nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2015‒12‒20
fifteen papers chosen by
João José de Matos Ferreira
Universidade da Beira Interior

  1. R&D partnerships and innovation performance: Can there be too much of a good thing? By Hottenrott, Hanna; Lopes-Bento, Cindy
  2. Agglomeration and innovation By Carlino, Gerald; Kerr, William R.
  3. Does the explanatory power of the OLI approach differ among sectors and business functions: Evidence from firm-level data By Arvanitis, Spyros; Hollenstein, Heinz; Stucki, Tobias
  4. Institutional distance and foreign direct investment. By R. Cezar; O. R. Escobar
  5. R&D Spending and Investment Decision: Evidence from European Firms By O.A. Carboni; G. Medda
  6. Profits, R&D and labour: Breaking the law of diminishing returns to labour By Sara Amoroso
  7. International Technology Transfer and Domestic Innovation: Evidence from the High-Speed Rail Sector in China By Yatang Lin; Yu Qin; Zhuan Zie
  8. Fractionalization and Entrepreneurial Activities By Awaworyi Churchill, Sefa
  9. Innovation and competition in Internet and mobile banking: an industrial organization perspective By Mariotto, Carlotta; Verdier, Marianne
  10. TFP, Labor Productivity and the (Un)observed Labor Input: Temporary Agency Work By Alexander Schiersch
  11. Off-shoring, specialization and R&D* By Bournakis, Ioannis; Vecchi, Michela; Venturini, Francesco
  12. Environmental Policies, Innovation and Productivity in the EU By Roberta De Santis; Cecilia Jona Lasinio
  13. Empirical evaluation of interest barrier effects By Dreßler, Daniel; Scheuering, Uwe
  14. The Integration of Energy, Environment and Health Policies in China: A Review By Huijie Yan
  15. Major Public Enterprises in Croatia By Anto BAJO; Marko PRIMORAC

  1. By: Hottenrott, Hanna; Lopes-Bento, Cindy
    Abstract: R&D collaboration facilitates pooling of complementary skills, learning from the partner as well as sharing risks and costs. Research therefore repeatedly stressed the positive relationship between collaborative R&D and innovation performance. Fewer studies addressed potential drawbacks of collaborative R&D. Collaborative R&D comes at the costs of coordination and monitoring, requires knowledge disclosure and involves the risk of opportunistic behaviour by the partners. Thus, while the net gains from collaboration can be high initially, cost may start to outweigh those benefits if firms engage in multiple collaborative projects simultaneously. This study explicitly considers a firm's collaboration intensity, that is, the share of collaborative R&D projects in the firms' total R&D project portfolio. For a sample of 2,891 firms located in Germany, active in abroad range of manufacturing and service sectors and of which 86% are SMEs, we indeed find that increasing the share of collaborative R&D projects in total R&D projects is associated with a higher probability of product innovation and with a higher market success of new products. While we can confirm previous findings in terms of gains for innovation performance, we also find that collaboration has decreasing and even negative returns on product innovation if its intensity increases above a certain threshold. Consequently, the relationship between collaboration intensity and innovation has an inverted-U shape. In particular, costs start outweighing benefits if a firm pursues more than about two thirds of its R&D projects in collaboration. This result is robust to conditioning market success to the introduction of new products and to accounting for the selection into collaborating.
    Keywords: innovation performance,product innovation,R&D partnerships,collaboration intensity,financing constraints,collaboration complexity,transaction costs,selection model,endogenous switching
    JEL: O31 O32 O33 O34
    Date: 2015
  2. By: Carlino, Gerald (Federal Reserve Bank of Philadelphia); Kerr, William R. (Harvard University, Bank of Finland, and NBER)
    Abstract: This paper reviews academic research on the connections between agglomeration and innovation. We first describe the conceptual distinctions between invention and innovation. We then discuss how these factors are frequently measured in the data and note some resulting empirical regularities. Innovative activity tends to be more concentrated than industrial activity, and we discuss important findings from the literature about why this is so. We highlight the traits of cities (e.g., size, industrial diversity) that theoretical and empirical work link to innovation, and we discuss factors that help sustain these features (e.g., the localization of entrepreneurial finance).
