nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2016‒02‒17
23 papers chosen by
João José de Matos Ferreira
Universidade da Beira Interior

  1. Innovation and Employment Growth in Japan: An empirical analysis based on micro data of the Basic Survey of Business Structure and Activity (Japanese) By YoungGak KIM; IKEUCHI Kenta; KWON Hyeog Ug; FUKAO Kyoji
  2. Joint R&D subsidies, related variety, and regional innovation By Broekel, Tom; Brachert, Matthias; Duschl, Matthias; Brenner, Thomas
  3. Firm R&D Investment and Export Market Exposure By Vuong, Van Anh; Peters, Bettina; Roberts, Mark
  4. Cross-Border M&As and Innovative Activity of Acquiring and Target Firms By Stiebale, Joel
  5. Science, Innovation and National Growth By Brenner, Thomas
  6. The Future Development of EU Industry in a Global Context By Sandra M. Leitner; Manuel Marcias; Daniel Mirza; Robert Stehrer; Roman Stöllinger
  7. Who Works for Whom? Worker Sorting in a Model of Entrepreneurship with Heterogeneous Labor Markets By Dinlersoz, Emin; Hyatt, Henry R.; Janicki, Hubert P.
  8. Endogenous competition exposure: China's rise, intra-industry and intra-firm reallocations By Gampfer, Benjamin; Geishecker, Ingo
  9. Exports, agglomeration and workforce diversity: An empirical assessment for German establishments By Brunow, Stephan; Grünwald, Luise
  10. Research Joint Ventures and Technological Proximity By Müller, Aranja; Zaby, Alexandra
  11. The effects of cultural distance on multi-unit firms By Rydzek, Benedikt; Egger, Peter; Riezman, Raymond
  12. When Does HRM 'Work' in Small British Enterprises? By White, Michael; Bryson, Alex
  13. Competitividade industrial, complexidade e intensidade tecnológica em Portugal By Gustavo Britto; João Prates Romero; Elton Freitas; Marcelo Tonne; Clara Coelho
  14. A Principal-Agent Model of Competition Law Compliance By Herold, Daniel
  15. International Knowledge Spillovers: The Benefits from Employing Immigrants By Hiller, Sanne; Bitzer, Jürgen; Gören, Erkan
  16. The Role of Toeholds and Capital Gain Taxes for Corporate Acquisition Strategies By Stimmelmayr, Michael; Liberini, Federica; Russo, Antonio
  17. The long-run effect of foreign direct investment on total factor productivity in developing countries: A panel cointegration analysis By Herzer, Dierk
  18. Specialized human capital, unemployment risk, and the value premium By Jank, Stephan
  19. Strategic Formation of Homogeneous Bargaining Networks By Gauer, Florian
  20. Cooperation, motivation and social balance By Bosworth, Steven; Singer, Tania; Snower, Dennis J.
  22. How does the development of the financial industry advance renewable energy? A panel regression study of 198 countries over three decades By Scholtens, Bert; Veldhuis, Rineke
  23. The science of monetary policy: an imperfect knowledge perspective By Stefano Eusepi; Bruce Preston

  1. By: YoungGak KIM; IKEUCHI Kenta; KWON Hyeog Ug; FUKAO Kyoji
    Abstract: Using firm level panel data taken from the Basic Survey of Japanese Business Structure and Activities between 1991 and 2010, we examine the relationship between innovation, excessive labor, and employment growth in Japan. The main results of this paper are as follows: (1) There are relatively many firms holding excessive labor. (2) The degree of the excessive labor is serious for large firms. (3)Firms do not adjust employment instantly. If excessive labor for the current term exists, firms gradually reduce employment. This result is consistent with theoretical model considering adjustment cost. (4) Other things being equal, as firms invest aggressively in research and development (R&D), they increase employment. (5) The negative correlation between total factor productivity (TFP) growth and employment growth is observed, whereas TFP growth by R&D has a positive impact on employment. (6) The product innovation that is proxied by R&D positively affects employment in the manufacturing sector. On the other, in the non-manufacturing sector, the process innovation that is proxied by capital formation increases employment.
