nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2014‒03‒15
fifteen papers chosen by
Joao Jose de Matos Ferreira
University of the Beira Interior

  1. Driving a firmÕs export propensity and export intensity: the role of experience, innovation, and international marketing strategy By Eleonora Di Maria; Roberto Ganau
  2. National or international public funding? Subsidies or loans? Evaluating the innovation impact of R&D support programmes By Huergo, Elena; Moreno, Lourdes
  3. European market integration and the determinants of firm localization: The case of Poland By Gehringer, Agnieszka; Krenz, Astrid
  4. Knowledge Licensing in a Model of R&D-driven Endogenous Growth By Vahagn Jerbashian
  5. Economic growth and crime against small and medium sized enterprises in developing economies By Islam, Asif
  6. Migration and Regional Sorting of Skills By Tano, Sofia
  7. Trade Liberalization and Optimal R&D Policies with Process Innovation By Thanh Le; Cuong Le Van
  8. R&D networks: theory, empirics and policy implications By Michael D. König; Xiaodong Liu; Yves Zenou
  9. Financial crisis, internationalization choices and Italian firm survival By Costa, Stefano; Pappalardo, Carmine; Vicarelli, Claudio
  11. Evaluation of Small Business Innovation Research Programs in Japan By Inoue, Hiroyasu; Yamaguchi, Eiichi
  12. Business ICT Adoption and Open Access: The Example of SMEs at Industrial Parks in the Netherlands By Bert Sadowski
  13. Economic Crisis and Female Entrepreneurship: Evidence from Countries in Eastern Europe and Central Asia By Saumik Paul; Vengadeshvaran Sarma

  1. By: Eleonora Di Maria (University of Padova); Roberto Ganau (University of Padova)
    Abstract: Moving from the hypothesis of firm heterogeneity, we analyze whether the firmÕs experience, product and process innovation as well as a clear international marketing strategy affect firmsÕ probabilities of entering export markets and their export intensities (sales achieved abroad). The paper provides further knowledge on the determinants of both the decision to address foreign markets (firm export propensity) and the degree of penetration in those foreign markets (export intensity), by integrating the three above-mentioned streams of research usually approached as distinctive ones. Even though there is a large set of studies dealing with an analysis of export determinants, there is still a lack of theoretical and empirical investigation on how firmÕs innovation (product to be developed, process improvement) and marketing strategy (commitment, marketing investments) interplay in the international business processes, taking into account any prior experience of the firm in general terms as well as in the international scenario. Specifically, the paper empirically investigates how experience, innovation and international marketing strategy influence export behavior at the firm level in order to explore how these determinants act as export drivers for a firm and the consequences measured in terms of export intensity. We carried out a quantitative analysis based on a dataset on 582 Italian manufacturing firms observed over the three-year periods 2001Ð2003 and 2004Ð2006. As far as export propensity is concerned, it emerges that the main drivers affecting the firmÕs decision to enter foreign markets are related to its internal productivity level, innovation capabilities in terms of product innovation as well as an explicit marketing strategy oriented to foreign markets (establishing collaborations with foreign firms or direct commercial investment abroad). Thus, experience can be interpreted as the capability of a firm to manage internal processes (managerial experience) efficiently rather than in terms of knowledge cumulated through years of economic activities (captured through the age variable) or transferred from other partners or foreign ownership. When considering export intensity, two main elements arise from the analysis. The first one is that the shift from product to process innovations affects exports. This result can be explained by the firmÕs capability to efficiently change its internal processes to face the demand arising from foreign clients. The second important element refers to the remarkable role of direct commercial investment in influencing export intensity. This result confirms that the firm gains in terms of value captured by controlling directly its distribution channel.
    Keywords: experience; innovation; international marketing strategy; export intensity; Italy.
