nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2019‒11‒25
eleven papers chosen by
João José de Matos Ferreira
Universidade da Beira Interior

  1. Innovation modes in SMEs: Mechanisms integrating STI-processes into DUI-mode learning and the role of regional innovation policy By Alhusen, Harm; Bennat, Tatjana
  2. Start-up Subsidies: Does the Policy Instrument Matter? By Hanna Hottenrott; Robert Richstein
  3. Corporate Entrepreneurship, Strategy Formulation, and the Performance of the Nigerian Manufacturing Sector By OMISORE, Segun; Ho, Toan Manh
  4. Business travels, multinational firms and international trade By Francesco Bripi
  5. The influence of bank branch closure on entrepreneurship sustainability By Sin Tian Ho, Cynthia; Berggren, Björn
  6. Mapping the pathways towards farm-level sustainable intensification of agriculture: an exploratory network 3 analysis of stakeholders’ views By Micha, Evgenia; Fenton, Owen; Daly, Karen; Kakonyi, Gabriella; Ezzati, Golnaz; Moloney, Thomas; Thornton, Steven F
  7. Subsidies, spillovers and exports By Girma, Sourafel; Görg, Holger; Stepanok, Ignat
  8. Technology, profits and wages By Andrea Coveri; Mario Pianta
  9. Local Capital Scarcity and Small Firm Growth: Evidence from Real Estate Booms in China By Harald Hau; Difei Ouyang
  10. Training, Human Capital, and Gender Gaps in Entrepreneurial Performance By Brixiová, Zuzana; Kangoye, Thierry
  11. Quid Pro Quo, Knowledge Spillover and Industrial Upgrading By Jie Bai; Panle Barwick; Shengmao Cao; Shanjun Li

  1. By: Alhusen, Harm; Bennat, Tatjana
    Abstract: Innovation processes consist of interactive learning mechanisms that combine different knowledge sources. Using a set of 72 exploratory interviews with small- and medium-sized enterprises (SMEs) and regional innovation consultants, this paper analyzes the combination of STI (science-technology -innovation) and DUI (innovation based on learning-by-doing, -using and -interacting) modes of innovation. We show that SMEs integrate STI-based knowledge into DUI-routines through mechanisms with varying levels of complexity. The mechanisms we describe differ with respect to a) effects on innovativeness, b) the absorptive capacities required and c) incurred costs. Based on these mechanisms, d) cognitive, organizational and financial barriers to combinatorial innovation modes are derived. We find that e) regional innovation consultancies play an important role in fostering combinatorial innovation modes. We therefore explore the role of regional innovation policy and its effects on firms' combination of innovation modes. Our findings point out innovation drivers that facilitate SMEs' capacity to absorb STI-based knowledge. Based on our empirical findings, we derive implications for innovation policy with regards to absorptive capacities in SMEs.
    Keywords: Innovation modes,DUI,Regional Innovation System,R&D cooperation,Knowledge bases,Regional innovation policy
    JEL: D23 D83 L10 L22 O31 O33 O38
    Date: 2019
  2. By: Hanna Hottenrott (aTUM School of Management, Technical University of Munich, Arcisstraße 21, 80333 Munich, Germany, bZEW – Leibniz Centre for European Economic Research, L7, 1, Mannheim, Germany.); Robert Richstein (cManchot Graduate School, Heinrich Heine University Düsseldorf, Universitätsstraße 1, 40225 Düsseldorf, Germany)
    Abstract: New knowledge-intensive firms contribute to innovation, competition, and employment growth, but externalities like knowledge spillovers can prevent entrepreneurs from appropriating the full returns from their investments. In addition, uncertainty and information asymmetry pose challenges for financing. Public policy programs therefore aim to support start-ups. This study evaluates the effects of participation in such programs on the performance of start-ups in high-tech and knowledge-intensive sectors that were founded in Germany between 2005 and 2012. Distinguishing between grants and subsidized loans and after matching recipients and non-recipients based on a broad set of founder and company characteristics, we find that both grants and subsidized loans facilitate tangible investment, employment and revenue growth. Grants are, however, better suited to increasing R&D investments than loans are. Combined with grants, subsidized loans facilitate turning research results into marketable products by means of investments in tangible assets. Start-ups that participate in both types of programs outperform grant-only recipients in terms of innovation performance, employment and future revenues. Finally, program participation does not crowd out private venture capital.
