nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2016‒07‒23
sixteen papers chosen by
João José de Matos Ferreira
Universidade da Beira Interior

  2. External search for exploration of future discontinuities and trends: Implications from the literature using co-citation and content analysis By Heuschneider, Sara; Herstatt, Cornelius
  3. Why does he get award? Comparison of innovative thinking points By Jen Chia Chang; Hsi Chi Hsiao; Su Chang Chen; Tien Li Chen; Pei Jou Chiu
  4. Technology and Innovation Policies for Small and Medium-Sized Enterprises in East Asia By Intarakumnerd, Patarapong; Goto, Akira
  5. Advertising, Innovation and Economic Growth By Pau Roldan; Laurent Cavenaile
  6. The role of innovation and agglomeration for employment growth in the environmental sector By Horbach, Jens; Janser, Markus
  7. Do Manufacturing Firms Benefit from Services FDI? – Evidence from Six New EU Member States By Damijan, Jože; Kostevc, Črt; Marek, Philipp; Rojec, Matija
  8. Fashion, fads and the popularity of choices: micro-foundations for non-equilibrium consumer theory By Jean-Francois Mercure
  9. Isolation and Innovation – Two Contradictory Concepts? Explorative Findings from the German Laser Industry By Kudic, Muhamed; Ehrenfeld, Wilfried; Pusch, Toralf
  10. Where to Locate Innovative Activities in Global Value Chains: Does Co-location Matter? By Rene Belderbos; Leo Sleuwaegen; Dieter Somers; Koen De Backer
  11. The effect of labor flows, ownership and skill-relatedness on firm productivity By Zsolt Csáfordi; László Lőrincz; Balázs Lengyel; Károly Miklós Kiss
  12. Economic issues of innovation clusters-based industrial policy : a critical overview By Iritié, B. G. Jean Jacques
  13. Chinese investments in Africa: what have we known and what should we know? By Alexis Abodohoui; Marie-Helene Regniere; Zhan Su
  14. The Effect of attitude toward aging on ICT adoption: the Readiness of user By Ju-Chuan Wu; Chih-Jou Chen
  15. Product Mix and Firm Productivity Responses to Trade Competition By Mayer, Thierry; Melitz, Marc J; Ottaviano, Gianmarco

    Abstract: Many small to medium scale enterprises (SMEs) in emerging economies are yet to adopt supply chain management practices. However, they have realised the strategic importance of supply chain management as a tool for optimum business performance. This paper examined the importance of service quality, dynamic capabilities and relationship continuity as mechanisms for the enhancement of supply chain performance in SMEs. Participants in the study included a total of 348 SME managers who were based in South Africa. Data were analysed using the Statistical Packages for the Social Sciences (SPSS version 23.0). Spearman correlations were used to determine the strength of the relationship between constructs. Regression analysis was used to test for prediction between the dependant and independent constructs. The results of the correlation tests showed significant positive correlations between supply chain performance and two constructs; service quality and dynamic capabilities. Regression analysis showed that service quality and dynamic capabilities significantly predicted supply chain performance. A comparison of the betas showed that service quality exerts greater influence on supply chain performance than the other two constructs. The study is significant in that it facilitates improved diagnosis of supply chain performance challenges amongst SMEs in emerging economies.
    Keywords: Service quality, dynamic capabilities, relationship continuity, SME
    JEL: L22 M00
  2. By: Heuschneider, Sara; Herstatt, Cornelius
    Abstract: To stay ahead of the competition, firms need to constantly adapt to the changing environment by identifying new opportunities and product innovations. The search for future discontinuities and trends using external knowledge sources enables firms to develop a foresight capability to proactively shape future direction and to improve innovation capacity. Recent open innovation literature discusses external search strategies and their impact on innovation performance. In order to investigate the implications of these findings for external search in the context of foresight, this paper aims to systematically analyze the current focus and intellectual structure of the external search field by means of co-citation and content analysis. Findings indicate a strong focus of the research field on the external search for innovations, e.g. for new product ideas and problem solutions throughout the innovation process. However, it is so far poorly understood how firms can employ external search to detect future discontinuities and trends in the environment. To address this knowledge gap, dimensions of search strategies are derived from the current external search literature and are assessed with respect to their relevance for search in the context of foresight. In the course of the discussion, the breadth and depth of external search as well as the technological, geographical and relational distance of search are found to be relevant dimensions of external search strategies for identifying future developments. The identified dimensions can serve as a starting point to further investigate how firms can benefit from different external search strategies to identify discontinuities and trends in the environment. The paper closes with practical implications and suggestions for further research in this area.
