation: the perceptions of SMEs and Intermediaries By Margarida Catarino; Aurora A.C. Teixeira
  9. Bridging University-Firm relationships and Open Innovation literature: a critical synthesis By Luís Pinheiro; Aurora A.C. Teixeira
  10. The Dynamics of R&D Network in the IT Industry By Nobuyuki Hanaki; Ryo Nakajima; Yoshiaki Ogura
  11. Strategic Under-utilization of Patents and Entry Deterrence: The Case of Pharmaceutical Industry By Marjit, Sugata; Kabiraj, Tarun; Dutta, Arijita
  12. Health Care and Health Outcomes of Migrants: Evidence from Portugal By Pita Barros, Pedro; Medalho Pereira, Isabel
  13. Domestic Impact of Internationalisation: The case of JM By Mário Pedro Ferreira; Susana Costa e Silva
  14. Skill composition and regional entrepreneurship: a comparative study between Germany and Portugal By Mendonça, Joana; Grimpe, Christoph
  15. Skills and Industrial Competitiveness By Robert Stehrer; Terry Ward; Sebastian Leitner; Michael Landesmann
  16. Fatores Institucionais, Desenvolvimento e Competitividade Econômica: o Caso dos Países da América Latina By Dnilson Carlos Dias; Jean dos Santos Nascimento; Rosângela Aparecida Soares Fernandes
  17. Institutions and the Allocation of Entrepreneurial Talent between Productive and Destructive Activities By Mark Sanders; Utz Weitzel

  1. By: Köhler, Christian; Sofka, Wolfgang; Grimpe, Christoph
    Abstract: The shift towards more open and interconnected innovation activities has been a major topic of recent academic and practitioner discussions. Firms have to connect their in-house R&D activities with external partners, such as leading customers or universities, to increase the effectiveness of their innovation activities. Hence, management needs to define search strategies for valuable knowledge in its environment. In this paper we argue that search strategies have to reflect the heterogeneity of various knowledge sources with regard to the knowledge they can provide and how these sources can be activated. We hypothesize that search strategies driven by science, suppliers and the product market will contribute differently to innovation success with radically new versus incrementally refined products. We suggest that innovation in service sectors is fundamentally different in nature which influences the performance of different search strategies. We test these hypotheses for a sample of more than 5,000 firms from five European countries. The results support our hypotheses and highlight the potentials and shortcomings of different search strategies. --
    Keywords: Search strategies,service innovation,radical versus incremental innovation
    JEL: L60 O32
    Date: 2009
  2. By: Schmiele, Anja
    Abstract: This paper aims to shed light on firm specific drivers that lead firms to internationalise their innovation activities. The paper draws a comprehensive picture of driving forces by including firm capabilities, characteristics of the firm’s competitive environment and the influence of innovation obstacles in the home country. In particular, the role of the potential driving forces is tested on the probability to carry out different innovative activities abroad (R&D, design/conception of new products, manufacturing of innovative products and implementation of new processes). In a second step these driving forces are used to observe their impact on the decision to locate innovation activities in various countries and regions (China, Eastern Europe, Western Europe and North America) as well as in groups of countries with similar levels of knowledge (country clubs). The analysis is based on the Mannheim Innovation Panel survey which represents the German CIS (Community Innovation Survey) contribution. Two survey waves are combined and result in a sample of about 1400 firms. The results show that the decision to perform innovation activities abroad is mainly driven by organisational capabilities such as absorptive capacities, international experience and existing technological competences of the respective firm. Innovation barriers at the German home base such as lack of labour and high innovation costs foster the set up of later-stage innovation activities abroad while the lack of demand demonstrates a barrier to the internationalisation decision for the development and manufacturing of new products. Location decisions receive the strongest influencing effects from the international experience of the firm. Firms which innovate in developing countries seem to require a more extensive level of international experience by international R&D cooperation. --
    Keywords: Internationalisation of R&D,Innovation,Absorptive Capacities,Market Structure,China,Asia,Emerging countries
    JEL: F23 L22 L25 O31 O32 O47
    Date: 2009
    Abstract: The discussion on open innovation suggests that the ability to absorb external knowledge has become a major driver for competition. In the case of inbound open innovation, companies screen their environment to search for the appropriate technology and knowledge and do not exclusively rely on in-house R&D. A key precondition is that firms dispose of “absorptive capacity” to internalise external knowledge. For R&D intensive large firms, the concept of absorptive capacity is well understood. In contrast, for small firms and firms operating in traditional sectors, implementing the concept of absorptive capacity is less documented. These firms will have to look for assistance to build their absorptive capacity or even to ‘outsource’ a significant part of this function. This paper, therefore, focuses on the role of collective research centres in Belgium in building absorptive capacity at the intraorganisational dyad level. This type of technology intermediaries are created to help firms operating in traditional sectors to take advantage of the latest technological developments. The aim of the paper is to demonstrate that the trend towards openness of the innovation process forces firms lacking absortive capacity to search for alternative ways to engage in inbound open innovation. The paper highlights the multiple activities of which absorptive capacity is made up; it defines the concept of absorptive capacity as a precondition to open innovation; and it demonstrates how firms lacking absorptive capacity collectively cope with the distributedness of knowledge and innovation.
