nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2015‒10‒04
thirty-one papers chosen by
João José de Matos Ferreira
Universidade da Beira Interior

  1. IPR-beachheads. Babcock & Wilcox's business and innovation strategies in Spain By Saiz, Patricio
  2. The spatial component of R&D networks By Tobias Scholl; Antonios Garas; Frank Schweitzer
  3. Micro-founded measurement of regional competitiveness in Europe By Gabor Bekes; Gianmarco I.P. Ottaviano
  4. 5th European Conference on Corporate R&D and Innovation CONCORDi 2015. Industrial Research and Innovation: Evidence for Policy – Background Note By Mafini Dosso; Fernando Hervas; Pietro Moncada-Paternò-Castello
  5. Research and Development Expenditures and Quality of Life in European Union Countries By Adam P. Balcerzak; Michal Bernard Pietrzak
  7. Learning Externalities in Opaque Asset Markets: Evidence from International Commercial Real Estate By Fuess, Roland; Ruf, Daniel
  8. Export Behavior of the Turkish Manufacturing Firms By Aslihan Atabek Demirhan
  9. Internalizing Global Value Chains: A Firm-Level Analysis By Laura Alfaro; Pol Antràs; Davin Chor; Paola Conconi
  10. Liquidity, Innovation, and Endogenous Growth By Malamud, Semyon; Zucchi, Francesca
  11. Foreign Direct Investment and Intellectual Property Protection in Developing Countries: Theory and Evidence By Michael A. Klein
  12. Dynamics of internal R&D stakeholders in the Fuzzy Front-End of breakthrough engineering projects By Sophie Hooge; Cédric Dalmasso
  13. Entrepreneurial Intentions and Behaviour of Students Attending Danish Universities By Britta Boyd; Simon Fietze; Kristian Philipsen
  14. Environmental Policies, Innovation and Productivity in EU By Roberta De Santis; Cecilia Jona Lasinio
  15. Internationalization Process of Entrepreneurial Activities: A Comparative Study of Czech Companies By Šárka Zapletalová
  16. International R&D spillovers, R&D offshoring and economic performance: A survey of literature By Abassi, Boutheina
  17. R&D networks and regional knowledge production in Europe. Evidence from a space-time model By Iris Wanzenböck; Philipp Piribauer
  18. Labour as a knowledge carrier – How increased mobility influences entrepreneurship By Braunerhjelm, Pontus; Ding, Ding; Thulin, Per
  19. International R&D spillovers in Central and Eastern Europe. The role of capital imports and local conditions By Maite Alguacil; Andrea Éltetó; Valeriano Martínez–San Román
  20. 'Industrial Transformation with Heterogeneous FDI and Human Capital' By King Yoong Lim
  21. Measuring regional competitiveness: A survey of approaches, measurement and data By Gabor Bekes
  22. Collective identity formation in hybrid organizations. By Romain Boulongne; Eva Boxenbaum
  23. The ladder of foreign sales: Internationalization modes of European firms By Gabor Bekes; Balázs Murakozy
  24. Transfer of Know-how for SMEs in Georgia, Moldova and Ukraine. White Paper: Georgia By Maya Grigolia; Lasha Labadze; Pavol Minarik; Alena Zemplinerova; Marek Vokoun
  25. A system dynamic and multi-criteria evaluation of innovations in environmental services By Kirsi Hyytinen; Sampsa Ruutu; Mika Nieminen; Faïz Gallouj; Marja Toivonen
  26. Social Networks, Ethnicity, and Entrepreneurship By William R. Kerr; Martin Mandorff
  27. Competition Between and Within Universities: Theoretical and Experimental Investigation of Group Identity and the Desire to Win By Zhuoqiong (Charlie); David Ong; Roman Sheremeta
  28. The geography, variety and dynamics of service exports in Spain: a firm-level analysis By Minondo, Asier
  29. Entrepreneurship, institutions and growth in European regions : a uniform mechanism By K. Bruns; N.S. Bosma; M.W.J.L. Sanders; M.C. Schramm
  30. Do free trade agreements affect tariffs of non-member countries? A theoretical and empirical investigation By Halis Murat Yildiz; Kamal Saggi; Andrey Stoyanov
  31. Competition with Multinational Firms: Theory and Evidence By Balázs Murakozy; Katheryn Niles Russ

  1. By: Saiz, Patricio (Departamento de Análisis Económico: Teoría Económica e Historia Económica. Universidad Autónoma de Madrid)
    Abstract: During the last quarter of the nineteenth century, American corporations began their multinational expansion to Europe through direct investments in the most-developed economies. Being increasingly aware of scientific and technological knowledge business value, they also began to develop early IPR international protection strategies in order to defend their intangible assets abroad. Before World War II, many of these multinationals had also reached lagging peripheral countries, resulting in a complex European network of subsidiaries and affiliates that has been scarcely studied. This paper delves into the Babcock & Wilcox entrepreneurial conglomerate – one of the most interesting case studies of early multinational expansion – to analyze how it arrived and developed in Spain, what its business and innovation strategies in that market were, and the role of patent management in that process. Our findings reveal that corporate interests in patent capture, control, and administration not only shifted research and innovation handling within firms but also led to quick learning on how to successfully use IPRs as business, legal, and organizational tools for international expansion.
