nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2015‒05‒02
fourteen papers chosen by
João José de Matos Ferreira
Universidade da Beira Interior

  1. World Corporate Top R&D Investors: Innovation and IP bundles By Hélène Dernis; Mafini Dosso; Fernando Hervas; Valentine Millot; Mariagrazia Squicciarini; Antonio Vezzani
  2. A study of technological capability among product based telecom start-ups in India: Role of knowledge, learning and bricolage By Aeron, Prageet; Jain, Rekha
  3. Is innovation activity persistent among small firms in developing countries? Evidence from Vietnam By Trinh, Long
  4. Imported Intermediates and Firm Performance: An empirical analysis using micro data from Japanese manufacturers (Japanese) By SATO Hitoshi; ZHANG Hongyong; WAKASUGI Ryuhei
  5. Do Manufacturing Firms Benefit from Services FDI? – Evidence from Six New EU Member States By J. Damijan; C. Kostevc; Philipp Marek; M. Rojec
  6. Analysing the role of consumers within Technological Innovation Systems towards sustainability: the case of Alternative Food Networks By Filippo Randelli; Benedetto Rocchi
  7. Does Labour Mobility Foster Innovation? Evidence from Sweden By Braunerhjelm, Pontus; Ding, Ding; Thulin, Per
  8. A Note on Foreign Direct Investment (FDI) and Industrial Competitiveness in Brazil By Regis Bonelli
  9. Intellectual Property Protection in India and Implications for Health Innovation: Emerging Perspectives By Basant, Rakesh; Srinivasan, Shuchi
  10. The Rise of Female Entrepreneurs: New Evidence on Gender Differences in Liquidity Constraints By Sauer, Robert M.; Wilson, Tanya
  11. Innovation, Inequality and a Golden Rule for Growth in an Economy with Cobb-Douglas Function and an R&D Sector By Welfens, Paul J. J.
  12. KIBS for Public Needs By Dmitri Vinogradov; Elena Shadrina; Marina Doroshenko
  13. Firm-level Productivity Spillovers in China's Chemical Industry: A Spatial Hausman-Taylor Approach By Badi H. Baltagi; Peter H. Egger; Michaela Kesina
  14. Why do Cross-border Merger/Acquisition Deals become Delayed, or Unsuccessful? – A Cross-Case Analysis in the Dynamic Industries By Reddy, Kotapati Srinivasa

  1. By: Hélène Dernis (OECD); Mafini Dosso (European Commission JRC-IPTS); Fernando Hervas (European Commission JRC-IPTS); Valentine Millot (OECD); Mariagrazia Squicciarini (OECD); Antonio Vezzani (European Commission JRC-IPTS)
    Abstract: This report presents original data and statistics on the innovation output of world top corporate R&D investors. Essentially descriptive in nature, it presents statistics about the technological profiles of companies, their trademark strategies for new products and services and about the extent to which these two forms of Intellectual Property Rights (IPR) are bundled to protect and appropriate the returns from investment in knowledge-based assets. The report provides interesting insights about the innovation strategies of this sample of world leading corporate R&D investors and opens the door to further research and analysis about companies' global strategies for knowledge development and exploitation. The main target audience of this report is the policy and research communities, as well as analysts with an interest in supporting evidence-based policy making in the area of innovation and industrial policies. This joint EC-OECD report builds on the efforts to collect up-to-date, reliable and comparable company data on the top corporate R&D investors worldwide carried-out by the European Commission since 2004 (the EU Industrial R&D Investment Scoreboard publication) and on the solid knowledge and experience of the OECD in developing and providing robust and state of the art indicators on science, technology and industry (see for example OECD's STI Scoreboard publications).
