nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2015‒07‒04
sixteen papers chosen by
João José de Matos Ferreira
Universidade da Beira Interior

  1. Local innovation and global value chains in developing countries By De Marchi V.; Giuliani E.; Rabellotti R.
  2. The impact of R&D subsidy on innovation: a study of New Zealand firms By Adam Jaffe; Trinh Le
  3. Internationalization Of Regional Clusters: Theoretical And Empirical Issues By Ekaterina Islankina
  4. Entrepreneurial Regions: Do Macro-psychological Cultural Characteristics of Regions help solve the “Knowledge Paradox” of Economics? By Obschonka, Martin; Stuetzer, Michael; Gosling, Samuel D.; Rentfrow, Peter J.; Lamb, Michael E.; Potter, Jeff; Audretsch, David B.
  6. Best Practices as to How to Support Investment in Intangible Assets By Alexander Ebner; Fabian Bocek
  7. The role of strategic alliances in creating technology legitimacy: a study on the emerging field of bio-plastics By Maikel Kishna; Eva Niesten; Simona Negro; Marko Hekkert
  8. Work Force Composition and Innovation: How Diversity in Employees’ Ethnical and Disciplinary Backgrounds Facilitates Knowledge Re-combination By Mohammadi, Ali; Broström, Anders; Franzoni, Chiara
  9. The Role of Investments in Export Growth: Evidence of a Middle-Income Country. By Adriana Peluffo
  10. Competitiveness of the European Economy By Michael Landesmann; Sandra M. Leitner; Robert Stehrer
  11. Competition, Selectivity and Innovation in the Higher Educational Market By Lynne Pepall; Dan Richards
  12. Product Differentiation, Export Participation and Productivity Growth: Evidence from Chinese Manufacturing Firms By Hu, Cui; Tan, Yong
  14. Investing in the cheapest form of energy: efficiency practices of SMEs in rural Ghana. By Ackah, Ishmael
  15. Institutional entrepreneurship in the emerging renewable energy field; incumbents versus new entrants By Smink; Joost Koch; Eva Niesten; Simona Negro; Marko Hekkert
  16. The Accumulation of Human and Nonhuman Capital, Revisited By Barbara M. Fraumeni; Michael S. Christian; Jon D. Samuels

  1. By: De Marchi V.; Giuliani E.; Rabellotti R. (UNU-MERIT)
    Abstract: The GVC approach has stressed that inter-firm linkages within GVCs can play a crucial role in transferring technological knowledge and promoting innovation. However, the exact nature of these GVC inter-firms relationships, and their impact on the learning and innovative processes of firms involved in such GVCs in developing countries is still controversial and rather understudied. In this paper we argue that to investigate whether and how firms involved in GVCs as well as industrial clusters, regions and countries innovate, scholars should not focus entirely on GVC characteristics and the role of lead firms, but they also should take into account domestic technological capabilities at the firm, industrial cluster/regional and local innovation system-levels. In this study we undertake a systematic review of the literature on GVCs in developing countries to investigate if and how innovation has been undertaken at the local level. With cluster analysis, we have identified three types of GVCs, defined as a GVC-led Innovators, consisting of innovative local firms, which intensively use knowledge sources from within the GVC; b Independent Innovators also consisting of innovative firms, but whose learning sources mainly come from outside the GVC; c Weak Innovators, including a large group of scarcely innovative firms, drawing selectively on some of the knowledge sources available within the GVC but poorly using other forms of learning.
    Keywords: Industrialization; Manufacturing and Service Industries; Choice of Technology; International Linkages to Development; Role of International Organizations; Technological Change: Choices and Consequences; Diffusion Processes; Technological Change: Government Policy;
    JEL: O14 O19 O33 O38
    Date: 2015
  2. By: Adam Jaffe (Motu Economic and Public Policy Research); Trinh Le (Motu Economic and Public Policy Research)
    Abstract: This paper examines the impact of government assistance through R&D grants on innovation output for firms in New Zealand. Using a large database that links administrative and tax data with survey data, we are able to control for large number of firm characteristics and thus minimise selection bias. We find that receipt of an R&D grant significantly increases the probability that a firm in the manufacturing and service sectors applies for a patent during 2005–2009, but no positive impact is found on the probability of applying for a trademark. Using only firms that participated in the Business Operation Survey, we find that receiving a grant almost doubles the probability that a firm introduces new goods and services to the world while its effects on process innovation and any product innovation are relatively much weaker. Moreover, there is little evidence that grant receipt has differential effects between small to medium (<50 employees) and larger firms. These findings are broadly in line with recent international evidence from Japan, Canada and Italy which found positive impacts of public R&D subsidy on patenting activity and the introduction of new products.