    Date: 2016–01
  2. By: Broekel, Tom; Brachert, Matthias; Duschl, Matthias; Brenner, Thomas
    Abstract: Subsidies for R&D are an important tool of public R&D policy, which motivates extensive scientific analyses and evaluations. The paper adds to this literature by arguing that the effects of R&D subsidies go beyond the extension of organizations monetary resources invested into R&D. It is argued that collaboration induced by subsidized joint R&D projects yield significant effects that are missed in traditional analyses. An empirical study on the level of German labor market regions substantiates this claim showing that collaborative R&D subsidies impact regions innovation growth when providing access to related variety and embedding regions into central positions in cross- regional knowledge networks.
    JEL: L14 O31 R12
    Date: 2015
  3. By: Vuong, Van Anh; Peters, Bettina; Roberts, Mark
    Abstract: In this paper, we estimate a dynamic structural model of a rm s decision to invest in R&D and use it to measure the expected long-run bene t from R&D investment. We apply the model to German rms in ve high-tech manufacturing industries and distinguish rms by whether they sell in just the domestic market or also export some of their production. We nd that R&D investment leads to a higher rate of product and process innovation among exporting rms and these innovations have a larger impact on productivity improvement in export market sales. As a result, exporting rms have a higher payo from R&D investment, invest in R&D more frequently than rms that only sell in the domestic market, and, subsequently, have higher rates of productivity growth. The endogenous investment in R&D is an important mechanism that leads to a divergence in the long-run performance of rms that di er in their export market exposure.
    JEL: L60 O31 O33
    Date: 2015
  4. By: Stiebale, Joel
    Abstract: This paper analyzes the effects of cross-border mergers and acquisitions (M&As) on the innovation of European firms. The results indicate a considerable increase in post-acquisition innovation in the merged entity. This is mainly driven by inventors based in the acquirer's country, while innovation in the target's country tends to decline. The asymmetry of effects between acquiring and target firms increases with pre-acquisition differences in knowledge stocks, indicating a relocation of innovative activities towards more efficient usage within multinational firms. Instrumental variable techniques as well as a propensity-score matching approach indicate that the effect of cross-border M&As on innovation is causal.
    JEL: F23 D22 G34
    Date: 2015
  5. By: Brenner, Thomas
    Abstract: This paper studies the effects of public research (publications) and innovation output (patents) on national economic growth with the help of a GMM panel regression including 114 countries. Effects on productivity growth and capital and labor inputs are distinguished. Furthermore, different time lags are examined for the various analyzed effects and two time periods as well as less and more developed countries are studied separately. The results confirm the effect of innovation output on productivity for more developed countries. Simultaneously, innovation output is found to have negative impacts on capital and labor inputs, while public research is found to have positive impacts on labor inputs.
    JEL: O11 O31 C23
    Date: 2015
  6. By: Sandra M. Leitner (The Vienna Institute for International Economic Studies, wiiw); Manuel Marcias; Daniel Mirza; Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw); Roman Stöllinger (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Summary Global trade patterns are changing rapidly. Emerging economies are increasing their share of exports overall and intensifying competition in nearly all sectors. Low-cost advantage initially helped emerging economies, particularly China, penetrate low technology labour intensive sectors. More recently, emerging economies have started to compete in higher value-added sectors where European industries have traditionally had comparative advantage. Greater trade integration has also led to a dispersion of value chains well beyond national borders, increasing the granularity of trade. In this rapidly changing context, it is valuable to predict the future profile of EU exports so that the results can inform current policy. Using a model based approach this report examines the future profile of EU exports at sector and aggregate level in terms of trade volumes and quality competitiveness. A value chain approach allows then to quantify impacts on sectoral value added and GDP.
    Keywords: trade patterns, gravity, scenarios, quality of trade, GDP impact
    JEL: F14 F17
    Date: 2016–01
  7. By: Dinlersoz, Emin (U.S. Census Bureau); Hyatt, Henry R. (U.S. Census Bureau); Janicki, Hubert P. (U.S. Census Bureau)
    Abstract: Young and small firms are typically matched with younger and nonemployed individuals, and they provide these workers with lower earnings compared to other firms. To explore the mechanisms behind these facts, a dynamic model of entrepreneurship is introduced, where individuals can choose not to work, become entrepreneurs, or work in one of the two sectors: corporate or entrepreneurial. The differences in production technology, financial constraints, and labor market frictions lead to sector-specific wages and worker sorting across the two sectors. Individuals with lower assets tend to accept lower-paying jobs in the entrepreneurial sector, an implication that finds support in the data. The effect on the entrepreneurial sector of changes in key parameters is also studied to explore some channels that may have contributed to the decline of entrepreneurship in the United States.
