nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2021‒02‒08
nine papers chosen by
João José de Matos Ferreira
Universidade da Beira Interior

  1. Productive linkages in a segmented model: analyzing the role of services in the exporting performance of German manufacturing By Daniel Herrero
  2. The Impact of R&D tax incentives in Portugal By Rita Bessone Basto; Ana Martins; Guida Nogueira
  3. Micro-foundations of small business internationalization: introduction to the Special Section By Johanna Vanderstraeten; Ellen Loots; Anais Hamelin; Arjen van Witteloostuijn
  4. Competition and private R&D investment By Thomas Grebel; Lionel Nesta
  5. Growth, development, and structural change at the firm-level: The example of the PR China By Heinrich, Torsten; Yang, Jangho; Dai, Shuanping
  6. Dynamic and Non-Neutral Productivity Effects of Foreign Ownership: A Nonparametric Approach By Yoonseok Lee; Mary E. Lovely; Hoang Pham
  7. The Impact of Covid-19 on Productivity By Nicholas Bloom; Philip Bunn; Paul Mizen; Pawel Smietanka; Gregory Thwaites
  8. EU competitiveness: recent trends, drivers, and links to economic policy: A Synthesis Report By MARSCHINSKI Robert; DE AMORES HERNANDEZ Antonio; AMOROSO Sara; BAUER Peter; CARDANI Roberta; CSEFALVAY Zoltan; GENTY Aurelien; GKOTSIS Petros; GREGORI Wildmer; GRASSANO Nicola; HERNANDEZ GUEVARA Hector; MARTINEZ TUREGANO David; NARDO Michela; PATARACCHIA Beatrice; POTTERS Lesley; RATTO Marco; ROMAN Maria Victoria; RUEDA CANTUCHE Jose; SANCHEZ MARTINEZ Miguel; TACCHELLA Andrea; TUEBKE Alexander; VEZZANI Antonio
  9. Internet Access and U.S. - China Innovation Competition By Gerard Hoberg; Yuan Li; Gordon M. Phillips

  1. By: Daniel Herrero (Instituto Complutense de Estudios Internacionales (ICEI), Universidad Complutense de Madrid.)
    Abstract: This article analyzes the causes of the exporting performance of the German manufacturing sector. By applying a subsystem approach to the input-output analysis, we take into account the interlinkages that exist between manufacturing and services. Particularly, two types of relationships that influence manufacturing competitiveness are considered: the wage squeeze in services due to institutional factors and outsourcing; and the role played by the knowledge-intensive business services (KIBS) as innovation drivers. With vertically integrated sectors as observations, an export model is estimated. Overall, our results point to the minor importance of labor costs for international competitiveness. We also capture a significant but small effect of service suppliers’labor cost on manufacturing exports. We find that KIBS have helped manufacturing gain international competitiveness. The paper concludes that non-price factors are the main drivers of German exports and that the relationship between manufacturing and services is not only a matter of cost reduction.
    Keywords: Unit labor costs; Competitiveness; Germany; Manufacturing; Productive linkages; Input-output
    Date: 2020
  2. By: Rita Bessone Basto (Research Office of the Portuguese Ministry of the Economy and Digital Transition); Ana Martins (Research Office of the Portuguese Ministry of the Economy and Digital Transition); Guida Nogueira (Research Office of the Portuguese Ministry of the Economy and Digital Transition)
    Abstract: The competitiveness of an economy increasingly depends on its ability to innovate. Theory suggests that innovation makes an important contribution to growth both at the firm level and at the national level. Innovative economies that deliver new differentiated products and services and/or develop more efficient production processes are often more productive, more resilient and adaptable in the face of adversity and change, and better able to support higher living standards and thus greater well-being. However, because knowledge is a public good, without government support, private agents are likely to underinvest in R&D, as it usually leads to higher social returns than private ones. In this context, it is strategically important to use public funds to promote innovative activity in firms to achieve the optimal level of R&D investment. Since 2000, indirect public support through tax credits has become more prominent and is currently the main form of public R&D support for most OECD countries. This paper evaluates the impact of SIFIDE, the Portuguese system of tax incentives to corporate R&D investment, on firms’ behaviour. The results show the effectiveness of SIFIDE in promoting investment in R&D, both through the impact of the program on intangible investment and on R&D staff.