    Date: 2014–01
  2. By: Huergo, Elena; Moreno, Lourdes
    Abstract: The objective of this study is to compare the effect of different types of public support for R&D projects on firms’ technological capabilities. We distinguish be-tween low-interest loans and subsidies and between national and European sup-port. Using data on 2,319 Spanish firms during the period 2002-2005, we estimate a multivariate probit to analyse the determinants of firms’ participation in public R&D programmes and, later, the impact of this participation on firms’ technologi-cal capabilities using different indicators. The results provide evidence of the ef-fectiveness of all treatments for improving firms’ innovative performance. Specif-ically, although the three kinds of public aid stimulate the intensity of R&D in-vestment, the highest impact corresponds to soft credits. In addition, national sub-sidies have a higher impact on internal R&D intensity than EU grants, but the op-posite relation is found as regards total R&D intensity. With respect to innovation outputs, apart from the indirect effect of public support by stimulating R&D in-tensity, we also find evidence of a direct effect of participation in the CDTI credit system and in the European subsidy programme on the probability of obtaining product innovations and applying for patents.
    Keywords: Soft loans, R&D subsidies, impact assessment
    JEL: H81 L2 L52 O3
    Date: 2014–03–07
  3. By: Gehringer, Agnieszka; Krenz, Astrid
    Abstract: The paper analyses empirically the determinants of firms´ localization in Poland. We use regional data of the sixteen Polish administrative regions over the period 2003 to 2010 to examine which role agglomeration forces and other factors played in explaining the choice to operate in a certain location. Our results suggest that agglomeration economies stemming in particular from the R&D sector, as well as human capital and the infrastructure positively influence the regional localization of firms. Poland´s accession to the European Union had a positive impact for the location decision of new firms in the Polish economy. --
    Keywords: localization,agglomeration economies,knowledge externalities,Polish regions,European integration
    JEL: F14 F15 F23 R11 R12
    Date: 2014
  4. By: Vahagn Jerbashian (Facultat d'Economia i Empresa; Universitat de Barcelona (UB))
    Abstract: In this paper I present an endogenous growth model where the engine of growth is in-house R&D performed by high-tech firms. I model knowledge (patent) licensing among high-tech firms. I show that if there is knowledge licensing, high-tech firms innovate more and economic growth is higher than in cases when there are knowledge spillovers or there is no exchange of knowledge among high-tech firms. However, in case when there is knowledge licensing the number of high-tech firms is lower than in cases when there are knowledge spillovers or there is no exchange of knowledge.
    Keywords: Knowledge Licensing, Intra-firm R&D, Competitive Pressure,Endogenous Growth.
    JEL: O30 O41 L16
    Date: 2014
  5. By: Islam, Asif
    Abstract: Several studies have explored the relationship between economy-level crime rates or individual-level crime and economic growth. However, few studies have examined the relationship between economic growth and crime against firms. This study uses data for about 12,000 firms in 27 developing countries and finds that economic growth is negatively associated with crime. This relationship is stronger for small and medium firms than large firms. The study also explores several economy-wide factors and their influence on the growth-crime relationship for small and medium enterprises. The results are robust to various sensitivity checks.
