nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2019‒09‒30
twelve papers chosen by
João José de Matos Ferreira
Universidade da Beira Interior

  1. Digitization and knowledge spillover effectiveness: Evidence from the "German Mittelstand" By Proeger, Till; Runst, Petrik
  2. The antecedents of new R&D collaborations with different partner types: On the dynamics of past R&D collaboration and innovative performance By Rene Belderbos; Victor Gilsing; Boris Lokshin; Martin Carree; Juan Fernández Sastre
  3. Knowledge searching strategies, testing for complementarities on the innovation behavior of the firm By Alejandro Bello-Pintado; Felipe Berrutti; Carlos Bianchi; Pablo Blanchard
  4. Business Dynamics, Knowledge Economy, and the Economic Performance of African Countries By Simplice A. Asongu; Voxi H. S. Amavilah; Antonio R. Andres
  5. What Happened to the U.S. Business Dynamism? By Ufuk Akcigit; Sina Ates
  6. Corporate Venture Capital (CVC) investments and technological performance: Geographic diversity and the interplay with technology alliances By Rene Belderbos; Jojo Jacob; Boris Lokshin
  7. Labor Earnings Dynamics with a Large Informal Sector By Diego Gomes; Cezar Santos; Felipe Iachan
  8. The China Shock and Employment in Portuguese Firms By Lee G. Branstetter; Brian K. Kovak; Jacqueline Mauro; Ana Venancio
  9. A Theory of Falling Growth and Rising Rents By Philippe Aghion; Antonin Bergeaud; Huiyu Li; Peter Klenow; Timo Boppart
  10. Cross-country evidence on the contributions of research institutions to innovation By Caroline Paunov; Martin Borowiecki; Nevine El-Mallakh
  11. The role of overconfidence in overweighting private information: Does gender matter? By Cao, Qian; Li, Jianbiao; Niu, Xiaofei
  12. Specialization, Market Access and Medium-Term Growth By Dominick Bartelme; Andrei Levchenko; Ting Lan

  1. By: Proeger, Till; Runst, Petrik
    Abstract: The Knowledge Spillover Theory of Entrepreneurship (KSTE) considers determinants of knowledge diffusion as well as their impact on entrepreneurial activities and growth. Extending the KSTE, the role of incumbent firms for the broad diffusion of new knowledge has been emphasized. For those firms, the barriers to an effective flow of information are considered using the concepts of knowledge filters and absorptive capacities. Both concepts enable the derivation of institutional measures to penetrate knowledge filters and systematically increase absorptive capacities. We interpret the process of digitization as a central process of knowledge spillover in recent years and determine digitization-related knowledge filters for particular domains of firm decision-making. Using a consultant-based in-depth evaluation of 200 SMEs conducted in the context of a federal innovation program, structural drivers, firm clusters and domain-specific knowledge filters for digitization are determined. We find little evidence for structural drivers of knowledge spillover effectiveness. However, as firms are clustered according to their digitization pattern, we show that firms realize high degrees of digitization in most domains or in none, leading us to argue that domain-specific knowledge filters are weak. Rather, knowledge spillover in digitization can be considered a process with initially strong general knowledge filter and - once this filter has been penetrated - weaker subsequent domain-specific knowledge filters. Policy and managerial implications for increasing digitization-related knowledge spillovers in SMEs are discussed.
    Keywords: Digitization,Knowledge Filter,Knowledge Spillover Theory of Entrepreneurship,Small and Medium Enterprises
    JEL: D21 D82 H41 K23 L14
    Date: 2019
  2. By: Rene Belderbos; Victor Gilsing; Boris Lokshin; Martin Carree; Juan Fernández Sastre
    Abstract: We examine firms’ propensity to adapt their R&D collaboration portfolio by establishing new types of R&D collaboration with different kinds of partners (suppliers, customers, competitors and universities & public research institutions). We argue that existing R&D collaboration with one of the two value chain partners (suppliers or customers) is associated with the formation of new R&D collaboration with the other value chain partner to ensure temporal alignment in innovation within the value chain. In contrast, issues related to governance and unintended knowledge spillovers suggest that ‘horizontal’ R&D collaboration with competitors only spurs R&D collaboration with other partner types if such competitor R&D collaboration has been discontinued earlier (‘delayed temporal alignment’). We posit that persistent prior R&D collaboration with institutional partners is an antecedent to the establishment of new R&D collaboration with industrial partners, and that discontinuation of a particular type of R&D collaboration is likely to lead to a restart of such R&D collaborative effort. Strong prior innovative performance is expected to increase the probability that firms establish R&D collaborations with new partner types, except for R&D collaboration with competitors, since the most innovative firms may fear leakage of proprietary knowledge to rivals. We find broad support for these predictions in a large panel of Spanish innovating firms (2004-2011). Our findings highlight that it is not just the configuration of R&D collaborations with existing partner types that predicts tie formation with new partner types, but also the intertemporal pattern of prior R&D collaboration and managerial discretion provided by past innovation success.