    Keywords: entrepreneurship, borrowing constraints, financial frictions, labor market frictions, worker sorting, decline in entrepreneurship
    JEL: L26 J21 J22 J23 J24 J30 E21 E23 E24
    Date: 2016–01
  8. By: Gampfer, Benjamin; Geishecker, Ingo
    Abstract: In this paper we analyse the manufacturing sector's capacity to mitigate increasing import competition from China. In our view, competition exposure is endogenous, i.e. influenced by firms' decisions which products are sold and what markets are served. We construct a counterfactual competition measure to assess the importance of different types of adaptation to increased competition: inter- and intra-industry reallocations, firm entry and exit, and product- and destination switching, among others. Combining Danish firm register data with transactional level trade statistics we are able to track product-level competition changes on the domestic as well as on each export market. Between 1997 and 2008 aggregated manufacturing level exposure to Chinese imports increased by 177 per cent but counterfactually would have increased by remarkable 283 per cent had the manufacturing sector not successfully adapted. The mitigation of sector level competition exposure works through all adaptation channels, notably firm entry and exit, and inter-industry reallocations. However, for surviving firms, product and destination switching are very relevant mechanisms to mitigate increased competitive pressure from China.
    JEL: F14 L60
    Date: 2015
  9. By: Brunow, Stephan; Grünwald, Luise
    Abstract: Theoretical and empirical contributions on export behavior highlight the importance of firms' productivity and their levels of economies of scale on firms' export success in `foreign markets. In the context of agglomeration economies, firms enjoy produc-tivity gains when they are located close to competitors or upstreaming industries and they benefit from knowledge spillovers and other positive externalities. In such a stimulating environment, firms become more prone to be exporters. Beyond the role played by externalities, firms may benefit when they employ a diverse workforce and when the interaction of distinct knowledge and related problem-solving abilities increases productivity and secures export success. In this paper, we ask whether German firms (i.e., establishments) benefit from localization and urbanization exter-nalities and face higher export proportions. We also control for a variety of estab-lishment characteristics and workforce diversity. For this purpose, a comprehensive German data set that combines survey data and administrative data is used. While controlling for firm heterogeneity in a fractional response model, we provide evi-dence that manufacturing establishments and smaller establishments (up to 250 employees) benefit most from externalities and especially from knowledge spillover. There is weak evidence supporting the benefit of workforce diversity; however, that factor could explain between-establishment variation.
    JEL: D22 F14 M14
    Date: 2015
  10. By: Müller, Aranja; Zaby, Alexandra
    Abstract: We study research joint ventures (RJV) given that knowledge spillovers depend positively on the technological proximity between rms. Possible scenarios differ in the intensity of collaboration, i.e., the (non)coordination of research activities and the extent of knowledge sharing. The investigation of bilateral RJVs in an oligopolistic market allows to distinguish e ects for insider and outsider rms. Our central ndings are (i) RJVs do not generally outperform competitive research with respect to innovative output, and social welfare. (ii) Technological proximity and the intensity of cooperation play a decisive role for the private and social favorability of a RJV. (iii) Joint research combined with complete knowledge sharing outperforms less intensive cooperation forms.
    JEL: D43 L13 O31
    Date: 2015
  11. By: Rydzek, Benedikt; Egger, Peter; Riezman, Raymond
    Abstract: In this paper we develop a model to analyze the effects of (country-pair-specific) costs of creating, transferring and accessing intangible assets for multi-unit firms. These costs might vary with the cultural distance between countries, such as the difference in language, work ethics or other moral values. We argue that these costs are an important factor to explain why most firms are single unit firms, most multi-unit firms have only one affiliated unit and why multinational firms are only a tiny fraction of all firms in a country. Therefore, we develop a model with heterogeneous firms that produce differentiated goods in different firm units. The number of units depends on the costs of transferring intangible assets. If these costs are relatively high, most firms will be single unit firms. Furthermore, if costs of transferring intangible assets to an affiliated firm in a foreign country are even higher, only the most productive firms will be multinational firms. Additionally, multinational firms will be open more affiliated firms in countries that are culturally closer to their home country. These findings square with stylized facts and estimation results presented in the paper.
    JEL: F23 L11 L25
    Date: 2015
  12. By: White, Michael (Policy Studies Institute); Bryson, Alex (University College London)
    Abstract: Using nationally representative workplace data we find substantial use of high-performance work systems (HPWS) in Britain's small enterprises. We find empirical support for the proposition that HPWS have a non-linear association with employees' overall job attitude, with a positive association apparent where HPWS are used intensively. These associations are robust to factors often cited as obstacles to HPWS implementation such as informality and family ownership.