    Keywords: external search,corporate foresight,discontinuities,trends,innovation management,search strategies
    Date: 2016
  3. By: Jen Chia Chang (Graduate Institute of Technological & Vocational Education, National Taipei University of Technology); Hsi Chi Hsiao (Department of Business Administration, Cheng Shiu University); Su Chang Chen (Institute of service management, National Penghu University of Science and Technology); Tien Li Chen (Department of Industrial Design, National Taipei University of Technology); Pei Jou Chiu (Graduate Institute of Technological & Vocational Education, National Taipei University of Technology)
    Abstract: Innovation is an important basis for successfully gaining global market shares in the era of technological changes. In order to maintain national competitiveness, the government attaches great importance to innovative thinking ability. To this end, throughout various stages of education in Taiwan, creativity competitions are held. Among them, at universities and colleges, annual innovation and entrepreneurship competitions are held; at vocational high schools, national creativity project work competitions are held. In this study, award-winning students from the two competitions were selected. The creative concept design capability scale was adopted to compare the award winners and non-winners in terms of differences in innovative thinking points. The creative concept design capability scale was used to assess the gap among students who received training, college project instructors, and student innovative thinking points. Findings show that the overall innovative thinking points are mostly concentrated in the appearance. University/college of technology or vocational high school competition award winners alike have a significantly higher total score compared to the total innovative thinking points score of regular university/college of technological teachers and students. However, as to the innovative thinking points for different categories, university and college award winners of innovation entrepreneurship competitions tend to put the chemical change of innovative thinking points to better uses; vocational high school award winners of creativity project work competitions tend to put the external size and external texture layout of innovative thinking points to better uses. The university and college students on the project team are better able to use the physical changes, structural complexity, operability, shape changes, functional enhancement, and usage enhancement of the innovative thinking points. This study recommends that students select more related professional practical courses to “learn by doing†. Students are encouraged to participate in off-campus learning activities or creativity competitions so that they can broaden their horizons. As for teaching, teachers may lead students in site visits to learn about innovative products in the industry. The course design combines theory and practice, case discussions are examples of which.
    Keywords: Innovative thinking points, Competition award winner, Creativity
    JEL: I20 I23 I29
  4. By: Intarakumnerd, Patarapong (Asian Development Bank Institute); Goto, Akira (Asian Development Bank Institute)
    Abstract: Policies for stimulating technological development and innovation in small and medium-sized enterprises can be divided into three groups. Supply-side policies aim at increasing firms’ incentives to invest in innovation by reducing costs. Demand-side policies are public actions to induce innovation and/or speed up the diffusion of innovation. Systemic policies focus on strengthening interactive learning between actors in innovation systems. Policies can be implemented through various instruments comprising tax incentives, grants or direct subsidies, low-interest loans, and the government’s direct equity participation. These instruments have pros and cons. The experiences of four late-industrializing East Asian economies—Taipei,China; Singapore; Malaysia; and Thailand—provide key lessons. Firms at different levels of technological and innovative capability need different policy instruments. The more successful economies have a higher level of flexibility and policy coordination and learning. The amount, duration, and continuity of government supporting schemes are crucial. Policy makers must have a deep understanding of what constitutes innovations and innovation systems, and how they evolve over time. Innovation financing policies require other corresponding policy initiatives to make them successful. Lastly, institutional factors do shape the choices and effective implementation of these policies.