    Keywords: open innovation; absorptive capacity; technology intermediation
    Date: 2009–08
  4. By: Czarnitzki , Dirk; Wastyn, Annelies
    Abstract: The concept of knowledge has gained in interest since industrialized economics have induced a shift in importance from labor, capital and natural resources towards intellectual resources. This study investigates how the management of knowledge influences the innovation performance of a firm. While former studies mainly focused on knowledge management cycles, we distinguish different types of knowledge management techniques. It turns out that there is a difference between three knowledge management techniques and their influence on product and process innovation. The ability to source external knowledge positively affects the firm's introduction of new products and products new to the market. For obtaining cost reductions it is effective to stimulate employees to share knowledge. The availability of a codified knowledge management policy also positively affects the cost reduction possibilities of a firm. These results indicate that it is important for a firm to carefully select the tools of knowledge management in function of the kind of technical innovation it wants to proceed. --
    Keywords: Knowledge management,innovation performance
    JEL: O31 O32
    Date: 2009
  5. By: Annamaria Fiore (Agenzia Regionale per la Tecnologia e l’Innovazione - ARTI); Maria Jennifer Grisorio (Agenzia Regionale per la Tecnologia e l’Innovazione - ARTI); Francesco Prota (Department of Economics & Mathematics, University of Bari)
    Abstract: Increasing globalization, if properly exploited, can provide interesting opportunities for regional economies. Nevertheless, when they are not managed with a far-sighted approach, regions, and particularly those at an intermediate level of development, can lose their comparative advantages compared to regions of developing countries. Innovation is the main instrument for improving and ensuring competitiveness to enterprises and growth opportunities to local economies. The aim of this paper is to discuss the importance of public policies in reinforcing regional innovation systems, and the role of regional innovation agencies. With this in mind, we describe the policies implemented by the Regional Agency for Technology and Innovation (ARTI) of Apulia, a region in Southern Italy. We also provide the first assessment of ARTI’s activities and provide some suggestions on how to improve regional R&D policies.
    Keywords: public policy, innovation, regional innovation system, regional competitiveness
    JEL: O18 O38 R58
    Date: 2009–11
  6. By: Laura Alfaro; Maggie Chen
    Abstract: In this paper we characterize the topology of global multinational networks and examine the macro and micro patterns of multinational activity. We construct indices of network density at both pairwise industry and establishment level and measure agglomeration in a global and continuous metric space. These indices exhibit distinct advantages compared to traditional measures of agglomeration including the independence on the level of geographic aggregation. Estimating the indices using a new worldwide establishment dataset, we investigate both the significance and causes of multinational firm co-agglomeration. In contrast to the conventional emphasis of the literature on the role of input-output linkages, we assess the effect of various agglomeration economies. We find that, relative to counterfactuals, multinationals with greater factor-market externalities, knowledge spillovers, and vertical linkages exhibit significant co-agglomeration. The importance of these factors differs across headquarters, subsidiary, and employment networks, but knowledge spillovers and capital-market externalities, two traditionally under-emphasized forces, exert consistently strong effects. Within each macro network, there is a large heterogeneity across subsidiaries. Subsidiaries with greater size and higher productivity attract significantly more agglomeration than their counterfactuals and become the hubs of the network.
