nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2016‒08‒21
fifteen papers chosen by
João José de Matos Ferreira
Universidade da Beira Interior

  1. Smart Specialization as an innovation-driven strategy for economic diversification: Examples from Scandinavian regions By Asheim, Bjørn; Grillitsch, Markus; Trippl, Michaela
  2. Dynamics of Innovation and Internationalization among Small and Medium-Sized Enterprises in Viet Nam By Trinh, Long Q.
  3. Types of FDI and determinants of affiliate size: the classification makes the difference By Hecht, Veronika; Moritz, Michael; Noska, Patricia; Schäffler, Johannes
  4. Patentability, R&D direction, and cumulative innovation By Chen, Yongmin; Pan, Shiyuan; Zhang, Tianle
  5. A Pseudo-Panel Approach to Estimating Dynamic Effects of Road Infrastructure Provision on Firm Performance in a Developing Country Context By Samira Barzin; Sabine D'Costa; Daniel Graham
  6. Smart Specialisation: Creating Growth through Trans-national co-operation and Value Chains By Age Mariussen; Ruslan Rakhmatullin; Lina Stanionyte
  7. A Delphi Approach to Boost an Open Innovation Policy By Santos, Antonio Bob; Mendonca, Sandro
  8. Product Mix and Firm Productivity Responses to Trade Competition By Thierry Mayer; Marc Melitz; Gianmarco Ottaviano
  9. Exporting and Workforce Skills-Intensity in the Egyptian Manufacturing Firms: Empirical Evidence Using World Bank Firm-Level Data for Egypt By Ahmed Fayez Abdelgouad
  10. RegDemo: Preparation and Merger of Actor Data – Technical Documentation of Routines and Datasets By Ehrenfeld, Wilfried
  11. Roads to innovation: Firm-level evidence from China By Wang, Xu; Zhang, Xiaobo; Xie, Zhuan; Huang, Yiping
  12. Informality as a Stepping Stone: A Search-Theoretical Assessment of Informal Sector and Government Policy By Tumen, Semih
  13. Does female labor scarcity encourage innovation?: Evidence from China’s gender imbalance By Tan, Zhibo; Zhang, Xiaobo
  14. Intra-good trade in Germany: A first look at the evidence By Joachim Wagner
  15. Public policy to promote entrepreneurship: a call to arms By Zoltan J. Acs; Thomas Åstebro; David B. Audretsch; David T. Robinson

  1. By: Asheim, Bjørn (University of Stavanger); Grillitsch, Markus (CIRCLE, Lund University); Trippl, Michaela (CIRCLE, Lund University)
    Abstract: This book chapter provides conceptual and empirical foundations for smart specialisation, a policy approach of far-reaching importance in the European context. We interpret the very notion as “diversified” specialisation into areas of existing or potential competitive advantage, which differentiates a region/nation from others. “Smart” relates to the identification of these areas through a process of entrepreneurial discovery, in which all actors are mobilized to be able to discover domains for securing existing and future competitiveness. Competitive advantage through smart specialization can be promoted in all types of industries but based on the industry specific modes of innovation and knowledge bases, which is illustrated through case studies in Denmark, Sweden, and Norway. Depending on the preconditions, we find that variegated strategies of smart specialisation are pursued, including building the absorptive capacity of DUI based firms by increasing their research based competence (introducing analytical knowledge), combining unrelated knowledge bases to move into new related and unrelated industries, combining related knowledge bases to move into unrelated industries, and moving into high-value added niches by introducing symbolic knowledge in traditional sectors.
    Keywords: Smart specialisation; policy; innovation; economic diversification; entrepreneurial discovery; knowledge bases; new path development; competitive advantage; regions
    JEL: O18 O30 O38 P48 R10 R58
    Date: 2016–08–12
  2. By: Trinh, Long Q. (Asian Development Bank Institute)
    Abstract: This paper examines the bidirectional causality between innovation and internationalization in the context of developing countries. Using a dynamic bivariate probit model and adopting a broad definition of internationalization, this paper analyzes these issues using a panel dataset of small and medium-sized enterprises in Viet Nam. The results show a high persistence in process and product innovations and internationalization decisions. Furthermore, we find that, for non-micro firms, past internationalization has a positive effect on process innovation, but past process innovation does not have a significant effect on the internationalization decision. For this group of firms, we also find signs of cross-dependence between process innovation and the internationalization decision. Our results, however, do not show dynamic interdependence between internationalization and product innovation.