    Keywords: Babcock & Wilcox, patents, foreign investments, Spain
    JEL: F23 N84 O32 O33 O34
    Date: 2015–05
  2. By: Tobias Scholl; Antonios Garas; Frank Schweitzer
    Abstract: We study the role of geography in R&D networks by means of a quantitative, micro-geographic approach. Using a large database that covers international R&D collaborations from 1984 to 2009, we localize each actor precisely in space through its latitude and longitude. This allows us to analyze the R&D network at all geographic scales simultaneously. Our empirical results show that despite the high importance of the city level, transnational R&D collaborations at large distances are much more frequent than expected from similar networks. This provides evidence for the ambiguity of distance in economic cooperation which is also suggested by the existing literature. In addition we test whether the hypothesis of local buzz and global pipelines applies to the observed R&D network by calculating well-defined metrics from network theory.
    Date: 2015–09
  3. By: Gabor Bekes (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences and CEPR); Gianmarco I.P. Ottaviano (London School of Economics, University of Bologna, CEP and CEPR)
    Abstract: Enhancing competitiveness is a popular target in economic policy making – not only at the national, but at the regional level as well despite neither generally accepted definition nor any strong agreement on how to measure it. In this chapter we discuss the conceptual underpinnings of why it is interesting to unpack the economic performance of a country into the economic performance of its regions. We argue that as firms compete; measuring regional competitiveness should be also based on comparing firm performance across EU regions. Given available data, we propose a new way to gauge how firms fare is to look at their ability to access and penetrate world markets. The key index is export per worker from a region to non-EU destinations relative to the EU average – a ‘regional competitiveness’ index that captures the capacity of a region’s firms to outperform the firms of the average EU region in terms of exports.
    Keywords: export, regional competitiveness, measurement, granularity
    JEL: R11 F14 R58
    Date: 2015–06
  4. By: Mafini Dosso (European Commission – JRC - IPTS); Fernando Hervas (European Commission – JRC - IPTS); Pietro Moncada-Paternò-Castello (European Commission – JRC - IPTS)
    Abstract: This background note offers first a synthesis of the main research questions addressed under the three topics of the 5th European Conference on Corporate R&D and Innovation - Industrial Research and Innovation: Evidence for Policy (CONCORDi 2015). Section II positions the selected papers in the current academic literature. It focuses on the extent to which the papers address the main issues above-underlined, and on how they strengthen and challenge what we know about evidence for industrial R&D and innovation policies. Section III briefly presents the key priorities of the European innovation and industrial policy and some examples of current programs to support corporate R&D and innovation activities. Section IV raises a series of research and policy issues the Conference will address.
    Keywords: R&D, innovation, policy
    Date: 2015–09
  5. By: Adam P. Balcerzak (Nicolaus Copernicus University, Poland); Michal Bernard Pietrzak (Nicolaus Copernicus University, Poland)
    Abstract: The improvement of quality of life of people is currently considered as the main responsibility of every government. Due to the emergence of knowledge-based economy, it is commonly believed that investments in research and development (R&D) at a given level are the necessary condition to create growth based on innovations, thus support welfare in case of developed countries. In this context the article is devoted to the analysis of influence of R&D expenditures on quality of life in case of European Union countries. As the main measure of quality of life Human Development Index was utilized. Thus, the article can be considered as an input to the discussion on the potential of HDI index for measuring the quality of live in case of narrow group of relatively developed countries. In the empirical part of the paper, panel data mythology fulfilling the postulates of dynamic estimation was used. The research was done for EU countries for the period 2004-2010. The empirical part takes into consideration the structural diversity between “old” and “new” members of the EU. First of all, the results can be treated as a voice confirming the usefulness of HDI as a measure of quality of life also from the perspective of narrow group of highly developed countries. Then, the research confirms the positive influence of R&D on European welfare only in the case of highly developed “old member”.