    Keywords: financing constraints, subsidies, R&D, high-tech start-ups, innovation policy
    JEL: G32 H25 O38
    Date: 2019–11
  3. By: OMISORE, Segun; Ho, Toan Manh (Thanh Tay University Hanoi)
    Abstract: Corporate entrepreneurship is a process that encourages formulating and implementing new ideas, taking risks, and creating new ideas to start new businesses. It is associated with innovation, which results in entrepreneur wealth and adds value for an organisation and the customers that buy the products. The Nigerian manufacturing sector has been underperforming in the past decade with numerous firms in the sector operating at less than 30% of initially installed capacity. Despite various industrial transformation programmes initiated by the successive governments to boost manufacturing outputs, most firms in this sector do not seem to have made any significant progress in response. Reasons for this underperformance is arguably due to the misalignment between ‘externally-driven’ policies and the ‘internal processes’ within the individual firms of various sizes. To explore and unravel the undercurrents impelling the seeming strategy- environment misalignment, this study takes a recourse to the strategic management literature. It draws from the intersectionality of strategy-environment congruence and the attendant moderating effect on performance. In order to drill down to conceptual specifics, it builds on the 3Cs framework (competence, commitment and co-ordination) initially propounded by Jha and Iyer (2007). Based on a sample of 32 manufacturing firms and leaning on the qualitative methodological approach (using interpretative phenomenological analysis), the study sought to gain situated, contextual, insights into the perceptions of the phenomenon as demonstrable in the strategic configuration. It interrogated respective processes of strategy formulation and implementation in the degree to which they are moderated by the contending environmental variables and the cumulative impact on corporate performance. This is the level of analysis at which corporate entrepreneurship behaviour, in terms of both antecedents and consequences, profoundly manifests itself; mirroring management behaviour, sensitivity and predilections towards environmental scanning capabilities. The sample of firms was drawn from firms of varying sizes in four geopolitical zones of Nigeria – South West, South East, South, and North Central. Results indicate profound ambivalences in the nature of the operating environment and the signals emitted there from which, in turn, truncates entrepreneurial behaviours of firms. Essentially, negative perceptions of the environment militated against strategic coherence, thus adversely impacting corporate performances. Essentially, the eclectic 3Cs paradigm holds strong explanatory as well as diagnostic force in explicating the setbacks of the Nigerian manufacturing sector. The analytical prism is a novelty and offers tremendous latitude for sketching out appropriate turnaround intervention strategies.
    Date: 2019–07–31
  4. By: Francesco Bripi (Bank of Italy)
    Abstract: Business travels are a key driver of growth as they contribute to knowledge diffusion and innovation. They are also a relevant component of services trade. This paper analyzes the determinants of business travels expenditure in Italy, where this phenomenon is relevant and it is concentrated in few Italian regions. Using a “unilateral” gravity approach, I find significant correlations between trade flows, FDI stocks and business travel expenditures. Identification is addressed using inverse measures of offshorable and of routinary tasks, instrumental variables and selection methods. The analysis highlights that the pattern of business travels expenditure is shaped to some extent by the business cycle of partner countries relative to that of Italian regions. Moreover, the pattern is determined to a greater extent by activities that are least intensive in offshorable or routinary tasks. This second result suggests that remote controls systems substituted only more standardized activities. Indeed, broadband diffusion in the partner countries reduced business travels expenditure only in more routinary sectors. Overall this evidence is consistent with the view that business travels have been affected by the recent developments in ICT.