    Keywords: technological development; East Asia SMEs; diffusion of innovation; demand-side policies
    JEL: D22 L25 O31
    Date: 2016–07–20
  5. By: Pau Roldan (New York University); Laurent Cavenaile (New York University)
    Abstract: We develop a model of firm dynamics through product innovation that explicitly incorporates advertising decisions by firms. We model advertising by constructing a framework that unifies a number of facts identified by the empirical marketing literature. The model is then used to explain several empirical regularities across firm sizes using U.S. data. Through a novel interaction between R&D and advertising, we are able to explain empirically observed deviations from Gibrat’s law, as well as the behavior of advertising expenditures across firms, the degree of substitution between R&D and advertising expenditures as firms grow large, and broadly the effects of advertising on both firm and economic growth. We find that smaller firms can be both more innovation- and advertising-intensive as in the data even when there exist increasing returns to scale in research.
    Date: 2016
  6. By: Horbach, Jens; Janser, Markus (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "The environmental sector is supposed to yield a dual benefit: its goods and services are intended to help to tackle environmental challenges and its establishments should create new jobs. However, it is still unclear in empirical terms whether that really is the case. This paper investigates whether employment growth in 'green' establishments with 'green' products and services is higher compared to other establishments. Furthermore, the main factors determining labor demand in this field are analyzed. We use linked employment and regional data for Germany. The descriptive results show that the environmental sector is characterized by disproportionately high employment growth. The application of both a generalized linear mixed model and an instrumental variables regression reveals that especially innovation and industry agglomeration foster employment growth in establishments in the environmental sector. Establishments without green products and services show a smaller increase in employment, even if they are also innovative." (Author's abstract, IAB-Doku) ((en))
    Keywords: Umweltschutzindustrie, Beschäftigungseffekte, Innovation, Arbeitskräftenachfrage
    JEL: J23 Q52 Q55 R23
    Date: 2015–05–28
  7. By: Damijan, Jože; Kostevc, Črt; Marek, Philipp; Rojec, Matija
    Abstract: This paper focuses on the effect of foreign presence in the services sector on the productivity growth of downstream customers in the manufacturing sector in six EU new member countries in the course of their accession to the European Union. For this purpose, the analysis combines firm-level information, data on economic structures and annual national input-output tables. The findings suggest that services FDI may enhance productivity of manufacturing firms in Central and Eastern European (CEE) countries through vertical forward spillovers, and thereby contribute to their competitiveness. The consideration of firm characteristics shows that the magnitude of spillover effects depends on size, ownership structure, and initial productivity level of downstream firms as well as on the diverging technological intensity across sector on the supply and demand side. The results suggest that services FDI foster productivity of domestic rather than foreign controlled firms in the host economy. For the period between 2003 and 2008, the findings suggest that the increasing share of services provided by foreign affiliates enhanced the productivity growth of domestic firms in manufacturing by 0.16%. Furthermore, the firms' absorptive capability and the size reduce the spillover effect of services FDI on the productivity of manufacturing firms. A sectoral distinction shows that firms at the end of the value chain experience a larger productivity growth through services FDI, whereas the aggregate positive effect seems to be driven by FDI in energy supply. This does not hold for science-based industries, which are spurred by foreign presence in knowledge-intensive business services.
    Keywords: production,cost,capital,total factor and multifactor productivity,capacity,economic integration
    JEL: D24 F15
    Date: 2015
  8. By: Jean-Francois Mercure
    Abstract: Knowledge acquisition by consumers is a key process in the diffusion of innovations. However, in standard theories of the representative agent, agents do not learn and innovations are adopted instantaneously. Here, we show that in a discrete choice model where utility-maximising agents with heterogenous preferences learn about products through peers, their stock of knowledge on products becomes heterogenous, fads and fashions arise, and transitivity in aggregate preferences is lost. Non-equilibrium path-dependent dynamics emerge, the representative agent exhibits behavioural rules different than individual agents, and aggregate utility cannot be optimised. Instead, an evolutionary theory of product innovation and diffusion emerges.
