nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2011‒08‒22
thirteen papers chosen by
Joao Jose de Matos Ferreira
University of the Beira Interior

  1. Patent licensing in spatial competition: Does pre-innovation cost asymmetry matter? By Poddar, Sougata; Bouguezzi , Fehmi
  2. Intellectual Property Rights and South-North Formation of Global Innovation Networks By Maria Comune; Alireza Naghavi; Giovanni Prarolo
  3. A GLOBAL TALENT MAGNET: How a San Francisco/Bay Area Higher Education Hub Could Advance California’s Comparative Advantage In Attracting International Talent and Further Build US Economic Competitiveness By John Aubrey Douglass, Richard Edelstein and Cecile Hoareau
  4. Do institutions matter for FDI spillovers ? the implications of China's"special characteristics" By Du, Luosha; Harrison, Ann; Jefferson, Gary
  5. Virtual Incubation in Industrial Clusters: A Case Study in Pakistan By Babur Wasim Arif; Tetsushi Sonobe
  6. International Trade and Firm Performance: A Survey of Empirical Studies since 2006 By Joachim Wagner
  7. The regional employment impacts of renewable energy expenditures: The case for modelling By Grant Allan; Michelle Gilmartin
  8. Innovation subsidies: Does the funding source matter for innovation intensity and performance? Empirical evidence from Germany By CZARNITZKI Dirk; LOPES BENTO Cindy
  9. On the Genesis of Multinational Foreign Affiliate Networks By Egger, Peter; Fahn, Matthias; Merlo, Valeria; Wamser, Georg
  10. Structural change, National Innovation System and balance-of-payments contraint: a theoretical and empirical analysis of the Brazilian case By João Prates Romero; Fabrício Silveira; Gustavo Britto
  11. The Software Value Chain as an Analytical Framework for the Software Industry and Its Exemplary Application for Vertical Integration Measurement By Pussep, Anton; Schief, Markus; Widjaja, Thomas; Buxmann, Peter; Wolf, Christian Michael
  12. Stakeholder dialogue as an institutional strategy for sustainable development in China : the case of community environmental roundtables By Wang, Hua
  13. ACADEMIC DISCIPLINES AND THE UNDERGRADUATE EXPERIENCE: Rethinking Bok’s “Underachieving Colleges†Thesis By Steven Brint and Allison M. Cantwell

  1. By: Poddar, Sougata; Bouguezzi , Fehmi
    Abstract: We consider the optimal licensing strategy of an insider patentee in a circular city of Salop’s model and in a linear city of Hotelling’s model when firms have asymmetric pre-innovation marginal costs of production and compete in prices. We completely characterize the optimal licensing policies using a fixed fee and per-unit royalty under the drastic and non-drastic innovations. We find that when the innovative firm is efficient compared to the licensee at the pre-innovation stage then the results regarding optimal licensing policy coincide with the results described in the literature with symmetric firms. However, this is not true when the innovative firm is inefficient in the pre-innovation stage compared to the licensee. To that end, we show that even a drastic innovation can be licensed using a royalty scheme when the patentee is highly inefficient compared to licensee in the pre-innovation stage and the size of the innovation is intermediate. We also show that in this set-up, fixed fee licensing is never optimal.
    Keywords: Innovation; Technology transfer; Salop model; Hotelling model; Patent licensing; symmetric and asymmetric costs
    JEL: L13 D45 D43
    Date: 2011–08–12
  2. By: Maria Comune; Alireza Naghavi; Giovanni Prarolo
    Abstract: With the rise of the knowledge economy; delivering sound innovation policies requires a thorough understanding of how knowledge is produced and diffused. This paper takes a step to analyze a new form of globalization; the so-called system of Global Innovation Networks (GINs); to shed light on how the protection of intellectual property rights (IPRs) influences their creation and development. We focus on the role of IPR protection in fostering international innovative activities in emerging economies (South); such as China and India; and more generally; how IPRs affect the development of GINs between newly industrialized countries and OECD countries. Using both survey-based firm-level and country-level global data; we find IPRs to be an important determinant of participation in GINS from a Southern perspective. We find IPR protection at home and its harmonization across county pairs foster South-North formation of GINs. We also find that a stringent regime in the destination country discourages foreign international innovative activities that originate in NICs. Both levels of our analysis confirm the ICT industry; particularly the hardware segment; to rely on IPRs when engaging in the international outsourcing and offshoring of innovation or in patenting activities abroad.