    Keywords: European Union, HDI, research and development expenditures, dynamic panel model
    JEL: I3 I31
    Date: 2015–09
  6. By: Daniela Di Cagno (Università LUISS "Guido Carli"); Andrea Fabrizi (Ministero dello Sviluppo Economico); Velentina Meliciani (Università di Teramo); Iris Wanzenböck (Austrian Institute of Technology)
    Abstract: This paper investigates the impact of “relational” spillovers arising from participation in European research networks on knowledge creation across European regions. We use links in EU Framework Programmes (from the Fourth to the Seventh) to weight foreign R&D in order to construct a relational distance matrix across 257 European regions over the period 1995-2010. We, then, assess the impact of relational spillovers on regional patent applications controlling also for local spatial spillovers. We find that relational spillovers matter for knowledge creation although spatial contiguity remains a crucial factor. We also find that spillovers are higher when regions with different levels of R&D participate in European networks. .
    Keywords: Relational spillovers, R&D collaboration, knowledge, EU Framework Programmes, spatial correlation, patents.
    JEL: O31 R12 C23
    Date: 2015
  7. By: Fuess, Roland; Ruf, Daniel
    Abstract: This paper uses a unique dataset to empirically test the implications of limited transparency in decentralized asset markets. We capture differences in the level of transparency as a linkage mechanism among international commercial real estate markets. This connectivity arises from the strategic interaction of informed and uninformed investors. Our identification strategy exploits the unique feature of spatial econometrics to analyze the transmission of learning externalities across segmented opaque markets. We find empirical evidence of cross-sectional dependence and implied co-movements among global real estate excess returns. Furthermore, we show that local shocks are amplified via spillover effects and feedback loops, which provide a potential source of instability in the international commercial property sector.
    Keywords: Commercial real estate, cross-sectional dependence, learning externalities, opaque markets, spatial econometrics, transparency risk
    JEL: C33 D82 D83 G15 R30
    Date: 2015–09
  8. By: Aslihan Atabek Demirhan
    Abstract: Up to date, Turkey’s export performance has been analyzed from macro perspective extensively. However, far too little attention has been paid to firm-level analysis contrary to ongoing and growing empirical literature. Using firm-level data of manufacturing sector during the period 1989-2010, this paper explored the export behavior of Turkish firms. The preliminary analysis revealed the superiority of exporting firms over non-exporters. Both self-selection and learning-by-exporting are found to be valid explanation for the source of this observed export premium. Dynamic discrete choice model results show that Turkish manufacturing firms are facing with export market entry costs and those costs are important determinants of the firms’ export propensity. Besides, it is observed that crises lead to changes in those entry costs and consequently changes in the export behavior of the firms.
    Keywords: Export behavior, Firm heterogeneity, Firm-level analysis, Micro econometrics, Turkey
    JEL: C25 C22 F14
    Date: 2015
  9. By: Laura Alfaro; Pol Antràs; Davin Chor; Paola Conconi
    Abstract: In recent decades, technological progress in information and communication technology and falling trade barriers have led firms to retain within their boundaries and in their domestic economies only a subset of their production stages. A key decision facing firms worldwide is the extent of control to exert over the different segments of their production processes. Building on Antràs and Chor (2013), we describe a property-rights model of firm boundary choices along the value chain. To assess the evidence, we construct firm-level measures of the upstreamness of integrated and non-integrated inputs by combining information on the production activities of firms operating in more than 100 countries with Input-Output tables. In line with the model's predictions, we find that whether a firm integrates upstream or downstream suppliers depends crucially on the elasticity of demand for its final product. Moreover, a firm's propensity to integrate a given stage of the value chain is shaped by the relative contractibility of the stages located upstream versus downstream from that stage. Our results suggest that contractual frictions play an important role in shaping the integration choices of firms around the world.
    JEL: D23 F14 F23 L20
    Date: 2015–09
  10. By: Malamud, Semyon; Zucchi, Francesca
    Abstract: We study optimal liquidity management, innovation, and production decisions for a continuum of firms facing financing frictions and the threat of creative destruction. We show that liquidity constraints unambiguously lead firms to decrease their production rate but, surprisingly, may spur investment in innovation (R&D). Using the model, we characterize which firms substitute production for innovation when constrained and thus display a non-monotonic relation between cash reserves and R&D. We embed our single-firm dynamics in a Schumpeterian model of endogenous growth and demonstrate that financing frictions have an ambiguous effect on economic growth.