    Keywords: agglomeration; clusters; innovation; invention; entrepreneurship
    JEL: J20 J60 L10 L20 L60 O30 R10 R30
    Date: 2015–12–10
  3. By: Arvanitis, Spyros; Hollenstein, Heinz; Stucki, Tobias
    Abstract: The relevance of services FDI strongly increased over the last two decades. As services and goods differ with respect to important characteristics, one may expect that the determinants of internationalisation are not identical in services and manufacturing. Surprisingly, there is practically no firm-level research contrasting the two sectors in this respect. In order to fill this gap, the authors aim at identifying for manufacturing and services, firstly, the determinants of a firm's propensity to engage in foreign activities (exports and/or FDI) and, secondly, the factors determining a firm's direct foreign presence in terms of (combinations of) business functions. The authors find that an OLI-based model is well suited for explaining not only the propensity to go international but also the differences between two specific forms of FDI in terms of business functions both for manufacturing and services. In all models, the explanatory power of the OLI approach is stronger for manufacturing than service activities. The results are consistent with the stages view of internationalisation in particular in manufacturing, but to a lesser extent also in services where the process of internationalization is less continuous.
    Keywords: manufacturing vs. services internationalisation,offshoring vs. exports,internationalisation of business functions,multinational companies,international business strategy
    JEL: F23
    Date: 2015
  4. By: R. Cezar; O. R. Escobar
    Abstract: This paper studies the link between foreign direct investment (FDI) and institutional distance. Using a heterogeneous firms framework, we develop a theoretical model to explain how institutional distance influences FDI, and it is shown that institutional distance reduces both the likelihood that a firm will invest in a foreign country and the volume of investment it will undertake. We test our model using inward and outward FDI data on OECD countries. The empirical results confirm the theory and indicate that FDI activity declines with institutional distance. In addition, we find that firms from developed economies adapt more easily to institutional distance than firms from developing economies.
    Keywords: SForeign direct investment, Institutions, Heterogeneous firms, Gravity model.
    JEL: F12 F23 H80 K20
    Date: 2015
  5. By: O.A. Carboni; G. Medda
    Abstract: This paper investigates the role of research activity and other micro determinants, on firms' investment behaviour. The empirical analysis is based on a large representative and cross-country comparative sample of manufacturing firms across seven European countries. Given the potential simultaneity between investment decision and R&D spending, we used an instrumental variable procedure to overcome the problem of endogeneity and an instrument was constructed to cope with this issue. We find that R&D positively affects investment decisions. The analysis highlights the importance of financial factors, particularly with respect to firms’ internal resources, and also sensible cross-country effects, in determining the investment level.
    Keywords: r&d, investment, firm behavior, IV model
    JEL: C31 O32
    Date: 2015
  6. By: Sara Amoroso (European Commission – JRC - IPTS)
    Abstract: A basic assumption in the economic literature is the one of diminishing marginal returns to labour. However, theoretical studies on knowledge and labour specialization assume that an increase in the knowledge investment embodied in the human capital of workers raises the marginal product of labour. In this paper, we propose a structural approach to test the hypothesis of non-diminishing returns to labour for a panel data set of R&D investing companies, and we explore how the marginal returns to labour vary with their level of knowledge capital (R&D) intensity. Our econometric analysis provides a number of results. First, we find that more knowledge intensive firms have non-diminishing returns to labour, while less knowledge intensive companies exhibit diminishing returns. Second, independently from the knowledge capital intensity, returns to labour increase with size. Relatively smaller firms have diminishing returns, while larger companies have non-diminishing to increasing returns to labour. However, we show that more knowledge intensive firms can attain the threshold of non-diminishing returns faster than their counterparts.
