|
on Economics of Strategic Management |
|
Issue of 2012‒05‒15
seventeen papers chosen by Joao Jose de Matos Ferreira University of the Beira Interior |
| By: | Cosh, A.; Zhang, J. |
| Abstract: | Whilst the variety of search activities promotes innovation, there is a central tension between a firm's potential benefits from wide and diverse search activities and its ability to reap these potential benefits. In this paper, we argue that the potential and realised benefits from a firm' search activities are influenced not only by its resources and capabilities, but also by the nature of innovation activities at sector level. Drawing upon a statistical analysis of a large scale survey conducted in the US, we examine the impact of a firm's external search strategy along two dimensions (search intensity and direction) on its innovative performance. Our findings suggest that manufacturing firms tend to benefit from wide and diversified search activities whereas knowledge intensive business services (KIBS) firms tend to benefit from narrow and specialised search activities. Furthermore, when taking account of firm size and absorptive capacity, a more nuanced picture emerges. Implications and contributions to the innovation search literature are discussed. |
| Keywords: | variety of search, open innovation, SME, manufacturing, Knowledge intensive business services, US survey |
| JEL: | L25 O14 O32 |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:cbr:cbrwps:wp431&r=cse |
| By: | Jan Fagerberg; Maryann Feldman; Martin Srholec |
| Abstract: | This paper analyzes factors that shape the technological capabilities of individual U.S. states and European countries, which are arguably comparable policy units. The analysis demonstrates convergence in technological capabilities from 2000 to 2007. The results indicate that social capabilities, such as a highly educated labor force, an egalitarian distribution of income, a participatory democracy and prevalence of public safety, condition the growth of technological capability. The analysis also considers other aspects of territorial dynamics, such as the possible effects of spatial agglomeration, urbanization economies, and differences in industrial specialization and knowledge spillovers from neighboring regions. |
| Keywords: | innovation; technological capabilities; European Union; United States; |
| JEL: | R11 R12 O32 O33 |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp455&r=cse |
| By: | Hughes, A. |
| Abstract: | This paper analyses science policy resource allocation in the light of a comparison of the open innovation and Mode 2 new production of knowledge conceptual frameworks. It provides a brief historical review of the evolution of science funding and the application of the Haldane principle in the UK. The core of the paper analyses academic and business attitudes to university-industry links using two recent large scale surveys and argues that there is a largely false dichotomy drawn between applied and basic research. University-industry links are already extensive and encompass a wide range of interactions than those captured by the usual debate over science engineering and narrow conceptions of commercialisation based on patenting and spin-outs. |
| Keywords: | Science Policy, Haldane Principle, Open Innovation, University-Industry Links |
| JEL: | O31 O38 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:cbr:cbrwps:wp425&r=cse |
| By: | Houthoofd, Noël (Hogeschool-Universiteit Brussel (HUB)); Hendrickx, Jef (Hogeschool-Universiteit Brussel (HUB)) |
| Abstract: | The purpose of the paper is to identify the sources of variation in firm performance. This is one of the cornerstones of strategy research, i.e. the relative importance of industry and firm level effects on firm performance. Multilevel analysis is well suited to analyze variance in performance when the data are hierarchically structured (industry segments consist of firms, firms operate within the context of industry segments). The Belgian industry studied is a service industry that consists of about 25 electrical wholesalers. Data were collected from 20 firms during the period 1998-2003 from responses to a questionnaire sent to all the firms in the market. The sample in the data set covers more than 95 percent of the market (in sales), as the missing firms were just fringe competitors. The results show that firm effects explain most of the variance in four performance variables. That bears out the importance of each firm having its own specific, idiosyncratic resources and competences. The explanatory power of firm effects varies by about 30 to 40 percent while the intra-industry effect explains around 10 percent of the variance. Even though firm effects are dominant, intra-industry effects explain a significant portion of the variance in firm level performance. The firm effect is smaller than in previous studies. The firm effect varies across the performance measures: firm effects are higher for returns on assets than for profit margins. The industry segment effect (or intra-industry effect) is more independent of the dependent variable. The industry segment effect is in line with previous studies on the strategic group effect. Top managers should carefully choose and monitor the intra-industry domain they are in. |
| Keywords: | firm effect vs. industry effect, electrical wholesale sector, performance differences, multilevel analysis |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:hub:wpecon:201217&r=cse |
| By: | Jaap W.B. Bos; Ryan C.R. van Lamoen; Mark W.J.L. Sanders |
