nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2017‒12‒03
eleven papers chosen by
João José de Matos Ferreira
Universidade da Beira Interior

  1. Not too close, not too far: testing the Goldilocks principle of ‘optimal’ distance in innovation networks By Fitjar, Rune Dahl; Hubert, Franz; Rodríguez-Pose, Andrés
  2. Strategic conflicts on the horizon: R&D incentives for environmental technologies By Heyen, Daniel
  3. Gender diversity, R&D teams and patents:An application to Spanish firms By Mercedes Teruel; Agustí Segarra-Blasco
  4. Foreign direct investment via M&A and domestic entrepreneurship: blessing or curse? By Danakol, Seçil Hülya; Estrin, Saul; Reynolds, Paul; Weitzel, Utz
  5. Innovation Capabilities of a Firm: a Key Role of Information Exploration By Kazantcev, Anatoly K.; Logacheva, Anna V.; Veselova, Anna S.
  6. Exploring the Reciprocal Relationship Between Innovation, Internationalization, and Organizational Learning: A Complex System Model for Small Firms By Freixanet, Joan; Churakova, Iya Yu.
  7. Regional strategic assets and the location strategies of emerging countries’ multinationals in Europe By Crescenzi, Riccardo; Pietrobelli, Carlo; Rabellotti, Roberta
  8. Knowledge Diffusion, Trade and Innovation Across Countries and Sectors By Cai, Jie; Li, Nan; Santacreu, Ana Maria
  9. The Role of Joint R&D Centers Formation with Universities for MNEs in the Russian IT Market By Kuznetsova, Svetlana; Morozova, Daria; Morozova, Tatiana; Muravskii, Daniil V.; Mironova, Daria
  10. Technology, Market Structure and the Gains from Trade By Giammario Impullitti; Omar Licandro; Pontus Rendahl
  11. Policy Implications on Company Growth – A Review By Ali-Yrkkö, Jyrki; Kotiranta, Annu; Ylhäinen, Ilkka

  1. By: Fitjar, Rune Dahl; Hubert, Franz; Rodríguez-Pose, Andrés
    Abstract: This paper analyses how the formation of collaboration networks affects firm-level innovation by applying the ‘Goldilocks principle’. The ‘Goldilocks principle’ of optimal distance in innovation networks postulates that the best firm-level innovation results are achieved when the partners involved in the network are located at the ‘right’ distance, i.e. ‘not too close and not too far’ from one another, across non-geographical proximity dimensions. This principle is tested on a survey of 542 Norwegian firms conducted in 2013, containing information about firm-level innovation activities and key innovation partners. The results of the ordinal logit regression analysis substantiate the Goldilocks principle, as the most innovative firms are found among those that collaborate with partners at medium levels of proximity for all non-geographical dimensions. The analysis also underscores the importance of the presence of a substitution–innovation mechanism, with geographical distance problems being compensated by proximity in other dimensions as a driver of innovation, while there is no support for a potential overlap–innovation mechanism.
    Keywords: proximities; innovation; collaboration; Goldilocks principle; Norway
    JEL: J50
    Date: 2016–08–17
  2. By: Heyen, Daniel
    Abstract: Technological innovation is a key strategy for tackling climate change and other environmental problems. The required R&D expenditures however are substantial and fall on self-interested countries. Thus, the prospects of successful innovation critically depend on innovation incentives. This paper focuses on a specific mechanism for strategic distortions in this R&D game. In this mechanism, the outlook of future conflicts surrounding technology deployment directly impacts on the willingness to undertake R&D. Apart from free-riding, a different deployment conflict with distortive effects on innovation can occur. Low deployment costs and heterogeneous preferences might give rise to 'free-driving' (Weitzman 2015): The country with the highest preference for technology deployment, the free driver, may dominate the deployment outcome to the detriment of others. The present paper develops a simple two stage model for analysing how technology deployment conflicts, free-riding and free-driving, shape R&D incentives of two asymmetric countries. The framework gives rise to rich findings, underpinning the narrative that future deployment conflicts extend to the R&D stage. While the outlook of free-riding unambiguously weakens innovation incentives, the findings for free-driving are more complex, including the possibility of excessive R&D as well as incentives for counter-R&D.