    Keywords: human resource management, high-performance work system, small firms, organisational commitment, job satisfaction
    JEL: J28 M50 M54
    Date: 2016–01
  13. By: Gustavo Britto (Cedeplar-UFMG); João Prates Romero (n/a); Elton Freitas (Cedeplar-UFMG); Marcelo Tonne (Cedeplar-UFMG); Clara Coelho (Cedeplar-UFMG)
    Abstract: This paper expands the methodology developed by Hidalgo et al. (2007), Hausman et al. (2007) and Hidalgo and Hausman (2009) to analyse the relationship between structural change, economic complexity and technological intensity in Portugal. To this end, product space networks as well as indicators of revealed relative (dis)advantages are built and analysed from 1980 to 2010. The results show that in spite of a loss in terms of competitiveness in high-technology goods, Portugal’s long term trend is promising, giving the improvement of the network in terms of goods of intermediate technological intensity and the reduction of the share of primary and primary based goods in total exports. This trend reflects the systematic improvement of the sophistication index of the Portuguese trade after the establishment of the European Union.
    Keywords: Economic Complexity; Capabilities; Product Space, Brazil; South Korea
    JEL: O14 O19 O57 F14
    Date: 2015–11
  14. By: Herold, Daniel
    Abstract: This paper analyzes firm owners' incentives to implement Competition Law Compliance Programs as imperfect monitoring devices in a principal-agent setup and the interaction effects with bonus contracts. The manager chooses working effort and has the option to cartelize. The model reveals a non-monotonic relationship between profit targets and incentives to collude. Contrary to intuition, it might be the case that low instead of high profit targets facilitate collusion. This result is driven by the threat of detection and punishment. A Compliance Program deters the agent from misbehavior and enhances effort as long as the agent did not engage in collusive activity. Additionally, the owner can use the Program as an insurance against fines.
    JEL: D21 D82 D02
    Date: 2015
  15. By: Hiller, Sanne; Bitzer, Jürgen; Gören, Erkan
    Abstract: This paper explores the role of immigrant employees for a firm's capability to absorb international knowledge. Using matched employer-employee data from Denmark for the years 1999 to 2009, we are able to show that non-Danish employees from technological advanced countries contribute significantly to firm's economic output through their ability to access international knowledge. The empirical results suggest that the immigrants' impact increases if they come from technological advanced countries, have a high educational level, and are employed in high-skilled positions. However, the latter does not hold for immigrant managers.
    JEL: D20 J82 L20
    Date: 2015
  16. By: Stimmelmayr, Michael; Liberini, Federica; Russo, Antonio
    Abstract: Ownership takeovers often follow complex strategies where the control of the target firm is acquired through a sequence of independent contracts. We study the role of capital gain taxes on the contract structure and on the method of finance of merger and acquisitions (M&As). We find that capital gain taxes discourage cash-to-stock transactions and that this effect is stronger in sequential acquisitions. In addition, we show that capital gain taxes promote sequential acquisitions and thus carry a beneficial welfare effect by avoiding the waste of productive resources due to unprofitable mergers. We provide empirical support for the model predictions by estimating a bivariate probit on a sample of acquisition contracts collected from the Thomson Financial SDC database.
    JEL: G34 H25 C35
    Date: 2015
  17. By: Herzer, Dierk
    Abstract: This paper examines the long-run effect of the level of foreign direct investment (FDI) on the level of total factor productivity (TFP) for 70 developing countries for the period 1981-2011 using panel cointegration techniques. It is found that (i) FDI has, on average, a negative long-run effect on TFP in developing countries; (ii) causality runs in only one direction, from FDI to TFP, and (iii) the long-run effect of FDI of TFP differs between selected groups of countries: while the estimated long-run FDI-TFP coefficients are significantly negative for subsamples of countries with lower levels of human capital, financial development, and trade openness, the coefficients are insignificant or significantly positive for subgroups of countries with higher levels of human capital, financial development, and trade openness.