| Abstract: | In this paper we estimate, using stochastic frontier estimation techniques, the relationship between R&D inputs a innovative output in a sample of Dutch firms. We find that over 63% of between firm variation in observed "innovativeness" can be attributed to inefficiency in the innovation process. The remainder is due to differences in the innovation production process itself. We derive our results including the usual controls and find in addition that large firms tend to look more innovative. But when considered more carefully large firms turn out to be less efficient. With standard estimation techniques this inefficiency is masked by a more productive innovation technology. We thus find evidence of economies of scale in line with the Schumpeter mark II hypothesis (large firms are more innovative), but also show that large firms tend to operate at lower levels of efficiency. |
| Keywords: | Innovation, Scale Economies, Frontier |
| JEL: | D21 G21 L10 O3 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:deg:conpap:c016_060&r=cse |
| By: | Cowan, Robin (UNU-MERIT / MGSOG, Maastricht University, and BETA, Université de Strasbourg); Kamath, Anant (UNU-MERIT / MGSOG, Maastricht University, and University of Georgia, United States) |
| Abstract: | When agents use informal interaction to exchange knowledge, their production relations may develop as emergent properties of their social relations and may exhibit homophily. The Saliyar community cluster in India is an archetype of this. This cluster’s experience is investigated on how its thickly homophilous networks have steered it from dominance to decline, in the market for a product which calls for constant improvement of knowhow, under unchanging production technology. A network analysis of the Saliyars community cluster — in comparison with the networks of the communities in a cluster of a similar population at Payattuvila, which has surged ahead of the Saliyar Cluster in performance in handloom weaving — provides evidence that it is not simply social embeddedness alone, but the homophily in socially embedded links that are detrimental to clusters dependent upon informal knowledge exchanges. Hence, we provide evidence that social embeddedness is not as detrimental unless combined with homophily. The conceptual ambit of embeddedness has to broaden out to recognise that social relations come in various ‘homophilies’. This has many policy implications too as it involves studying embeddedness and homophily in rural traditional technology clusters intensively involving community social capital; such clusters being ubiquitous in India and whose experiences have not been scrutinised in this perspective. |
| Keywords: | Clusters, Handloom, Networks, Social Embeddedness, Homophily, Kerala |
| JEL: | D83 D85 O33 Z13 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:unumer:2012031&r=cse |
| By: | Raphael Auer; Philip Sauré |
| Abstract: | We develop a general equilibrium model of vertical innovation in which multiple firms compete monopolistically in the quality space. The model features many firms that each hold the monopoly to produce a unique quality level of an otherwise homogenous good and consumers who are heterogeneous in their valuation of the good’s quality. If the marginal cost of production is convex with respect to quality, multiple firms coexist and their equilibrium markups are determined by the degree of convexity and the density of quality-competition. To endogenize the latter, we nest this industry setup in a Schumpeterian model of endogenous growth. Each firm enters the industry as the technology leader and successively transits through the product cycle as it becomes superseded by further innovations. The intrinsic reason of why innovation happens in our economy is not one of displacing the incumbent, but rather, innovation is a means to differentiate oneself from existing firms and target new consumers. Aggregate growth arises if, on the one hand increasingly wealthy consumers are willing to pay for higher quality and on the other hand, private firms’ innovation generates income growth by enlarging the set of available technologies. Since the frequency of innovation determines the toughness of product market competition, in our framework the relation between growth and competition is reversed compared to standard Schumpeterian framework. Our setup does not feature business stealing in the sense that already marginal innovations grant non-negligible profits. Rather, innovators sell to a set of consumers that was served relatively poorly by pre-existing firms. Never the less, "creative destruction" prevails as new entrants make the set of available goods more differentiated, thereby exerting a pro-competitive effect on the entire industry. |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:deg:conpap:c016_067&r=cse |
| By: | Matthieu Crozet; Federico Trionfetti |
| Abstract: | Guided by empirical evidence we consider firms heterogeneity in terms of factor intensity. We show that Heckscher-Ohlin comparative advantage and firm-level relative factor-intensity interact to jointly explain the observed differences in relative sales. Firms whose relative factor-intensity matches up with the comparative advantage of the country have lower relative marginal costs and larger relative sales than firms who do not. Our empirical analysis, conducted using data for a large panel of European firms, supports these predictions. Our findings also provide an original firm-level verification of the Heckscher-Ohlin model based on the effect of comparative advantage on firms relative sales. |
