nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2021‒06‒28
seven papers chosen by
João José de Matos Ferreira
Universidade da Beira Interior

  1. Open innovation in managerial innovation: the case of internal audit. By Stéphane Lhuillery; Marion Tellechea; Stéphanie Thiery
  2. Effect of Entrepreneurial Marketing Dimensions on Small and Medium Enterprises Performance in Nasarawa State By Amin, Hindu Jibril
  3. Trade and Innovation By Marc J. Melitz; Stephen J. Redding
  4. The Social Power of Spillover Effects: Educating Against Environmental Externalities By Andri Brenner
  5. Technological breakthroughs in European regions: the role of related and unrelated combinations By Ron Boschma; Ernest Miguélez; Rosina Moreno; Diego B. Ocampo-Corrales
  6. Innovation in Transition countries: the role of training By Antonella Biscione; Chiara Burlina; Raul Caruso; Annunziata de Felice
  7. The impact of Covid-19 and of the earlier crisis on firms’ innovation and growth: a comparative analysis By Anabela Santos; Karel Haegeman; Pietro Moncada-Paternó-Castello

  1. By: Stéphane Lhuillery; Marion Tellechea; Stéphanie Thiery
    Abstract: Research on innovation has grown into a substantial body of literature and has drawn attention to knowledge sources. However, little is known about the drivers of audit innovation. This article seeks to identify, delineate and categorize knowledge sources’ impact on internal audit innovation. We implement an econometric model and find that internal audit departments developing search capabilities to modify their processes can innovate in their practices. Using the original measures of internal search capabilities and innovation, our findings highlight the effects of search, intrafirm and external knowledge sources on internal audit innovation: among intrafirm knowledge sources, management’s reviews of internal audit functions are key factors that foster innovation. Among external sources, professional associations play a prominent role in firms’ propensity to innovate. Most noticeably, firms with high absorptive capabilities deliberately deviate from compliance to innovate using professional associations’ and ICT consultants’ knowledge. Our study contributes to the literature on open innovation and auditing by illuminating internal audit functions’ innovative potential.
    Keywords: internal audit; open innovation; search; internal knowledge sources; external knowledge sources; absorptive capacity.
    JEL: O3
    Date: 2021
  2. By: Amin, Hindu Jibril
    Abstract: Entrepreneurial Marketing (EM) Dimensions play a critical role in small and medium enterprises (SMEs) performance. The extant study explored the effect of EM dimensions on the performance of SMEs operating within Nasarawa State, Nigeria. EM was conceptualized as innovativeness, risk-taking, and value creation. The research population was 1979 registered SMEs in Nasarawa state, Nigeria. The sample size was 322 which was determined using Raosoft sample size calculator. Out of 322 sets of questionnaire distributed, 136 were validly filled and returned. The data collected were analyzed using Regression Analysis technique to test the study’s hypotheses using Statistical Product and Service Solutions software. Results specify that all three of the EM dimensions under study have significant effect on SME performance. In terms of contribution to the model, the explanatory variables were able to contribute 62.1 percent to the variable of interest (SME performance). On individual basis, innovativeness explained the most to the criterion variable. The findings of this study offer important insights for owners and managers of SMEs, researchers, and policymakers to further understand the effects of EM dimensions on SMEs’ performance. SMEs should be encouraged to embrace the entrepreneurial dimensions of innovativeness, risk taking, and value creation to increase business performance.
    Date: 2021–05–31
  3. By: Marc J. Melitz; Stephen J. Redding
    Abstract: Two central insights from the Schumpeterian approach to innovation and growth are that the pace of innovation is endogenously determined by the expectation of future profits and that growth is inherently a process of creative destruction. As international trade is a key determinant of firm profitability and survival, it is natural to expect it to play a key role in shaping both incentives to innovate and the rate of creative destruction. In this paper, we review the theoretical and empirical literature on trade and innovation. We highlight four key mechanisms through which international trade affects endogenous innovation and growth: (i) market size; (ii) competition; (iii) comparative advantage; (iv) knowledge spillovers. Each of these mechanisms offers a potential source of dynamic welfare gains in addition to the static welfare gains from trade from conventional trade theory. Recent research has suggested that these dynamic welfare gains from trade can be substantial relative to their static counterparts. Discriminating between alternative mechanisms for these dynamic welfare gains and strengthening the evidence on their quantitative magnitude remain exciting areas of ongoing research.