    Keywords: SME internationalization and innovation; process innovation; cross-dependence; product innovation
    JEL: L20 L25 O31
    Date: 2016–08–16
  3. By: Hecht, Veronika (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Moritz, Michael (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Noska, Patricia; Schäffler, Johannes (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "This paper deals with the measurement of motives for foreign direct investment (FDI). Due to a lack of information, several indirect measures exist in order to classify multinational firms into the two main types of FDI. While vertical foreign direct investment (VFDI) refers to the international fragmentation of the production process for cost-saving reasons, horizontal foreign direct investment (HFDI) is performed in order to gain access to new markets. One common approach to identify the dominant reason for firms to go abroad is to compare the industry affiliation of the investing company in the home country and the subsidiary in the target country. The question arises as to how reliable this measure is for identifying FDI motives. The IAB-ReLOC survey allows a profound investigation on the issue of classifying the motives of the firms for going abroad into vertical and horizontal FDI. Apart from industry affiliation data applied in conventional approaches to categorize FDI types, the survey data also includes a self-assessment of the firms with respect to the main motive for investing in the neighboring country, and information on intra-firm trade concerning the flow of intermediate inputs between the German headquarters and the Czech affiliates. Against the background of featuring a well-grounded database, we shed a light on the relevance of productivity in the German-Czech FDI relations. We pursue a reference group approach by comparing German multinational firms that have an affiliate in the Czech Republic to German companies without direct investment abroad. The data provided by the German multinationals enables us to investigate the size of FDI under the aspect of the number of employees in their Czech affiliates. By applying a two-step Heckman procedure, we control for sample selection bias: in the first stage we analyze the extensive margin of FDI, i.e. the probability to select into the group of multinational investors. The second stage examines the relationship between productivity and the intensive margin of FDI. We find evidence that productivity is not only a crucial factor for the decision to invest in the neighboring country, but plays also a relevant role for the number of employees in the Czech subsidiary. Differences are revealed between direct and indirect measures of FDI types. The size of horizontal investments is significantly affected by productivity only in the case of classifications that are based on survey responses. This result confirms theoretical expectations and previous empirical literature by standing in marked contrast to the outcome for indirect measurement concepts. Our finding leads us to the conclusion that one should be more cautious in interpreting differences between vertical and horizontal FDI when using approximative classification concepts." (Author's abstract, IAB-Doku) ((en))
    JEL: F23 J21 R12
    Date: 2016–08–15
  4. By: Chen, Yongmin; Pan, Shiyuan; Zhang, Tianle
    Abstract: We present a model of cumulative innovation where firms can conduct R&D in both a safe and a risky direction. Innovations in the risky direction produce quality improvements with higher expected sizes and variances. As patentability standards rise, an innovation in the risky direction is less likely to receive a patent that replaces the current technology, which decreases the static incentive for new entrants to conduct risky R&D, but increases their dynamic incentive because of the longer duration---and hence higher reward---for incumbency. These, together with a strategic substitution and a market structure effect, result in an inverted-U shape in the risky direction but a U shape in the safe direction for the relationship between R&D intensity and patentability standards. There exists a patentability standard that induces the efficient innovation direction, whereas R&D is biased towards (against) the risky direction under lower (higher) standards. The optimal patentability standard may distort the R&D direction to increase the industry innovation rate that is socially deficient.