    Keywords: size, specialization, profitability, profit function
    JEL: J24 L10 L25 O30
    Date: 2015–12
  7. By: Yatang Lin; Yu Qin; Zhuan Zie
    Abstract: How does the transfer of advanced technology spur innovation in developing countries? This paper exploits the large-scale introduction of high-speed railway (HSR) technology into China in 2004 as a natural experiment to address this question. The experiment is unique in the sense that this wave of technology transfer is large, abrupt and arguably exogenous in timing, covering a variety of technology classes and a large number of geographically-dispersed railway-related firms. With detailed information on the types of technology transferred and the identities of the receiving firms, as well as their product market specializations, we are able to depict a clear picture of how foreign technology is digested and spurs follow-up innovation in and out of directly receiving firms. Our findings suggest that technology transfer leads to significant growth in HSR-related patents in cities with direct receivers of imported technology after 2004 in a triple-difference estimation. We also observe sizable spillovers to firms that are not directly related to the railway industry. Technology similarity plays an important role in technology diffusion, but we do not observe any significant impacts of geographic proximity. Previous university research strength in relevant fields is also conducive to stronger technology spillovers.
    Keywords: innovation, foreign technology transfer, knowledge spillover, China
    JEL: O25 O33 O38
    Date: 2015–12
  8. By: Awaworyi Churchill, Sefa
    Abstract: The vast majority of the literature on ethnicity and entrepreneurship focuses on the construct of ethnic entrepreneurship. However, very little is known about how ethnic heterogeneity affects entrepreneurship. This study attempts to fill the gap, and thus examines the effect of ethnic heterogeneity on entrepreneurial activities in a cross-section of 90 countries. Using indices of ethnic and linguistic fractionalization, we show that ethnic heterogeneity negatively influences entrepreneurship. We argue that potential channels that can explain the negative effect of fractionalization on entrepreneurship include trust, social network, social capital, innovation, and discrimination among others. Results are robust to several checks.
    Keywords: entrepreneurship,ethnic diversity,fractionalization
    Date: 2015–12–07
  9. By: Mariotto, Carlotta (MINES ParisTech, PSL - Research University); Verdier, Marianne (Université Paris 2 Panthéon Assas, CRED (TEPP) and MINES ParisTech, PSL - Research University)
    Abstract: Over the recent years, the development of Internet banking and mobile banking has had a considerable impact on competition in the retail banking industry. In some countries, the regulatory framework has been adapted to allow non-banks to operate in retail payments and compete with banks for deposits. Several platforms or large retailers have started to offer innovative financial products to their customers. In this paper, we survey the issues related to innovation and competition in Internet banking and mobile banking and discuss some perspectives for future research.
    Keywords: bank competition; bank regulation; non-banks; payment systems; Internet banking; mobile banking; platform markets
    JEL: E42 G21 L96
    Date: 2015–11–25
  10. By: Alexander Schiersch
    Abstract: The study focuses on the question of whether productivity estimates are biased due to the emergence of a new input that is usually omitted: temporary agency worker (TAW). The study analyzes labor productivity and TFP by means of a structural approach using a representative dataset of German manufacturing firms. The empirical results show, once TAW is taken into account, that: i) labor productivity in most manufacturing sectors is significantly lower; ii) average TFP differs significantly in most sectors; but iii) the coefficients for regular labor are not significantly different between estimations with and without TAW.
    Keywords: Temporary agency work, total factor productivity, labor productivity, omitted variable bias, structural productivity estimation
    JEL: D24 J24 L24 L60
    Date: 2015
  11. By: Bournakis, Ioannis; Vecchi, Michela; Venturini, Francesco
    Abstract: This paper investigates whether off-shoring promotes technological specialization by reallocating resources towards high-tech industries and/or stimulating within industry R&D. Using data for the US, Japan and Europe, our results show that material off-shoring promotes high-tech specialization through input reallocation between sectors, while service off-shoring favours technologically advanced production by increasing within-industry productivity, mainly via its positive impact on R&D. Conversely, we find that the increasing fragmentation of core production tasks, captured by narrow off-shoring, has adverse effects on technological specialisation, which suggests that this type of off-shoring is mainly pursued for cost-reduction motives.