| Keywords: | Factor intensity, Firms heterogeneity, Test of trade theories. |
| JEL: | F1 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:deg:conpap:c016_019&r=cse |
| By: | Nikolai V. Kolabutin; Nikolay A. Zenkevich |
| Abstract: | There are two conditions that are important to investigate the stability problem when considering the long-term cooperative agreements: the dynamic stability (time consistency), and strategic stability. This paper presents the results based on the profit distribution procedure (PRP), which implement a model of stable cooperation. The paper also shows the relationship between the dynamic and strategic stability of cooperative agreement and the numerical results showing the influence of parameters on the character of participants’ development. |
| Keywords: | Differential Game, Coalition, Shapley Value, Dynamic Stability, Strategic Stabilty |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:deg:conpap:c016_055&r=cse |
| By: | Francesco Bogliacino (Universidad EAFIT and RISE Group, Medellin); Marco Vivarelli (DISCE, Università Cattolica) |
| Abstract: | In this study we use a unique database covering 25 manufacturing and service sectors for 16 European countries over the period 1996-2005, for a total of 2,295 observations, and apply GMM-SYS panel estimations of a demand-for-labour equation augmented with technology. We find that R&D expenditures have a job-creating effect, in accordance with the previoustheoretical and empirical literature discussed in the paper. Interestingly enough, the labourfriendly nature of R&D emerges in both the flow and the stock specifications. These findings provide further justification for the European Lisbon-Barcelona targets. |
| Keywords: | Technological change, corporate R&D, employment, product innovation, GMMSYS. |
| JEL: | O33 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:ctc:serie2:dises1178&r=cse |
| By: | Gil Mehrez; Anastasia Guscina; Mark de Broeck |
| Abstract: | Conceptual ambiguities and statistical weaknesses hamper the assessment of external competitiveness. The term competitiveness, while applied extensively, is often imprecisely defined, which can result in analytical errors and mistaken policy advice. Furthermore, aggregate statistical measures of competitiveness in terms of exchange rate misalignment can be biased. To address these issues, this paper makes two contributions. First, it clarifies the external competitiveness concept, highlighting the dichotomy between productivity-driven long-run growth and short-run deviations from the underlying growth trajectory, which can be related to exchange rate misalignment. Second, it develops a disaggregated statistical approach for examining competitiveness based on unit labor costs at the three digit industry level in a group of comparable countries. The case of Slovakia is used to illustrate these concepts, but the analytical insights have general application. |
| Keywords: | Current account deficits , Economic growth , Global competitiveness , Industrial sector , Labor costs , Productivity , Real effective exchange rates , |
| Date: | 2012–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:12/107&r=cse |
| By: | Nicola Gennaioli; Rafael Laporta; Florencio López-de-Silanes; Andrei Schleifer |
| Abstract: | We investigate the determinants of regional development using a newly constructed database of 1569 sub-national regions from 110 countries covering 74 percent of the worlds surface and 96 percent of its GDP. We combine the cross-regional analysis of geographic, institutional, cultural, and human capital determinants of regional development with an examination of productivity in several thousand establishments located in these regions. To organize the discussion, we present a new model of regional development that introduces into a standard migration framework elements of both the Lucas (1978) model of the allocation of talent between entrepreneurship and work, and the Lucas (1988) model of human capital externalities. The evidence points to the paramount importance of human capital in accounting for regional differences in development, but also suggests from model estimation and calibration that entrepreneurial inputs and human capital externalities are essential for understanding the data. |
| Keywords: | productivity, entrepreneurial education, regional externalities |
| JEL: | I25 O11 O15 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:581&r=cse |
| By: | Pedro Mazeda Gil; Fernanda Figueiredo |
| Abstract: | This paper studies the firm size distribution arising from an endogenous growth model of quality ladders with expanding variety. The probability distribution function of a given cohort of firms is a Poisson distribution that converges asymptotically to a normal of log size. However, due to firm entry propelled by horizontal R&D, the total distribution – i.e., when the entire population of firms is considered – is a mixture of overlapping Poisson distributions which is systematically right skewed and exhibits a fatter upper tail than the normal distribution of log size. Our theoretical results qualitatively match the empirical evidence found both for the cohort and the total distribution, and which has been presented as a challenge for theory to explain. Moreover, by obtaining a total distribution with a gradually falling variance over a long time span, the model is able to address complementary empirical evidence that points to a total distribution subtly evolving over time. |