    Keywords: Governance Indicators,Public Sector Corruption&Anticorruption Measures,Achieving Shared Growth,Population Policies,Gender and Law
    Date: 2014–02–01
  6. By: Tano, Sofia (Department of Economics, Umeå School of Business and Economics)
    Abstract: This thesis consists of an introductory part and four papers. Paper [I] estimates jointly the choice of whether to enroll in education and the choice of location among young people. Being a particularly mobile group, the location choices of young individuals shape much of the regional distribution of human capital, growth, and local public sector budgets. Applying Swedish register data on nest leavers, we seek to determine factors deciding the education and location choice of young people. The results indicate a systematic selection higher education based on school grades and preferences for locations with higher per capita tax bases and with lower shares of elderly people. The importance of family networks for the choice of location is confirmed. Paper [II] examines how individual ability, reflected by the grade point average (GPA) from comprehensive school affects the probability of migration among university graduates. The econometric analysis applies detailed micro-data of two entire cohorts of young individuals retrieved from the Swedish population registers. The results indicate that individual abilities are strongly influential both concerning completion of a university degree and for the migration decision. In addition, we find a positive relationship between the GPA and migrating from regions with lower per capita tax bases and/or a relatively small share of highly educated individuals. Analogously, individuals with a high GPA tend to stay in more densely populated regions, suggesting a clustering of human capital vis-à-vis school grades. Paper [III] estimates the relationship between migration across labour market regions and the subsequent changes in earnings by using the GPA from the final year of comprehensive school as a proxy for ability. This measure aims to capture heterogeneity in the returns to migration for individuals conditional on education attainment. Using Swedish register data on young adults, a difference-in-difference propensity score matching estimator is applied to estimate income differences measured up to seven years after migration. The results show variation between different ability groups regarding the returns to regional migration. There are indications of larger gains for individuals holding top grades, while the bottom half seems to benefit less, or face slightly negative effects. Paper [IV] examines whether power couple formation and the location choice of such couples are driven by factors already inherent in young people during their formative school years. The paper also extends the analysis by modeling location choice among different sizes of labor market areas, given different power statuses of the couples. Based on analysis of Swedish register data, we produce evidence that power spouses evolve from the population of high achieving school age individuals; the latter is identified by high academic performance during their years of compulsory school. Regarding location choice, the results indicate that power couples display a relatively high tendency to migrate from their regions of origin to large cities.
    Keywords: Agglomeration; early markers; human capital; income; interregional migration; individual ability; location choice; marital matching; propensity score matching; regional clustering; skills; university graduates
    JEL: I21 I23 J12 J24 J31 J61 R23
    Date: 2014–03–04
  7. By: Thanh Le; Cuong Le Van
    Abstract: We set up a theoretical framework to discuss the impact of trade liberalization and R&D policies on domestic exporting firms' incentive to innovate and social welfare. In this framework, exporting firms invest in R&D to reduce their production costs and, in return, receive R&D subsidies from the government. While firms target at maximizing their profits, the government aims to maximize the social welfare. We consider different settings of firm competition to explore their strategic behaviours as well as the government's strategic behaviour at the policy stage. We find that tradeliberalization in the foreign market is always welfare enhancing and, in most cases, leads to higher export sales and R&D investments of firms, and raises productivity at firms and industry level. When firms are independent monopolies in the overseas market, it is optimal for the government not to provide any R&D subsidy. When goods are close substitutes, the social optimum can be achieved as a Nash equilibrium by applying an optimal R&D tax. Trade liberalization induces a higher R&D tax rate to be levied on firms. When firms also conduct business in the home market, it is always optimal for the government to provide firms with a financial support to their R&D activity. While this R&D subsidy is decreasing in the trade cost when firms are independent monopolies, its monotonicity in the trade costs is determined by the convexity of the R&D cost function when firms produce close substitutes.
    Keywords: Trade, R&D, subsidies, welfare
    JEL: F12 F13 F15 O31
    Date: 2014–02–25
  8. By: Michael D. König; Xiaodong Liu; Yves Zenou
    Abstract: We study a structural model of R&D alliance networks in which firms jointly form R&D collaborations to lower their production costs while competing on the product market. We derive the Nash equilibrium of this game, provide a welfare analysis and determine the optimal R&D subsidy program that maximizes total welfare. We also identify the key firms, i.e. the firms whose exit would reduce welfare the most. We then structurally estimate our model using a panel dataset of R&D collaborations and annual company reports. We use our estimates to identify the key firms and analyze the impact of R&D subsidy programs. Moreover, we analyze temporal changes in the rankings of key firms and how these changes affect the optimal R&D policy.