    JEL: F21 O47 C23
    Date: 2015
  18. By: Jank, Stephan
    Abstract: To determine whether negative shocks to specialized human capital are priced in the cross section of stock returns, this study measures shocks to industry-specific human capital by employment growth in that industry. In industries in which employment contracts, exposure to the value factor is significantly higher than in industries in which employment expands. Cross-sectional predictive regressions and hedging portfolio returns document that stocks belonging to industries with low employment growth have higher expected returns than stocks belonging to industries with high employment growth. The return premium related to employment growth is pervasive across small, big, and micro stocks, as well as when micro stocks are excluded. The premium cannot be explained by the capital asset pricing model, but the hedging portfolio's payoffs are inversely related to that of the value-minus-growth risk factor.
    JEL: G10 G11 G12
    Date: 2015
  19. By: Gauer, Florian
    Abstract: We analyze a model of strategic network formation prior to a Manea (2011) bargaining game: ex-ante homogeneous players form an undirected network with explicit linking costs anticipating expected equilibrium payoffs from the subsequent sequential network bargaining. Assuming patient players, we provide a complete characterization of networks being pairwise (Nash) stable on a cost interval of positive length: specific disjoint unions of separated pairs, odd circles and isolated players constitute this class. Even for all single cost levels we are able to exclude a wide range of structures from being pairwise stable, including all other equitable networks. As an important implication, this reveals the diversity of possible bargaining outcomes to be substantially narrowed down provided pairwise stability. Further, we find that for sufficiently high costs the pairwise stable and efficient networks coincide whereas this does not hold if costs are low or at an intermediate level. As a robustness check, we also study the case of time-discounting players.
    JEL: C72 C78 D85
    Date: 2015
  20. By: Bosworth, Steven; Singer, Tania; Snower, Dennis J.
    Abstract: This paper examines the reflexive interplay between individual decisions and social forces to analyze the evolution of cooperation in the presence of "multi-directedness", whereby people's preferences depend on their psychological motives. People have access to multiple, discrete motives. Different motives may be activated by different social settings. Inter-individual differences in dispositional types affect the responsiveness of people's motives to their social settings. The evolution of these dispositional types is driven by changes in the frequencies of social settings. In this context, economic policies can influence economic decisions not merely by modifying incentives operating through given preferences, but also by influencing people's motives (thereby changing their preferences) and by changing the distribution of dispositional types in the population (thereby changing their motivational responsiveness to social settings).
    Keywords: motivation,reflexivity,cooperation,social dilemma,endogenous preferences,dispositions
    JEL: A13 C72 D01 D03 D62 D64
    Date: 2016
  21. By: Stijepic, Denis; Wagner, Helmut
    Abstract: Recent literature studies structural change and aggregate dynamics in neoclassical multi-sector growth models. A central aspect of this literature is the explanation of Kaldor-Kuznets-stylized-facts , which state that massive structural change takes place while aggregate-dynamics are relatively stable in the long-run. We present a growth model analysing the role of government in structural change and aggregate growth. We show that, besides distortionary effects on the sector structure, the provision of government services has an impact on the intertemporal elasticity of substitution of the representative household and, thus, on aggregate dynamics. These results can be used to explain the Kaldor-Kuznets-facts.
    JEL: O41 O38 O14
    Date: 2015
  22. By: Scholtens, Bert; Veldhuis, Rineke
    Abstract: Abstract We investigate how the development of the financial industry connects with renewable energy. We analyze 198 countries over three decades in various model settings (fixed effects, random effects, dynamic panel). We use a wide range of proxies for the development of the financial industry and establish that in general this development has a positive impact on renewable energy capacity. Especially, the relative size of the commercial banking industry as well as of private credit and the size of the financial industry play a crucial role in advancing renewable energy investments.
    JEL: C33 E22 G10
    Date: 2015
  23. By: Stefano Eusepi; Bruce Preston
    Abstract: New Keynesian theory identifies a set of principles central to the design and implementation of monetary policy. These principles rely on the ability of a central bank to manage expectations precisely, with policy prescriptions typically derived under the assumption of perfect information and full rationality. In consequence the prevailing policy regime is credible and correctly understood by market participants. Despite considerable advances in understanding, recent events have engendered a reevaluation of the theory and practice of monetary policy. The challenging macroeconomic environment bequeathed by the financial crisis has led many to question the efficacy of monetary policy, and, particularly, question whether central banks can influence expectations with as much control as previously thought. The objective of this survey is to review what is understood about the challenges to the New Keynesian paradigm posed by imperfect knowledge and to assess the degree of confidence with which one should hold the basic prescriptions of modern monetary economics.
    Date: 2016–02

This nep-cse issue is ©2016 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.