nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2014‒07‒21
23 papers chosen by
João José de Matos Ferreira
Universidade da Beira Interior

  1. Innovation in the Service Sector and the Role of Patents and Trade Secrets By Masayuki Morikawa
  2. Dilemma in Individual Collaboration for Invention: Should We be Similar or Diverse in Knowledge? By Huo, Dong; Motohashi, Kazuyuki
  3. Multinational’s global open innovation activities in emerging markets: A case of Japanese firms’collaborations with national research institutes in Thailand By Motohashi, Kazuyuki
  4. The Role of Business Knowledge in the Internationalisation Process of Hungarian Corporations By Bartha, Zoltán; S. Gubik, Andrea
  5. India as a destination of multinational’s R&D: Growingimportance and management strategy of local R&D centers By Motohashi, Kazuyuki
  6. Public-Private Collaboration for Productive Development Policies in Colombia By Marcela Eslava; Marcela Meléndez; Guillermo Perry
  7. The effect of the financial crisis on TFP growth: a general equilibrium approach By Millard, Stephen; Nicolae, Anamaria
  8. Networks and Manufacturing Firms in Africa: Results from a Randomized Field Experiment By Marcel Fafchamps; Simon Quinn
  9. Railroad expansion and entrepreneurship: Evidence from Meiji Japan By John Tang
  11. On the Mechanism of International Technology Diffusion for Energy Productivity Growth By Jin Wei; ZhongXiang Zhang
  12. Constraints, Determinants of SME Innovation, and the Role of Government Support By OUM Sothea; Narjoko Dionisius; Charles HARVIE
  13. Does Export Yield Productivity and Markup Premiums? Evidence from the Japanese manufacturing industry By KATO Atsuyuki
  14. Innovation Tournaments with Multiple Contributors By Laurence Ales; Soo-Haeng Cho; Ersin Korpeoglu
  15. Competition and Screening with Skilled and Motivated Workers By F. Barigozzi; N. Burani
  16. Growth Strategy with Social Capital and Physical Capital- Theory and Evidence: the Case of Vietnam By Cuong Le Van; Anh Ngoc Nguyen; Ngoc-Minh Nguyen
  17. When Category-based Indices Encounter Non-independent Categories: Solving the Taxonomy Issue in Resource-based Empirical Studies By Huo, Dong; Motohashi, Kazuyuki
  18. Regional and industrial mobility of workers leaving mature industries. A study of individuals who exit the Swedish shipbuilding industry 1970-2000 By Rikard Eriksson; Martin Henning; Anne Otto
  19. Relaxing Credit Constraints in Emerging Economies: The Impact of Public Loans on the Performance of Brazilian Manufacturers By Gianmarco I. P. Ottaviano; Filipe Lage de Sousa
  20. Clustering Value-Added Trade: Structural and Policy Dimensions By Escaith, Hubert; Gaudin, Hadrien
  21. The Effect of Federal Government Size on Private Economic Performance in Canada: 1870–2011 By J. Stephen Ferris; Marcel-Cristian Voia
  22. Going beyond tradition: Carbon policy in a high-growth economy: The case of China By Lucas Bretschger; Lin Zhang
  23. What Types of Companies Have Female and Foreign Directors? By Masayuki Morikawa

  1. By: Masayuki Morikawa
    Abstract: This paper, using Japanese firm-level data, presents findings about innovative activities in the service sector and the role of patents and trade secrets on innovation. According to the analysis, first, service firms have fewer product innovations than do manufacturing firms, but the productivity of innovative service firms is very high. Second, service firms have a low propensity for holding patents, but their holding of trade secrets is comparable to that of the manufacturing firms. Third, patents and trade secrets have positive relationships with product innovations, and the effects are quantitatively similar in magnitude in both the manufacturing and the service sectors. On the other hand, a positive relationship between trade secrets and process innovations is found only in the manufacturing sector. These results suggest a pivotal role of the law protecting trade secrets on innovation and productivity growth in the service sector.
    JEL: O31 O34 L80
    Date: 2014
  2. By: Huo, Dong; Motohashi, Kazuyuki
    Abstract: This study integrates theories relevant to collaborative knowledge creation and provides evidence to discover effects of knowledge diversity on collaborative knowledge creation. The analysis uses a sample comprising 38,500 granted U.S. utility patents involving two collaborating inventors, from application year 1991 to 2005. Interindividual knowledge diversity is thought to affect collaborative knowledge creation in three dimensions: increasing probability of excellent ideas, increasing probability of disagreements, and lowering knowledge assimilation. Furthermore, these impacts are conditional on two proposed moderators: technology scope and affiliation scope. Empirical evidence supports the positive effect of knowledge diversity weakening as the scope of technology broadens. The effect also differs depending upon whether the collaboration occurs between organizations, within one organization, or outside any organization.