    Keywords: services trade, travel, FDI, knowledge diffusion
    JEL: F14 F20 J61 O33
    Date: 2019–11
  5. By: Sin Tian Ho, Cynthia (Department of Real Estate and Construction Management, Royal Institute of Technology); Berggren, Björn (Department of Real Estate and Construction Management, Royal Institute of Technology)
    Abstract: We study the influence of bank branch closure on new firm formation in Sweden, with a panel database that captures the geographical locations of all the Swedish bank branches from 2000 to 2013. Using spatial econometric analysis at a municipal level, we show that bank proximity to firms is vital for entrepreneurship to thrive and sustain in Sweden. From the Fixed-Effects spatial models, the increase in distance to the banks due to bank branch closure is shown to affect new firm formation negatively. The further a firm is located away from the bank, the higher the monitoring cost is for the banks. The increase in distance also results in an increase in information asymmetries because of the banks’ eroded ability to collect soft information about the borrower firm. Due to high risks associated with the lack of information and uncertainty, banks might not be as willing to loan money to a distant firm compared to a nearby firm. Furthermore, the presence of neighbourhood spillover effects is evidenced through the Moran’s I statistics, which means that the omission of spatial effects in the analysis would have resulted in biased estimates.
    Keywords: bank branches; entrepreneurship; financing; new firm formation; Sweden
    JEL: C31 R10
    Date: 2019–11–14
  6. By: Micha, Evgenia; Fenton, Owen; Daly, Karen; Kakonyi, Gabriella; Ezzati, Golnaz; Moloney, Thomas; Thornton, Steven F
    Abstract: Sustainable intensification of agriculture (SIA) has become an important concept to ensuring food security in the context of increasing agricultural production while minimising negative externalities in contemporary agronomic systems. In supporting this, there is a need to establish a decision-making and management system that involves the views and opinions of different stakeholders and unifies the goals of SIA amongst them. The objective of this work is to identify and describe pathways toward farm-level SIA. An explanatory network approach and fuzzy cognitive maps (FCMs) support the analysis of stakeholder views across the three pillars of sustainability: social, economic and environmental. Different stakeholder groups were asked to collectively map the pathways towards farm level SIA in a workshop exercise. The respective groups considered a common set of pre-selected factors as potential descriptors of sustainability and created unique maps by adding their own components and descriptors and identifying causal links between them. While the relative weighting of factors by each group differed, according to their perspectives and interpretation, yield, knowledge transfer, water quality, weather extremes and technology/infrastructure were scored as priority descriptors of farm-level sustainability by all groups in an aggregate analysis. Exploratory analysis of FCMs was found to provide an efficient mechanism to investigate stakeholder views on pathways towards farm-level SIA, by identifying causal relationships and interactions between factors and actors that affect its achievement. The study shows that sustainable intensification is a complex dynamic system that includes institutional structures, personal goals, stakeholder interests and socio-economic factors, and is affected by cognitive beliefs and particular knowledge within stakeholder groups. Our results show how experience, knowledge and beliefs affect the perception of farm-level SIA by various stakeholder groups, and how this knowledge is often fragmented and miscommunicated. The exercise confirmed the hypothesis that farm-level SIA has to be seen as a dynamic process in which farm performance is affected by various factors, with the complexity of the process increasing when different stakeholder interests and beliefs combine for farm management.
    Date: 2019–09–10
  7. By: Girma, Sourafel; Görg, Holger; Stepanok, Ignat
    Abstract: We ask whether production related subsidies have a role to play in explaining Chinese firms' export performance. We, firstly, implement an estimation approach that allows for both direct and indirect ("spillover") effects of the subsidy on the probability to export. Secondly, our approach enables us to allow these two effects to differ depending on the share of firms that already receive subsidies in a well-specified cluster. These two issues have, to the best of our knowledge, not been considered in evaluations of subsidies on export performance. Our estimation results provide a sobering assessment of the role of production related subsidies in stimulating export performance.