    Keywords: Patent, Trademark, IP bundle, Scoreboard, Top corporate R&D investors
    Date: 2015–03
  2. By: Aeron, Prageet; Jain, Rekha
    Abstract: Present work explores the development of new products among telecom start-ups in India. This paper weaves together threads of literature including innovation, bricolage, learning and knowledge acquisition and technological capability. We employ a qualitative research method and works through the data collected from seven independent start-ups. Our work proposes a process model for the evolution of technological capability as a result of complex interplay between existing knowledge, bricolage, new knowledge acquisition, and combinative capabilities. Paper further identifies gap focused learning and market focused learning as the two dominant learning mechanisms and also develops a conceptualization for studying architecture among the telecom related firms.
    Keywords: New product development; Bricolage; Learning; Technological capability.
  3. By: Trinh, Long
    Abstract: Using firm-level panel data collected in Vietnam bi-annually from 2005 to 2013, this paper examines whether innovation is persistent among small firms in Vietnam. The empirical results obtained from dynamic random effect probit and dynamic random effect ordered probit show that the innovation activity is persistent among these small firms. Our estimation results also show slightly different roles of human capital of firm’s owner and employees in innovation activities. While the owner’s human capital is associated with creating a new product, employees’ human capital is positively correlated with upgrading the existing products or production procedure. However, we do not find evidence on the roles of unobserved heterogeneity in explaining this persistence. Our results are consistent with results found in the literature for firms in developed economies.
    Keywords: Innovation, Persistence of Innovation, Unobserved heterogeneity, Dynamic Random Effect Probit Model, Dynamic Random Effect Ordered Probit Model, Small and Medium Enterprises, Vietnam
    JEL: C23 C25 L20 O31 O33
    Date: 2015–04–14
  4. By: SATO Hitoshi; ZHANG Hongyong; WAKASUGI Ryuhei
    Abstract: Market openness improves the efficiency of business operations through various channels, and firms' usage of imported intermediate goods is one of such conduits. This paper empirically examines the effects of import of intermediates on Japanese manufacturers' productivity and profitability by using firm-level data from the Basic Survey of Business Structure and Activities. We find that (i) productive firms tend to import intermediates; (ii) however, the dependency on imported intermediates decreases as firm productivity increases; (iii) firms with high exports/output ratios, foreign enterprises' investments, or foreign affiliates tend to import intermediates; (iv) firms with high productivity, high exports/output ratios, or foreign enterprises' investments tend to be more profitable; and (v) arm's-length import of intermediates is positively correlated to firm profitability, whereas import of intermediates from foreign affiliates (i.e., in-house import) is negatively correlated. These findings imply that Japanese firms have room to improve productivity and profitability by increasing imports of intermediate goods and that inducing small and medium-sized enterprises unfamiliar to foreign intermediates to import and use them will be significant through policy support such as information dissemination and human resource training.
    Date: 2015–04
  5. By: J. Damijan; C. Kostevc; Philipp Marek; M. Rojec
    Abstract: This paper focuses on the effect of foreign presence in the services sector on the productivity growth of downstream customers in the manufacturing sector in six EU new member countries in the course of their accession to the European Union. For this purpose, the analysis combines firm-level information, data on economic structures and annual national input-output tables. The findings suggest that services FDI may enhance productivity of manufacturing firms in Central and Eastern European (CEE) countries through vertical forward spillovers, and thereby contribute to their competitiveness. The consideration of firm characteristics shows that the magnitude of spillover effects depends on size, ownership structure, and initial productivity level of downstream firms as well as on the diverging technological intensity across sector on the supply and demand side. The results suggest that services FDI foster productivity of domestic rather than foreign controlled firms in the host economy. For the period between 2003 and 2008, the findings suggest that the increasing share of services provided by foreign affiliates enhanced the productivity growth of domestic firms in manufacturing by 0.16%. Furthermore, the firms’ absorptive capability and the size reduce the spillover effect of services FDI on the productivity of manufacturing firms. A sectoral distinction shows that firms at the end of the value chain experience a larger productivity growth through services FDI, whereas the aggregate positive effect seems to be driven by FDI in energy supply. This does not hold for science-based industries, which are spurred by foreign presence in knowledge-intensive business services.
