nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2014‒04‒11
twenty papers chosen by
Joao Jose de Matos Ferreira
University of the Beira Interior

  1. Innovation Systems Research in the Italian Food Industry By Ornella Wanda Maietta
  2. Policy Simulation of Firms Cooperation in Innovation By Heshmati, Almas; Lenz-Cesar, Flávio
  3. Firm Knowledge, Neighborhood Diversity and Innovation By Wixe, Sofia
  5. Regional productivity effects of multinational firm affiliates By Andersson, Martin; Gråsjö, Urban; Karlsson, Charlie
  6. Media clusters and metropolitan knowledge economy By Karlsson, Charlie; Rouchy, Philippe
  7. Spillovers product substitution and R&D investment : theory and evidence By Lionel Nesta; Thomas Grebel
  8. Do incentive systems spur work motivations of inventors in high-tech firms By Nathalie Lazaric; Alain Raybaut
  9. How Structural Changes in Complex Networks Impact Organizational Learning Performance By Somayeh Koohborfardhaghighi; Jorn Altmann
  10. Banks and New Firm Formation By Backman, Mikaela
  12. The Rise and Fall of R&D Networks By Mauro Napoletano; Mario V Tomasello; Antonios Garas; Frank Schweitzer
  13. Trust-based Work-time and Product Improvements: Evidence from Firm Level Data By Olivier N. Godart; Holger Görg; Aoife Hanley
  14. Does R&D increase the profit contribution of intangible assets? An exploration of European and American automotive supplierss By Stefan Lutz
  15. How ICT Investment and Energy Use Influence the Productivity of Korean Industries By Khayyat, Nabaz T.; Lee, Jongsu; Heshmati, Almas
  16. Measuring and decomposing the overall efficiency of multi-period and -division systems associated with DEA By Chen, Kaihua
  17. Managing Transition in an Artistic Company With Entrepreneurial Management By Thomas Paris; Frédéric Leroy
  18. Competitiveness disparities behind the economic crisis in the euro area By Rantala, Olavi
  19. Labour cost trends and international competitiveness in Europe By Alexander Herzog-Stein; Heike Joebges; Ulrike Stein; Rudolf Zwiener
  20. Strategic Withholding through Production Failures By Fogelberg, Sara; Lazarczyk, Ewa

  1. By: Ornella Wanda Maietta (DISES and CSEF, University of Naples Federico II.; CSEF, University of Naples)
    Abstract: The objective of the paper is to determine the role that R&D networking, through the collaboration of firms with universities, plays among the determinants of product and process innovation in the Italian food and drink industry and how geographical proximity to a university affects both R&D university-industry collaboration and innovation. The data are sourced from the 7th (1995-1997), 8th (1998-2000), 9th (2001-2003) and 10th (2004-2006) waves of Capitalia survey data. The approach is a triprobit analysis in which the dependent variables are R&D collaboration with a university, process and product innovation; the independent variables are firm, territorial and university characteristics.
    Keywords: product and process innovation, university-industry interaction, geographical distance, food and drink industries
    JEL: O31 D21 R1
    Date: 2014–03–29
  2. By: Heshmati, Almas (Centre of Excellence for Science and Innovation Studies (CESIS), & Department of Economics, Sogang University); Lenz-Cesar, Flávio (Ministry of Communications, Esplanada dos Ministério)
    Abstract: This study utilizes results from an agent-based simulation model to conduct public policy simulation of firms’ networking and cooperation in innovation. The simulation game investigates the differences in sector responses to internal and external changes, including cross-sector spillovers, when applying three different policy strategies to promote cooperation in innovation. The public policy strategies include clustering to develop certain industries, incentives to encourage cooperative R&D and spin-off policies to foster entrepreneurship among R&D personnel. These policies are compared with the no-policy alternative evolving from the initial state serving as a benchmark to verify the gains (or loses) in the number of firms cooperating and networking. Firms’ behavior is defined according to empirical findings from analysis of determinants of firms’ participation in cooperation in innovation with other organizations using the Korean Innovation Survey. The analysis based on manufacturing sector data shows that firms’ decision to cooperate with partners is primarily affected positively by firm’s size and the share of employees involved in R&D activities. Then, each cooperative partnership is affected by a different set of determinants. The agent-based models are found to have a great potential to be used in decision support systems for policy makers. The findings indicate possible appropriate policy strategies to be applied depending on the target industries. We have applied few examples and showed how the results may be interpreted. Guidelines are provided on how to generalize the model to include a number of extensions that can serve as an optimal direction for future research in this area.