    Date: 2016–07
  9. By: Kudic, Muhamed; Ehrenfeld, Wilfried; Pusch, Toralf
    Abstract: We apply a network perspective and study the emergence of core-periphery (CP) structures in innovation networks to shed some light on the relationship between isolation and innovation. It has been frequently argued that a firm's location in a densely interconnected network area improves its ability to access information and absorb technological knowledge. This, in turn, enables a firm to generate new products and services at a higher rate compared to less integrated competitors. However, the importance of peripheral positions for innovation processes is still a widely neglected issue in literature. Isolation may provide unique conditions that induce innovations which otherwise may never have been invented. Such innovations have the potential to lay the ground for a firm's pathway towards the network core, where the industry's established technological knowledge is assumed to be located. The aim of our paper is twofold. Firstly, we propose a new CP indicator and apply it to analyze the emergence of CP patterns in the German laser industry. We employ publicly funded Research and Development (R&D) cooperation project data over a period of more than two decades. Secondly, we explore the paths on which firms move from isolated positions towards the core (and vice versa). Our exploratory results open up a number of new research questions at the intersection between geography, economics and network research.
    Abstract: Wir legen eine Netzwerkperspektive zugrunde und untersuchen die Entstehung von Kern-Peripherie- (CP-) Strukturen in Innovationsnetzwerken, um den Zusammenhang zwischen Isolation und Innovation vertiefend zu beleuchten. In bisherigen Studien wurde argumentiert, dass die Lage eines Unternehmens in dicht verknüpften Bereichen eines Netzwerks seine Fähigkeit verbessert, auf Informationen zuzugreifen und technologisches Wissen zu absorbieren. Dies erlaubt es solchen Unternehmen, neue Produkte und Dienstleistungen in einem höheren Maße zu generieren als weniger integrierte Konkurrenzunternehmen. Die Bedeutung peripherer Positionen für Innovationsprozesse ist jedoch bisher ein weitestgehend vernachlässigter Aspekt in der Literatur. Isolation kann ein einzigartiges Umfeld bereitstellen, das Innovationen induzieren kann, die anderenfalls niemals entstanden wären. Solche Innovationen können die Grundlage für den Pfad eines Unternehmens in Richtung des Netzwerk-Kerns bilden, von dem angenommen wird, dass sich dort das in der Branche etablierte technologische Wissen konzentriert. Unser Beitrag verfolgt zwei Ziele. Erstens schlagen wir einen neuen CP-Indikator vor und wenden ihn an, um die Entstehung von CP-Strukturen in der deutschen Laserindustrie zu analysieren. Dazu verwenden wir Projektdaten zu öffentlich geförderten Kooperationen über einen Beobachtungszeitraum von mehr als zwei Jahrzehnten. Zweitens untersuchen wir die Pfade, auf denen sich Unternehmen aus isolierten Positionen in Richtung des Kerns bewegen (und umgekehrt). Unsere Ergebnisse eröffnen eine Reihe von Fragestellungen an der Schnittstelle zwischen Geographie, Wirtschaft und Netzwerkforschung.
    Keywords: innovation networks,core-periphery,laser industry,Innovationsnetzwerke,Kern-Peripherie,Laserindustrie
    JEL: C45 D85 O31 O32
    Date: 2015
  10. By: Rene Belderbos; Leo Sleuwaegen; Dieter Somers; Koen De Backer
    Abstract: With the emergence of global value chains (GVCs), production processes are increasingly fragmented and dispersed across different countries. Although many MNEs still exhibit an important ‘home bias’ in their global innovation activities, a growing number of firms have offshored R&D and innovative activities to foreign locations. Is the more recent offshoring of R&D and innovation linked to the prior waves of manufacturing offshoring? The fear in OECD economies is that because of co-location effects between production and innovative activities, the loss of certain manufacturing/assembly activities may result in a loss of innovative capabilities (R&D, design, etc.) in the longer-term. The offshoring of R&D and innovation within GVCs poses new challenges to economic policy in OECD and emerging economies. For example, how can countries attract inward R&D investments by foreign MNEs? Should outward R&D investments by MNEs be a concern for the countries in which the MNEs are headquartered?