    Keywords: production, cost, capital, total factor and multifactor productivity, capacity; economic integration
    JEL: D24 F15
    Date: 2015–04
  6. By: Filippo Randelli (Dipartimento di Scienze per l'Economia e l'Impresa); Benedetto Rocchi (Dipartimento di Scienze per l'Economia e l'Impresa)
    Abstract: In recent years, an increasing number of studies have stressed the relevance of the consumer experience in the research of new trajectories towards sustainability. On the early stage of an innovation process the purchase continue to be strategic for the market creation although consumers should not be conceived only as selector of different commercial options. This paper argues for a broader application of Technological Innovation System (TIS) conceptual framework and proposes an analytical approach that explicitly considers consumers and producers as interacting and then coevolving actors. In this view the transition towards sustainability is not exclusively a production based innovation process and also the interactive relation between consumers and producers may foster the transition towards a new socio-technical regime. The conceptual framework will be introduced and exemplified with the case of Alternative Food Networks, a TIS in the food industry, based on a meta-analysis of the literature.
    Keywords: Technological Innovation Systems, Consumers, Alternative Food Networks, Agriculture
    JEL: D12 O31 Q55
    Date: 2015
  7. By: Braunerhjelm, Pontus (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Ding, Ding (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Thulin, Per (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: By utilising a Swedish unique, matched employer-employee dataset that has been pooled with firm-level patent application data, we provide new evidence that knowledge workers’ mobility has a positive and strongly significant impact on firm innovation output, as measured by firm patent applications. The effect is particularly strong for knowledge workers that have previously worked in a patenting firm (the learning-by-hiring effect), but firms losing a knowledge worker are also shown to benefit (the diaspora effect), albeit more weakly. Finally, the effect is more pronounced when the joining worker originates in another region.
    Keywords: Labour mobility; knowledge diffusion; innovation; social networks
    JEL: J24 O31 R23
    Date: 2015–04–24
  8. By: Regis Bonelli
    Abstract: This paper addresses a key issue of the link between increased capital inflows through FDI and industrial competitiveness in Brazil. It provides an analysis of the two way relationship which can exist in theory between FDI and competitiveness, as well as some empirical evidence from Brazil in the 1990s. Inflows of FDI to Brazil have increased significantly during the 1990s, and although manufacturing has been losing out in terms of its share of FDI, the stock of foreign capital in the manufacturing sector more than doubled (in current US dollars) between 1990 and 1996. At the same time, rapid growth of manufacturing productivity has been amply documented, in the same period of time. There seems, therefore, to exist a prima facie case for supposing that foreign investment has contributed to increased productivity and competitiveness in Brazil. When looking at disaggregated data within manufacturing which links the growth of competitiveness (whether measured by unit labor costs or export performance) and FDI, however, there does not appear to be a clear cut relationship with either the growth of FDI or the share of foreign capital within different industries. The link applies to some industries, but not to others. In other words: if one interpreted the causation as running in the opposite direction, this evidence would suggest that there is no general tendency for FDI to be attracted primarily to industries where competitiveness is improving most rapidly. This has the implication that rapid productivity growth might be the result of factors other than FDI — like trade liberalization, for instance. O texto aborda um tema central da relação entre o aumento dos influxos de capital através do IDE e a competitividade industrial no Brasil. Nesse sentido, confere uma análise da inter-relação existente na teoria entre IDE e competitividade, bem como evidência empírica para o caso brasileiro nos anos 90. Os fluxos de capital estrangeiro para o Brasil aumentaram expressivamente nos anos 90, especialmente após 1993. Embora a indústria de transformação tenha perdido participação relativa no estoque total do IDE nesses anos, o estoque desse capital estrangeiro na indústria mais do que dobrou de tamanho, quando medido em dólares correntes. Ao mesmo tempo, esse período caracterizou-se por rápido incremento da produtividade industrial, amplamente documentado em diversos estudos. Parece existir, portanto, base para argumentar que o IDE contribuiu para os ganhos de produtividade e de competitividade no Brasil nos anos 90. Ao examinar os dados desagregados, porém, o quadro torna-se menos nítido. A relação entre o crescimento da competitividade (medida pelos custos unitários da mão-de-obra ou pelo desempenho exportador) e do IDE parece existir apenas para um subgrupo de indústrias. Se a direção de causalidade é interpretada no sentido oposto, a evidência sugere que não há tendência generalizada para que o investimento estrangeiro seja atraído sobretudo para as indústrias cuja competitividade está em processo de melhora mais flagrante. Isso implica que os ganhos de produtividade e de competitividade podem estar sendo o resultado de outros fatores que não unicamente o IDE. Entre eles, destaca-se a liberalização comercial.