    Keywords: agent-based simulation; collaborative R&D; innovation networks; simulation game; policy strategy;
    JEL: C15 C71 D21 D85 L20 O31
    Date: 2014–03–27
  3. By: Wixe, Sofia (Centre for Entrepreneurship and Spatial Economics (CEnSE), Jönköping International Business School,)
    Abstract: This paper tests the importance of firm level knowledge and neighborhood diversity, as a source for localized knowledge spillovers, on firms propensity to innovate. Diversity is measured in terms of industries as well as employee education and occupation, of which the results show a positive neighborhood effect from diversity in education. In addition, an added positive effect from neighborhood diversity in education is found for firms with a larger share of highly educated employees, which points to the importance of absorptive capacity. However, firm characteristics, such as the knowledge of the own employees, provide to be the strongest determinants for the innovativeness of firms.
    Keywords: Knowledge; neighborhood diversity; education; skills; innovation
    JEL: J21 J24 O31 R32
    Date: 2014–04–03
  4. By: Kärt Rõigas; Marge Seppo; Urmas Varblane; Pierre Mohnen
    Abstract: This paper presents an econometric analysis of the characteristics of firm’s cooperating with universities using Community Innovation Survey (CIS) data for 14 European countries. Our model incorporates three groups of variables which could be related to the probability to cooperate with universities. The first group of variables is related to the size of a firm, the second group measures different innovation activities and the third group describes the internationalisation of firms. In addition, we test for the number of linkages, public financing and the sector of the firm. In order to provide a comparative view across the European countries we use the CIS for the period 2006–2008, where we have data for 14 countries. We use a standard logit model for firm level data, with a dependent variable indicating whether a firm used a university as a cooperation partner or not. We estimate two separate models for cooperating with home and with foreign universities. Our main findings reveal that despite the origin of the university, firms must have a certain level of capabilities to have universities as cooperation partners – conducting internal or external R&D is a significant factor characterising the cooperation with universities. Investments into machinery and equipment as one of the innovative activities are hindering the cooperation with universities. Significant differences between firms that cooperate with home universities, compared to those cooperating with foreign universities exist. Firms cooperating with foreign universities are characterised by a higher level of internationalisation, measured by an export and foreign ownership dummy.
    Keywords: university- industry cooperation, Europe, comparative view, national innovation system, competitiveness, technological change
    JEL: O32 O33 O57
    Date: 2014
  5. By: Andersson, Martin (CITR, Blekinge Inst of Technology); Gråsjö, Urban (University West); Karlsson, Charlie (CITR, Blekinge Inst of Technology)
    Abstract: Multinational firms (MNFs) have been shown to have a set of defining characteristics. Compared to domestic firms, they have a larger fraction of skilled workers, higher R&D to sales ratios and established networks to knowledge sources in several different countries. As illustrated by the so-called ‘anchor-tenant’ hypothesis, they can be described as “knowledge spillover agents”. MNF affiliates, as defined in this paper, are firms that are part of large domestic and foreign MNFs. In this paper we test whether the local presence of MNF affiliates generate spillover effects on the local industry. The empirical analysis focuses on assessing whether the productivity of the regional manufacturing industry of non-affiliated firms is higher in regions with a large fraction of MNF affiliates. The analysis uses data on Swedish firms and is conducted on regional level as well as on firm level. The regressions show that local presence of MNFs in a region has a positive effect on Gross Regional Product (GRP) from non-MNFs. The paper also shows that regions where the low-productive non-MNFs are located appear to benefit the most from local presence of MNFs. The MNFs have, on the other hand, no effect on non-MNF productivity in regions where the high-productive non-MNFs are located.
    Keywords: Multinational firms; affiliates; productivity; R&D; knowledge; spillovers; skilled workers; region
    JEL: F23 J24 O33 R11
    Date: 2014–04–02
  6. By: Karlsson, Charlie (CITR, Blekinge Inst of Technology); Rouchy, Philippe (CITR, Blekinge Inst of Technology)
    Abstract: Large media clusters have emerged in a limited number of large cities, characterizing the geographical concentration of the global media industry. This paper starts by exploring the effect of the rapid advancement of Information and Communication Technologies (ICT) had on the media economy. It concludes that the role of the “weightless economy” on media cluster has enhanced its production and distribution functions. We review the specificities of media cluster that ties agglomeration to creative, diversified attributes of production and distribution. The implication is that media firms hold strong tendencies to cluster in urban regions since they make full usage of its resources, namely its export capabilities and import transformation strength. Finally, we invite researchers to consider Jacobs’ metropolitan and global reciprocating system of city growth as a valid unit for analysing media clusters. The question leads envisaging if media clusters' strong metropolitan base allows them to grow further through globalised circuits. The paper concludes that large, media clusters drive on intellectually dense network of information, which can only be cultivated through large agglomerations existing capabilities. Consequently, the research question focuses upon the economic role of knowledge in media creation and export replacement. We emphasize the strength of Jacob’s model of media cluster for understanding its mechanism of value creation and endogenous system of globalisation.