    Keywords: Industrial policy, innovation, R&D
    JEL: O31 O34 O38
    Date: 2015–05
  3. By: Ekaterina Islankina (National Research University Higher School of Economics)
    Abstract: Today regions are becoming independent actors able to compete globally as globalization of competition is consistent with the localization of competitive advantage. In many ways regional competitiveness is based on the clustering concept. Changes in the global economic environment are making cluster linkages more important, too. Clusters are not capable of long-term excellence and development unless their members are acting in global markets and involved in international knowledge transfer. Thus, internationalization of clusters has turned out to be a new subject of innovation policy and regional development agenda, however lacking strong scientific background in Russia. The paper aims at discovering theoretical and analytical basis for clustering concept and internationalization, the reviewing of best internationalization practices from the clusters worldwide as well as exploring empirical issues of regional clusters` internationalization in Russia and their comparison with the EU outputs. A special emphasis is put on the articulation of practical guide for cluster management organizations responsible for the development of global linkages.
    Keywords: regional development, innovative clusters, internationalization, Russia, the EU
    JEL: F20 O O19 O57 R58
    Date: 2015
  4. By: Obschonka, Martin; Stuetzer, Michael; Gosling, Samuel D.; Rentfrow, Peter J.; Lamb, Michael E.; Potter, Jeff; Audretsch, David B.
    Abstract: In recent years, modern economies have shifted away from being based on physical capital and towards being based on new knowledge (e.g., new ideas and inventions). Consequently, contemporary economic theorizing and key public policies have been based on the assumption that resources for generating knowledge (e.g., education, diversity of industries) are essential for regional economic vitality. However, policy makers and scholars have discovered that, contrary to expectations, the mere presence of, and investments in, new knowledge does not guarantee a high level of regional economic performance (e.g., high entrepreneurship rates). To date, this “knowledge paradox” has resisted resolution. We take an interdisciplinary perspective to offer a new explanation, hypothesizing that “hidden” regional culture differences serve as a crucial factor that is missing from conventional economic analyses and public policy strategies. Focusing on entrepreneurial activity, we hypothesize that the statistical relation between knowledge resources and entrepreneurial vitality (i.e., high entrepreneurship rates) in a region will depend on “hidden” regional differences in entrepreneurial culture. To capture such “hidden” regional differences, we derive measures of entrepreneurship-prone culture from two large personality datasets from the United States (N = 935,858) and Great Britain (N = 417,217). In both countries, the findings were consistent with the knowledge-culture-interaction hypothesis. A series of nine additional robustness checks underscored the robustness of these results. Naturally, these purely correlational findings cannot provide direct evidence for causal processes, but the results nonetheless yield a remarkably consistent and robust picture in the two countries. In doing so, the findings raise the idea of regional culture serving as a new causal candidate, potentially driving the knowledge paradox; such an explanation would be consistent with research on the psychological characteristics of entrepreneurs.
    Keywords: Innovation; Personality; Knowledge; Culture; Entrepreneurship; Psychology; Regions; Cities
    JEL: L26 M13 O3
    Date: 2015–06
  5. By: Jitao Tang (Ernst&Young LLP); Rosanne Altshuler (Rutgers University)
    Abstract: Most studies of foreign direct investment (FDI) spillovers focus on externalities of inward FDI to host country firms. However, spillovers may also be generated from outward FDI and flow to home country firms. We test for the presence of spillovers from U.S. multinational corporations to domestic U.S. firms in the same industry, downstream industries and upstream industries using firm level information from Standard and Poor’s Compustat data and industry level data on U.S. outward FDI from the U.S. Bureau of Economic Analysis. We find evidence of positive and significant spillovers flowing from multinational customers to their domestic suppliers. This is consistent with most previous studies of spillovers from inward FDI and may suggest a role for domestic policies that subsidize outward FDI. We also find that the presence of beneficial spillovers depends on several firm characteristics in
    Keywords: Multinational enterprises, Foreign direct investment, Productivity spillovers, Absorptive capacity
    JEL: F21 F23
    Date: 2015–01–04
  6. By: Alexander Ebner; Fabian Bocek
    Abstract: Intangible investment is an indispensable factor in the projected socio-ecological transition towards a new European path of economic growth. Its concern with knowledge-based intangible assets highlights the innovation-driven formation of a knowledge-based economy, which is at the heart of current EU strategies for the promotion of sustainable growth. The policy report will summarise best practices of supporting investments in intangible assets in the EU member states at the level of firms, industries and countries as a whole. In proceeding with this work, the policy report will draw on insights that were developed in preceding FP7 projects, in particular COINVEST. This allows for an understanding of intangible investment as investment in intangible assets that provide firm-specific flows of knowledge services. These involve both formal and tacit knowledge in diverse areas such as firm-funded investment in R&D, education and training, software and databases as well as design and branding, accompanied by mechanisms of inter-firm cooperation in the management of knowledge assets. The diverse strategies and policies in support of intangible investment across the EU are going to be assessed on the basis of available cases and data about best practices. The resulting policy report is set to sort out those strategies and policies that provide the most effective support of intangible investment in the formation of a socio-ecologically sustainble knowledge-based economy.
