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on Economics of Strategic Management |
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Issue of 2018‒05‒14
thirteen papers chosen by João José de Matos Ferreira Universidade da Beira Interior |
| By: | Ufuk Akcigit; Sina T. Ates; Giammario Impullitti |
| Abstract: | How do import tariffs and R&D subsidies help domestic firms compete globally? How do these policies affect aggregate growth and economic welfare? To answer these questions, we build a dynamic general equilibrium growth model where firm innovation endogenously determines the dynamics of technology, and, therefore, market leadership and trade flows, in a world with two large open economies at different stages of development. Firms’ R&D decisions are driven by (i) the defensive innovation motive, (ii) the expansionary innovation motive, and (iii) technology spillovers. The theoretical investigation illustrates that, statically, globalization (defined as reduced trade barriers) has ambiguous effects on welfare, while, dynamically, intensified globalization boosts domestic innovation through induced international competition. Accounting for transitional dynamics, we use our model for policy evaluation and compute optimal policies over different time horizons. The model suggests that the introduction of the Research and Experimentation Tax Credit in 1981 proves to be an effective policy response to foreign competition, generating substantial welfare gains in the long run. A counterfactual exercise shows that increasing tariffs as an alternative policy response improves domestic welfare only when the policymaker cares about the very short run, and only when introduced unilaterally. Tariffs generate large welfare losses in the medium and long run, or when there is retaliation by the foreign economy. Protectionist measures generate large dynamic losses by distorting the impact of openness on innovation incentives and productivity growth. Finally, our model predicts that a more globalized world entails less government intervention, thanks to innovation-stimulating effects of intensified international competition. |
| JEL: | F13 O4 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24543&r=cse |
| By: | Akcigit, Ufuk; Ates, Sina T.; Impullitti, Giammario |
| Abstract: | How do import tariffs and R&D subsidies help domestic firms compete globally? How do these policies affect aggregate growth and economic welfare? To answer these questions, we build a dynamic general equilibrium growth model where firm innovation endogenously determines the dynamics of technology, and, therefore, market leadership and trade flows, in a world with two large open economies at different stages of development. Firms' R&D decisions are driven by (i) the defensive innovation motive, (ii) the expansionary innovation motive, and (iii) technology spillovers. The theoretical investigation illustrates that, statically, globalization (defined as reduced trade barriers) has ambiguous effects on welfare, while, dynamically, intensified globalization boosts domestic innovation through induced international competition. Accounting for transitional dynamics, we use our model for policy evaluation and compute optimal policies over different time horizons. The model suggests that the introduction of the Research and Experimentation Tax Credit in 1981 proves to be an effective policy response to foreign competition, generating substantial welfare gains in the long run. A counterfactual exercise shows that increasing tariffs as an alternative policy response improves domestic welfare only when the policymaker cares about the very short run, and only when introduced unilaterally. Tariffs generate large welfare losses in the medium and long run, or when there is retaliation by the foreign economy. Protectionist measures generate large dynamic losses by distorting the impact of openness on innovation incentives and productivity growth. Finally, our model predicts that a more globalized world entails less government intervention, thanks to innovation-stimulating effects of intensified international competition. |
| Keywords: | Competition; Economic Growth; foreign technological catching-up; innovation policy; short- and long-run gains from globalization; trade policy |
| JEL: | F13 F43 O40 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12888&r=cse |
| By: | Quatraro, Francesco; Scandura, Alessandra (University of Turin) |
| Abstract: | This work investigates the generation of green technologies (GTs) in Italian NUTS 3 regions across time, by focusing on the knowledge generation mechanisms underlying the creation of green patents. Firstly, we hypothesize that inventions in non-green technological domains positively influence the generation of GTs, because the latter occur as the outcome of a recombination process among a wide array of technological domains. Secondly, we hypothesise that the involvement of academic inventors in patenting activity bears positive effects on the generation of GTs, because they are able to manage the recombination across different technological domains. Thirdly, we explore the interaction effect between academic inventors’ involvement and non-green technologies to investigate whether the former are especially relevant in presence of higher or lower levels of the latter. We estimate zero-inflated negative binomial, spatial durbin and logistic regressions on a dataset of 103 Italian NUTS 3 regions for which we collected patent and regional data for the time span 1998-2009. The results suggest that both academic inventors and spillovers from polluting technologies bear positive direct effects on the generation of GTs; moreover, we find that academic inventors compensate for low levels of spillovers. |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:uto:labeco:201802&r=cse |