    Keywords: Clustering; media industry; agglomeration; weightless economy; creative industry; globalization; regional development
    JEL: L82 R11
    Date: 2014–03–31
  7. By: Lionel Nesta (OFCE); Thomas Grebel
    Abstract: We investigate the conditions under which R&D investment by rival firms may be negatively or positively correlated. Using a two-stage game the influence of spillovers and product substitution is investigated. It is shown that under Cournot competition, the sign of the R&D reaction function depends on four types of environments in terms of the level of product substitution and of spillovers. We then test the prediction of the model on the world’s largest manufacturing corporations. We assume that firms make oblivious R&D investments based on the R&D decision of the average rival company. We then develop a dynamic panel data model that accounts for the endogeneity of the decision of the mean rival firms. Results corroborate the validity of the theoretical model.
    Keywords: Process R&D; spillovers; product substitution ; reaction function; GMM
    JEL: D43 L13 O31
    Date: 2013–10
  8. By: Nathalie Lazaric (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis (UNS)); Alain Raybaut (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - Université Nice Sophia Antipolis (UNS) - CNRS : UMR6227)
    Abstract: In this article, we explore the potential tensions between the incentive systems of group of inventors and knowledge diversity in a high tech firm.
    Keywords: Work motivation, groups of inventors, knowledge diversity, Knowledge creation
    Date: 2014
  9. By: Somayeh Koohborfardhaghighi (College of Engineering, Seoul National University); Jorn Altmann (College of Engineering, Seoul National University)
    Abstract: The power of using knowledge against competitors is a key success factor in the information age. However, the knowledge itself is not the source of competitive advantage for an organization; rather its power lies in its use. In a learning organization, collective knowledge of the individuals is needed, in order to reach the overall goals of the organization. From an organizational perspective, the most important aspect of knowledge management is knowledge transfer. Therefore, knowledge within the organization should be available to others through social interactions. The contributions of this paper are two-fold: First, we show that the network structure that emerges from those social interactions depends on the variability in individual patterns of behavior. Second, we emphasize the importance of network structure changes for organizational learning. A consequence is that a high clustering coefficient within a network does not necessarily produce a high learning outcome. It can even result in a loss of innovation. Another consequence is that a small average shortest path length within a network of individuals positively affects organizational learning. Therefore, certain topological features of a network can help network members to have a better access to information within an organization.
    Keywords: Complex Networks, Organizational Learning, Knowledge Management, Network Formation.
    JEL: C02 C6 C15 D23 D81 D85 L22 L25 M12 O31
    Date: 2014–03
  10. By: Backman, Mikaela (Jönköping International Business School, & Centre of Excellence for Science and Innovation Studies (CESIS))
    Abstract: It is natural to assume that the characteristics of the bank sector are important factors for new firm formation when external capital is needed for establishing new firms. The local bank sector acts as the main provider of financial funds in Sweden since other sources of external capital are limited. In addition, the banking services needed in the start-up process tend to be sensitive to distance and are mainly supplied locally. Thus, the structure of the local bank sector is an important factor that determines the conditions for start-ups. The finding in this paper supports the hypothesis that new firm formation is positively influenced by (1) the average size of the bank branches, (2) number of independent banks and bank branches per capita, and (3) the intensity of competition level. Access to independent banks and bank branches has a stronger influence on start-ups in more rural locations.
    Keywords: new firm formation; local bank sector; Sweden
    JEL: G21 L26 R11
    Date: 2014–03–31
  11. By: Backman, Mikaela (Jönköping International Business School, & Centre of Excellence for Science and Innovation Studies (CESIS)); Gabe, Todd (University of Maine); Mellander, Charlotta (Jönköping International Business School, & Centre of Excellence for Science and Innovation Studies (CESIS))
    Abstract: This paper examines the effects of human capital on the growth and survival of a large sample of Swedish businesses. Human capital is represented by conventional measures of the educational attainment and experience of an establishment’s workers, and skills-based measures of the types of occupations present in the company. Controlling for an establishment’s size and age, as well as its industry and region of location, we find that the human capital embodied in a company’s workers significantly affects its performance. The specific effects, however, depend on how human capital is measured and whether the analysis focuses on growth or survival.