    Keywords: R&D tax credits, Innovation, BERD, SIFIDE, Propensity score matching, Differences-in-Differences.
    JEL: O31 O32 H25 H32 C31
    Date: 2021–01
  3. By: Johanna Vanderstraeten (Universiteit Antwerpen [Antwerpen]); Ellen Loots (Erasmus University Rotterdam); Anais Hamelin (LARGE - Laboratoire de Recherche en Gestion et Economie - UNISTRA - Université de Strasbourg); Arjen van Witteloostuijn (Universiteit Antwerpen [Antwerpen])
    Abstract: Purpose: We introduce and summarize the selected papers of the Special Section on the "Micro-Foundations of Small Business Internationalization and briefly summarize the state-of-the-art of this literature stream. Design/methodology/approach: We briefly summarize the state-of-the-art of the literature regarding the micro-foundations of small business internationalization. Then, we summarize the selected papers of the Special Section, highlighting their main contributions. We end with suggesting future research avenues. Findings: We move beyond the usual suspects such as gender, education and experience to bring together internationalization studies that open up the individual lens to small business internationalization. To do so, we selected papers examining deeper-level behavioural and psychological constructs impacting the internationalization process, going from internationalization intention to internationalization behaviour and eventually leading to internationalization performance. Originality/value: We stress the importance of the entrepreneur as a person to better understand small business internationalization. We address the current lack of attention attributed to psychological and behavioural drivers (e.g. motives, attitudes, ambitions and aspirations) throughout the internationalization process, and we urge future researchers to further develop this research stream
    Keywords: Micro-foundation,Personality,Entrepreneur,Internationalization,SME,Small business,Cross Cultural & Strategic Management Small business,SMEs
    Date: 2020
  4. By: Thomas Grebel; Lionel Nesta (Université Côte d'Azur, CNRS, GREDEG (France))
    Abstract: We investigate the determinants of the sign of Research and Development reaction functions of rival firms. Using a two-stage n-firm Cournot competition game, we show that this sign depends on four types of environments in terms of product rivalry and technology spillovers. We test the predictions of the model on the world's largest manufacturing corporations. Assuming that firms make R&D investments based on the R&D effort of the representative rival company, we develop a dynamic panel data model that accounts for the endogeneity of the decision of the rival firm. Empirical results thoroughly corroborate the validity of the theoretical model.
    Date: 2020–05–27
  5. By: Heinrich, Torsten; Yang, Jangho; Dai, Shuanping
    Abstract: Understanding the microeconomic details of technological catch-up processes offers great potential for informing both innovation economics and development policy. We study the economic transition of the PR China from an agrarian country to a high-tech economy as one example for such a case. It is clear from past literature that rapidly rising productivity levels played a crucial role. However, the distribution of labor productivity in Chinese firms has not been comprehensively investigated and it remains an open question if this can be used to guide economic development. We analyze labor productivity and the dynamic change of labor productivity in firm-level data for the years 1998-2013 from the Chinese Industrial Enterprise Database. We demonstrate that both variables are conveniently modeled as Lévy alpha-stable distributions, provide parameter estimates and analyze dynamic changes to this distribution. We find that the productivity gains were not due to super-star firms, but due to a systematic shift of the entire distribution with otherwise mostly unchanged characteristics. We also found an emerging right-skew in the distribution of labor productivity change. While there are significant differences between the 31 provinces and autonomous regions of the P.R. China, we also show that there are systematic relations between micro-level and province-level variables. We conclude with some implications of these findings for development policy.