    JEL: D2 F2 R1 R3
    Date: 2009–12
    Abstract: Governments have increasingly become involved in stimulating cooperation for innovation and R&D and have less focused on direct R&D subsidies. One set of initiatives is targeted at providing financial support for technology intermediaries. In this paper, we shed light on when technology intermediaries contribute to learning or networking outcomes generated by the firms that call upon them. We hereby focus on network and competence additionality as measures for cognitive capacity additionality and study the impact of collective research centres on their member firms. The results indicate that absorptive capacity of the collective research centre does not affect cognitive capacity additionality generated by the member firms for R&D activities, but higher levels of absorptive capacity tend to negatively affect cognitive capacity additionality generated by member firms engaging in R&D related activities. The absorptive capacity of the member firms does not directly affect cognitive capacity additionality generated by the member firms, but the results on mediation analysis show that member firms with higher levels of absorptive capacity use the services of the collective research centre more intensively, and generate higher levels of cognitive capacity additionality.
    Date: 2009–09
  8. By: Margarida Catarino (Faculdade de Economia, Universidade do Porto); Aurora A.C. Teixeira (CEF.UP, Faculdade de Economia, Universidade do Porto; INESC Porto)
    Abstract: Despite the large number of studies on Research and Development (R&D) cooperation, this is, in general, focused on the firms’ perceptions, neglecting the perception of the R&D Intermediary (e.g., universities, technology centres, R&D institutes, intellectual property supporting offices). Moreover, cooperation has been analyzed on a national perspective with cooperation projects in R&D involving entities from different countries being rarely studied. In the present paper we gathered empirical evidence on the motivation, obstacles and outcomes of international R&D cooperation projects based on the perceptions from both firms and intermediaries. Resorting to an unique database that includes 473 R&D international cooperation projects, developed within the 6th Framework Programme, we demonstrate that the heterogeneity is quite large as far as the motivations are concerned for the international R&D cooperation. This high heterogeneity might explain the high failure rate of R&D partnerships, namely the ones involving firms and universities. Not losing sight of the necessary enhancement of the scientific and knowledge basis, essential for the technological progress of nations, evidence gathered seem to advise an attitude on behalf of Intermediaries more focused on firms’ intended results.
    Keywords: international R&D cooperation, Intermediaries, firms
    Date: 2009–11
  9. By: Luís Pinheiro (Faculdade de Economia, Universidade do Porto); Aurora A.C. Teixeira (CEF.UP, Faculdade de Economia, Universidade do Porto; INESC Porto)
    Abstract: Open Innovation is understood as a flow of incoming and outgoing knowledge and technology which allows, at the level of a firm, the acceleration of the innovation process, as well as a faster establishment and access to new markets, for external use of that same innovation. This type of innovation includes technological innovation, which comes from internal and external sources, as well as different modalities of accessing the market and, therefore, commercializing the innovation. Resorting to a bibliometric analysis, using Open Innovation as the search keyword, we found that the majority of the existing studies on OI is of conceptual character. On the one hand, from the scarce existing empirical studies, the issue of the relation University – Enterprise (U-E), one of the components of the open innovation model, is analyzed in a relatively superficial way neglecting, or not referring in the most appropriated way, the mechanisms by which companies could obtain (via innovation) competitive advantage through the exploration of a more open model of innovation based on the relationships with universities. On the other hand, the existing studies on U-E relations do not highlight, at least in an explicit way, the question of the open innovation model. Such studies are still highly directed to a unidirectional profit optic, that is, are too centred on the advantages which the enterprises will be able to obtain from the relation with the universities, failing taking into account the value that potentially goes to universities from such links.