    Keywords: Cash management; Creative destruction; Endogenous growth; Financial constraints; Innovation
    JEL: D21 G31 G32 G35 L11
    Date: 2015–09
  11. By: Michael A. Klein (Indiana University)
    Abstract: This paper theoretically and empirically analyzes the interaction of intellectual property policy among developing countries. I extend existing North-South product cycle models where innovation, foreign direct investment (FDI), and imitation are endogenous to include multiple Southern countries, which together constitute a developing region. I assume that a Northern firm that has invested in a Southern country faces the threat of imitation from all Southern countries within the region. In this way, the level of FDI in each Southern country depends upon the protection of intellectual property throughout the region. The model predicts that a unilateral strengthening of intellectual property rights (IPRs) in a Southern country is relatively ineffective at attracting FDI inflows. However, a uniform strengthening of IPRs throughout the developing region, such as the TRIPS agreement required, successfully stimulates FDI into all countries in the region. Using panel data ! from 47 developing countries from 1970-2010, I test the predictions of the model empirically. I provide evidence that the response of FDI to strengthened IPRs in a particular developing country depends upon the level of protection in neighboring developing countries. I argue that this analysis suggests a powerful justification of the TRIPS agreement as a harmonization of IPRs among developing countries, which successfully stimulates FDI inflows into developing countries in a way that a unilateral policy reform could not.
    Keywords: Intellectual Property Rights, Foreign Direct Investment, Developing Countries, TRIPS
    Date: 2015–08
  12. By: Sophie Hooge (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris); Cédric Dalmasso (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris)
    Abstract: In competitive industries, intensive innovation is a recognized necessity (Wheelwright and Clark, 1992; Le Masson et al., 2010). One success factor of breakthrough R&D projects lies in the knowledge articulation between innovation definition phases, composed of fuzzy front-end (FFE) and innovative new product development (NPD) stages (Koen et al, 2002; Cooper et al, 2001), and industrial development processes. Then, central issue for innovation projects managers becomes internal R&D stakeholders’ management (Elias et al., 2002) and sustainable learning dynamics across the two parts of the organization (O’Connor, 2008). Our paper fits into this research gap for local breakthrough R&D in the dominant design. We discuss the role of technical expertise level of NDP stakeholders involved in early stages of innovative projects. The research mobilized two longitudinal studies (Yin, 1989) carried out with a global car manufacturer through collaborative management research (Radaelli et al., 2012) since 2005, one focusing on the FFE management, while the other was devoted to learning dynamics of engineering development departments. A cartography of the internal network of breakthrough R&D (Mitchell et al, 1997) underlined a stable organizational network across projects. Nevertheless, a quantitative analysis of accounting data on 8 projects highlights important dynamics of involvement or dis-engagement within the network. The analysis showed that the accounting reporting at the portfolio level used to hide to top-managers the heterogeneity and depth of resources dynamics at the project level. The impacts of local breakthrough R&D on the engineering development organization was similar to waves: some stakeholders, who played roles of experts, spokespersons or innovation design strategists, were able to involve quickly the individuals to maintain the project progress, sometime generating an over-commitment on innovation projects. At the opposite, a lack of trust of the design partners generated withdrawal of resources that needed a strong stakeholder management to be prevented.
    Keywords: Breakthrough R&D, Stakeholders management , Commitment
    Date: 2015–06–17
  13. By: Britta Boyd (Department of Border Region Studies, University of Southern Denmark); Simon Fietze (Department of Border Region Studies, University of Southern Denmark); Kristian Philipsen (Department of Entrepreneurship and Relationship Management, University of Southern Denmark)
    Abstract: The research field of entrepreneurship gets more and more important in Denmark. The Global Entrepreneurship Monitor (GEM) and recently the Global University Entrepreneurial Spirit Students’ Survey (GUESSS) were carried out to gain more insights about entrepreneurial intentions and activities in Denmark. The origins of GUESSS go back to 2003 when researchers at the Swiss Research Institute of Small Business and Entrepreneurship at the University of St. Gallen (KMU-HSG) started the survey. The study is conducted every two years to explore the entrepreneurial intent and activity of students as well as the entrepreneurship training and education provided by universities in 34 countries around the world. In the sixth data collection wave Demark participated for the first time in 2013. The results for the Danish sample are presented in this report. The main findings are that Danish students have a rather low entrepreneurial intention. Their career intentions seem to follow the international pattern of first being an employee and then later becoming a founder. The report suggest to improve entrepreneurial intention among Danish students by stimulating entrepreneurial education at universities considering specific offers and activities for the different groups of entrepreneurial students as well as for students who not have considered becoming a founder yet.
    Keywords: entrepreneurial intention, succession intention, GUESSS, Denmark
    JEL: I21 I23 I28 L26
    Date: 2015–09
  14. By: Roberta De Santis (ISTAT); Cecilia Jona Lasinio (ISTAT)
    Abstract: In a globalized framework, environmental regulations can have a decisive role in influencing countries’ comparative advantages. The conventional perception about environmental protection is that it imposes additional costs on firms, which may reduce their global competitiveness with negative effects on growth and employment. However, some economists, in particular Porter and Van der Linde (1995), argue that pollution is often associated with a waste of resources and that more stringent environmental policies can stimulate innovations that may over-compensate for the costs of complying with these policies. This is known as the Porter hypothesis and suggests the existence of a “double dividend”, for both economic and environmental aspects, related to environmental regulation. In this paper, we adopt a macroeconomic approach to investigate the impact of different environmental instruments on the economy as a whole. We investigate the environmental policy impacts on a sample of European economies in 1995-2008. Our findings suggest that the “narrow” Porter Hypothesis cannot be rejected and that the choice of the policy instruments is not neutral. In particular, market based environmental stringency measures look as the most effective to stimulate innovations and productivity.