    Keywords: invention, collaboration, knowledge diversity, knowledge quality, technology scope, affiliation scope
    JEL: O31 O32
    Date: 2014–02
  3. By: Motohashi, Kazuyuki
    Abstract: This paper analyzes the management of multinational’s R&D in emerging economies, taking the case of Japanese firms’ R&D collaboration with NTSDA, Thai national research institute. A detail interview survey for two cases, Polyplastics, an engineering plastics manufacturer and Shiseido, a cosmetic company, both working together with NSTDA for R&D, reveals that there exist significant variations of motivations, scopes and outcomes of such activities. Home base exploiting type activities (Polyplastics) are easier to manage as a natural extension to home country activities, but it is important to motivate its partner to collaborate, since only exploiting local resources may not be sustainable for long time. While, home base augmenting type activities (Shiseido), a local activity has to be well coordinated in global operation at headquarter. In addition, it is difficult to see a short term benefit from such explorative activities, so that top management support becomes important to sustain such activities for certain amount of time.
    Keywords: : Multinational R&D, Thailand, open innovation, national innovation system
    JEL: F23 O32
    Date: 2014–01
  4. By: Bartha, Zoltán; S. Gubik, Andrea
    Abstract: The aim of this paper is to identify the knowledge elements that are crucial in the internationalisation process of Hungarian firms. It uses a two-dimensional model of business knowledge, which separates business knowledge along two dimensions: the tacit or explicit nature; and the codified or uncodified one. This model tells us that tacit and codified knowledge is the most difficult to transfer, while the explicit-uncodified part is the easiest. The five types of business knowledge were measured with a questionnaire. It is non-representative, filled in by 104 Hungarian firms among which the larger and more internationalised ones are overrepresented. Based on this non-representative sample we have found that the organisational beliefs and habits, and the competence of the employees are the two business knowledge elements that are most closely associated with the internationalisation of the firms. This makes it especially difficult to promote internationalisation through the transfer of knowledge, because these key knowledge elements are the stickiest, the hardest to transfer.
    Keywords: internationalisation, business knowledge, Hungary
    JEL: L21 M16
    Date: 2014–05–08
  5. By: Motohashi, Kazuyuki
    Abstract: While R&D activities of multinational firms in India focus on offshore development, some companies are developing cutting-edge technologies. In addition, product development for the local market has increased with the expansion of the Indian market. India’s importance as an R&D center is predicted to increase, and multinationals in advanced countries must improve the competency creation mission of R&D entities in India. To do so, attracting exceptional talent and running highly autonomous organizations with reduced control from headquarters are critical. However, within a corporate-wide innovation strategy, fostering unity through social controls such as international personnel rotations and training, close communication, and permeation of the corporate culture are essential to having an effective local entity.
    Keywords: multinational R&D; India; division of innovative labor
    JEL: F23 O32
    Date: 2014–02
  6. By: Marcela Eslava; Marcela Meléndez; Guillermo Perry
    Abstract: This study analyzes the institutions that shape public private collaboration for the design and implementation of productive development policies in Colombia. Colombia is an interesting case because productive development policies are increasingly designed, in principle, in the context of formal institutions and venues, with public-private collaboration being a pillar of that formal design. We focus on two specific cases: (1) the Private Council for Competitiveness and its role in the National System for Competitiveness; (2) the Colombian government’s Productive Transformation Program. These case studies suggest that public private collaboration has contributed to the continuity of productive development policies across governments. Collaboration has also been behind particular achievements, such as helping overcome specific government failures, and helping develop private organizational capabilities. A central message of this document is thus that formal institutions to foster public private collaboration, such as the ones adopted in Colombia over the last few decades, have an important potential for advancing adequate productive development policies. However, public private collaboration for productive policies has by no means brought a development “miracle”.
    Keywords: Industrial Policies, Public-Private Collaboration, Competitiveness
    JEL: D02 D24 D78 L52 L78
    Date: 2013–09–06
  7. By: Millard, Stephen (Bank of England); Nicolae, Anamaria (Durham University Business School)
    Abstract: In this paper, we use a simple endogenous growth model to show how a financial crisis might have a permanent effect on the level of total factor productivity (TFP). In the model, a financial shock leads to a rise in the spread between the rate of interest paid by firms and the risk-free rate. Since firms have to borrow to finance their research and development (R&D) spending, such a rise in the spread leads to a fall in R&D spending, which affects innovation and, hence, reduces TFP growth. In turn, this leads to permanent falls in the levels of output and labour productivity.
