nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2018‒06‒18
seven papers chosen by
João José de Matos Ferreira
Universidade da Beira Interior

  1. Innovation and Firm Performance in the People’s Republic of China: A Structural Approach with Spillovers By Howell, Anthony
  2. Firm competitiveness and regional disparities in Georgia By Rodríguez-Pose, Andrés; Hardy, Daniel
  3. Green Technologies and Smart Specialisation Strategies: A European Patent-Based Analysis of the Intertwining of Technological Relatedness and Key-Enabling-Technologies. By Montresor, Sandro; Quatraro, Francesco
  4. Spinning the Web: The Impact of ICT on Trade in Intermediates and Technology Diffusion By Réka Juhász; Claudia Steinwender
  5. From a hint of perfume to a sip of whisky: the recombination of knowledge from fragrance to spirits industry By Rani Jeanne Dang
  6. Impact of counterfeiting on the performance of digital technology companies By Nikolaus Thumm; Vincenzo Butticè; Federico Caviggioli; Chiara Franzoni; Giuseppe, Scellato
  7. Relative R&D intensity for exporters in an oligopolistic industry with spillovers. By Juan A. Mañez; Rafael Moner Colonques; Juan A. Sanchis; Jose J. Sempere-Monerris

  1. By: Howell, Anthony (Asian Development Bank Institute)
    Abstract: We adopt a structural framework to study the process of indigenous innovation and its impact on firm performance in the People’s Republic of China (PRC). In our analysis we use a rich source of panel data comprising almost 70,000 private Chinese firms operating in the PRC from 2004 to 2007. Relying on a structural innovation framework, we estimate the effects of technological learning during each phase of the structural model: (i) the firm’s decision to innovate, (ii) the innovation effort, (iii) the innovation throughput, and (iv) the firm performance. We show that in the early stages of innovation, Chinese firms fail to incorporate learning spillovers into their innovation effort, even when considering their absorptive capacity. Conversely, we found that in the later stages of innovation, learning spillovers positively increase firms’ innovation output as well as their performance, especially for firms with high absorptive capacity.
    Keywords: innovation; firm performance; learning; agglomeration; institutions; People’s Republic of China
    JEL: O30
    Date: 2018–02–08
  2. By: Rodríguez-Pose, Andrés; Hardy, Daniel
    Abstract: There are many challenges to building firm competitiveness in posttransition economies, particularly with the intensification of as global trade integration. Intranation variations in firm competitiveness are also stark, highlighting the need for policies to overcome the legacy of pretransition economic structures. Utilizing data from Georgia's annual firm census and household surveys, this paper analyzes the nature of the country's competitive landscape—measured as labor productivity—over the period 2006–2012. The results of our empirical estimations reveal that although a large proportion of a firm's competitiveness is associated with its own characteristics (sorting and compositional effects), location-specific factors are also highly relevant. In particular, the extent of agglomeration, human capital endowments, and local expenditures—such as transport infrastructure investments—play a significant role in conditioning firm-level competitiveness. Given current regional endowments, these findings highlight the significant attention that needs to be paid to building capacities in less-favored areas, not only to ensure that trade integration does not harm Georgia's less-favored regions, but also to make further progress in developing the country's private sector and fully maximize the export potential across its full stock of enterprises.
    Keywords: competitiveness; productivity; firms; Georgia transition economies
    JEL: N0 R14 J01
    Date: 2017–04–01
  3. By: Montresor, Sandro; Quatraro, Francesco (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
  4. By: Réka Juhász; Claudia Steinwender
    Abstract: This paper studies how information and communication technology (ICT) improvements affect trade along the value chain and international technology diffusion. We examine the impact of a revolutionary technology, the roll-out of the global telegraph network, on the 19th century cotton textile industry. First, we show that connection to the telegraph disproportionately increased trade in intermediate goods relative to final goods. We document that this was due to differences in codifiability; that is, the extent to which product specifications could be communicated at a distance using only words (and thus by sending telegrams) as opposed to inspecting a sample of the product. Second, adoption of the telegraph also facilitated international technology diffusion through the complementary mechanisms of importing machinery and acquiring knowledge of the production process and local demand through importing intermediates. These results shed light on how ICT facilitates the formation of global value chains and the diffusion of frontier technology.