    Date: 2016–07–12
  11. By: Zsolt Csáfordi (Hungarian Academy of Sciences CERS, Institute of Economics); László Lőrincz (Hungarian Academy of Sciences CERS, Institute of Economics); Balázs Lengyel (Hungarian Academy of Sciences CERS, Institute of Economics); Károly Miklós Kiss (Hungarian Academy of Sciences CERS, Institute of Economics)
    Abstract: Labor flows are major source of knowledge spillover between companies, in which the characteristics of the companies play an important role. Previous research found the more productive the sending firm is he bigger effect of labor flows on the productivity of the receiving firm. Another literature claims that domestic firms benefit from labor flows from multinational enterprises (MNE). We test these arguments by analyzing an anonymized employer-employee linked panel database from Hungary for the 2003-2011 period and also look at the similarity of necessary skills in the sending and receiving firm because industry-specific skills of employee’s matter in organizational learning and therefore in productivity growth. We construct the skill-relatedness network of industries based on inter-industry labor mobility and distinguish related and non-related labor inflows by comparing the observed level of mobility to an expected level of mobility. Our results suggest that labor flows from more productive firms increases the effect of labor flows significantly. Domestic companies obtain productivity gains from labor inflows coming from MNEs; however, inflows from MNEs have the greatest positive effect if the receiving firm is also a MNE. The effect of flows from skill-related industries, and particularly from the same industry outperform the effect of flows from unrelated industries, however, these effects are mitigated by the relative productivity effect.
    Keywords: skill-relatedness network, firm productivity, knowledge spillover, labor mobility, productivity gap, firm ownership
    JEL: D22 J24 J60
  12. By: Iritié, B. G. Jean Jacques
    Abstract: Criticisms vis-à-vis cluster policy are numerous, often confusing and really unhelpful; while some authors systematically question the merits, others on the contrary play a genuine role of counsel in his favour. This paper attempts to refocus the debate and analyses the economic issues, impacts and implications of the innovation clusters policy. To do this, we take a critical view of the literature on clusters, focusing on analysis of the effects of three industrial dynamics in perpetual movement within clusters, especially research and development, industrial location and technology cooperation. We assume that innovation cluster "potentiates", by a synergistic action, the beneficial effect of each of these three industrial dynamics in favour of localised firms. However, it appears from the analysis that the hopes and expectations invested in cluster policy must be reconsidered and relativised. So the reasons for the rising power of cluster policies must be sought elsewhere than in a necessarily consensual and tangible evidence of positive impacts of clusters.
    Keywords: cluster,innovation,competitiveness pole,research and development,industrial location,technology cooperation,localised knowledge spillovers,LKS,epistemic communities
    JEL: O25 O30 R10
    Date: 2016
  13. By: Alexis Abodohoui (Laval University); Marie-Helene Regniere (Laval University); Zhan Su (Laval University)
    Abstract: This study conducts a systematic review of the researches on Chinese investments in Africa, publishing in major journals of business administration and international business over these last 10 years. It studies the motivational factors for Chinese firm’s presence in Africa, the modes of entry of Chinese investment, the management issues, and their impacts on local economy and firms. It aims to provide an organizing framework for emerging theoretical and methodological issues, as well as future research direction in this field.Based on the international business theories, the findings of this study indicated that, to date, the majority of research has attempted to either qualitatively or conceptually criticize the cooperation between China and Africa, and there are very few studies that define model and develop measurement tools to empirically test the effects of the Chinese presence in the African continent and its impacts on local enterprises. Very few studies have provided robust evidence to establish the role that China is playing and the crowding-in or crowding-out effects of the Sino-Africa cooperation. This paper discusses about 5 major flaws in the existing literature and concludes with some emerging issues, the practical implications of this review, and future research directions.