    Keywords: Open Innovation; U-E relations; Emergency; Sustainability; Benefits
    Date: 2009–11
  10. By: Nobuyuki Hanaki; Ryo Nakajima; Yoshiaki Ogura
    Abstract: In this paper, we provide an empirical analysis of evolving networks of successful R&D collaborations in the IT industry (consisting of firms that obtained patents in the technological category of computers and communication) in the U.S. between 1985 and 1995. We first show that the R&D network has become more extensive, more clustered, and more unequal in the sense that 'stars' have emerged in the network. We then analyze the effect of the existing network structure in the process of new R&D collaboration formation. We control for unobserved similarities among firms based on the community structures within the network that the algorithm developed by Girvan and Newman (2004) identifies and find a significant cyclic closure and preferential attachment effect.
    Date: 2009–08
  11. By: Marjit, Sugata; Kabiraj, Tarun; Dutta, Arijita
    Abstract: This paper seeks to explain why some pharmaceutical companies are observed to withdraw their products before patents are expired and simultaneously introduce new patented (competing) products. Given the specific nature of drug markets, the companies in fact increase the entry cost of the potential generic drug manufacturers and thereby lessen competition for new drugs. The paper determines the optimal date of withdrawing the product and studies comparative static effects of the change of parameters underlying the model.
    Keywords: Patent protection; patent expiry; pharmaceutical industries; generic drugs; entry cost.
    JEL: O3 L1
    Date: 2009–11
  12. By: Pita Barros, Pedro; Medalho Pereira, Isabel
    Abstract: This paper studies the performance of immigrants relative to natives, in terms of their health status, use of health care services, lifestyles, and coverage of health expenditures. We base the analysis on international evidence that identified a healthy immigrant effect, complemented by empirical research on the Portuguese National Health Survey. Furthermore, we assess whether differences in health performance depend on the personal characteristics of the individuals or can be directly associated with their migration experience.
    Keywords: Migration; health status; health care; healthy immigrant effect; Portugal
    JEL: O15 C33
    Date: 2009–07–01
  13. By: Mário Pedro Ferreira (Faculdade de Economia e Gestão, Universidade Católica Portuguesa (Porto)); Susana Costa e Silva (Faculdade de Economia e Gestão, Universidade Católica Portuguesa (Porto))
    Abstract: The influence of internationalisation processes in the domestic activities of firms’ has not been considered as an important issue in existing models, because they tend to focus on a partial and restricted view of the firm. The purpose of this paper is to challenge that view by attempting a dynamic view of the firm is which primal importance is given to the relationship between international and domestic activities. The main research question is whether domestic activities can be significantly affected by international activities, namely knowledge transfer. Results confirm the dynamic approach adopted by firms however there are no definitive answers in terms of the domestic impact of internationalisation. Despite clear hints of evidence for the internationaldomestic relationship, there was no confirmation of this relationship at the financial level.
    Date: 2009–12
  14. By: Mendonça, Joana; Grimpe, Christoph
    Abstract: The question whether agglomeration externalities arise either from specialization or diversification of economic activity has since long been a major topic in the analysis of factors determining economic growth. In this paper we analyze whether a more specialized or a more diverse skill composition of labor in regions affects the level of new firm entries in general as well as in technology- and knowledge-intensive subsectors. We compare Germany and Portugal which exhibit, though EU member states, different institutional infrastructures for entrepreneurship. Based on a harmonized dataset, our results indicate that the skill composition has different effects on firm entry in the two countries. More specifically, for Portugal the specialization of skills has a positive effect on the level on new firm entry in all sectors. In contrast to this, our results for Germany reveal exactly the opposite effect. These results suggest that both specialization and diversity theories hold, and that the effect thus may depend on other more local and regional factors. --
    Keywords: Entrepreneurship,skill composition,regional analysis,comparative study
    JEL: J24 L26 O57 R11
    Date: 2009