    Keywords: Economic growth path, High road strategy, Innovation, Intangible assets, Social capital as growth driver, Socio-ecological transition
    JEL: D22 D83 M19
    Date: 2015–06
  7. By: Maikel Kishna; Eva Niesten; Simona Negro; Marko Hekkert
    Abstract: The aim of this study is to analyze the role of strategic alliances in creating legitimacy for an emerging sustainable technology. The literature has identified different ways in which alliances create legitimacy for firms, but it has failed to address the legitimacy of technologies. This paper contributes to this literature by identifying technology-sourced market legitimacy, technology-sourced social legitimacy and technology legitimacy. It focuses on the case of bio-plastics, which is emerging as a sustainable technology due to pressures towards environmentalism in the chemical industry. The analysis is based on a database that we constructed using secondary sources, and which contains information on 105 alliances in the field of bio-plastics over the period 1990-2013. The results show that firms increase their market and social legitimacy by accessing the sustainable technology of an alliance partner, by collaboratively developing a sustainable technology, or by providing the technology of a partner with access to customers and production capacity. Alliances also promote the desirability and appropriateness of a technology (i.e. technology legitimacy) by supplying multiple applications of the technology to an expanding number of markets, by exercising their signaling role, and by acting as institutional entrepreneurs. Alliances that stimulate technology-sourced market and social legitimacy are often bilateral and inter-firm alliances that produce and market sustainable technologies. In contrast, alliances that stimulate technology legitimacy are multilateral and inter-organizational alliances in the pre-competitive and R&D stages of the value chain.
    Date: 2015–06
  8. By: Mohammadi, Ali (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Broström, Anders (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Franzoni, Chiara (Politecnico di Milano)
    Abstract: In this paper, we study how workforce composition is related to firm’s radical innovation. Previous studies have argued that teams composed by individuals with diverse background are able to perform more information processing and make a deeper use of the information, which is important to accomplish complex tasks. We suggest that this argument can be extended to the level of the aggregate workforce of high technology firms. Our theoretical interest is focused on the extent to which insights from the literatures on science and invention can be applied to firms’ abilities to achieve radical innovation. In particular, we argue that having a set of employees with greater ethnical and higher education diversity is associated with superior radical innovation performance. Using a sample of 3,888 Swedish firms, we find that greater workforce ethnic diversity is positively correlated to the share of a firm’s turnover generated by radical innovation, while it is neutral to incremental innovation. Greater diversity in terms of higher educational disciplinary background of the workforce is positively correlated to the share of turnover generated by both radical and incremental innovation. Contrary to our hypothesis, we also find that having more external collaborations reduces the importance of a workforce with a diverse disciplinary background, while the importance of ethnic diversity is hold unchanged. Our findings hold after using alternatives measures of dependent and independent variables, alternative sample sizes, and alternative estimation techniques including panel data, and structural equation modeling for simultaneous estimation of diversity, R&D intensity and external search.
    Keywords: Ethnic diversity; Education diversity; External search; Radical innovation
    JEL: J15 J24 J61 O32
    Date: 2015–06–29
  9. By: Adriana Peluffo (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: In this work we follow the recent strand of work linking innovation, productivity and exports. We test the hypothesis that a rise in investment favors entrance in export markets and increases exports among previously exporting firms. We address causal links through impact evaluation techniques for observational data. We examine the binary case as well as continuous treatment analysis for investment as treatment. The analysis is conducted for a panel of Uruguayan manufacturing firms for the period 1997-2008. To the best of our knowledge, this is the first study of our approach for a Latin American economy, and the relatively long time span of our data makes it possible a better characterization of new entrants and firms with changing export behavior. Also, our data appears to be richer, including information to estimate total factor productivity, and R&D and training investments, which provide better controls for confounding factors. We find evidence that investments "cause" exports and export orientation, which provides a rationale for carefully designing investment promotion policies rather than focusing on other export support policies.