    Keywords: Environmental innovation; R&D game; innovation incentives; externalities; strategic conflicts; climate engineering; geoengineering; free driver externality
    JEL: D62 H41 O31 Q54 Q55
    Date: 2016–10–25
  3. By: Mercedes Teruel (GRIT, Universitat Rovira i Virgili); Agustí Segarra-Blasco (GRIT, Universitat Rovira i Virgili)
    Abstract: Previous results show that gender diversity increases the probability firms’ innovation. This paper explores the relationship between gender diversity of R&D departments and their capacity to patent. Based on the Spanish Community Innovation Survey between 2004 and 2014, we have applied a two-step procedure control for endogeneity. Our results show that gender diversity affects a firm’s capacity to patent in different manners depending on the coverage of the patents. On the one hand, gender diversity affects OEPM patents negatively, while the impact becomes positive for patents with an international coverage (EPO, USPTO, or PCT). This analysis is relevant in order reveal the dual effect of gender diversity within R&D teams on their capacity to process and register patents.
    Keywords: gender diversity, patent generation
    JEL: O30 O31 J16
    Date: 2017–11
  4. By: Danakol, Seçil Hülya; Estrin, Saul; Reynolds, Paul; Weitzel, Utz
    Abstract: There are conflicting predictions in the literature about the relationship between FDI and entrepreneurship. This paper explores how foreign direct investment (FDI) inflows, measured by lagged cross-border mergers and acquisitions (M&A), affect entrepreneurial entry in the host economy. We have constructed a micro panel of more than two thousand individuals in each of seventy countries, 2000-2009, linked to FDI by matching sectors. We find the relationship between FDI inflows and domestic entrepreneurship to be negative across all economies. This negative effect is much more pronounced in developed than developing economies and is also identified within industries, notably in manufacturing. Policies to encourage FDI via M&A need to consider how to counteract the prevailing adverse effect on domestic entrepreneurship.
    Keywords: foreign direct investment; entrepreneurship; new firm entry; spillovers
    JEL: J1
    Date: 2017–03–01
  5. By: Kazantcev, Anatoly K.; Logacheva, Anna V.; Veselova, Anna S.
    Abstract: Following the logic of resource-based view and dynamic capabilities, exploration and exploitation concepts the present study addresses the concept of firmÙ³ innovation resources and innovation capabilities. Empirical testing of measurement model conducted on the sample of 55 Russian industrial enterprises identified a set of six components of innovation capabilities: financial, technological, informational (exploration and exploitation), human and organizational. Information exploration component is found to be the most important for firmÙ³ innovation capabilities formation, while financial component is found to be critical to form firmÙ³ innovation resources.
    Keywords: innovation capabilities, innovation measurement, information exploration, resource-based view, dynamic capabilities, innovation resources, innovative firm,
    Date: 2016
  6. By: Freixanet, Joan; Churakova, Iya Yu.
    Abstract: The purpose of this study is to explore the relationship between innovation, internationalization, and organizational learning in small businesses. Emergent approaches go beyond the linear causality that has traditionally linked these concepts in previous research in favor of holistic, complex approaches that stress mutual or circular causality. Based on this approach, and after analyzing 285 interviews and 54 companies from various industries, the authors find that the three activities are reciprocally linked to each other, forming a complex system. The firmsÙ evolution over a period of nine years also shows that, faced with various change elements, they evolved and adopted four kinds of configurations, characterized by low and high incremental and radical innovation, local and global internationalization, and adaptive and generative learning. The findings are relevant to scholars, managers, and government policymakers.
    Keywords: internationalization, innovation, organizational learning, complex system, complexity theory, small business, SME, incremental innovation, radical innovation, multiplecase study, dynamic model, adaptive learning,
    Date: 2016
  7. By: Crescenzi, Riccardo; Pietrobelli, Carlo; Rabellotti, Roberta
    Abstract: This paper explores the location strategies of Multinational Enterprises (MNEs) from emerging countries (EMNEs) in search for regional strategic assets. The analysis is based on a systematic comparison between EMNEs and multinationals from advanced countries (AMNEs) in order to unveil similarities and differences between these two major sources of foreign investments into the regions of the European Union. The empirical results suggest that EMNEs follow a distinct logic in their location strategies because they are attracted by the availability of technological competences only when their subsidiaries pursue more sophisticated and technology-intensive activities. Conversely EMNEs share some behavioural similarities with AMNEs in their response to the spatial agglomeration of investments.