    Keywords: Gravity Model; Information Communication Technology; Innovation; Intellectual Property Rights; International collaborations; Networks
    Date: 2011–07
  3. By: John Aubrey Douglass, Richard Edelstein and Cecile Hoareau
    Abstract: During the 2009-10 academic year international students generated more than $18.8 billion in net income into the US economy. California alone had nearly 100,000 international students with an economic impact of nearly $3.0 billion. In this paper, we outline a strategy for the San Francisco/Bay Area to double the number of international students enrolled in local colleges and universities in ten years or less, generating a total direct economic impact of an additional $1 billion a year into the regional economy. The US retains a huge market advantage for attracting foreign students. Within the US, the San Francisco/Bay Area is particularly attractive and could prevail as an extraordinary global talent magnet, if only policymakers and higher education leaders better understood this and formulated strategies to tap the global demand for higher education. Ultimately, all globalism is local. We propose that the San Francisco/Bay Area, a region with a group of stellar universities and colleges, should re-imagine itself as a Global Higher Education Hub to meet national and regional economic needs, as well as the thirst of a growing world population for high-quality tertiary education. Other parts of the world have already developed their version of the higher education hub idea. The major difference in our proposed Californian version is that foreign competitors seek to attract foreign universities to help build enrollment and program capacity at home, and are funded almost solely by significant government subsidies. Our model builds capacity, but is focused on attracting the world’s talent and generating additional income to existing public and private colleges and universities. Doubling international enrollment from 30,000 to 60,000 students in ten years or less will require expanding regional enrollment capacity as part of a strategy to ensure access to native students, and as part of a scheme to attract a new generation of faculty and researchers to the Bay Area and California. International students would need to pay higher then the full cost of their education, helping to subsidize domestic students and college and university programs. The result would be a San Francisco/Bay Area Global Higher Education Hub – a self-reinforcing knowledge ecosystem that is internationally attractive, socially beneficial, and economically viable. We offer a path for analyzing the feasibility of this Global Higher Education Hub, including the steps necessary to engage the private sector and local government to help create enrollment capacity and academic programs, a discussion of a financial model, possible marketing strategies, and for developing shared facilities and services. This initiative will require most Bay Area colleges and universities, including UC Berkeley and Stanford University, to collaborate. By providing a leadership role, Berkeley and Stanford would help brand the hub idea internationally, provide leadership in shaping direct and indirect economic returns of the SF/Bay area higher education hub, while also gaining from the increased international attractiveness of the region and the use of shared facilities. It is about the money. But it is also about establishing closer ties with the regional universities and colleges, business interests and local governments, enhancing the quality and reputation of our universities and colleges, building enrollment capacity for native students, integrating international perspectives into the activities and learning of students and faculty, and broadening the opportunity for international collaborations. It is about solidifying the Bay Area as a global talent magnet, one that is even more culturally diverse, even more innovative, and that continues to attract talent from throughout the world. We conclude the paper by suggesting that a regionally based knowledge hub would also be a viable strategy for a select group of other urban areas of the US.
    Keywords: Education
    Date: 2011–05–01
  4. By: Du, Luosha; Harrison, Ann; Jefferson, Gary
    Abstract: The authors investigate how institutions affect productivity spillovers from foreign direct investment (FDI) to China's domestic industrial enterprises during 1998-2007. They examine three institutional features that comprise aspects of China's"special characteristics": (1) the different sources of FDI, where FDI is nearly evenly divided between mostly Organization for Economic Co-operation and Development (OECD) countries and Hong Kong (SAR of China), Taiwan (China), and Macau (SAR of China); (2) China's heterogeneous ownership structure, involving state- (SOEs) and non-state owned (non-SOEs) enterprises, firms with foreign equity participation, and non-SOE, domestic firms; and (3) industrial promotion via tariffs or through tax holidays to foreign direct investment. The authors also explore how productivity spillovers from FDI changed with China's entry into the WTO in late 2001. They find robust positive and significant spillovers to domestic firms via backward linkages (the contacts between foreign buyers and local suppliers). The results suggest varied success with industrial promotion policies. Final goods tariffs as well as input tariffs are negatively associated with firm-level productivity. However, they find that productivity spillovers were higher from foreign firms that paid less than the statutory corporate tax rate.