    Date: 2015–01
  9. By: Basant, Rakesh; Srinivasan, Shuchi
    Abstract: With the advent of TRIPS, the IP regimes have changed in most WTO member countries. India also came up with its own version of TRIPS compatible IP regime which has been hailed by some as a ‘model’ regime for developing countries, while others are not convinced that it will provide the right incentives for medical innovation and enhance access to healthcare. This paper undertakes a review of available studies to provide a perspective on the role of IP protection in developing healthcare innovations. Broadly, the relevant literature in the context of India has followed two strands: some studies focus on the implications of the new IP regime on access to healthcare, while others explore the implications of IP on innovation in general and medical innovation, in particular. Interestingly, the two strands do not converge. Moreover, many studies view IP driven innovations as a constraint on access, as these are expected to be monopolized by the IP owner. We argue that there is merit in viewing healthcare access and innovation as complementary processes. This is particularly the case when one defines ‘health innovation’ more broadly to include:(a) Product innovations in drugs; (b) Process innovations in pharmaceutical industry; (c) New drug delivery mechanisms , bio-enhancers and dosage forms; (d) Product innovations in medical equipment and devices; (e) Innovations in the delivery of health services; and (f) Policy innovations to enhance access to healthcare.
  10. By: Sauer, Robert M. (Royal Holloway, University of London); Wilson, Tanya (Royal Holloway, University of London)
    Abstract: Small business activity and female entrepreneurship have become increasingly important features of the UK economy since the start of the Great Recession. In this paper, we re-examine the impact of liquidity constraints on new business formation in an instrumental variables framework, using a previously unexplored data set from the UK. The new results indicate that it is primarily single women that drive the well-established empirical relationship between personal wealth and business start-ups. Therefore, public policies specifically targeted at relieving the liquidity constraints of women could help further accelerate the rise of female entrepreneurship.
    Keywords: entrepreneurship, liquidity constraints
    JEL: J23 L26 M13
    Date: 2015–04
  11. By: Welfens, Paul J. J. (University of Wuppertal)
    Abstract: The innovative approach presented introduces a modified neoclassical growth model which includes a new bias of technological progress in a quasi-endogenous growth model in which part of labor is used in the research & development sector. The combination of a macroeconomic production function and a new progress function, plus the assumption that the output elasticity of capital is positively influenced by the size of the R&D sector, sheds new light on innovation and growth as well as income inequality: Thus there is a new approach for explaining Piketty's historical findings of a medium term rise of the capital income share in industrialized countries – both in the earlier and later part of the 19th century and in 1990-2010. A rising share of capital income can be explained within this approach by the increase in the output elasticity of capital, which has been developed in a new way, namely in the context of R&D. In the approach presented herein, the golden rule issues are also highlighted and it is shown that choosing the right size of the R&D sector will bring about maximum sustainable per capita consumption. While the basic new model is presented for the case of a closed economy, one could easily accommodate both trade and foreign direct investment and thereby get a better understanding of complex international investment, trade and FDI dynamics – including with respect to the envisaged Transatlantic Trade and Investment Partnership.