    Keywords: R&D networks, key firms, optimal subsidies
    JEL: D85 L24 O33
    Date: 2014–03
  9. By: Costa, Stefano; Pappalardo, Carmine; Vicarelli, Claudio
    Abstract: In this paper we focus on the relationship between internationalization choices and survival of Italian firms during the financial crisis. Making use of a new database matching four firm-level datasets provided by the Italian National Statistical Institute (ISTAT), we build a detailed taxonomy of internationalization activities of Italian firms in 2007 and 2010, before and after the financial crisis. Descriptive analyses confirms that firms showing a more complex form of internationalization have higher levels of efficiency, as well as higher diversification of production, measured in terms of the variety of exported goods. Indeed, over the period 2007-2010 Italian firms have moved (on average) towards more complex forms of internationalization. These upwards changes have determined positive effects on employment dynamics and value added growth. For each class of internationalization we estimate a conditional Probit of survival according to the level of productivity and controlling for firm and industry specific variables. Our results show that multinational firms (at the top of our taxonomy) show a lower resilience during the crisis with respect “global” or “two-way traders”, playing a minor role of stabilizers with respect to domestic owner firms. These findings put more emphasis on issue of the diversification of products and markets as a goal to be pursued by firms, even in times of crisis such as the current ones, to remain competitive, make profits and survive.
    Keywords: heterogeneous firms, internationalization, survival premia, financial crisis.
    JEL: F10 F14 F23
    Date: 2014–03–04
    Date: 2014
  11. By: Inoue, Hiroyasu; Yamaguchi, Eiichi
    Abstract: Subsidizing small high-technology firms is now considered to be important in stimulating economies throughout the world. This is because fast growing small firms create new markets and jobs. The Small Business Innovation Research (SBIR) program has played an important role in the United States in subsidization providing two billion dollars every year. Japan started its own SBIR program inspired by that in the United States. This paper examines the direct effects of Japan's SBIR program through the attributes of firms. First, we compared the changes in sales, employment, and the number of patents between SBIR awardees and matching firms. However, SBIR awardees did not demonstrate better performance in sales or employment. Therefore, it seems that the direct effect of Japan's SBIR program has not produced positive results. However, it did increase the number of patents. Second, we examined the overall results by using regression models. Even with control variables, these results were unchanged. Therefore, we concluded that the results were robust.
    Keywords: Small business, Research policy, Innovation, SBIR, Japan
    JEL: O2 O3
    Date: 2014–02–24
  12. By: Bert Sadowski
    Abstract: Information and Communication Technologies (ICT) provide small- and medium-sized enterprises (SMEs) with an option to create and exploit strategic opportunities. Prior investment in ICT infrastructure can lead to follow-up decisions to adopt new ICT services, but there is no guarantee that SMEs will also use emerging strategic opportunities in adopting these services. In this context, the paper examines whether or not the adoption of advanced ICT infrastructure and advanced ICT services by SMEs has been inter-related and was depending on number of firm-specific, market-specific and location-specific factors. In contrast to previous studies, the focus is on the extent to which the adoption of ICT infrastructure and ICT services has been driven by expectations about open access by SMEs. Open access was conceptualized as expectations by these companies about cheaper prices in the future, better quality of service and more competition on the infrastructure. The research uses data from a survey undertaken among 247 SMEs on different industrial parks in the Netherlands in February 2011. The results of the analysis show that SMEs value open access factors very high with respect to their choice to opt for new ICT infrastructure and new ICT services.
    Keywords: business ICT, SME, Open Access
    Date: 2014–02
  13. By: Saumik Paul; Vengadeshvaran Sarma
    Abstract: Building on the theory of necessity entrepreneurship, we test whether female entrepreneurship was a part of the household coping mechanism facing the recent global crisis across 30 transition countries centered in Eastern Europe and Central Asia. The identification strategy relies on the self-reported crisis victimization indicators at the household level. Main findings indicate that female members from crisis-affected households are more willing to become entrepreneurs and have initiated firms at a significantly higher rate since 2007. The estimated outcomes are particularly critical for male headed households with propensity score matching and doubly robust tests supporting the main findings. We also find that prior entrepreneurial activity at the household level, acts as a catalyst for such female necessity entrepreneurship. Overall, the findings suggest that crisis perhaps worked as a contextual factor contributing to the creation of necessary entrepreneurship among women.
    Keywords: Female Entrepreneurship; Economic Crisis; Eastern Europe and Central Asia
    Date: 2014
    Date: 2014

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