    Keywords: cumulative innovation, patentability standards, R&D intensity, R&D direction, rate of innovation, innovation direction
    JEL: L1 O3
    Date: 2016–08
  5. By: Samira Barzin; Sabine D'Costa; Daniel Graham
    Abstract: We construct a pseudo-panel of Colombian firms based on the Colombian Annual Manufacturing Survey to study the effects of transportation infrastructure on firm performance in a developing country. Our findings report an output elasticity with respect to road infrastructure of 0.132 to 0.146 across the specifications, which confirms our initial hypothesis that roads are an important driver for private sector output growth. The fact that our results are larger than those reported in the literature for developed countries could suggest that the role of transportation infrastructure is relatively more important for the economy of developing countries. Furthermore, our findings reveal that there exists a time lag with which firms’ productions react to changes in the road stock. We interpret these findings as firms requiring time to adjust their production processes to road improvements of at least a year. We furthermore identify that the effect of road infrastructure is particularly large for those manufacturing industries that are capital-intensive and produce heavy goods. Further robustness tests reveal that our results are not driven by the possibility of agglomeration economies or the chosen measurement of transportation infrastructure. We additionally provide Monte Carlo simulations to provide support for the validity of pseudo-panels in the context of firm-level data.
    Keywords: Infrastructure; Roads; Economic Development; Pseudo-Panels; Monte Carlo Simulations; Latin America; Colombia
    JEL: O18 O14 R42 C15
    Date: 2016–08
  6. By: Age Mariussen (University of Vaasa); Ruslan Rakhmatullin (European Commission - JRC); Lina Stanionyte (European Commission - JRC)
    Abstract: S3 begins within a region/country by exploiting place-based expertise and industrial skills within the regional innovation eco-system. The paper refers to emerging research which indicates that some regions suffer from insufficient innovation eco-system complexity, followed by sub-optimal innovation performances and path lock-in. This indicates that regional innovation eco-systems could be further strengthened through transnational learning and collaboration. Several major forms of collaboration are identified. The paper suggests that macro-regional and trans-European smart specialisation strategies could be based on multi-level approaches to experimentally extend and strengthen regional innovation eco-systems. In order to achieve robust and long-lasting outcomes, these experiments could apply some existing S3 tools. Here, an important issue is the transition from temporary programmes, projects and networks to new institutional frameworks for co-evolution and collaboration between smart specialised regions. The next important step is to exploit the European diversity identified through regional RIS3 strategies. The long-term challenge is the strengthening of emergent European and macro-regional systems of innovation, and thus supporting the regions.
    Keywords: policy analysis; R & D; research; collaboration; policy; innovation; ecosystem
    Date: 2016–08
  7. By: Santos, Antonio Bob; Mendonca, Sandro
    Abstract: In this research paper we intend to find out whether open innovation approach may be a valid approach to the definition of innovation policy. To that, we use a method applied in various fields of study, including public policy and open innovation studies: the Delphi method. After the introduction (Section 1), we describe the Delphi method (Section 2) and the methodology used in this research (Section 3). The results of the application of the Delphi method are presented in Section 4, where we identify public policy priorities in an open innovation perspective. Then, we propose measures of public policy through which these priorities could be achieved (Section 5). Section 6 presents the main findings, concluding that the approach of open innovation may be considered for prioritization of innovation policy and policy measures.
    Keywords: open innovation, innovation policy, public policy, Delphi
    JEL: O25 O32 O38
    Date: 2016
  8. By: Thierry Mayer; Marc Melitz; Gianmarco Ottaviano
    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.
    Keywords: Multiproduct Firms;Productivity;Trade
    JEL: F1
    Date: 2016–07
  9. By: Ahmed Fayez Abdelgouad (Leuphana University Lueneburg, Germany)
    Abstract: The World Bank’s Enterprise Surveys (WES( for the manufacturing firms in Egypt are used to study the characteristics of exporting firms and the determinants of the exporting behavior in the Egyptian manufacturing sector in general and to investigate the link between the exporting activities and the workforce skills-intensity in the Egyptian manufacturing sector in specific. Several methods to estimate the probability and intensity of exporting are presented. The main findings indicate that firms in the manufacturing sector in Egypt which their workforce are characterized by higher levels of skills-intensity are more likely to export compared to other firms with lower levels of skills-intensity. Firms that hire female workers are more likely to export than other firms which do not employ women. Furthermore, firms that are larger in their size, have R&D departments, and owned by foreigners are more likely to export than others and have statistically significant effects on export intensity as well. The results suggest also that firms that are larger in their size are more likely to start to export than others.