    Keywords: environmental regulation, productivity, innovation, Porter hypothesis.
    JEL: D24 Q50 Q55 O47 O31
    Date: 2015
  15. By: Šárka Zapletalová (Department of Business Economics and Management, School of Business Administration, Silesian University)
    Abstract: Internationalization of entrepreneurial activities is not only a matter of large enterprises. Currently, the majority of SMEs is undergoing the process of internationalization. The purpose of this paper is to compare the internationalization process of Czech large enterprises and SMEs. The companies included in the study are those that have already undertaken internationalization activities and are incorporated in the Czech Republic. The findings of the comparison show that the company size affects only the speed of internationalization of Czech companies. The choice of geographical coverage and entry mode is not affected by company size.
    Keywords: Internationalization process, large enterprises, small and medium-sized enterprise (SME), Czech companies, entry modes, geographical sub-regions.
    JEL: F23 M16
    Date: 2015–09–29
  16. By: Abassi, Boutheina
    Abstract: This paper surveys what we know about international R&D spillovers, with a particular attention devoted to the business literature that link the R&D internationalization to economic performance. Despite the fact that there is a large literature on the internationalization of R&D at the country level, there are only few studies that examine the implications of international innovation and research activities at different levels of disaggregation. The few studies that exist emphasize the significance of international R&D and R&D offshoring in promoting economic performance. However, the existing literature comes finally with different conclusion as regards the relative importance of international spillovers and, the evidences presented so far with respect to R&D offshoring are still far from being conclusive.
    Keywords: international R&D spillovers, R&D offshoring, economic performance
    JEL: F43 O32 O4
    Date: 2015–09
  17. By: Iris Wanzenböck (Innovation Systems Department, Austrian Institute of Technology); Philipp Piribauer (Department of Economics, Vienna University of Economics and Business)
    Abstract: In this paper we estimate space-time impacts of the embeddedness in R&D networks on regional knowledge production by means of a dynamic spatial panel data model with non-linear effects for a set of 229 European NUTS-2 regions in the period 1999-2009. Embeddedness refers to the positioning in networks where nodes represent regions that are linked by joint R&D endeavours in European Framework Programmes. We observe positive immediate impacts on regional knowledge production arising from increased embeddedness in EU funded R&D networks, in particular for regions with lower own knowledge endowments. However, long-term impacts of R&D network embeddedness are comparatively small.
    Keywords: R&D networks, European Framework Programme, regional knowledge production, dynamic spatial panel data model, space-time impacts
    JEL: C33 O31 R12
    Date: 2015–09
  18. By: Braunerhjelm, Pontus (Centre of Excellence for Science and Innovation Studies (CESIS), Royal Institute of Technology (KTH), & Swedish Entrepreneurship Forum); Ding, Ding (Centre of Excellence for Science and Innovation Studies (CESIS), & Royal Institute of Technology (KTH)); Thulin, Per (Centre of Excellence for Science and Innovation Studies (CESIS), Royal Institute of Technology (KTH), & Swedish Entrepreneurship Forum)
    Abstract: According to the knowledge-based spillover theory of entrepreneurship (KSTE), entrepreneurship is positively associated with the knowledge endowment level. An increase in knowledge expands the opportunity set, which is then exploited by heterogeneous entrepreneurs. The objective of this paper is to empirically test the validity of the KSTE by employing a detailed database comprising more than 19 million observations for the period 2001–2008 at the level of individuals, firms and regions in Sweden. Knowledge is claimed to be partly embodied in labour, implying that an increase in labour mobility can be expected to influence knowledge endowment at the regional level. Our dependent variable is an individual who has remained in a region throughout the time period considered. Controlling for a number of other variables, inter-regional labour inflows and intra-regional mobility levels are shown to exert a strong positive effect on entrepreneurship. This contrasts with inter-regional outflows, which negatively affect entrepreneurial entry. Another noteworthy result is that the probability of exploiting an increased knowledge stock through entrepreneurship increases by 15 percentage points if the individual has previous experience in starting a firm.