    Keywords: international trade, investments, export behavior
    JEL: F14 O33 D22
    Date: 2015–07
  10. By: Michael Landesmann (The Vienna Institute for International Economic Studies, wiiw); Sandra M. Leitner (The Vienna Institute for International Economic Studies, wiiw); Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Summary This paper uses the World Input-Output Database (WIOD) to analyse changes of Europe’s position in global specialisation and location patterns of exporting activity within Europe by means of a number of competitiveness indicators. We consider both manufacturing as well as tradable services. The study analyses the increasing role of services–industry linkages, the differentiation in specialisation and competitiveness patterns amongst groups of EU member countries pointing to the increasing concentration of manufacturing activity in the ‘Central European Manufacturing Core’ and to competitive weaknesses of some of the EU’s core economies as well as of some of the lower- and medium-income economies (‘Europe’s periphery’). We also undertake an econometric analysis of the determinants of a range of competitiveness indicators, including explanatory variables such as labour productivity, skill composition or labour compensation per employee as highlighted by traditional trade theories as well as domestic and foreign business services linkages or vertical cross-border production integration to account for phenomena which have come to shape the global trade landscape more recently. 
    Keywords: competitiveness, European economy, Europe’s periphery, global trade specialisation, international production networks, vertical trade integration, services–manufacturing linkages
    JEL: F02 F14 F15
    Date: 2015–05
  11. By: Lynne Pepall; Dan Richards
    Abstract: Recent innovations in digital learning and web-based technologies have enabled scalability in educational services that has previously not been feasible presenting a potential disruption in traditional higher education markets. This paper explores the impact of these innovations in a vertically differentiated higher educational market with both selective and nonselective institutions. Selective institutions are characterized by peer effects and a revenue model that assures quality. Nonselective institutions have open admissions and are tuition driven. Students differ in their ability to benefit from educational services. We describe how selective and non-selective institutions compete for students through tuition and admission criteria and how free non-credentialed educational services such as MOOCs affect the market equilibrium. Our model also helps explain why selective institutions are the main proprietors of MOOCs.
    Keywords: Higher Education, Vertical Differentiation, Network Effects
    JEL: D43 I23
  12. By: Hu, Cui; Tan, Yong
    Abstract: In this paper, we investigate how the degree of export participation and product differentiation affect firms’ productivity growth through learning-by-exporting. We extend the model of Melitz and Ottaviano (2008) to endogenize the effort firms allocate to learning. This choice depends on both the degree to which firms enter export markets and the extent to which products are differentiated across producers. Using a firm-level dataset from China’s manufacturing industries, we implement propensity score matching methods to test the model’s predictions. Our results indicate that the degree of export participation is positively correlated with TFP improvements. Simultaneously, we empirically verify that firms exporting less differentiated products experience faster TFP growth than those exporting more differentiated products.
    Keywords: Export participation, Product differentiation, TFP, Learning-by-exporting.
    JEL: D24 F1 L1
    Date: 2015–01–27
  13. By: Akanksha Ritesh; Rajesh Mehrotra
    Abstract: Due to liberalization and globalization, competition has become so intense, that managers have less time to respond to changing market situation. In order to remain competitive they have to cut cost, enhance efficiency in operations and increase profitability. Rapid developments in information and communication technology have provided enormous data to the managers to arrive at decision, comparable to market standards. This leads to complex process. How to make decisions in this complex and competitive environment? How to manage the employee retention? In the today era no one can deny the importance and credibility of roles and responsibilities of Human Resource Management in an organization with reference to women participation as it ensures the achievement of maximum growth for the organization. Now the employers also having strong opinion that,’ their “Human Capitals” are one of the important key drivers in their growth. Women today are present in every field of work. Research has consistently indicated strong correlation between diverse senior management and financial performance of organizations, highlighting business benefits from having considerable number of women employees as part of the workforce. The scarcity of global talent has led to many organizations pro-actively doing their best to recognize, retain, and develop women. In India, keeping women employees on the job has proven difficult in a traditional patriarchal society. With the changing work force demography, and the talent war among the companies to attract and retain the best-in-class candidates, Indian companies continue to work on improving existing policies and facilities for womenwhich projects that now the ability to manage effectively the employee talent within the organization is necessary and becoming more critical everyday due to switchovers in this competitive environment. Employee relationship management (ERM) is a process that companies uses to effectively manage all interactions with employees, ultimately to achieve the goals of the organization. Happy employees are productive employees. Successful businesses know how to manage relationships to build lasting employee satisfaction. The most important part of any business is its people. No business can run effectively