    Keywords: structural change; China; labor productivity; heavy-tailed distributions; microdata
    JEL: J24 L11 O10 O3 O53 R12
    Date: 2020–12–27
  6. By: Yoonseok Lee (Center for Policy Research, Maxwell School, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244); Mary E. Lovely (Department of Economics, Maxwell School, Syracuse University, 110 Eggers Hall, Syracuse, NY 13244); Hoang Pham (Oregon State University)
    Abstract: This paper studies two novel productivity characteristics of foreign acquisition on high-tech manufacturing firms: the dynamic and the non-Hicks-neutral effects. A dynamic productivity effect of foreign ownership arises when adoption of foreign technology and management practices takes time to fully realize. Furthermore, these dynamic adjustments may be capital or labor augmenting as adoption of advanced production technologies tends to have non-neutral productivity implications in developed countries. We propose and implement an econometric framework to estimate both effects using firm-level data from China's manufacturing sector. Our framework extends the nonparametric productivity framework developed by Gandhi, Navarro and Rivers (2020), in which identification is achieved using a firm's first-order conditions and timing assumptions. We find strong evidence of dynamic and non-neutral effects from foreign ownership, with significant differences across investment sources. Investment from OECD sources is found to provide a long-term productivity boost for all but the largest recipients, while that from Hong Kong, Macau and Taiwan does not raise performance. These findings have implications for China's declining labor share and for the rising domestic value-added content of its high-tech exports
    Keywords: Foreign Direct Investment, Productivity Dynamics, Non-Hicks-Neutral Effect, China's Manufacturing Sector, Nonparametric Model
    JEL: F23 D24 L25 C51 F61 P33 L60
    Date: 2021–01
  7. By: Nicholas Bloom; Philip Bunn; Paul Mizen; Pawel Smietanka; Gregory Thwaites
    Abstract: We analyze the impact of Covid-19 on productivity in the United Kingdom using data derived from a large monthly firm panel survey. Our estimates suggest that Covid-19 will reduce TFP in the private sector by up to 5% in 2020 Q4, falling back to a 1% reduction in the medium term. Firms anticipate a large reduction in ‘within-firm’ productivity, primarily because measures to contain Covid-19 are expected to increase intermediate costs. The negative ‘within-firm’ effect is partially offset by a positive ‘between-firm’ effect as low productivity sectors, and the least productive firms among them, are disproportionately affected by Covid-19 and consequently make a smaller contribution to the economy. In the longer run, productivity growth is likely to be reduced by diminished R&D expenditure and diverted senior management time spent on dealing with the pandemic.
    JEL: E0 L2
    Date: 2020–12
  8. By: MARSCHINSKI Robert (European Commission - JRC); DE AMORES HERNANDEZ Antonio (European Commission - JRC); AMOROSO Sara (European Commission - JRC); BAUER Peter (European Commission - JRC); CARDANI Roberta (European Commission - JRC); CSEFALVAY Zoltan (European Commission - JRC); GENTY Aurelien (European Commission - JRC); GKOTSIS Petros (European Commission - JRC); GREGORI Wildmer (European Commission - JRC); GRASSANO Nicola (European Commission - JRC); HERNANDEZ GUEVARA Hector (European Commission - JRC); MARTINEZ TUREGANO David (European Commission - JRC); NARDO Michela (European Commission - JRC); PATARACCHIA Beatrice (European Commission - JRC); POTTERS Lesley (European Commission - JRC); RATTO Marco (European Commission - JRC); ROMAN Maria Victoria (European Commission - JRC); RUEDA CANTUCHE Jose (European Commission - JRC); SANCHEZ MARTINEZ Miguel (European Commission - JRC); TACCHELLA Andrea (European Commission - JRC); TUEBKE Alexander (European Commission - JRC); VEZZANI Antonio
    Abstract: This report informs the debate on Europe's economic competitiveness and how it can be sustained under the pressures of globalisation. It presents a series of research findings from different areas of analytical work carried out at the 'Growth and Innovation' Directorate of the Joint Research Centre. The focus is on current challenges, with topics ranging from global value chains analysis to competition policy, and from the possible reasons for the recent EU productivity stagnation to the economic damage implied by FDI restrictions. The common denominator of all contributions is their aim to inform discussions on competitiveness and their relevance for EU economic policy.
    Keywords: competitiveness, productivity, global value chains, competition policy, restrictive regulation, mode 5
    Date: 2021–01
  9. By: Gerard Hoberg; Yuan Li; Gordon M. Phillips
    Abstract: Using new measures of expanded Internet access in China and internet-based search, we examine how competitive shocks from China impact U.S. innovation through the markets for innovation and existing products. We identify shocks to innovation competition using the geography of Chinese internet penetration and Chinese import data. Increases in the ability of Chinese industry peers to gather knowledge through the internet are followed by reductions in U.S. R&D investment and subsequent patents, and increased patenting by Chinese firms. The new Chinese patents also cite the U.S. firms patents at a high rate, consistent with increased intellectual property competition.
    JEL: D43 F13 L21 L26 O31 O34
    Date: 2020–12

This nep-cse issue is ©2021 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.