    Keywords: High-tech specialization, off-shoring, productivity, R&D, OECD industries
    JEL: F14 L16 O30
    Date: 2015–12–15
  12. By: Roberta De Santis; Cecilia Jona Lasinio
    Abstract: In this paper we test the weak Porter hypothesis on a sample of European economies in the period 1995-2008. We focus on the channels through which tighter environmental regulation affects productivity and innovation. Our findings suggest that the “weak” Porter hypothesis cannot be rejected and that the choice of policy instruments is not neutral. In particular, market based environmental stringency measures seem to be the most suitable to stimulate innovation and productivity growth. Consistently with the strategic reorientation of environmental policies in the European Union since the end of the eighties, our results indicate that the EU might privilege market based instruments in order to meet more effectively the 2030 targets, especially through the channels of innovation and productivity enhancement.
    Keywords: environmental regulation, productivity, innovation, Porter hypothesis
    JEL: D24 Q50 Q55 O47 O31
    Date: 2015–11
  13. By: Dreßler, Daniel; Scheuering, Uwe
    Abstract: This paper empirically estimates the effects of a new thin-capitalization rule on the financing behavior of German corporations employing a fixed effects difference-in-difference approach. We compare treatment and control groups separated by a hypothetical application of the new rule in three years before its introduction. Our analysis does not provide empirical evidence for a pure interest barrier effect. This indicates that the few affected firms were either unable to reduce their leverage or used exceptions. The observable trend towards less debt might stem from a general preference for lower debt ratios after the crisis or from the tax rate cut, which was introduced simultaneously.
    Keywords: Capital Structure,Corporate Taxation,Interest Barrier,Empirical Analysis,Firm-Level Data
    JEL: F23 H25 H32
    Date: 2015
  14. By: Huijie Yan (Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS)
    Abstract: The goal of sustainable development is far from being achieved in China. In this context, this paper aims to provide an overview of China’s energy, environment and health policies over the past 30 years and discuss whether the previous policies have fully integrated the energy, environment and health issues in its sustainable development agenda. From the overview, we observe that the energy policies accelerating energy industrial upgrading, stimulating development of new energy sources, deregulating energy pricing mechanism, promoting energy saving and seizing the opportunity of green growth are conducive to an improvement of environmental conditions and public health in China. However, the environmental policies are not effectively implemented and subsequently they could not succeed in reducing environmental risks on public health and putting pressure on enterprises to efficiently use energy. The health policies have not taken real actions to focus with any specificity on energy-induced or pollution-induced health problems.
    Keywords: Energy, Environment, Health, China
    JEL: Q48 Q53 Q58 I18
    Date: 2015–11–10
  15. By: Anto BAJO (Institute of public finance, Zagreb, Croatia); Marko PRIMORAC (University of Zagreb, Faculty of Economics and Business, Zagreb, Croatia.)
    Abstract: The aim of this paper is to present basic characteristics of state-owned enterprises in Croatia, assess their financial operations and identify major trends in their operations and long-term development prospects. The analysis is carried out for the period from 2009 to 2013. The paper gradually examines financial operations, management system and the systems of accountability and transparency. The particular emphasis is on the comparative overview of major state-owned enterprises’ missions and the extent to which they serve public purposes. Moreover, the paper evaluates capital investment plans and provides proposals for the reform of state-owned enterprises in Croatia. In all state-owned enterprises, a serious organizational restructuring - adjustment of the organizational structure and number of employees is still expected
    Keywords: state owned enterprise, financial operation, management, accountability, capital investment.
    Date: 2015–08

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