| By: | Mira Kantemirova (Gorsky State Agrarian University); Zaur Dzakoev (North Ossetian State University); Zara Alikova (North Ossetian State Medical Academy); Sergei Chedgemov (North Ossetian State Medical Academy); Zarina Soskieva (North Ossetian State Medical Academy) |
| Abstract: | This study is aimed at the application of the percolation theory to simulation of a sustainable network organization of the economy in conditions of high uncertainty of the external environment. The methods for investment and cost recovery efficiency calculation in order to achieve synergy are used in the course of networks formation. The methods of graph theory and one-dimensional percolation are used herein. The conceptual content of the modified percolation approach to the analysis and simulation of network structures is specified. The controlled process of network formation offers the possibility to form the percolation cluster on the basis of minimization of its length (the shortest path). The formation regularities of two types of a percolation cluster (internal and cross-border) as the basis for the creation of the appropriate network structures are revealed. The examples of the applied problems, which study the percolation based on lattice cells (lattice coupling problem), are considered herein. The results of empirical approbation of the proposed approach in the field of services with the description of the algorithm for the networks and a cluster formation are presented. The transition from the random Bernol's percolation (based on random selection of cells) in favor of the correlated percolation is justified. |
| Keywords: | cluster,percolation theory,percolation,networks |
| Date: | 2018–03–30 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01773587&r=cse |
| By: | Anabela Santos (Université Libre de Bruxelles, iCite); Michele Cincera (Université Libre de Bruxelles, iCite and ECARES); Paulo Neto (Universidade de Évora – Departamento de Economia, UMPP, CEFAGE-UÉ and CIEO-UALG); Maria Manuel Serrano (Universidade de Évora – Departamento de Sociologia, UMPP and SOCIUS-CSG/ISEG-UL) |
| Abstract: | The aim of the present paper is to assess the effect of competition on innovation (patent applications) and on productivity (Total Factor Productivity and Labour Productivity), using data from 654 Portuguese firms, according to 208 NACE 4-digits sectors, and over the period 2007 to 2015. For this purpose, two different methodological approaches were used, a Poisson regression model for the patent function and a log-log fixed effect model for the productivity function. The results reveal that, on average, competition has a negative, U-shaped form effect on innovation in the short term, and a positive effect in the medium-long term. Nevertheless, the model focusing only on manufacturing sectors shows some differences from the model considering all economic activities, namely a linear positive effect of competition on innovation. Concerning the effect of competition on productivity, a positive effect on Total Factor Productivity emerged from the analysis, while for labour productivity a negative one prevails. |
| Keywords: | Competition, Innovation, Productivity. |
| JEL: | L10 O31 D24 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:mde:wpaper:0102&r=cse |
| By: | William Barnett (Department of Economics, The University of Kansas; Center for Financial Stability, New York City; IC2 Institute, University of Texas at Austin); Mingzhi Hu (Department of Investment, School of Public Economics and Administration, Shanghai University of Finance and Economics,Shanghai, China;); Xue Wang (Department of Finance; College of Economics, Jinan University, Guangzhou, China;) |
| Abstract: | Impacts on the probability of transition to entrepreneurship in rural China associated with the utilization of information communication technology (ICT) are estimated using longitudinal data from the China Family Panel Studies (CFPS) survey. We identify cell phone ownership and internet use as proxy variables for ICT utilization and find that cell phone ownership and internet use have positive impacts on entrepreneurship. After controlling for observables and time and regional fixed effects, cell phone users (internet users) are 2.0 (6.4) percentage points more likely to engage in entrepreneurship than the others. Considering that the average entrepreneurship rate for rural households is only 9.5% in the sample, the influence of cell phone ownership and internet use are very strong in the economic sense. Our results are robust to unobservable individual characteristics, model misspecification, and reverse causality of entrepreneurship to ICT utilization. Evidence also suggests that social network and information and knowledge acquisition play the mediating roles in the impact of ICT utilization on entrepreneurship. |
| Keywords: | ICT; social network; information acquisition; entrepreneurship |
| JEL: | D10 M51 Q55 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:kan:wpaper:201802&r=cse |
| By: | Antonelli, Cristiano; Colombelli, Alessandra (University of Turin) |
| Abstract: | This paper provides an extended CDM approach to analyse jointly the simultaneous effects of knowledge spillovers in the knowledge generation function and in the technology production function. It introduces the distinction between imitation and knowledge externalities and articulates the hypothesis that spillovers yield their effects via three well distinct mechanisms: i) knowledge externalities that exert positive and direct effects on the knowledge production function, and ii) indirect effects on the technology production function via their effects on the cost of knowledge; iii) imitation externalities exert direct and positive effects on productivity in the technology production function. We test our hypotheses on a large panel of Italian companies distributed in the NUTS2 regions for the period 2005 – 2009. The econometric analysis consists in a model comprising a system of equations that test the simultaneous role of spillovers in the knowledge generation function and the technology production function with the inclusion of endogenous knowledge costs. The results confirm that the access to external knowledge – as an input in the knowledge generation function – plays a key role in increasing the knowledge output and – as an input in the technology production function – has positive indirect and direct effects on the productivity of firms. |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:uto:labeco:201711&r=cse |