    Date: 2017–10
  3. By: Alejandro Bello-Pintado (Universidad Pública de Navarra (España)); Felipe Berrutti (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economí­a); Carlos Bianchi (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economí­a); Pablo Blanchard (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economí­a)
    Abstract: According to two basic building blocks of neo-Schumpeterian economics, firms innovation process shows idiosyncratic features related to their specific characteristics of the firm and of the environment where it acts. Moreover, firms innovation is recognized as an interactive process. Hence, due to systemic functioning, it is expected that the effect of two simultaneous external linkages will be different from the sum of their isolated effects. However, the external search for knowledge and information sources (KISs) may present constraints related to the searching costs and the cognitive distance between the firm and the KISs. This paper aims to contribute empirical evidence to revisit these theoretical building blocks by analyzing the search strategies conducted by firms. We identify three types of external KISs and analyze the effects of eight search strategies (KIS combinations) on firms innovation behavior. In addition, we test the complementarity or substitution effects of the simultaneous use of different KISs on the innovation behavior – effort and performance – of Uruguayan firms. We identify the specific effect of different KIS combinations but find no evidence of a linear relation between search scope and innovation behavior. Moreover, we find evidence of complementary effects between relatively closer and more distant KISs and substitution effects between relatively near KISs.
    Keywords: information sources, search strategy, complementarity, supermodularity
    JEL: D22 D83 L25 O32
    Date: 2019
  4. By: Simplice A. Asongu (Yaoundé/Cameroon); Voxi H. S. Amavilah (REEPS, Arizona, USA); Antonio R. Andres (Ostrava, Czech Republic)
    Abstract: This paper develops a framework (a) to examine whether or not the African business environment hinders or promotes the knowledge economy (KE), (b) to determine how the KE affects economic performance, and (c) how economic performance relates to the inequality-adjusted human socioeconomic development (IHDI) of 53 African countries during the 1996-2010 time period. We estimate the linkages with three related equations. The results support a strong correlation between the dynamics of starting and doing business and variations in KE. The results also show that there exists a weak link between KE and economic performance. Nonetheless, KE-influenced performance plays a more important role in socioeconomic development than some of the conventional control variables like foreign direct investment (FDI), foreign aid, and even private investment.
    Keywords: Business Dynamics; Knowledge Economy; Economic Performance,
    JEL: L59 O10 O30 O20 O55
    Date: 2019–01
  5. By: Ufuk Akcigit (University of Chicago); Sina Ates (Federal Reserve Board)
    Abstract: In the last several decades the U.S. economy has witnessed a number of striking trends that indicate a rising market concentration and a slowdown in business dynamism. In this paper, we make an attempt to understand potential common forces behind these empirical regularities through the lens of a micro-founded general equilibrium model of endogenous firm dynamics. Importantly, the theoretical model captures the strategic behavior between competing firms, its effect on their innovation decisions, and the resulting “best vs. the rest” dynamics. We focus on four potential mechanisms that can potentially drive the observed changes and use the calibrated version of the model to assess the relative importance of these channels. One particular exercise replicates the transitional dynamics of the U.S. economy through joint moves in all four channels and decomposes the contribution of each channel to the resulting trends. Our results highlight the dominant role of a decline in the intensity of knowledge diffusion from the frontier firms to the laggard ones in explaining the observed shifts. We conclude presenting new evidence that shows an increasing concentration of innovative activity.
    Date: 2019
  6. By: Rene Belderbos; Jojo Jacob; Boris Lokshin
    Abstract: Firms are increasingly operating portfolios of geographically dispersed CVC investments for accessing a variety of location-specific knowledge, often alongside traditional external knowledge-sourcing strategies such as technology alliances. We examine the conditions under which geographic diversity in corporate venture capital (CVC) investments has positive consequences for firms’ technological performance in the context of simultaneously pursued technology alliance strategies. We find that geographic diversity in CVC portfolios enhances performance as long as firms avoid knowledge redundancy in knowledge-sourcing arising from geographic overlaps with technology alliances, and the managerial complexity, coordination costs, and resource constraints stemming from the simultaneous pursuit of diversity in both technology alliances and CVC investments. Our inferences draw on a panel data set on the patents, CVC investments, and technology alliances of 55 CVC-active firms in a variety of industries.
    Keywords: CVC investments, technology alliances, technological performance
    Date: 2017–10
  7. By: Diego Gomes (University of Alberta); Cezar Santos (Fundacao Getulio Vargas); Felipe Iachan (FGV)
    Abstract: We study labor earnings dynamics in a developing economy with a large informal sector. We use nationally representative Brazilian panel data that cover both formal and informal workers. We provide two main contributions. First, we document large disparities in earnings fluctuations faced across these segments of the labor market, as well as the high intensity of transitions between them. Informality is associated with more volatile earnings, while agents in the formal sector are subject to significant downside risk. Transitions across formal and informal employment bring large earnings shocks on average and have a frequency that depends on age and the initial earnings level. Second, we assess the consequences of these empirical disparities on decisions of consumption and savings. Our tool is a standard life cycle model with heterogeneous agents where the earnings processes are estimated to reflect the aforementioned empirical findings. The simulations reveal sizable impacts.