    Keywords: Firm growth; firm survival; human capital; education; skills
    JEL: J21 J24 L25
    Date: 2014–03–25
  12. By: Mauro Napoletano (OFCE); Mario V Tomasello; Antonios Garas; Frank Schweitzer (Chair of Systems Design)
    Abstract: Drawing on a large database of publicly announced R&D alliances, we track the evolutionof R&D networks in a large number of economic sectors over a long time period (1986-2009). Our main goal is to evaluate temporal and sectoral robustness of the main statisticalproperties of empirical R&D networks. By studying a large set of indicators, we providea more complete description of these networks with respect to the existing literature. Wefind that most network properties are invariant across sectors. In addition, they do notchange when alliances are considered independently of the sectorsto which partners belong.Moreover, we find that many properties of R&D networks are characterized by a rise-and-fall dynamics with a peak in the mid-nineties. Finally, we show that suchproperties of empirical R&D networks support predictions of the recent theoretical literature on R&D network formation.
    Date: 2013–09
  13. By: Olivier N. Godart; Holger Görg; Aoife Hanley
    Abstract: We explore whether the introduction of trust based working hours is related to the subsequent innovation performance of firms. Employing a panel data set of over 5,000 German establishments, we implement a propensity score matching approach where we only consider firms that did not use trust based work contracts initially. Our results show that firms which adopt such contracts tend to be between 11 to 14 percent more likely to improve products. These results hold when we control for another form of flexible time work arrangements, namely working time accounts. Thus, the positive relationship between the adoption of trust based working hours and innovation seems to be driven by the degree of control and self-management over working days, rather than by merely allowing time flexibility
    Keywords: Trust based work time, innovation, firm performance
    JEL: M1 M5 L2
    Date: 2014–04
  14. By: Stefan Lutz (Royal Docks Business School, University of East London)
    Abstract: Economic theory implies that research and development (R&D) efforts increase firm productivity and ultimately profits. In particular, R&D expenses lead to the development of intangible assets in the form of intellectual property (IP) and these assets command a return that increases overall profits of the firm. This hypothesis is investigated for the North American and European automotive supplier industries. Results indicate that R&D expenses in fact increase both intangible asset levels and their profit contributions. In particular, increases in the R&D expense to sales ratio lead to increases in the profit contribution of intangible assets relative to sales. This indicates that more R&D intensive IP should command higher royalty rates per sales when licensed to third parties and within multinational enterprises alike.
    Keywords: Productivity; Intellectual property; Royalties; MNE; Transfer pricing.
    JEL: D24 L20 L62 M21
    Date: 2014–02
  15. By: Khayyat, Nabaz T. (Seoul National University); Lee, Jongsu (Seoul National University); Heshmati, Almas (Sogang University)
    Abstract: This empirical study examines changes in industrial productivity in Korea between 1980 and 2009, focusing on how investment in information and communication technology (ICT) and energy use, influence productivity levels. A dynamic factor demand model is applied in order to link inter-temporal production decisions by explicitly recognizing that the level of certain factors of production cannot be changed without incurring so-called adjustment costs, defined in terms of forgone output from current production. In particular, we investigate how the ICT–energy relationship affects total factor productivity growth in 30 industrial sectors. Describing industry-specific productivity levels is important for policymakers when the allocation of public investment and support is limited. The results presented herein show that ICT/non-ICT capital investment are substitutes for labor and energy use. We also find a high output growth rate in the sampled sectors, and increasing returns to scale, whose effects on the TFP component are higher than those of technological progress.
    Keywords: dynamic factor demand, panel data, ICT investment, energy use, productivity
    JEL: C32 C33 Q41
    Date: 2014–03
  16. By: Chen, Kaihua
    Abstract: The combination way of component efficiencies into the overall efficiency is a central topic in the efficiency modeling of network systems based on data envelopment analysis (DEA). In terms of the feature and advantage of DEA modeling as the multiplier generation on inputs/outputs, it is desirable that the combination weights are derived from the data and self-generated in calculation process. The prior weights choice makes DEA modeling lose the objectivity and generalization in efficiency measures. This study proposes a new formulating approach of dynamic network DEA (DN-DEA) models to measure and decompose the overall efficiency of multi-period and -division systems without the pre-specified weights to combine component efficiencies into the overall efficiency. In our formulating approach, the double identities of carry-overs connecting consecutive periods and linkers connecting consecutive divisions are fully accounted for. This approach is applicable for the formulations of both radial measures (DN-CCR and DN-BCC) and non-radial measures (DN-SBM). This study extends Kao’s (in press) relational approach of dynamic DEA to dynamic network systems for empirical comparison. In contrast to Kao’s (in press) approach, our approach can present a weighted average decomposition of the overall (in)efficiency score into components ones by a set of endogenous weight sets which are the most favorable for the tested multi-period and -division system. This makes sense of the comparison between overall and component (in)efficiency scores. In this context, the overall efficiency score is less or more than all component ones. We applied our models to evaluate the innovation efficiency of OECD (Organization for Economic Co-operation and Development) countries.