    Keywords: Emerging Markets,Debt Markets,Economic Theory&Research,Investment and Investment Climate,Labor Policies
    Date: 2011–08–01
  5. By: Babur Wasim Arif (Federal Bureau of Statistics, Pakistan); Tetsushi Sonobe (National Graduate Institute for Policy Studies)
    Abstract: In industrial clusters, transaction costs are kept low and free riding is discouraged by a community mechanism developed through dense and repeated interactions among entrepreneurs. In such environments, new entrants without established reputations and connections are put at a distinct disadvantage. This negative effect on new entry must be neutralized for an industrial cluster to expand. Using enterprise level data from Pakistan, this study finds that personal networks are indeed important for successful enterprise operation, which works to the advantage of incumbents, but that subcontracting plays the role of virtual incubation in nurturing new enterprises, reinforcing the cluster’s dynamism.
    Keywords: South Asia, Pakistan, industrial cluster, social capital, subcontracting
    Date: 2011–08
  6. By: Joachim Wagner (Institute of Economics, Leuphana University of Lüneburg, Germany)
    Abstract: The literature on international trade and firm performance grows exponentially. This paper attempts to summarize what we learn from this literature to guide both future empirical and theoretical work in this area, and public debates and policy makers, in an evidence-based way. The focus is on the empirical part of the literature that consists of recently published papers using data for firms from manufacturing or services industries to study the links between international trade (exports and imports) and dimensions of firm performance (productivity, wages, profitability and survival). It discusses recent add-ons to the box of tools for empirical investigation in this field and suggests topics for future research.
    Keywords: International trade, firm performance, empirical studies, survey
    JEL: F14
    Date: 2011–08
  7. By: Grant Allan (Fraser of Allander Institute, University of Strathclyde); Michelle Gilmartin (Fraser of Allander Institute, University of Strathclyde)
    Abstract: One aspect of the case for policy support for renewable energy developments is the wider economic benefits that are expected to be generated. Within Scotland, as with other regions of the UK, there is a focus on encouraging domesticallyâ€based renewable technologies. In this paper, we use a regional computable general equilibrium framework to model the impact on the Scottish economy of expenditures relating to marine energy installations. The results illustrate the potential for (considerable) ‘legacy’ effects after expenditures cease. In identifying the specific sectoral expenditures with the largest impact on (lifetime) regional employment, this approach offers important policy guidance.
    Keywords: Renewable energy policy; regional economic impacts; computable general equilibrium modelling.
    JEL: C68 R11 R58
    Date: 2011–08
    Abstract: Applying a variant of a non-parametric matching estimator, we consider European funding and national funding as heterogeneous treatments, distinguishing and simultaneously analyzing the effect these treatments have on innovation input and performance. In terms of input, getting funding from both sources yields the highest impact. If funding from only one source is received, EU grants have higher effects. In terms of output, holding innovation expenditures constant, funding from both sources display higher sales of market novelties and future patent applications at the firm level. If only one grant is obtained, we find superiority for national funding.
    Keywords: Subsidies; Innovation; Policy Evaluation; Treatment effects; Nonparametric matching estimation
    JEL: C14 H50 O38
    Date: 2011–08
  9. By: Egger, Peter; Fahn, Matthias; Merlo, Valeria; Wamser, Georg
    Abstract: Multinational enterprises (MNEs) develop their networks of foreign affiliates gradually over time. Instead of exploring all profitable opportunities immediately, they first establish themselves in their home countries and then enter new markets stepwise. We argue that this behavior is driven by uncertainty concerning a firm’s success in new markets. After entry, the firm collects information which is used to update its beliefs about its performance at a market. As conditions in different markets are correlated, the information gathered in one of them can also be used to update beliefs elsewhere – with the degree of correlation depending on issues such as the geographical or cultural distance between markets. This correlated learning may render it optimal to enter markets sequentially – an investment in market A is only followed by entry in market B if the firm was sufficiently successful in A. The prediction that firms start their expansion in markets that are closer to their home base and then proceed step by step is supported by our empirical analysis, which features the universe of foreign affiliates held by German multinationals. Based on a rich set of benchmark estimates and sensitivity checks, we identify correlated learning across markets beyond alternative explanations as a key driver of gradualism in the genesis of multinational foreign affiliate networks.