    Date: 2019
  8. By: Lee G. Branstetter; Brian K. Kovak; Jacqueline Mauro; Ana Venancio
    Abstract: This paper considers the effects of Chinese import competition on firm-level labor market outcomes in Portugal. We examine direct competition in the Portuguese market and indirect competition Portugal's largest export markets in Western Europe. Using rich employer-employee data matched to firm-level trade transactions, we measure the degree to which different Portuguese firms faced Chinese import competition, based on firm product mix and distribution of sales across countries. We find economically and statistically significant employment declines in firms with more exposure to Chinese competition in European export markets, but minimal effects of direct competition in Portugal. Our findings also suggest a centrally important role for Portugal's stringent labor market regulations in limiting firms' ability to adjust to competitive shocks. In our earlier sample period (1995-2000), firms have limited ability to adjust employment, hours, or wages, and the primary adjustment margin is firm exit. In the later period (2000-2007), when more flexible temporary contracts comprise a larger share of employment, we find employment reductions among more exposed firms. Those employment reductions are entirely accounted for by changes in temporary employment, with no effect on permanent employment. We expect these findings to be informative for other peripheral European countries that had specialized in labor-intensive manufacturing industries operating under inflexible labor market regimes.
    JEL: F14 F16 J21 J31
    Date: 2019–09
  9. By: Philippe Aghion (College de France); Antonin Bergeaud (Banque de France); Huiyu Li (Federal Reserve Bank of San Francisco); Peter Klenow (Stanford University); Timo Boppart (IIES, Stockholm University)
    Abstract: Growth has fallen in the U.S., while firm concentration and profits have risen. Labor's share has fallen, mostly due to rising market share of low labor share firms. We propose a theory for these trends in which the driving force is falling firm-level costs of spanning multiple markets, perhaps due to ICT advances. The most efficient firms spread into new markets in response, generating a temporary burst of growth but also erecting barriers to future innovation if their efficiency is difficult for other firms to imitate. Despite rising rents, even the efficient firms do less innovation in the long run as they are more likely to face stiff competition if they enter markets against each other.
    Date: 2019
  10. By: Caroline Paunov (OECD); Martin Borowiecki (OECD); Nevine El-Mallakh (Université Paris 1 Panthéon-Sorbonne)
    Abstract: This paper presents preliminary evidence on the patenting activities of 21 200 research institutions - 20 091 higher education institutions (HEIs) and 1 109 public research institutes (PRIs) - for 36 OECD countries and China from 1992 to 2014. Our evidence, which builds on a database that matches research institutions to a sample of their patent applications, indicates patent applications to the European Patent Office (EPO) filed by research institutions grew faster than industry patents. Those jointly filed by industry and research institutions grew even faster. However, research institutions’ share in patent applications remains low and their ratio of patents granted to applications is below that of industry. An econometric analysis at postal code level shows that geographical proximity to research institutions is associated with higher industry patenting. Results from an instrumental variable estimation indicate that research institutions positively influence local industry patenting, including in life sciences and digital technologies.
    Keywords: China, Higher education institutions (HEIs), innovation, local knowledge spillovers, OECD countries, patents, public research institutes (PRIs), universities
    JEL: I23 O31 O34
    Date: 2019–09–24
  11. By: Cao, Qian; Li, Jianbiao; Niu, Xiaofei
    Abstract: This paper analyzes gender differences of overweighting private information in a social learning game. The results show that male participants’ fraction of choosing in line with private signal is significantly higher than female, i.e. men are more likely to follow their own private information than women. This gender effect is primarily salient in the incongruent rounds where a participant receives a private signal that is against with majority of the public information. However, no significant gender differences of overweighting private information are found in the congruent rounds where a participant receives a private signal that matches with majority of public information. In addition, we find that overweighting private information is positively correlated with overconfidence; men are more overconfident than women; a mediation analysis reveals that overconfidence explains the gender differences of overweighting private information.
    Keywords: overweighting private information,gender,overconfidence
    JEL: C91 D81
    Date: 2019
  12. By: Dominick Bartelme (University of Michigan); Andrei Levchenko (University of Michigan); Ting Lan (University of Michigan)
    Abstract: This paper estimates the impact of foreign sectoral demand and supply shocks on medium-term economic growth. Our empirical strategy is based on a first order approximation to a wide class of small open economy models that feature sector-level gravity in trade flows. The framework allows us to measure foreign shocks and characterize their impact on growth in terms of reduced-form elasticities. We use machine learning techniques to group 4-digit manufacturing sectors into a smaller number of clusters, and show that the cluster-level growth elasticities can be estimated using high-dimensional statistical techniques. We find clear evidence of heterogeneity in the growth elasticities of different foreign shocks. Foreign demand shocks in complex intermediate and capital goods have large growth impacts, and both supply and demand shocks in capital goods have particularly large impacts on growth for poor countries. Counterfactual exercises show that both comparative advantage and geography play a quantitatively large role in how foreign shocks affect economic growth.
    Date: 2019

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