without them. But people don’t work in a vacuum; they need to communicate and work with others to get their jobs done. To be successful, employers need to manage relationships in the workplace to keep the business functioning smoothly, avoid problems and make sure individual employees are performing at their best.The purpose of this paper is to investigate the new approach of ERM with special reference to women who are working in software industry and suggest possible ways to communicate the concept more effectively so that this concept could be implemented more successfully in Indian Industry. The objective of this study is to understand Employee Relation Management Role in enhancement of employee performance and it is essential to understand the effectiveness of Employee Relations activities and practices which are contributing positively towards women Employee Performance. This study will be undertaken basically on theoretical Ground and by examining the Annual Reports of Indian Industry and interaction and the collected information will be arranged and analyzed systematically. ERM with especial reference to women includes both quantitative and qualitative factors of Performances. The Employee Management tool is a strategic business tool that can help Indian Software Industry to take more focused approach to developing operating strategies and measure the women workforce retention outcomes. This paper will lead to the awareness of the importance of Employee Relationship Management for women workforce retention in software industry. The organization can introduce assigning appropriate importance to the activities – as they deem fit for women retention. Key words: Employee Relations, work-life balance, safe working conditions, attrition
    Date: 2015–06
  14. By: Ackah, Ishmael
    Abstract: Efficiency has been identified as the cheapest and cleanest source of fuel. Whilst effort has been made in the advanced countries to promote technology and efficiency, little is known about efficiency in emerging economies in Africa. The purpose of this study is to identify the energy efficiency practices of SMEs in rural Ghana and also examine the barriers to energy efficiency practices. First, a descriptive analysis was used to examine the barriers and energy efficiency indicators. Finally, autometrics is used to examine the relationship between energy efficiency and productivity at the aggregate level. The study finds that lack of information on energy efficiency practices is the most important barrier to energy efficiency. On the practices, methods such as putting off electrical appliances when not in use or when closed, using new electrical appliances and using less appliances to achieve the same goal are some of the common ones adopted by SMEs in rural Ghana. The study recommends that the Ghana Energy Commission should intensify its energy efficiency education and extend this to rural areas.
    Keywords: Efficiency, Small and Medium Scale Enterprises (SMEs), autometrics, Energy Consumption
    JEL: Q2 Q20 Q21 Q4 Q42
    Date: 2015–05–14
  15. By: Smink; Joost Koch; Eva Niesten; Simona Negro; Marko Hekkert
    Abstract: An underexplored issue in the institutional entrepreneurship (IE) literature is the difference between incumbents and new entrants in promoting institutional change for innovative technologies. We study the IE activities: cooperation, framing, and political tactics in the case of biomethane development in the Netherlands, during 2006-2012. While for decades biogas farmers have been unable to build a supporting institutional framework, incumbents recently arranged substantial government support. Our theoretical contribution lies in defining dimensions of the three core IE activities. We present empirical evidence that new entrants and incumbents employ all three activities, but in distinct ways. Thus, the incumbents’ IE activities lead to more substantial institutional change than new entrants’ activities. As a consequence, production shifts from electricity to gas and the scale of installations increases. We conclude that incumbents can accelerate institutional change, however their focus on large-scale installations makes it difficult for biogas farmers to contribute to biomethane production.
    Keywords: Sustainability transitions, Institutional entrepreneurship, renewable energy, incumbents, new entrants
    Date: 2015–06
  16. By: Barbara M. Fraumeni; Michael S. Christian; Jon D. Samuels
    Abstract: In the 25 years since Jorgenson and Fraumeni (1989) published their first article on human capital, the U.S. National Income and Product Accounts (NIPA) and the SNA have changed significantly. The contribution of this paper is two-fold: Creation of a contemporary set of accounts which integrate human capital measures into the latest comprehensive revision of the U.S. national income accounts and an analysis of trends in human capital and national income account aggregates over the post-war period. The paper is a national income accounting paper with production and factor outlay, income, receipt and expenditure, capital accumulation , and wealth accounts. All of these accounts are tied to the NIPA accounts, and supplemented with human capital estimates. A key feature of the human capital accounts is presentation of human capital estimates in current and constant prices. The time period covered is 1949-84 and 1998-2009. We update the human capital national income accounts and examine trends in the aggregate time series. The results in the original Jorgenson and Fraumeni paper are for 1982 and the aggregate time series are from 1949-1984. Subsequent research by Christian (2012) developed modified Jorgenson-Fraumeni (J-F) human capital estimates from 1998 through 2009. Unfortunately there is a gap in coverage. Nonetheless, a comparison of the aggregates and their trends between the earlier and later period will be informative. The accounting tables in this new paper are for 2009, the latest base year for the NIPA accounts.
    JEL: D24 E01 E24
    Date: 2015–06

This nep-cse issue is ©2015 by João José de Matos Ferreira. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.