| Keywords: | Firm size distribution; Skewness; Heavy tails; Endogenous growth; Horizontal and vertical R&D |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:deg:conpap:c016_065&r=cse |
| By: | Berardi, Michele |
| Abstract: | In a model of incomplete, heterogeneous information, with externalities and strategic interactions, we analyze the possibility for learning to act as coordination device. We build on the framework proposed by Angeletos and Pavan (2007) and extend it to a dynamic multiperiod setting where agents need to learn to coordinate. We analyze conditions under which adaptive and eductive learning obtain, and show that adaptive learning conditions are less demanding than the eductive ones: in particular, when actions are strategic substitutes, the equilibrium is always adaptively learnable, while it might not be eductively so. In case of heterogeneous preferences, moreover, convergence only depends on the average characteristic of agents in the economy. We also show that adaptive learning dynamics converge to the game theoretical strategic equilibrium, which means that agents can learn to act strategically in a simple and straightforward way. |
| Keywords: | Learning; heterogeneity; interaction; coordination |
| JEL: | D83 C73 C62 |
| Date: | 2012–05–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:38651&r=cse |
| By: | Sumon Bhaumik; Ralitza Dimova; Subal C. Kumbhakar; Kai Sun |
| Abstract: | Using a novel modeling approach, and cross-country firm level data for the textiles industry, we examine the impact of institutional quality on firm performance. Our methodology allows us to estimate the marginal impact of institutional quality on productivity of each firm. Our results bring into question conventional wisdom about the desirable characteristics of market institutions, which is based on empirical evidence about the impact of institutional quality on the average firm. We demonstrate, for example, that once both the direct impact of a change in institutional quality on total factor productivity and the indirect impact through changes in efficiency of use of factor inputs are taken into account, an increase in labor market rigidity may have a positive impact on firm output, at least for some firms. We also demonstrate that there are significant intra-country variations in the marginal impact of institutional quality, such that the characteristics of “winners” and “losers” will have to be taken into account before policy is introduced to change institutional quality in any direction. |
| Keywords: | Institutional quality; Firm performance; Marginal effect; Textiles industry |
| JEL: | C14 D24 K31 O43 |
| Date: | 2012–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2011-1029&r=cse |
| By: | Anna Torres; Tammo H. A. Bijmolt; Josep A. Tribé |
| Abstract: | In this paper we argue that socially responsible policies have a positive impact on a firms brand equity in the short-term as well as in the long-term. Moreover, once we distinguish between different stakeholders, we posit that secondary stakeholders such as community are even more important than primary stakeholders (customers, shareholders, workers and suppliers) in generating brand equity. Policies aimed at satisfied community interests act as a mechanism to reinforce trust that gives further credibility to social responsible polices with other stakeholders. The result is a decrease in conflicts among stakeholders and greater stakeholder willingness to provide intangible resources that enhance brand equity. We provide support of our theoretical contentions making use of a panel data composed of 57 firms from 10 countries (the US, Japan, South Korea, France, the UK, Italy, Germany, Finland, Switzerland and the Netherlands) for the period 2002 to 2007. We use detailed information on brand equity obtained from Interbrand and on corporate social responsibility (CSR) provided by the SiRi Global Profile database, as compiled by the Sustainable Investment Research International Company (SiRi). |
| Keywords: | Brand Equity, Corporate Social Responsibility, Stakeholders |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:424&r=cse |
| By: | Jayati Sarkar (Indira Gandhi Institute of Development Research); Subrata Sarkar (Indira Gandhi Institute of Development Research); Kaustav Sen (Indian Institute of Management) |
| Abstract: | We construct a Corporate Governance Index for 500 large listed Indian firms for the period from 2003 to 2008 in this paper. The index construction uses information on four important corporate governance mechanisms: the board of directors, the ownership structure, the audit committee, and the external auditor. The construction of the index for six years allows an examination of the evolution of corporate governance in India in a period when there have been a large number of corporate governance reforms. The analysis documents a rising trend in the level of the Corporate Governance Index of Indian companies. There is a strong association between the Corporate Governance Index and the market performance of companies, where companies with better corporate governance structures earn substantially higher rates of return in the market. This analysis shows that Indian markets tend to reward companies that carry out governance reforms. It provides an impetus to regulators as well as to push for further reforms. |
| Keywords: | Corporate Governance Index, board of directors, ownership structure, audit committee, external auditors |
| JEL: | C43 G18 G34 M41 M42 |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:ind:igiwpp:2012-009&r=cse |