nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2020‒10‒05
six papers chosen by
João José de Matos Ferreira
Universidade da Beira Interior

  1. Fencing Off Silicon Valley: Cross-Border Venture Capital and Technology Spillovers By Ufuk Akcigit; Sina T. Ates; Josh Lerner; Richard R. Townsend; Yulia Zhestkova
  2. Knowledge Networks and Strong Tie Creation: the Role of Relative Network Position By Maria Tsouri; ;
  3. Opening up the black box: Interacting subspheres through enterprise entry and exit in China By Maria Csanádi; Ferenc Gyuris; Wanjun Wang
  4. Strategic implications of counter-geoengineering: clash or cooperation? By Heyen, Daniel; Horton, Joshua; Moreno-Cruz, Juan
  5. Technology, industrial dynamics and productivity: a critical survey By Mehmet Ugur; Marco Vivarelli
  6. Transforming Indian Engineering Industries through Industry 4.0: An Integrative Conceptual Analysis By Sony, Michael; Aithal, Sreeramana

  1. By: Ufuk Akcigit; Sina T. Ates; Josh Lerner; Richard R. Townsend; Yulia Zhestkova
    Abstract: The treatment of foreign investors has been a contentious topic in U.S. entrepreneurship policy in recent years. This paper examines foreign corporate investments in Silicon Valley from a theoretical and empirical perspective. We model a setting where such funding may allow U.S. entrepreneurs to pursue technologies that they could not otherwise, but may also lead to spillovers to the overseas firm providing the financing and the nation where it is based. We show that despite the benefits from such inbound investments for U.S. firms, it may be optimal for the U.S. government to raise their costs to deter investments. Using as comprehensive as possible a sample of investments by non-U.S. corporate investors in U.S. start-ups between 1976 and 2015, we find evidence consistent with the presence of knowledge spill-overs to foreign investors.
    JEL: G24 O33 O34
    Date: 2020–09
  2. By: Maria Tsouri; ;
    Abstract: The proximity literature usually treats proximity in terms of common attributes shared by agents, disregarding the relative position of an actor inside the network. This paper discusses the importance of such dimension of proximity, labelled as in-network proximity, and proposes an empirical measurement for it, assessing its impact (jointly with other dimensions of proximity) on the creation of strong knowledge network ties in ICT in the region of Trentino. The findings show that actors with higher in-network proximity are more attractive for both other central actors and peripheral ones, which is further strengthening their position within the network.
    Keywords: knowledge networks, in-network proximity, strong ties, proximity dimensions
    Date: 2020–09
  3. By: Maria Csanádi (Institute of Economics, Centre for Economic and Regional Studies, 1097 Budapest, Tóth Kálmán u. 4, Hungary); Ferenc Gyuris (Department of Regional Science, Eötvös Loránd University (ELTE), 1117 Budapest, Hungary, Pázmány Péter stny. 1/C.,); Wanjun Wang (Nanjing University of Finance and Economics, Nanjing, China.)
    Abstract: In this paper, we scrutinize in the transforming party-state system of China the subtle dynamics of enterprise adaptation to state interventions, which react to hardening external and internal constraints. We use a comparative systemic framework that interprets adaptation in the context of system dynamics and transformation (Csanádi, 2006). We analyze a firm-level database of the Chinese industry from 1998 to 2013 with more than 3.8 million entities. Enterprise sensitivity and adaptation is measured by entries and exits. Taking a systemic approach, we distinguish enterprises that belong to either the party-state network or to the market as two economic sub-spheres defined by our analytical framework. Using the dynamics of entries and exits of industrial enterprises in each of these two spheres, we measure their expansion and contraction as well as that of the speed of both. Different speed allows for the quantification of the dynamics of economic transformation. Our results reveal that increasing frequency of entries and exits, both within and between the two spheres, are interconnected with state interventions reacting to booming and cooling periods of system-specific overinvestment and hardening and softening external constraints (Csanádi, 2015; Csanádi and Gyuris, forthcoming). Similarly, we reveal a strong connection between enterprise entries and exits and the occasional changes in the acceleration and slowdown of transformation dynamics through alternating periods of retreat and expansion of the network. We confirm the retreat of the network between 1998 and 2009 in terms of number of enterprises, employment, and sales revenues. However, we find that state interventions reacting to the 2008-2009 global crisis as well as Xi Jinping’s anticorruption campaign in 2012-2013 halted the retreat of the network in terms of various statistical indicators. Interventions also changed the moderate annual decline of state-owned capital share among enterprises belonging to the network (a clear trend until 2008), for they led to a “hidden expansion” of the state ownership through a relatively fast increase of its capital share from the early 2010s. Thus, transformation is not continuous, as halts and slowdowns during this process occur in major periods of state intervention. Neither is the advancement of transformation uniform. Regarding the number, employment, and sales revenue of enterprises, the retreat of the network and the expansion of the market sphere have substantially been more advanced than in case of the allocation of resources, which is selective and biased towards state-owned and large enterprises (Csanádi, 1997; Csanádi and Liu, 2012). These along with the resulting politically rational economic behavior of enterprises are essential characteristics of the party-state system.