    Keywords: innovation, growth, inequality, golden rule, Piketty
    JEL: O11 O32 O40 D63
    Date: 2015–04
  12. By: Dmitri Vinogradov (University of Essex); Elena Shadrina (National Research University Higher School of Economics); Marina Doroshenko (National Research University Higher School of Economics)
    Abstract: Knowledge intensive business services (KIBS) constitute a rapidly developing sector of modern economies. Numerous studies suggest that KIBS facilitate knowledge exchange between providers and consumers, and improve the innovativeness of the latter. However, because KIBS are strongly reliant on service co-production by the customer and provider working in partnership, intensive cooperation between the two parties is essential. Public procurement may provide supporting mechanisms for this sector, both directly (by purchasing services) and indirectly (by demonstrating the benefits of KIBS consumption, which may stimulate the demand for them from the private sector). Yet legislative constraints on the types of admissible public procurement mechanisms may have an undesirable effect on the provider selection, making it possible that services are purchased not from the most efficient or the most suitable provider. Along with that, public bodies are known to be managerially less efficient than private firms, partly due to a distorted system of incentives. These key differences between the public and private sectors motivated us to study the efficiency of public procurement of KIBS. In particular, we find that consumers of KIBS in the public sector report lower satisfaction from KIBS and admit a lower level of co-production than the private sector. Our main recommendations refer to the optimal choice of procurement mechanisms and the system of incentives in public institutions
    Keywords: knowledge-intensive business services, public procurement
    JEL: H57 L84
    Date: 2015
  13. By: Badi H. Baltagi (Center for Policy Research, Maxwell School, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244); Peter H. Egger (ETH Zurich); Michaela Kesina (ETH Zurich)
    Abstract: This paper assesses the role of intra-sectoral spillovers in total factor productivity across Chinese producers in the chemical industry. We use a rich panel data-set of 12,552 firms observed over the period 2004-2006 and model output by the firm as a function of skilled and unskilled labor, capital, materials, and total factor productivity, which is broadly defined. The latter is a composite of observable factors such as export market participation, foreign as well as public ownership, the extent of accumulated intangible assets, and unobservable total factor productivity. Despite the richness of our data-set, it suffers from the lack of time variation in the number of skilled workers as well as in the variable indicating public ownership. We introduce spatial spillovers in total factor productivity through contextual effects of observable variables as well as spatial dependence of the disturbances. We extend the Hausman and Taylor (1981) estimator to account for spatial correlation in the error term. This approach permits estimating the effect of time-invariant variables which are wiped out by the fixed effects estimator. While the original Hausman and Taylor (1981) estimator assumes homoskedastic error components, we provide spatial variants that allow for both homoskedasticity and heteroskedasticity. Monte Carlo results show, that our estimation procedure performs well in small samples. We find evidence of positive spillovers across chemical manufacturers and a large and significant detrimental effect of public ownership on total factor productivity.
    Keywords: Technology Spillovers, Spatial econometrics, Panel data econometrics, Firm-level productivity, Chinese firms
    JEL: C23 C31 D24 L65
    Date: 2014–12
  14. By: Reddy, Kotapati Srinivasa
    Abstract: The purpose of this paper is to analyze three litigated cross-border inbound acquisitions that associated with Asian emerging market-India, namely Vodafone-Hutchison and Bharti Airtel-MTN deals in the telecommunications industry, and Vedanta-Cairn India deal with oil and gas exploration industry. To do so, we adopt a legitimate method in qualitative research, that is, case study method and thereby perform a unit of analysis and cross-case analysis. We suggest that government officials’ erratic nature and ruling political party influence were more in foreign inward deals that characterize higher bid value, listed target company, cash payment, and stronger government control in the industry. Importantly, the liability of foreignness and liability of localness was found to be severe in Indian-hosted deals that describe higher valuation, cash payment and dynamic industry. We eventually propose implications of mergers and acquisitions for extractive industries thus to enhance productivity and improve welfare measures during post-integration phase.
    Keywords: Cross-border mergers and acquisitions; Foreign direct investment; Oil and gas exploration industry; Telecommunications industry; Institutional theory; legal and regulatory framework; Internationalization
    JEL: F2 F23 F4 G3 G34 L2 M1 M16
    Date: 2015

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