    Keywords: Firm-level data; Foreign affiliates; Learning; Location decisions; Multinational firms
    JEL: D83 D92 F23 L23
    Date: 2011–08
  10. By: João Prates Romero (Cedeplar/UFMG); Fabrício Silveira (Cedeplar/UFMG); Gustavo Britto (Cedeplar/UFMG T)
    Abstract: The paper explores the relationship between the income elasticities of demand for exports and for imports, economic growth, the technological content of local production, and the level of development of the National Innovation System (NIS). According to the literature, differences in long-run growth rates are associated with differences in the income elasticities of demand, which would in turn be determined by the maturity of the NIS. Mature NIS imply higher degrees of product diversification, leading to trade patterns which favour exports of goods with higher technological content (high income elasticity of demand), and imports of basic goods (low income elasticity). Hence, we test the relationship between the exports and imports of Brazilian high-tech products and the number of Brazilian patents registered in the USPTO, as a proxy for the level of development of the Brazilian NIS. The results of the analysis are corroborated by the investigation of innovations of the variables, through impulse response functions and forecast error decomposition, which confirm the theoretical hypothesis discussed.
    Keywords: Balance-of-Payments Constraint, Income Elasticities, Growth, Structural Change, National Innovation System.
    JEL: F43 L16 O11
    Date: 2011–08
  11. By: Pussep, Anton; Schief, Markus; Widjaja, Thomas; Buxmann, Peter; Wolf, Christian Michael
    Abstract: The value chain concept disaggregates a firm into the various activities it performs. Abstracting from the firm-level this concept has also been applied to industries as a whole. In this paper we conceptualize a software specific value chain and provide a first proof of concept. Our approach aggregates and unifies findings from a literature review on industry-level value chains, software value chains, and related concepts. The resulting unified software value chain comprises eleven activities: product research, component procurement, product development, user documentation, production and packaging, marketing, implementation, training and certification, maintenance and support, operations, and replacement. A first proof of concept is provided through expert interviews with software firms. Furthermore, we present an example that shows how the software value chain can be applied to measure the degree of vertical integration in the software industry.
    Keywords: software industry, value chain, software value chain, vertical integration, degree of vertical integration, vertical integration measurement
    Date: 2011
  12. By: Wang, Hua
    Abstract: Stakeholder dialogue, as an alternative institutional strategy for environmentally and socially sustainable development, has received little attention from researchers and practitioners in developing countries such as China, even though the dialogue strategy can potentially lead public governance to a more efficient level. This paper first discusses the potential of stakeholder dialogue as an institutional tool for promoting sustainable development in China, and then presents a pilot program of stakeholder dialogue recently developed in China -- the community environmental roundtables. Community leaders organize roundtable dialogues where representatives from government agencies, companies and the local residents exchange their views toward certain environmental issues they are facing and discuss possible ways to resolve the issues. Informal agreements are reached during the dialogues and implemented after them. This community roundtable dialogue strategy has been piloted in dozens of Chinese municipalities, addressing various environmental issues. A survey of dialogue participants shows that significant impacts have been generated on environmental protection, community management, as well as social and institutional development at the community level. Mutual understanding and trust among the government, companies, and local citizens are enhanced, environmental and social conflicts are reduced, and the public performance of various parties has been improved. This approach is expected to help solve other conflicts and public governance issues in China as well. The potential challenges of institutionalizing such a program in China are also discussed in the paper.
    Keywords: Environmental Economics&Policies,National Governance,Governance Indicators,Parliamentary Government,Civil Society
    Date: 2011–08–01
  13. By: Steven Brint and Allison M. Cantwell
    Abstract: Using data from the 2008 University of California Undergraduate Experience Survey, we show that study time and academic conscientiousness were lower among students in humanities and social science majors than among students in science and engineering majors. Analytical and critical thinking experiences were no more evident among humanities and social sciences majors than among science and engineering majors. All three academically beneficial experiences were, however, strongly related to participation in class and interaction with instructors, and participation was more common among humanities and social sciences students than among science and engineering students. Bok’s (2006) influential discussion of “underachievement’ in undergraduate education focused on institutional performance. Our findings indicate that future discussions should take into account differences among disciplinary categories and majors as well.
    Keywords: Education
    Date: 2011–03–01

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