    Keywords: Exporting, Workforce skills, World Bank Enterprise Surveys, Egypt, Manufacturing
    JEL: J24 F14 F16
    Date: 2016–04
  10. By: Ehrenfeld, Wilfried
    Abstract: Primary objective of the presented routines is the mapping of cooperative relations of companies, universities, non-university research facilities and other institutions on three levels of innovation activity (joint projects; publications, patents). This includes a) the standardization and merging of the three innovation-related databases (funding catalog (“Förderkatalog”); Web of Knowledge; DPMA patents) and b) linking this combined data pool with the data from the institution data sets Amadeus and Research Explorer by means of record linkage procedures. For this project the merger comprises the six regions considered in the RegDemo project. Spatial planning regions (“Raumordnungsregionen”) are used for delimitation: 501 - Aachen; 513 - Siegen; 602 - Nordhessen (= “Kassel”); 1302 – Mittleres Mecklenburg/Rostock (= “Rostock”); 1401 - Oberes Elbtal/Osterzgebirge (= “Dresden”); 1504 - Magdeburg.
    Abstract: Übergeordnetes Ziel der hier vorgestellten Routinen ist die Abbildung von Kooperationsbeziehungen von Unternehmen, Universitäten, außeruniversitären Forschungseinrichtung sowie sonstiger Institutionen auf drei Ebenen von Innovationstätigkeit (Verbundprojekte; Publikationen; Patente). Dazu werden a) die drei innovationsbezogenen Datenbanken (Förderkatalog; Web of Knowledge; DPMA Patente) vereinheitlicht und zusammengeführt sowie b) diese kombinierten Datenbestände mittels Record-Linkage-Techniken mit den Daten aus den Institutionendatensätzen Amadeus und Research Explorer verknüpft. Die Zusammenführung erstreckt sich für dieses Projekt auf die sechs Fallregionen, die in RegDemo vorgesehen sind. Die Abgrenzung erfolgt anhand von Raumordnungsregionen: 501 - Aachen; 513 - Siegen; 602 - Nordhessen (= „Kassel“); 1302 – Mittleres Mecklenburg/Rostock (= „Rostock“); 1401 - Oberes Elbtal/Osterzgebirge (= „Dresden“); 1504 - Magdeburg.
    Date: 2015
  11. By: Wang, Xu; Zhang, Xiaobo; Xie, Zhuan; Huang, Yiping
    Abstract: Although both infrastructure and innovation play an important role in fostering a country’s economic growth, discussion in the literature about how the two are connected is limited. This paper examines the impact of road density on firm innovation in China using a matched patent database at the firm level and road information at the city level. Regional variation in the difficulty of constructing roads is used as an instrumental variable to address the potential endogeneity problem of the road variable. The empirical results show that a 10 percent improvement in road density increases the average number of approved patents per firm by 0.71 percent. Road development spurs innovation by enlarging market size and facilitating knowledge spillover.
    Keywords: CHINA, EAST ASIA, ASIA, infrastructure, innovation, transportation, technology transfer, knowledge diffusion, O31 Innovation and Invention: Processes and Incentives, O33 Technological Change: Choices and Consequences, Diffusion Processes, R11 Regional Economic Activity: Growth, Development, Environmental Issues, and Changes, R40 Transportation Economics: General,
    Date: 2016
  12. By: Tumen, Semih (Central Bank of Turkey)
    Abstract: This paper develops a model of sequential job search to understand the factors determining the effect of tax and enforcement policies on the size (i.e., employment share) of the informal sector. The focus is on the role of informal sector as a stepping stone to formal jobs. I argue that the stepping-stone role of informal jobs is an important concept determining how strongly government policies affect the size of informal sector. I measure the extent of the stepping-stone role with the intensity of skill accumulation in the informal sector. If informal jobs help workers acquire skills, gain expertise, and build professional networks for boosting the chances to switch to a formal job, then the size of the informal sector is less sensitive to government policy. In this case, the option value of a job in the informal sector will be high and a worker with an informal job will not rush to switch to a formal job when a policy encouraging formal employment is in effect. If, on the other hand, the informal sector does not provide satisfactory training opportunities, then the size of the informal sector becomes more sensitive to government policy. Calibrating the model to the Brazilian data, I perform numerical exercises confirming that the effect of government policy on the size of the informal sector is a decreasing function of the intensity of skill acquisition in the informal sector.