    Keywords: exporting,subsidies,spillovers
    JEL: F14 F12 H25
    Date: 2019
  8. By: Andrea Coveri; Mario Pianta
    Abstract: Building on a Post-Keynesian theoretical framework, integrated with an analysis of technology, this article investigates the structural determinants of income distribution. We develop a simultaneous model on wage and profit dynamics identifying as key determinants productivity growth, capital-labour conflict, the relevance of trade unions and different strategies of technological change and offshoring. We perform an industry-level analysis on 38 manufacturing and service sectors for six major European countries from 1994 to 2014. Wage and profit dynamics is shown to be rooted in structural change, productivity growth and capital-labour conflict, with profits driven by product innovation and offshoring, and wages rising faster where new products are relevant and trade unions have a greater role.
    Keywords: Income distribution; innovation; offshoring; Europe; industries.
    Date: 2019–11–13
  9. By: Harald Hau; Difei Ouyang
    Abstract: In geographically segmented credit markets, local real estate booms can deteriorate the funding conditions for small manufacturing firms and undermine their competitiveness. Using exogenous variation in the administrative land supply across 172 Chinese cities, we show that higher predicted real estate prices cause higher borrowing costs for small manufacturing firms, reduce their bank lending, lower their investment rate and labor productivity, and reduce their output and TFP growth by economically significant magnitudes. These effects are absent in large and listed companies with access to the national capital market. The evidence highlights the benefits of financial market integration.
    Keywords: factor price externalities, real estate booms, firm growth, financial constraints
    JEL: D22 D24 R31
    Date: 2019
  10. By: Brixiová, Zuzana; Kangoye, Thierry
    Abstract: In the aftermath of the global financial crisis, policymakers have been increasingly striving to support female entrepreneurship as a possible growth driver. This paper contributes to reconciling mixed findings in the literature on the effectiveness of entrepreneurial training with an analysis that links training and human capital, including tertiary education and non-cognitive skills, with gender gaps in entrepreneurial performance in Africa. We have found that while financial literacy training directly benefits men, it does not raise the sales level of women entrepreneurs. Instead, tertiary education has a direct positive link with the performance of women. Consistent with our theoretical model where different skills are complements, tertiary education can act as a channel that makes training effective. Regarding non-cognitive skills, evidence shows that women entrepreneurs who are tenacious achieve stronger sales performance. Our results underscore the importance of incorporating tertiary education and entrepreneurial training programs focused on a balanced set of skills, including non-cognitive skills, among policies for women entrepreneurs.
    Keywords: Female entrepreneurship,training,non-cognitive skills,tertiary education
    JEL: L53 O12 J4
    Date: 2019
  11. By: Jie Bai (Center for International Development at Harvard University); Panle Barwick; Shengmao Cao; Shanjun Li
    Abstract: Are quid pro quo (technology for market access) policies effective in facilitating knowledge spillover to developing countries? We study this question in the context of the Chinese automobile industry where foreign firms are required to set up joint ventures with domestic firms in return for market access. Using a unique dataset of detailed quality measures along multiple dimensions of vehicle performance, we document empirical patterns consistent with knowledge spillovers through both ownership affiliation and geographical proximity: joint ventures and Chinese domestic firms with ownership or location linkage tend to specialize in similar quality dimensions. The identification primarily relies on within-product variation across quality dimensions and the results are robust to a variety of specifications. The pattern is not driven by endogenous joint-venture network formation, overlapping customer base, or learning by doing considerations. Leveraging additional micro datasets on part suppliers and worker flow, we document that supplier network and labor mobility are important channels in mediating knowledge spillovers. However, these channels are not tied to ownership affiliations. Finally, we calibrate a simple learning model and conduct policy counterfactuals to examine the role of quid pro quo. Our findings show that ownership affiliation facilitates learning but quality improvement is primarily driven by the other mechanisms.
    Keywords: Knowledge spillover
    Date: 2019–11

This nep-cse issue is ©2019 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.