| By: | Sandro Montresor; Francesco Quatraro, (University of Turin) |
| Abstract: | This paper investigates the move of regions towards sustainable growth through their specialisation in new green technologies. In particular, we analyse the role that smart specialisation strategies (S3) can have in this respect by addressing two research questions. First of all, we investigate whether the environmental diversification of regional technologies is, according to the S3 logic, driven by their “relatedness” to existing knowledge of green and non-green nature. Second, we analyse the role of the Key Enabling Technologies (KETs) that S3 policies recommend regions to prioritise, not only in fostering the adoption of environmental technologies, but also in affecting its dependence on the pre-existing knowledge-base. Combining regional patent and economic data for a 34-year panel (1980-2013) of 180 European regions, we find that the relatedness to the existing technological-base of the region actually makes the acquisition of a new green-tech specialisation more probable. This holds true with respect to both the green and non-green extant knowledge, pointing to a regional diversification that also benefits from the “hybridisation” of non-environmental technologies. The latter however requires a higher degree of relatedness than a “pure” green branching process. Regional KETs also help the transition towards sustainable technologies. What is more, they negatively moderate the green impact of the relatedness to pre-existing technologies, of both green and non-green nature, and thus attenuate the boundaries the latter could pose to regions in their environmental specialisation. These results confirm that S3 policies can actually boost the intertwining of a smart and sustainable kind of growth, and that the KETs inclusion within S3 can amplify the virtuous interaction between these two objectives. |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:uto:dipeco:201808&r=cse |
| By: | Borissov, Kirill; Bosi, Stefano; Ha-Huy, Thai; Modesto, Leonor |
| Abstract: | We extend the Lucas' 1988 model introducing two classes of agents with heterogeneous skills, discount factors and initial human capital endowments. We consider two regimes according to the planner's political constraints. In the first regime, that we call meritocracy, the planner faces individual constraints. In the second regime the planner faces an aggregate constraint, redistributing. We find that heterogeneity matters, particularly with redistribution. In the meritocracy regime, the optimal solution coincides with the BGP found by Lucas (1988) for the representative agent's case. In contrast, in the redistribution case, the solution for time devoted to capital accumulation is never interior for both agents. Either the less talented agents do not accumulate human capital or the more skilled agents do not work. Moreover, social welfare under the redistribution regime is always higher than under meritocracy and it is optimal to exploit existing differences. Finally, we find that inequality in human capital distribution increases in time and that, in the long run, inequality always promotes growth. |
| Keywords: | human capital, heterogenous patience and skills, inequality and growth. |
| JEL: | E24 O4 O41 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:86314&r=cse |
| By: | François Deltour (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - UN - Université de Nantes, SSG - Sciences sociales et de gestion - IMT Atlantique - IMT Atlantique Bretagne-Pays de la Loire); Sébastien Le Gall (LEGO - Laboratoire d'Economie et de Gestion de l'Ouest - UBS - Université de Bretagne Sud - UBO - Université de Brest - Institut Mines-Télécom [Paris] - UBL - Université Bretagne Loire - IMT Atlantique - IMT Atlantique Bretagne-Pays de la Loire, MARSOUIN - Môle Armoricain de Recherche sur la SOciété de l'information et des usages d'INternet - UR1 - Université de Rennes 1 - UBS - Université de Bretagne Sud - UBO - Université de Brest - Ecole Nationale de la Statistique et de Analyse de l'Information - Rennes - Institut Mines-Télécom [Paris] - UR2 - Université de Rennes 2 - UNIV-RENNES - Université de Rennes - UBL - Université Bretagne Loire - IMT Atlantique - IMT Atlantique Bretagne-Pays de la Loire); Virginie Lethiais (LEGO - Laboratoire d'Economie et de Gestion de l'Ouest - UBS - Université de Bretagne Sud - UBO - Université de Brest - Institut Mines-Télécom [Paris] - UBL - Université Bretagne Loire - IMT Atlantique - IMT Atlantique Bretagne-Pays de la Loire, MARSOUIN - Môle Armoricain de Recherche sur la SOciété de l'information et des usages d'INternet - UR1 - Université de Rennes 1 - UBS - Université de Bretagne Sud - UBO - Université de Brest - Ecole Nationale de la Statistique et de Analyse de l'Information - Rennes - Institut Mines-Télécom [Paris] - UR2 - Université de Rennes 2 - UNIV-RENNES - Université de Rennes - UBL - Université Bretagne Loire - IMT Atlantique - IMT Atlantique Bretagne-Pays de la Loire) |