    JEL: F14 N7 O14 O33
    Date: 2018–05
  5. By: Rani Jeanne Dang (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS - Centre National de la Recherche Scientifique - UNS - Université Nice Sophia Antipolis - UCA - Université Côte d'Azur)
    Abstract: The aim of this paper is to build, discuss and enrich a framework to examine the knowledge recombination process from an industry to another with the specific case of " Comte de Grasse Whisky ". The " Comte de Grasse Whisky " is a company that has set up an artisanal distillery in Provence (Grasse), South of France to develop a range of high-end spirits which production process derive from the well-known fragrance industry and savoir-faire of Grasse. The development of the Premium Whisky new market niche is a result of exaptation from the fragrance industry-in which numerous innovations are developed in the distillery process-to the spirits industry, in which only automating of the production has been observed. In order to operationalize this exaptation process, we mobilise the literature in knowledge management and innovation studies. Combining prior research on appropriate codification degree, exaptation and innovation through tradition, we develop a theoretical framework aimed at operationalizing the exaptation process, and identify the underlying challenges in this reinterpretation of knowledge.
    Keywords: knowledge recombination,exaptation,fragrance and spirits,search process,codification
    Date: 2018–05–22
  6. By: Nikolaus Thumm (European Commission – JRC - IPTS); Vincenzo Butticè (School of Management, Politecnico di Milano); Federico Caviggioli (Department of Management and Production Engineering, Politecnico di Torino); Chiara Franzoni (School of Management, Politecnico di Milano); Giuseppe, Scellato (Department of Management and Production Engineering, Politecnico di Torino)
    Abstract: Counterfeiting activities target companies in various sectors, including digital technology companies, defined as companies that produce and/or commercialize at least one physical product that incorporates a digital technology, excluding the merchandising related to the company brands. Counterfeiting is a fraudulent activity that potentially damages the economic and innovation performance of companies and can pose major threats to global competition and economic growth. However, the actual impact of counterfeiting on the performance of companies has not been tested empirically, due to methodological problems, including the lack of data on counterfeiting at the firm-level. Furthermore, prior theoretical studies have speculated that counterfeiting could have in part a beneficial effect on the performance of companies, due to indirect advertising, calling for empirical investigations to shed light on the issue. The goal of the present study is to provide empirical evidence on the impact of counterfeiting on both the economic and innovative performance of digital technology companies at the firm-level and on the global scale. To this aim, a new database was created combining data on counterfeiting activities during 2011-2013 (OECD-EUIPO, 2016) with financial information and patent data from 2009 to 2015. The result is a firm-level database that enables unprecedented analyses on the impact of counterfeiting on performance of digital technology companies. About 9% of the seizures of counterfeits that were illegally traded across borders during 2011 2013 involved goods commercialized by digital technology companies, equivalent to about the 9.1% of the total value of seizures. Collectively, about 11% of companies affected by illegal international trade of counterfeits are digital technology companies. The majority of these (58%) are big corporations with Operating Revenues greater than USD 1 bn. These account for 77% of the number of total seizures, and 84% of the value of seizures related to the digital technology companies. SMEs, defined as those with Operating Revenues up to USD 50 million, represent 21% of digital technology companies targeted and account for 5% of total seizures and 6% of the total value of seizures. The industries mostly targeted are electronics (both consumers’ electronics and electronics for industrial use), automotive and digital media. The digital technology products commercialized in frauds of IPRs include computer hardware and electronic components, batteries, sensors, autoparts, optical instruments, videogames, and recording of movies and motion picture. About 34% of digital technology companies affected by international trade of counterfeits are located in the EU28 or EFTA, 41% are located in North America, 23% are located in Asia. Within the EU28, UK, Germany, France and Italy are the countries hosting the largest number of targeted digital technology companies. Within the EU28, Germany and UK, followed by Belgium and Ireland, are the most-common country of destination of seized counterfeits. The overwhelming majority of seized goods related to digital technology companies is imported from Asia. 51% of these are imported from China, 41% comes from Hong Kong, China, 3% from Singapore. Other economies of provenance account each for less than 1% of the seizures. The vast majority (93%) of seizures affecting digital technology companies are due to violations of trademarks, and only a minority are due to violations of design models (4%), and copyrights (2%). Less than 1% of the seizures are due to violations of