    Keywords: Entrepreneurship; Knowledge-based spillover theory of entrepreneurship; Knowledge diffusion; Labour mobility
    JEL: J61 L26 O33
    Date: 2015–09–28
  19. By: Maite Alguacil (Departament of Economics, Universitat Jaume I, Castellón, Spain); Andrea Éltetó (Institute of World Economics, CERS, Hungarian Academy of Sciences, Budapest, Hungary); Valeriano Martínez–San Román (Department of Economics, University of Cantabria, Spain)
    Abstract: In this paper, we analyze both theoretically and empirically the role of foreign technology (embodied in capital and intermediate goods imports from more advanced countries) as the main driver of technology diffusion and productivity growth in the Central and Eastern European (CEE) member countries, taking into consideration the ability of these economies to adopt new technologies domestically. Productivity spillovers may vary depending on the absorptive capacities, thus conferring some scope for policy makers in their attempt to maximize the potential benefits from foreign transactions. Based on industrial-level data, we use different panel data methodologies to estimate the links between labor productivity, imports of capital goods, and local conditions in the CEE member states for the period 1995-2009. To detect potential different patterns of technology absorption at different stages of development, we split the sample into two different country groups: more and less advanced countries. Our results suggest that capital imports are productivity enhancing in the Central and Eastern European economies, with a greater effect on less advanced countries. Our estimates also confirm the relevance of other local conditions, such as domestic capital, skill endowments, and the technology gap, in productivity gains.
    Keywords: Imports of capital goods; Productivity; CEE countries; Local conditions
    JEL: C33 F14 O4
    Date: 2015
  20. By: King Yoong Lim
    Abstract: This paper examines industrial transformation using an imitation-innovation growth model with a stylised internalisation framework developed to determine the composition of heterogeneous foreign multinationals in a developing host economy. A key feature of the model is the introduction of a dichotomous relationship between domestic and foreign ?firms, where the latter, each of which consisting of an expert bringing either standardisation or sophisticated know-how, perceives heterogeneity among the productivity of domestic workers. Productivity is a transformation of ability, hence linking the skills acquisition decision and foreign subsidiaries? operational mode choice along the same ability distribution. Calibrated for Malaysia, the simulations uncover complementarities between labour market and FDI-promoting policies. These complementarities are stronger in an environment with endogenous technological change.
    Date: 2015
  21. By: Gabor Bekes (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences and CEPR)
    Abstract: This paper reviews a set of issues related to the concept and measurement of regional competitiveness. First, the concept of growth and competitiveness is argued to be different at regional level from the national level. In particular, the relationship between agglomeration and performance, the role of FDI in regions, and the key aspect of local institutions are analyzed. Second, a detailed review is carried out on potential data sources to gauge regional competitiveness using official, private sector as well as academic datasets.
    Keywords: regional competitiveness, data audit
    JEL: R11 R38
    Date: 2015–06
  22. By: Romain Boulongne (GROUPE HEC); Eva Boxenbaum (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris, Copenhagen Business School - Copenhagen Business School)
    Abstract: The present article examines the process of collective identity formation in the context of hybrid organizing. Empirically, we investigate hybrid organizing in a collaborative structure at the interface of two heterogeneous organizations in the domain of new renewable energies. We draw on the literature on knowledge sharing across organizational boundaries, particularly the notions of transfer, translation and transformation, to examine in real time how knowledge sharing in a hybrid setting contributes (or not) to the emergence of a new collective identity at the interface of two heterogeneous organizations. Our findings point to two factors that limit knowledge sharing and hence to new collective identity formation in a hybrid space: 1) ambiguous or multiple organizational roles and 2) strong identities of the collaborating organizations. These findings contribute to illuminating the initial formation of a new collective identity in hybrid organizing, and hence how new hybrid organizational forms may emerge non-intentionally.
    Keywords: hybrid organizing, collective identity, renewable energy
    Date: 2015–07–01
  23. By: Gabor Bekes (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences and CEPR); Balázs Murakozy (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences)
    Abstract: This paper show evidence that firms choose from a much larger set of internationalization modes than usually assumed in the international trade literature and that this choice is governed by similar selection processes than the one proposed by Helpman, Melitz, Yeaple (2004 AER). We rely on a unique dataset of European firms which, besides balance sheet and many qualitative variables, includes direct information on indirect and direct exporting, outsourcing, service and manufacturing FDI and operating business groups. We generalize a model of self-selection based on two dimensional firm heterogeneity productivity and quality - to N trade modes. By estimating this model we find evidence supporting selection into many modes, and learn that both quality and productivity play a similarly important role. The model is also suitable to inform us about the relative cost structure of different modes: indirect exporting does not seem to require a high fixed cost, while the fixed cost of FDI is much larger than that of exporting or outsourcing. We also find that when we focus on independent firms that are not part of vertical investment strategies which are firms usually considered in selection models -, results hold, albeit with lower estimated premia.