    Keywords: Chinese investments in Africa, existing researches, systematic review, major flaws, emerging issues, future research directions
    JEL: F20 F59 M16
  14. By: Ju-Chuan Wu (Department of Business Administration, Feng Chia University); Chih-Jou Chen (Department of Marketing and Logistics Management, National Penghu University of Science and Technology)
    Abstract: Due to progression of modern medication and technology, the average life span is extending, pursuing high-quality, healthy and long life growing to an old age is more desirable than ever. Taiwan is one of the fastest growing aging countries in Asia, in addition to the problem of an aging population; birth rate is also very low, nursing and elderly care might affect our financial and economic development. This research aims to explore the current situation of aging society, the gap between user’s attitude toward aging and the ICT needs for better performance of ICT innovative products and (or) service. In this study, the proposed model is composed the concepts of attitude toward aging, Innovation Diffusion Theory, and User’s Informational-Based Readiness. The research findings show that be helpful to the further application, cross-field cooperation, and long-term development between ICT and elderly service industry.
    Keywords: Aging in Place, Attitude toward aging, Information and Communication Technology (ICT), Service Innovation, Innovation Diffusion Theory Technology Readiness, User’s Informational-Based Readiness
  15. By: Mayer, Thierry; Melitz, Marc J; Ottaviano, Gianmarco
    Abstract: We document how demand shocks in export markets lead French multi-product exporters to re-allocate the mix of products sold in those destinations. In response to positive demand shocks, those French firms skew their export sales towards their best performing products; and also extend the range of products sold to that market. We develop a theoretical model of multi- product firms and derive the specific demand and cost conditions needed to generate these product-mix reallocations. Our theoretical model highlights how the increased competition from demand shocks in export markets - and the induced product mix reallocations - induce productivity changes within the firm. We then empirically test for this connection between the demand shocks and the productivity of multi-product firms exporting to those destinations. We find that the effect of those demand shocks on productivity are substantial - and explain an important share of aggregate productivity fluctuations for French manufacturing.
    JEL: F1
    Date: 2016–07
    Abstract: Turkey had not have a sufficient industry in order to meet domestic demand when the Republic was established in 1923. Industrialization of Turkey has begun with a liberal approach. After the Great Depression, statism influenced the industrialization policy of Turkey. Two import-substitution industrialization plans adopted in 1933 and 1938. Nevertheless, the second plan could not have been implemented effectively because of the II. World War. Baker Report in 1950’s advised Turkey to industrialize in sectors in which she has a comparative advantage. Although outward-oriented growth and export-led industrialization policy had gained importance in 1950s, they could not have sustained properly because of the foreign currency deficit. Turkey began to implement import-substitution industrialization strategy in 1960s. She experienced a structural transformation within her manufacturing industry together with the start of intermediate goods production. Depending upon neo-liberal policies, Turkey embraced export-led industrialization strategy in 1980s. Along with the export-led industrialization strategy, low exchange rate and low real wage policies increased the competitiveness of the Turkish industry. Customs Union with the European Union and membership duties of the World Trade Organization affected the industrialization policy of Turkey in 1990s. As a consequence, Turkish industry sector has been integrated with the global economy. Global competition began to affect the Turkish industry sector in 2000s. The ratio of the imported raw materials and intermediate goods used in the industry sector have increased. Along with the increased competitiveness of the sector, the volume of exports has also inclined. Despite the incline within the volume of exports, external trade deficit has also increased due to the increase in the imports of the intermediate goods. The Turkish industry sector has entered into 2000s with such structural problems. Apparently, Turkey has to adjust her export-led industrialization strategy once again upon the changing circumstances. In Turkish academia, a new export-led industrialization strategy which is supported by import-substitution has been considered as an adequate industrialization policy for the 2010s. The aim of this paper is to evaluate the effectiveness of the new industrialization strategy in Turkey referring to a collaboration of export-led industrialization with import substitution. At the first part of the paper, industrialization strategies of Turkey have been examined. At the second part, structural problems of the Turkish industry sector are determined. At the final part, policies which support the new industrialization strategy are discussed.
    Keywords: Economic Development, Industrial Policy, Turkish Economy
    JEL: F43 L50 L16

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.