    Keywords: China, system transformation, power network, local power, enterprise behavior, crisis, anti-corruption campaign, state intervention
    JEL: P12 P16 P2 P26 P31
    Date: 2020–09
  4. By: Heyen, Daniel; Horton, Joshua; Moreno-Cruz, Juan
    Abstract: Solar geoengineering has received increasing attention as an option to temporarily stabilize global temperatures. A key concern is that heterogeneous preferences over the optimal amount of cooling combined with low deployment costs may allow the country with the strongest incentive for cooling, the so-called free-driver, to impose a substantial externality on the rest of the world. We analyze whether the threat of counter-geoengineering technologies capable of negating the climatic effects of solar geoengineering can overcome the free-driver problem and tilt the game in favour of international cooperation. Our game-theoretical model of countries with asymmetric preferences allows for a rigorous analysis of the strategic interaction surrounding solar geoengineering and counter-geoengineering. We find that counter-geoengineering prevents the free-driver outcome, but not always with benign effects. The presence of counter-geoengineering leads to either a climate clash where countries engage in a non-cooperative escalation of opposing climate interventions (negative welfare effect), a moratorium treaty where countries commit to abstain from either type of climate intervention (indeterminate welfare effect), or cooperative deployment of solar geoengineering (positive welfare effect). We show that the outcome depends crucially on the degree of asymmetry in temperature preferences between countries.
    Keywords: climate intervention; solar geoengineering; counter-geoengineering; free-driver; strategic conflicts; game theory; cooperation; externality; global warming; international environmental agreements; ES/R009708/1
    JEL: Q54 H41 D62 D02 D72
    Date: 2019–05–01
  5. By: Mehmet Ugur (Institute of Political Economy, Governance, Finance and Accountability, University of Greenwich, United Kingdom); Marco Vivarelli (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore – UNU-MERIT, Maastricht, The Netherlands – IZA, Bonn, Germany)
    Abstract: We review the theoretical underpinnings and the empirical findings of the literature that investigates the effects of innovation on firm survival and firm productivity, which constitute the two main channels through which innovation drives growth. We aim to contribute to the ongoing debate along three paths. First, we discuss the extent to which the theoretical perspectives that inform the empirical models allow for heterogeneity in the effects of R&D/innovation on firm survival and productivity. Secondly, we draw attention to recent modeling and estimation effort that reveals novel sources of heterogeneity, non-linearity and volatility in the gains from R&D/innovation, particularly in terms of its effects on firm survival and productivity. Our third contribution is to link our findings with those from prior reviews to demonstrate how the state of the art is evolving and with what implications for future research.
    Keywords: Innovation, R&D, Survival, Productivity
    JEL: O30 O33
    Date: 2020–09
  6. By: Sony, Michael; Aithal, Sreeramana
    Abstract: The recent innovations in both industrialisation and informatisation technologies have culminated into a new generation of manufacturing paradigm. This manufacturing innovation promises mass customization due to flexibility in manufacturing, improved product quality and safety, new productivity levels, creation of smart products and services. Industry 4.0 is gradually making its presence felt in Indian Industries. Indian Engineering Industries being the largest segment in the Industry, holds immense potential if it embraces Industry 4.0. This research conceptually examines the effect of Industry 4.0 on Indian Engineering Industries on both the heavy and light engineering industries. ABCD framework is used to investigate the effect of Industry 4.0 in these Industries. The study finds that Indian engineering industry can be transformed to produce smart products and services, by the application of Industry 4.0. This is the first study to evaluate the effect of Industry 4.0 on Indian Engineering Industries. It also contributes to the theoretical need for evaluating the effects of Industry 4.0 in the developing world.
    Keywords: Industry 4.0, Indian Engineering Industries, Fourth Industrial Revolution, Cyber-Physical Systems
    JEL: L6 N6 O1 O14
    Date: 2020–08–10

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