    Keywords: innovation; regions; multinationals; European Union
    JEL: F21 F23 O33 R12 R58
    Date: 2016–02–01
  8. By: Cai, Jie (Shanghai University of Finance and Economics); Li, Nan (International Monetary Fund); Santacreu, Ana Maria (Federal Reserve Bank of St. Louis)
    Abstract: We develop and quantify a multi-country and multi-sector endogenous growth model in which comparative advantage and the stock of knowledge are endogenously determined by innovation and knowledge diffusion. We quantify the effect of trade liberalization on innovation, comparative advantage and welfare in a framework that features intersectoral production and knowledge linkages that are consistent with the data. A reduction in trade frictions induces a reallocation of innovation and comparative advantage across sectors: innovation reallocates towards sectors that experience larger increases in comparative advantage, and comparative advantage reallocates towards sectors with stronger knowledge spillovers. Furthermore, knowledge spillovers amplify the effect of a trade liberalization as countries and sectors benefit from foreign technology. In contrast to standard one sector models of trade and innovation without knowledge spillovers, we find significant dynamic gains from trade. These gains are mainly driven by innovation and knowledge diffusion across sectors and countries.
    Keywords: Technology Diffusion; R&D; Patent Citations; International Trade
    JEL: F12 O33 O41 O47
    Date: 2017–10–23
  9. By: Kuznetsova, Svetlana; Morozova, Daria; Morozova, Tatiana; Muravskii, Daniil V.; Mironova, Daria
    Abstract: In the article, the drivers and forms of university-corporation partnerships are analyzed, and the role of joint R&D centers formation with universities as a strategic direction of development for MNEs is discussed. As a result, a classification of universitycorporation partnerships drivers for MNEs was established, forms of such partnerships are distinguished and compared, and joint R&D centers have been classified by openness and level of involvement of the MNE in order to simplify and spill light on the choices related to internationalization of R&D for MNEs on the Russian market.
    Keywords: research and development, R&D, collaboration platforms, MNEs, knowledge sharing, IT market, Russia,
    Date: 2016
  10. By: Giammario Impullitti; Omar Licandro; Pontus Rendahl
    Abstract: We study the gains from trade in an economy with oligopolistic competition, firm heterogeneity, and innovation. Oligopolistic competition together with free entry make markups responsive to firm productivity and trade costs. Lowering trade costs reduces markups on domestic sales but increases markups on export sales, as firms do not pass the entire reduction in trade costs onto foreign consumers. Nevertheless, the downward pressure dominates and the average markup declines, deterring firms from entering the market and leading to higher market concentration. Neither the increased concentration nor the incomplete pass-through of trade costs to export markups are strong enough to compensate for the increase in competition on domestic sales. Thus the overall effect of trade on markups is pro-competitive and a key source of the associated welfare gains. In addition to markups, selection and innovation provide additional channels through which the trade-induced effect on competition impacts welfare. In a quantitative exercise, we decompose the total gains from trade into these three contributing channels; we find that innovation plays a small but non-negligible role, while the main component is equally split between the pro-competitive and the selection channel.
    Keywords: gains from trade, heterogeneous firms, oligopoly, innovation, endogenous markups, endogenous market structure
    JEL: F12 F13 O31 O41
    Date: 2017
  11. By: Ali-Yrkkö, Jyrki; Kotiranta, Annu; Ylhäinen, Ilkka
    Abstract: This report is a synthesis of the previous literature analyzing the role of different types of companies on economic growth and employment, and an overlook on the impacts of different policy measures on companies. The role of large companies in the economy is still significant, although diminishing. However, the size of a company is nearly always determined at the company level, rather than at the group level, which brings some uncertainty to the interpretation of the results. Majority of the research on public corporate funding concerning Finland focuses on R&D subsidies; there are fewer studies covering other business subsidies and public venture capital investments. R&D subsidies have mostly positive impacts on employment, especially among young and small companies. Impacts on the productivity are, however, uncertain. Cooperation of public and private investors maximizes the impact of public venture capital investments. The other business subsidies may help firms to grow larger but do not improve their productivity.
    Keywords: Growth, company, employment, firm size, small, SME, value added, productivity
    JEL: L25 O14 O47 J21 J23
    Date: 2017–11–20

This nep-cse issue is ©2017 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.