    Keywords: informal sector, stepping stone, government policy, job search, human capital, option value
    JEL: E26 J24 J38 J64
    Date: 2016–08
  13. By: Tan, Zhibo; Zhang, Xiaobo
    Abstract: Facing scarcity of a production factor, a firm can develop technologies to either substitute the scarce factor (price effect) or complement the more abundant factors (market size effect). Whether the market size effect or the price effect dominates largely depends on the elasticity of substitution among factors according to the theory of directed technical change. However, it is a great challenge to empirically test the theory because factor prices are often endogenously determined. In this paper, we use imbalanced sex ratios across Chinese provinces as a source of identification strategy to test how female labor scarcity affects corporate innovation based on the matched dataset of annual surveys of industrial firms in China and the national patent database. In regions with a large male population, female-intensive industries face more serious problems finding female workers than their male-intensive counterparts. We find that such female shortages have spurred firms in female-intensive industries to innovate more. The pattern is much more evident in industries with low substitution between female and male workers than in those with high substitution, consistent with the predictions of directed technical change theory.
    Keywords: CHINA, EAST ASIA, ASIA, prices, markets, labor, technology, innovation, gender, factor endowment, directed technical change, price effect, market size effect, elasticity of substitution, O31 Innovation and Invention: Processes and Incentives, O32 Management of Technological Innovation and R&, D, J21 Labor Force and Employment, Size, and Structure,
    Date: 2016
  14. By: Joachim Wagner (Leuphana University Lueneburg, Germany)
    Abstract: This paper contributes to the literature by using newly released comprehensive transaction level data on all exports and imports to document facts about the amount of intra-good trade – the simultaneous export and import of identical goods by one firm - in Germany. Combined data for trade transactions and for characteristics of a representative large sample of trading firms are then used to report differences between firms that export and import different goods only (inter-good traders) and firms that engage in the simultaneous export and import of identical goods (intra-good traders). We find that the share of intra-good trade in total trade was some 17 percent in Germany in 2012. Intra-good trade matters. This share differs widely between broadly defined groups of goods and between industries. Controlling for detailed industry affiliation intra-good traders differ significantly from inter-good traders – they are larger, more human capital intensive, more productive, have a higher R&D intensity, and are more profitable. The data, however, are not rich enough to reveal the direction of causality between intra-good trade and firm performance and to investigate empirically the reasons why some firms engage in intra-good trade.
    Keywords: Intra-product trade, two-way trade, imports, exports, Germany
    JEL: F14
    Date: 2016–08
  15. By: Zoltan J. Acs; Thomas Åstebro; David B. Audretsch; David T. Robinson
    Abstract: We debate the motivation for and effectiveness of public policies to encourage individuals to become entrepreneurs. Reviewing established evidence we find that most Western world policies do not greatly reduce or solve any market failures but instead waste taxpayers’ money, encourage those already intent on becoming entrepreneurs, and mostly generate one-employee businesses with low-growth intentions and a lack of interest in innovating. Most policy initiatives that would have the effect of promoting valuable entrepreneurship would not be recognizable as such, because they would primarily address other market failures: A central-payer health care would remove healthcare-related distortions affecting employment choices; greater STEM education would produce more engineers of which some start valuable new firms; and labor market reform to encourage hiring immigrants in jobs they have been educated for would reduce inefficient allocation of talent to entrepreneurship.
    Keywords: Entrepreneurship; Public policy; Social welfare
    JEL: J50
    Date: 2016

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