patents. However, seizures enacted in defence of patents are those that have the highest mean value. The analysis of infringed companies with respect to a control samples of non-infringed companies indicates that counterfeiting targets specifically highly profitable companies, with high propensity to innovate. Indeed, digital technology companies are more likely to become target of counterfeiting when they have larger Operating Revenues, and when they perform at a higher level in terms of profitability (return on total assets), prior to the window of observation. Target companies also have on average larger patent portfolios, prior to the observation of counterfeiting activities. Digital technology companies located in EU28 are on average less likely than companies located outside of EU28 to be the target of counterfeiting activities. Results from impact analyses indicate lower growth rates of operating profits for digital technology companies targeted by counterfeiting with respect to control samples of firms not affected by counterfeiting. In particular the econometric models provide evidence of a negative impact of counterfeiting on both EBITDA (Earnings before interest taxes depreciation and amortisation) and EBIT (Earnings before interest taxes). This result is robust across different estimation methods, model specifications and time windows. The data reveals only a weak negative impact on operating revenues, with limited statistical confidence. Conversely, there is no significant evidence that counterfeiting affected the investment in Fixed Assets of targeted firms with respect to the control sample. The results about the negative impact of counterfeiting activities on operating profits are in line with reports of greater costs incurred by these companies to enact anti-counterfeiting strategies, reported in prior descriptive literature. These practices include the broadening of product ranges, with fewer scale-economies and the enactment of anti-infringement procedures, such as ‘conspicuous packaging’, more screening and origin certifications, development of licensing downstream retailers and direct self-enforcement aimed at limiting the circulation of counterfeits. Results do not provide support for the existence of indirect positive spillover effects, as hypothesised by the theoretical literature, according to which infringed companies might benefit from an advertising effect due to the greater diffusion of brands from the counterfeiting activities. Indeed, at least for what concerns digital technology companies, there is no evidence of any positive effect of infringement on sales of original products. The digital technology companies that were affected by counterfeiting on average increased their patent portfolios during the observation period, but less than the digital technology companies that were not affected by counterfeiting. However, the result is not robust to the inclusion of control variables and to the adoption of alternative measures of innovation performance (Intangible Assets). It certainly merits further research, once more data on counterfeiting become available. Overall, the results indicate that counterfeiting activities harm the economic performance of targeted digital technology companies, by eroding their operating profits. The effect on innovative performance is negative, but still inconclusive due to insufficient dataset, and cannot exclude that counterfeiting may harm the propensity to innovate of digital technology companies. The analysis rules-out the existence of any positive spillover from counterfeiting.
    Keywords: Counterfeiting, trade, trade seizures, digital technologies, economic performance, innovative performance, patents, trademarks
    JEL: F1 K42 L63 O25 O31 O32 O34 O39
    Date: 2018–05
  7. By: Juan A. Mañez (Department of Applied Economics II (Economic Structure) and ERI-CES, University of Valencia, Spain); Rafael Moner Colonques (Department of Economic Analysis and ERI-CES, University of Valencia, Spain); Juan A. Sanchis (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).); Jose J. Sempere-Monerris (Department of Economic Analysis and ERI-CES, University of Valencia, Spain and CORE, UCL, Louvain-la-Neuve, Belgium)
    Abstract: This paper explores the links between firms R&D investment decisions, and firms decisions on how much to sell at home and abroad in a heterogeneous-firm international oligopoly. The model provides analytical results that yield four testable hypotheses, which are empirically checked with data from the Spanish Survey on Business Strategies (ESEE) for the period 1992-2013. Our results confirm that exporters invest in R&D four times more than non-exporters in relative terms (Hypothesis H1). Our estimates confirm that past R&D intensity has a positive and significantly different effect on domestic and export outputs by exporters and that the effect on the rate of growth of exports is larger (H2). Econometric evidence suggests a positive and significant effect of appropriability on domestic sales, while a positive but non-significant effect on exports; thus partially confirming hypothesis H3. Finally, R&D efficiency measured as the propensity to obtain a patent or utility model is found to have a positive and significant effect on the rate of growth of exports, which confirms H4.
    Keywords: International oligopoly, R&D, exports, knowledge spillovers.
    Date: 2018–07

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