    Keywords: Dynamic network DEA; Multi-period and -division systems; Efficiency measurement and decomposition; Innovation efficiency; OECD countries
    JEL: C51 O31 P51
    Date: 2014–02
  17. By: Thomas Paris (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - GROUPE HEC - CNRS : UMR2959); Frédéric Leroy (HEC Paris - Recherche - Hors Laboratoire - GROUPE HEC)
    Abstract: The important role of entrepreneurship in the dynamics of the arts sector and the influence of the leader's personality make succession a key issue in creative industries. What happens to an artistic organization when its founder leaves? How does it evolve? Can it adopt a style of management that is compatible with the founder's absence? This article focuses on the case of Groupe Bernard Loiseau, an iconic French company in the culinary arts whose owner and chef died suddenly. It sheds light on how the question of succession and that of style were addressed in this organization and how they are addressed in artistic organizations in general.
    Keywords: Succession; culinary art;entrepreneurial management;creative industries
    Date: 2014–01–01
  18. By: Rantala, Olavi
    Abstract: The euro area economic  crisis is largely a result of the competitiveness disparity between Germany and the rest of the euro area. The wage moderation in Germany has considerably improved  its competitiveness in relation to the rest of the euro area. Wage policy has been deflationary in Germany in the 2000s in the sense that real wage growth has fallen below labour productivity growth. In the rest of the euro area wage policy has been inflationary since real wage growth has exceeded labour productivity  growth. The input- output price model implies that due to the lower wage inflation the unit cost of production in industry has grown  much less in Germany than in the rest of the euro area. Restoring competitiveness necessitates a clear wage inflation halt in the rest of the euro area in the coming years.
    Keywords: Euro crisis, competitiveness
    JEL: C67 E64 F16
    Date: 2014–04–01
  19. By: Alexander Herzog-Stein; Heike Joebges; Ulrike Stein; Rudolf Zwiener
    Abstract: Based on data from Eurostat the Macroeconomic Policy Institute (IMK) regularly analyses the development of labour costs and unit labour costs in Europe. This report presents labour cost trends in the private sector, and disaggregated for private services and manufacturing industry, for a selection of European countries, the Euro Area and the European Union. Additionally, results of a new study investigating the extent of the labour-cost relief for industrial production in Germany associated with the use of intermediate inputs from the service sector are presented. Furthermore, labour cost trends in public services are presented. Next, the development of unit labour costs in Europe and more specifically the relationship between international price competitiveness, export prices, and unit labour costs are investigated.In 2012 hourly labour cost in the German private sector averaged 31.0 euro. Despite a recent normalisation in labour-cost trends in Germany, and an annual rate of change of 2.8 per cent, well above the European average, the German economy is in eighth place in the ranking of EU countries, one place down from the previous year. Hourly labour costs in private services are one fifth lower than in manufacturing industry; in no other European country does the service sector lag manufacturing to such an extent. Due to the use of cheaper intermediate inputs from the service sector, labour costs in the German industry are reduced by eight to ten per. Overall, the picture of a highly competitive German economy is confirmed.In recent years as a consequence of dramatic unit-labour-cost developments the so called European crisis countries regained their price competitiveness. However, German demand for imports remains relatively modest and hence is still a handicap for the ongoing economic adjustment processes in these countries. Therefore wages in Germany need to increase by more than 3 % per annum for an extended period.
    Date: 2013
  20. By: Fogelberg, Sara (Research Institute of Industrial Economics (IFN)); Lazarczyk, Ewa (Research Institute of Industrial Economics (IFN))
    Abstract: Anecdotal evidence indicates that electricity producers use production failures to disguise strategic reductions of capacity in order to influence prices, but systematic evidence is lacking. We use a quasi-experimental set up and data from the Swedish energy market to examine such behavior. In a market without strategic withholding, the decision of reporting a failure should be independent of the market price. We show that marginal producers in fact base their decision to report a failure in part on prices, which indicates that failures are a result of economic incentives as well as of technical problems.
    Keywords: Electricity markets; Urgent Market Messages (UMMs); Unplanned failures
    JEL: L49 L94
    Date: 2014–03–31

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