    Keywords: Firm heterogeneity, export, FDI, international trade mode, multinomial logit
    JEL: F14 F23
    Date: 2015–06
  24. By: Maya Grigolia; Lasha Labadze; Pavol Minarik; Alena Zemplinerova; Marek Vokoun
    Abstract: This report has been prepared in the framework of the project “Transfer of know-how to small and mid-size businesses” of the International Visegrad Fund (IVF) and USAID. It summarizes the conditions of the SME sector (small and medium size enterprises) in Georgia, identifies the main problems in their development and provides recommendations for further interventions based on the Czech experience, existing literature and a survey implemented among SME stakeholders.Georgia generally receives favorable evaluations of its business environment. It ranks high in indices of economic freedom and is among the top countries with respect to ease of starting and doing business. On the other hand, the SME sector suffers from several problems. The most serious obstacle to SME development seems to be in the area of finance; access to finance is difficult for SMEs and the cost of credit is high. Human capital and innovations are among the weak points of Georgian SMEs as well.The different shortcomings of the environment and markets call for different interventions. The paper is roadmap of concrete activities – it contains a set of recommendations to support SMEs development drawn on three different sources: first, the theoretical foundations of entrepreneurship policy, second, the Czech experience and know-how in the SME sector, and finally, the ideas of local experts and stakeholders generated during interviews and workshops.Activities and recommendations have been divided into “generic,” which relate to a particular determinant of business environment and have an impact across industries and sectors such as access to financing, education, developing skills training, R&D, innovation, export strategy, start-ups, and those which are “sector-specific,” such as banking, health and agriculture. Political stability, the main problem in Georgia, is beyond the scope of possible interventions.
    Keywords: small businesses, competition, liberalization, innovation, venture capital, business financing, skills and education
    JEL: D04 F23 L26 L30 M13 O25 O00
    Date: 2015
  25. By: Kirsi Hyytinen (VTT Information technology - Technical Research Centre of Finland); Sampsa Ruutu (VTT Information technology - Technical Research Centre of Finland); Mika Nieminen (VTT Information technology - Technical Research Centre of Finland); Faïz Gallouj (CLERSE - CLERSE - Centre lillois d'études et de recherches sociologiques et économiques - CNRS - Université Lille 1 - Sciences et technologies); Marja Toivonen (VTT Information technology - Technical Research Centre of Finland)
    Abstract: The purpose of this paper is to study the challenge of evaluation in the context of systemic innovations in which services are a core element. The paper argues that the traditional evaluation methods and measures are not able to capture neither the diversity of innovations in services and systems nor the multifaceted dimensions of performance resulting from these innovations. In order to contribute to a more purposeful evaluation practices and methods, a new combinatory approach is suggested based on multi-criteria and system dynamic perspectives. This approach is illustrated in the context of environmental services, using an environmental data platform as a case example.
    Keywords: environmental data platform, system dynamic, service innovation, systemic innovation, environmental services,multi-criteria evaluation
    Date: 2015
  26. By: William R. Kerr; Martin Mandorff
    Abstract: We study the relationship between ethnicity, occupational choice, and entrepreneurship. Immigrant groups in the United States cluster in specific business sectors. For example, Koreans are 34 times more likely than other immigrants to operate dry cleaners, and Gujarati-speaking Indians are 108 times more likely to manage motels. We develop a model of social interactions where non-work relationships facilitate the acquisition of sector-specific skills. The resulting scale economies generate occupational stratification along ethnic lines, consistent with the reoccurring phenomenon of small, socially-isolated groups achieving considerable economic success via concentrated entrepreneurship. Empirical evidence from the United States supports our model's underlying mechanisms.
    JEL: D21 D22 D85 F22 J15 L14 L26 M13
    Date: 2015–09
  27. By: Zhuoqiong (Charlie) (London School of Economics); David Ong (Economic Science Institute & Argyros School of Business and Economics, Chapman University); Roman Sheremeta (Case Western Reserve University)
    Abstract: We study how salient group identity, created through competition between students from different universities, as well as differences in the value of winning impact competitive behavior. Our experiment employs a simple all-pay auction within and between two university subject pools. We find that when competing against their peers, students within the lower tier university bid more aggressively than students within the top-tier university. Also, students from the lower tier university, in particular women, bid more aggressively when competing against students from the top-tier university. These findings, interpreted through a theoretical model incorporating both group identity and differential value of winning, suggest that students at the lower tier university have a stronger group identity as well as higher desire to win.