    Keywords: Endogenous growth; Research and development; Innovation
    JEL: O40
    Date: 2014–06–27
  8. By: Marcel Fafchamps; Simon Quinn
    Abstract: We run a novel field experiment to link managers of African manufacturing firms. The experiment features exogenous link formation, exogenous seeding of information and exogenous assignment to treatment and placebo. We study the impact of the experiment on firm business practices outside of the lab. We find that the experiment successfully created new variation in social networks. We find some limited evidence of diffusion of management practices, particularly in terms of firm formalisation and innovation. Such diffusion appears to be a combination of diffusion of innovation and simple imitation
    JEL: D22 L26 O33
    Date: 2014
  9. By: John Tang
    Abstract: Railroads in Meiji Japan are credited with facilitating factor mobility as well as access to human and financial capital, but the impact on firms is unclear. Using a newly developed firm-level dataset and a difference-in-differences model that exploits the temporal and spatial variation of railroad expansion, I assess the relationship between railways and firm activity across Japan. Results indicate that railroad expansion corresponded with increased firm activity, particularly in manufacturing, although this effect is mitigated in less populous regions. These findings are consistent with industrial agglomeration in areas with larger markets and earlier development among both new and existing establishments.
    JEL: L26 N75 O53
    Date: 2013
  10. By: Sunil Kanwar (Department of Economics, Delhi School of Economics, Delhi, India)
    Abstract: We revisit the relationship between market value and innovation in the context of manufacturing firms in India, using data for 2001-2010. In a milieu where most firms do not patent, the concern was whether ‘small’ innovations would be valued by the stock market. Interestingly, we find that the market places greater value on the relatively innovative firms, though the magnitude of this premium is much smaller than that for developed economies. Further, the market value-innovativeness relationship varies substantially across industry groups, surprisingly having the smallest magnitude for the science-based industries. This variation could be explained by the profit expectation and profit risk associated with the different industries.
    Date: 2014–05
  11. By: Jin Wei (Zhejiang University); ZhongXiang Zhang (School of Economics, Fudan University)
    Abstract: International diffusion of energy-saving technologies has received considerable attention in recent energy and environmental economics studies. As a helpful complement to the existing large-scale "black box" modelling works for energy/climate policy analysis, this paper contributes to a transparent analytical model for an economically intuitive exposition of the fundamental mechanism of international technology diffusion for energy productivity growth. We first develop a Solow-type exogenous model where technical change is specified as improvements in energy use efficiency (efficiency-improving vertical innovation). This model is then extended to a Romer-type endogenous model where technical change is described as an expansion of energy technology variety induced by R&D (variety-expanding horizontal innovation). We show that there is a cross-country convergence in the growth rate of energy productivity in a balanced growth path equilibrium, but the absolute levels of energy productivity diverge due to cross-country differences in indigenous innovation efficiency and knowledge absorptive capacities. An economy with a strong capacity of absorbing foreign knowledge diffusion and undertaking indigenous innovation tends to have a higher level of energy productivity.
    Keywords: technological innovation, energy technology diffusion, Solow growth model, endogenous growth model
    JEL: Q55 Q58 Q43 Q48 O13 O31 O33 O44 F18
    Date: 2014–06
  12. By: OUM Sothea (Economic Research Institute for ASEAN and East Asia (ERIA)); Narjoko Dionisius (Economic Research Institute for ASEAN and East Asia (ERIA)); Charles HARVIE (Centre for Small Business and Regional Research School of Economics, University of Wollongong, Australia)
    Abstract: This paper provides an empirical analysis of potential constraints to SMEs upgrading their capability to innovate, and assesses the effectiveness of government support in overcoming these constraints. The justification for government support is that market failures can hinder SMEs’ access to information, finance, technology, and human resources. This paper focuses on the impact of the perceived effectiveness of government support through business development services in terms of providing: (i) training; (ii) counselling and advice; (iii) technology development and transfer; (iv) information; (v) business linkages; (vi) financing; and (vii) a conducive business environment. The effectiveness of this support is evaluated against the ability of SMEs to innovate.
    Keywords: : SMEs, constraints, innovation, government support, and developing Asia.