  15. By: Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw); Terry Ward; Sebastian Leitner (The Vienna Institute for International Economic Studies, wiiw); Michael Landesmann (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: This study has been prepared for the European Commission (Framework Contract B2/Entr/05/091) and is composed of five sections. The first three sections all deal with assessing the role of skills in the European economy: Section 1 undertakes a number of econometric exercises to analyse the relationship between skills and two indicators of competitiveness, productivity growth and exports. This and the next section represent new research effort in that a disaggregated database (by NACE 2-digit industries) has been used to analyse this relationship. Section 2 extends the analysis towards the relationship between skills and economic growth by analysing the role of skills in the context of a growth accounting exercise where skill changes are separately identified in affecting the 'quality of labour services' and hence the contribution of labour input to value added. Again the analysis exploits the detailed, disaggregated database made recently available through the EU KLEMS project. Section 3 presents an overview of skill compositional changes in different groups of EU economies. We distinguish between EU Northern economies, EU South (composed of Greece, Portugal and Spain) and the New Member States (restricted to only four countries, the Czech Republic, Hungary, Slovakia and Slovenia, for data reasons). In this section aggregate, economy-wide skill upgrading is decomposed into 'within' and 'between' (industry) changes in skill composition and the results show interesting patterns distinguished for more advanced and catching-up types of economies. The last two sections move away from the topic of reviewing the impact of skills on economic performance and the tracking of changing skill demands in EU economies. In section 4, a literature overview is provided of empirical studies regarding returns to skill acquisition through schooling and training. The idea behind this section is that returns to schooling and training reflect both skill shortages and also provide the basis for decisions with regard to skill acquisition. Finally, section 5 presents a country-by-country overview of how information is gathered with regard to skill gaps in different EU economies. The methodologies and sources for assessing skill shortages are reviewed. These are a necessary ingredient into any attempt of designing policies in relation to skill planning and the design of schooling and training institutions. The section closes with a recommendation on useful extension of European-wide vacancy statistics.
    Keywords: skills, competitiveness, European industry, Industry, International Trade and Competitiveness, Labour and Migration
    JEL: D24 F14 J24 O47 O52
    Date: 2009–08
  16. By: Dnilson Carlos Dias (FACE-UFG, Ciências Econômicas); Jean dos Santos Nascimento (Universidade Federal de Tocantins); Rosângela Aparecida Soares Fernandes (Universidade Federal de Viçosa)
    Abstract: This study aims to determine the importance of institutional factors for the market focused on the process of economic development and global competitiveness of Latin American countries. Regressions were used in Panel Data for Fixed Effect (FE) and cross-section for the treatment of the variables representing institutional determinants. The results show the GDP per capita variables strongly influenced by Property Rights, Freedom Business, Government Size, Trade Freedom, Fiscal Freedom, but there is no influence of geographical and climatological variables. Competitiveness and Regulatory Affairs also were influenced by institutional factors. We conclude that the institutional evolution can determine economic development.
    Keywords: New Institutional Economics, Economic Development, Panel Data.
    JEL: B25 C31 C33
    Date: 2009–11
  17. By: Mark Sanders; Utz Weitzel
    Abstract: Entrepreneurship is generally regarded as a force of change, innovation and development in modern economies. Entrepreneurs bring new and better products to markets, restore allocative efficiency through arbitrage and reinvest their profits. However, as Baumol (1990), Mehlum et al. (2003) and Acemoglu (1995) have argued, the same energy and talent can also be allocated to unproductive ends and reduce total welfare. In this paper we present a model that analyzes the allocation of a given entrepreneurial talent over destructive and productive activities. We show that in this model two stable equilibria can emerge. As Baumol (1990) hypothesized, institutions determine the pay-offs to both types of entrepreneurial activity and hence drive this allocation. But we also show that the distribution of initial wealth and entrepreneurial talent plays a decisive role. This analysis provides a different perspective on the importance of high quality institutions in developing countries and sheds light on the situation in conflict and post-conflict countries, where both informal and formal institutions arguably have broken down. Under such circumstances, our analysis shows that micro credits can support the transition to a productive equilibrium, because they help to overcome credit contraints without creating incentives for destructive entrepreneurship.
    Keywords: growth, development, entrepreneurship, innovation, occupational choice
    JEL: O1 L26 P00
    Date: 2009–12

This nep-cse issue is ©2009 by Joao Jose de Matos Ferreira. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.