    Keywords: experiments, all-pay auction, competitiveness, group identity
    JEL: C91 D03 J7 Z13
    Date: 2015
  28. By: Minondo, Asier
    Abstract: This paper uses Spanish firm-level data to analyze the difference in the destination and variety-portfolios among service exporters. As for manufacture exporters, there is heterogeneity in the value of exports, the number of destinations and the number of varieties supplied among service exporters. However, compared to manufacture exporters, service exporters have a higher number of destinations and the number and value of transactions play a major role in explaining the evolution of aggregate exports.
    Keywords: services, exports, firm-level data, heterogeneity
    JEL: F14 F19 F23
    Date: 2015–09–30
  29. By: K. Bruns; N.S. Bosma; M.W.J.L. Sanders; M.C. Schramm
    Abstract: In this paper we present an alternative empirical strategy that sheds light on the importance of institutional quality for regional economic growth. The fundamental problem in this type of research is that institutional quality cannot be measured directly. Existing proxies are typically highly correlated with and endogenous to our dependent variable. We therefore propose a method that is akin to growth accounting, where we refer to the unexplained residual of a production function as total factor productivity. First we run a standard growth regression, including the usual suspects, on 90 European NUTS-2 and 3 regions. The residual variation in regional growth then includes the effect of the fundamentally latent variable that is institutional quality. If this is the case, then variables for which we may assume the effect on growth is strongly moderated through institutional quality, should have a different marginal effect on residual growth at the aggregation levels at which institutions operate. Theory and preliminary empirical evidence suggests that the effect of entrepreneurial activity is strongly moderated by institutional quality. We can thus test the hypothesis that the marginal effect of entrepreneurship on growth differs across regions and countries in our data. We indeed establish that entrepreneurial activity has a positive effect on growth. That is, entrepreneurial activity helps explain the residual variance in our standard growth regressions. However, this effect is not significant when we control for unobserved country differences in a multilevel analysis. We find that most of the cross regional variation is due to between country variation in average entrepreneurial activity, and that there is no longer an effect at the within-country regional level. In a latent class analysis, however, we do not find statistically significant differences in the coefficient across (groups of) regions after controlling for country effects. That is, our data suggests that country level institutional quality is most important for the effect of entrepreneurial activity on growth. After controlling for those differences, regions do not cluster in different classes. This also suggests that the difference between for example rural and urban regions in our sample is not significant, as such regions do not cluster in different groups. Before we draw strong conclusions, however, we note that this may be due to the administrative nature of our regional classification.
    Keywords: Institutions, Entrepreneurship, Regional Growth, Multilevel Model, Latent Class Model
    Date: 2015
  30. By: Halis Murat Yildiz (Department of Economics, Ryerson University, Toronto, Canada); Kamal Saggi (Department of Economics, Venderbilt University, Nashville, TN, USA); Andrey Stoyanov (Department of Economics, York University, Toronto, Canada)
    Abstract: In this paper, we investigate both theoretically and empirically the effects of free trade agreements (FTAs) on the tariffs of non-member countries. Our theoretical framework draws on the comparative advantage based trade model of Horn, Maggi, and Staiger (2010). In this model, since marginal costs of production are increasing with output, if a few countries form an FTA and start trading more with each other, they simultaneously become less willing to export to rest of the world a phenomenon we call external trade diversion. Such diversion reduces the ability and the incentive of non-member countries to manipulate their terms of trade, a mechanism that induces them to lower their tariffs on FTA members. We provide an empirical confirmation of this insight using industry- level bilateral trade data for 192 importing and 253 exporting countries, along with the information on all FTAs formed in the world during 1989-2011. Our analysis provides a rather convincing verification of the terms of trade theory since the formation of an FTA between a few countries can be reasonably interpreted as an exogenous event from the perspective of the rest of the world.
    Keywords: Free Trade Agreement, Terms of Trade, Optimal Tariffs
    JEL: F13 F14
    Date: 2015–09
  31. By: Balázs Murakozy (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences); Katheryn Niles Russ (University of California, Davis and NBER)
    Abstract: Do multinational firms wield more market power than their domestic counterparts? Using Hungarian firm-level data between 1993 and 2007, we find that markups are 19 percent higher for foreign-owned firms than for domestically owned firms. Moreover, markups for domestically owned firms are significantly lower in industries where multinationals have a greater technological edge, suggesting that Ricardian differences in technology and endogenous markups constitute important dimensions for models of foreign direct investment. We innovate within a canonical Ricardian model of endogenous markups and heterogeneous firms to provide analytical distributions of market shares and markups when goods are imperfect substitutes to provide structure for our empirical analysis. Our model explains about half of the multinational markup premium identified in the empirical analysis.
    Keywords: multinational firm; heterogeneous firms; Bertrand competition
    JEL: F12 F13 F15 F23
    Date: 2015–06

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