    JEL: L20 L25
    Date: 2014–10
  13. By: KATO Atsuyuki
    Abstract: This paper examines the relationship between productivity, markups, and development of foreign markets using a rich firm-level dataset of the Japanese manufacturing industry during the period 2000-2010. Using estimates of firm-specific productivity and markups, we investigate if the development of foreign markets through exports has a premium for their market performance. Our study confirmed that exports have significant productivity and markup premiums. In addition, export premiums vary across the destination markets. Exports to Asia show a significant productivity premium while other markets do not. For markups, exports to Asia and North America have a significant premium. These findings imply that both productivity and markups should be considered in assessing the development of foreign markets.
    Date: 2014–07
  14. By: Laurence Ales; Soo-Haeng Cho; Ersin Korpeoglu
  15. By: F. Barigozzi; N. Burani
    Abstract: We study optimal contracts offered by two firms competing for the exclusive services of one worker, who is privately informed about her ability and her motivation. Firms differ both in their production technology and in the mission they pursue and a motivated worker is keen to be hired by the mission-oriented firm. We find that the matching of worker types to firms is always Pareto-efficient. When the difference in firms’ technology is high, only the most efficient firm is active. When the difference is not very high, then agent types sort themselves by motivation: the mission-oriented firm hires motivated types and the profit-oriented firm employs non-motivated ones, independently of ability. Effort provision is higher when the worker is hired by the mission-oriented firm, but a compensating wage differential might exist: the motivated worker is paid less by the mission-oriented firm. Such an earnings penalty is driven entirely by motivation and is increasing in ability.
    JEL: D82 D86 J31 M55
    Date: 2014–06
  16. By: Cuong Le Van (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, VCREME - VanXuan Center of Research in Economics, Management and Environment - VanXuan Center of Research in Economics, Management and Environment); Anh Ngoc Nguyen (DEPOCEN - Development and Policies Research Center); Ngoc-Minh Nguyen (DEPOCEN - Development and Policies Research Center)
    Abstract: We study the impact of social capital in both simple theoretical and empirical model with the main assumption is the price of physical capital is a decreasing function of social capital. In our theoretical model, there exists a critical value such that firm will not invest in social capital if its saving is lower than the critical value and otherwise. Moreover, the output depends positively and non-linearly on the social capital. Our empirical model that captures the impact of physical capital, human capital, and social capital using the database from Survey of Small and Medium Scale Manufacturing Enterprises (SMEs) in Vietnam 2011, confirms the conclusions of the theoretical model.
    Keywords: Social capital; optimal growth
    Date: 2014–02
  17. By: Huo, Dong; Motohashi, Kazuyuki
    Abstract: Category-based measures such as the cosine index, Herfindahl index, entropy index, Euclidean distance, and Pearson’s correlation coefficient are widely applied in resource-based studies. However, when adopting these indices in empirical studies with respect to the categories of industry, technology, or knowledge, the inherent relatedness between the categories gives rise to a taxonomy issue, as the categories are not naturally inter-independent (as they are supposed to be in the application of the original indices) owing to inaccuracies in classification or categorization. Therefore, category-based indices may fail to produce a valid measurement, and this unmeasured relatedness can result in endogeneity in empirical analyses. To solve this issue, this study proposes new indices that can harness the relatedness information of categories. An example of mathematical constructive proof for the cosine index is given, and the development process provides a rigorous solution framework. In addition, this study thoroughly examines validity such as content validity, convergent validity, discriminant validity, internal consistency, and criterion-related validity. The results reveal that this approach performs as expected in empirical analyses. Finally, the mathematical interpretation and generality of this approach for other category-based indices such as the Herfindahl index, entropy index, Euclidean distance, and Pearson’s correlation coefficient are discussed. Interestingly, other proposed measures from existing literature, such as the concentric index, can also be incorporated into this solution framework.
    Keywords: measurement, taxonomy, category, diversity, relatedness, validity, metric
    JEL: O31 O32
    Date: 2013–11
  18. By: Rikard Eriksson; Martin Henning; Anne Otto
    Abstract: This paper follows the industry employment histories of all individuals at some point affiliated with the dismantling Swedish shipbuilding industry 1970-2000. We analyse the situation of the individual workers leaving shipbuilding through investigating to what extent they were employed at all, tended to move to related sectors inside or outside the region, and whether such moves were beneficial for the individuals. By cross-using German and Swedish data, our findings indicate a notable impact of regional industrial structure on the movement and success of individuals, and that individuals moving from shipbuilding to related sectors benefit more from moving than others.