| Abstract: | This article discusses the role played by location of small and medium-sized firms on their propensity to innovate. The research adopts a broad definition of innovation and sets the hypothesis that SMEs' propensity to innovate is not higher in large urban areas than in rural ones. Moreover, reducing SMEs' location to their head office tends to overestimate urban areas' innovativeness. Following the administration of an original regional survey, econometric tests are run on a representative sample of 1,253 SMEs in the French Brittany region, completed by location data proposed by the French National Institute of Statistics (Insee). The results confirm that firms located in the largest urban areas of the region are not more innovative that those located in the most isolated areas. They also partially validate the hypothesis that measuring the firms' location using the location of the head offices leads to overestimate the innovativeness of largest urban areas compared to less urbanized one. |
| Keywords: | Innovation,Localisation,Petites et moyennes entreprises |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01758281&r=cse |
| By: | Iferd, Younes; Plötz, Patrick |
| Abstract: | Firms are increasingly competing in an open innovation environment. Search strategies for external knowledge therefore become decisive for firms' success. Existing research distinguishes between breadth (diversity) and depth (intensity) with which firms deal with external knowledge sources. However, relatively little is known about how mangers can selectively strengthen one of these dimensions. We argue conceptually that the effect of breadth and depth of a research strategy on the innovation performance depends on (1) the type of innovation objectives (explorative vs. exploitative innovation objectives) and (2) the nature of the firm's orientation in drawing on external knowledge (science-based or market-based orientation). We test these hypotheses empirically for a sample of 1,434 manufacturing firms in Germany. Our results show that explorative innovation objectives strengthen the effect of breadth on innovation performance while exploitive objectives increase the depth. Moreover, we find that market-driven strategy favours breadth while science-driven strategy is more prevalent for depth search strategy. |
| Keywords: | open innovation,exploitative/explorative search strategies,market/science-driven strategies |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fisisi:s022018&r=cse |
| By: | JaeBin Ahn (International Monetary Fund); Hyoungmin Han (The Graduate Institute of International and Development Studies, Geneva); Yi Huang (The Graduate Institute of International and Development Studies, Geneva) |
| Abstract: | This paper examines how Korea’s import and export linkages with China affect the innovation outcomes of Korean manufacturing firms. Using our automated algorithm, we match Korean patent data to KIS-Value firm data from 1996 to 2015. We find that rising import and export with China lead to more patent applications by Korean manufacturing firms, with the positive impact particularly driven by large or public firms compared to SMEs or private firms. Most importantly, all of these results hold only in those sectors with higher quality products than Chinese products, shedding lights on reconciling recent empirical studies that found conflicting evidence on ’Schumpeterian force’ and ’escaping competition.’ |
| Keywords: | Competition, Innovation, China Shock, Schumpeterian Force, Escaping Competition |
| JEL: | F14 F16 O34 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:gii:giihei:heidwp07-2018&r=cse |
| By: | Chong Xiang; Stephen Yeaple |
| Abstract: | A country’s welfare depends on its ability to accumulate cognitive and noncognitive human capital. However, we do not fully understand what makes some countries successful at producing human capital and even struggle with measurement. e.g. international test scores are informative about the cognitive dimension but neglect the non-cognitive dimension. In this paper, we develop a multi-country, open-economy general-equilibrium framework in which countries’ ability to turn resources into human capital along the cognitive and non-cognitive dimensions is revealed by the endogenous educational and occupational choices of its citizens and their subsequent performance on international exams. Our model allows us to estimate countries’ underlying productivities of cognitive and non-cognitive human capital. We find that high test scores do not necessarily imply high cognitive productivities (e.g. Switzerland, Hong Kong) and that many countries with low test scores have high non-cognitive productivities (e.g. the U.S. and U.K.). We then aggregate over these two dimensions to construct a single educational quality index, and illustrate its intuition using an iso-education-quality curve. We use our model to decompose variation in output per capita across countries into a component involving the educational quality index and another involving output TFP. This exact decomposition shows that the differences in cognitive and noncognitive productivities across countries have large implications for differences in output per worker. These results help quantify the potential payoffs of education policies and clarify their objective; e.g. excessive attention to test scores may decrease aggregate output. International trade plays an important role in our model because the gains from trade help to compensate a country for uneven productivity across human capital types. In counterfactual exercises, we show that if barriers to trade are completely eliminated, we would obtain a very different iso-education-quality curve. This implies large improvements of overall education quality, and large gains from trade, for the countries with strong comparative advantages in producing cognitive (e.g. S. Korea would gain 30.1% to 44.1% of its output) or non-cognitive human capital (e.g. the Netherlands would gain 18.8% to 55.6%). |
| JEL: | F16 I21 I25 O15 O43 O47 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24524&r=cse |