    Date: 2014–07
  19. By: Gianmarco I. P. Ottaviano (London School of Economics and University of Bologna, CEP and LdA); Filipe Lage de Sousa (World Bank and Universidade Federal Fluminense)
    Abstract: Especially in developing countries credit constraints are often perceived as one of the most important market frictions constraining firm innovation and growth. Huge amounts of public money are being devoted to the removal of such constraints but their effectiveness is still subject to an intense policy debate. This paper contributes to this debate by analysing the effects of the Brazilian Development Bank (BNDES) loans. It finds that, before receiving BNDES support, granted firms are indeed more credit constrained than comparable non-granted firms. It also finds that BNDES support allows granted firms to achieve the same level of performance as similar non-granted firms that are not credit constrained. However, it does not allow granted firms to outperform similar non-granted ones.
    Keywords: heterogeneous firms, productivity, public policy analysis, credit constraints
    JEL: O38 H00
    Date: 2014–06–26
  20. By: Escaith, Hubert; Gaudin, Hadrien
    Abstract: The paper uses exploratory data analysis to propose a typology of exporters according to the value-added content of their exports as well as other economic and trade policy characteristics. In the process, it defines clusters of countries according to the multi-dimensional criteria defined by value-added, economic and trade policy indicators. Results show that natural resources and services orientation are among the most determinant variables. The level of economic development remains a crucial determinant of the Trade in Value-Added profile, more than the sheer size of the economy. Pro-active value-chain up-grading strategies foster a higher foreign content in exports, compensating the lower domestic margin by higher volumes. Protectionist policies are not particularly successful in increasing higher share of domestic content, except in services exports; but in this case, volumes remain marginal.
    Keywords: Trade in value-added; global value chains; trade policy; input-output analysis; effective protection rate; exploratory data analysis
    JEL: D57 F13 F14 F15 F23 O19 O24
    Date: 2014–07–10
  21. By: J. Stephen Ferris (Department of Economics, Carleton University); Marcel-Cristian Voia (Department of Economics, Carleton University)
    Abstract: This paper re-examines the relation between private economic performance and federal government size in Canada over the long 1870-2011 time period. The particular focus is on whether the effect of government size on private output has an inverted U shape with a tipping point. Its innovation is to use nonparametric techniques to assess whether the quadratic form most often employed is the appropriate parametric form for undertaking significance tests and whether that relationship is stable across the period. The empirical work does find a nonlinear relationship with a tipping point but finds the quadratic form applicable only to the early 1870-1936 time period. The latter period is more consistent with a linear form embodying a constant rather than increasing output cost to further increases in government size. The latter implies that policy based on the hypothesis that federal government size is currently excessive is premature.
    Keywords: Government Size, nonlinear time series, tipping point, endogeneity correction.
    JEL: H21 H23 C22 C26
    Date: 2014–03–24
  22. By: Lucas Bretschger (ETH Zurich, Switzerland); Lin Zhang (ETH Zurich, Switzerland)
    Abstract: There is widespread concern that an international agreement on stringent climate policies will not be reached because it would imply too high costs for fast growing economies like China. To quantify these costs we develop a general equilibrium model with fully endogenous growth. The framework includes disaggregated industrial and energy sectors, endogenous innovation, and sector-specific investments. We find that the implementation of Chinese government carbon policies until 2020 causes a welfare reduction of 0.3 percent. For the long run up to 2050 we show that welfare costs of internationally coordinated emission reduction targets lie between 3 and 8 percent. Assuming faster energy technology development, stronger induced innovation, and rising energy prices in the reference case reduces welfare losses significantly. We argue that increased urbanization raises the costs of carbon policies due to altered consumption patterns.
    Keywords: Carbon policy; China; Endogenous growth; Induced innova- tion; Urbanization.
    JEL: Q54 O41 O53 C68
    Date: 2014–07
  23. By: Masayuki Morikawa
    Abstract: This paper analyzes the determinants of the presence and the number of female and foreign directors among Japanese companies. First, listed and long-established companies, subsidiaries, and unionized companies tend not to have female directors. On the other hand, owner-managed companies are likely to have female directors and chief executive officers (CEOs). Company size and foreign shareholdings do not have significant relationships with the presence of female directors. Second, while some past studies in the United States and European countries find evidence of “tokenism,” whereby female-led companies do not appoint additional females as directors, we do not find such evidence among Japanese companies. Third, while foreign-owned companies and companies engaged in overseas activities tend to have foreign directors, other company characteristics, such as size and listing status, do not have systematic relationships with the presence of foreign directors.
    JEL: G32 J51 J71 M12 M51
    Date: 2014

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