    JEL: F1 F43 O4
    Date: 2021–06
  4. By: Andri Brenner (University of Potsdam, MCC Berlin)
    Abstract: Economists are worried that the lack of property rights to natural capital goods jeopardizes the sustainability of the economic growth miracle that has existed since industrialization. This article questions their position. A vertical innovation model with a portfolio of technologies for abatement, adaptation, and general (Harrod-neutral) technology reveals that environmental damage spillovers have a comparable effect on research profits as technology spillovers so that the social costs of depleting public natural capital are internalized. As long as there is free access to information and technology, growth is sustainable and the allocation of research efforts among alternative technologies is socially optimal. While there still is a need to address externalities from monopolistic research markets, no environmental policy is necessary. These results suggest that environmental externalities may originate in restricted access to information and technology, demonstrating that (i) information has a similar effect as an environmental tax and (ii) knowledge and technology transfers have an impact comparable to that of subsidies for research in green technology.
    Keywords: endogenous growth, horizontal innovation, sustainability
    JEL: O30 O44 Q55 Q56
    Date: 2021–06
  5. By: Ron Boschma; Ernest Miguélez; Rosina Moreno; Diego B. Ocampo-Corrales
    Abstract: This paper analyzes if the emergence and occurrence of breakthrough technologies in 277 European regions in the period 1981 to 2010 is related to the existing technological portfolio of regions. The study shows that, by far, most combinations breakthrough inventions make are between related technologies: almost no breakthrough patent makes combinations between unrelated combinations only. We also find that breakthrough inventions primarily combine and cite technological classes that are present in the region. Regressions show that the occurrence of breakthrough patents in a technology in a region is positively affected by the local stock of technologies that is related to such technology, but we do not find such an effect for the local stock of unrelated technologies, in contrast to studies that suggest otherwise. However, the region’s ability to enter new breakthrough inventions in a technology relies on the combination of knowledge that is both related and unrelated to such technology.
    Keywords: relatedness, unrelatedness, technological breakthroughs, regional diversification, European regions
    JEL: O18 O31 O33 R11
    Date: 2021
  6. By: Antonella Biscione (CESPIC, Catholic University Our Lady of Good Counsel); Chiara Burlina (Gran Sasso Science Institute (GSSI)); Raul Caruso (Department of Economic Policy and CSEA, Università Cattolica del Sacro Cuore, CESPIC Catholic University “Our Lady of Good Counsel”); Annunziata de Felice (Department of Law, University of Bari Aldo Moro)
    Abstract: This paper analyses the effect of different training programs on the firms’ innovation activities of 27 transition economies. Despite the ongoing debate on training and its effects on innovation, there are no previous studies investigating the role of different typologies of training. The results of the cross-country analysis show a positive relation between definite training and propensity to innovate, controlling several firms’ characteristics such as size, presence of females in the board, personnel’s education and managers’ past experience. We also find a positive effect when considering other definitions of training (problem solving, commercial, managerial, or on-the-job vs. in-class), thus suggesting the need for policy makers and practitioners to invest in ad-hoc training programs to foster innovation in transition economies.
    Keywords: Transition Economies; Innovation; Training
    JEL: O14 O32 P27 P36
    Date: 2021–04
  7. By: Anabela Santos (European Commission - JRC); Karel Haegeman (European Commission - JRC); Pietro Moncada-Paternó-Castello (European Commission - JRC)
    Abstract: Using the results of the Survey on the Access to Finance of Enterprises (2009 to 2020 editions), this paper aims to assess the effect of Covid-19 pandemic on the probabilities of firm to innovate and grow and to compare their likelihood with that of the previous downturn. To control for a possible endogeneity bias as part of innovation decisions a Recursive Bivariate Probit Model is used. Results show that the probabilities of firms to innovate and grow are lower in 2020 (Covid-19 crisis) than in 2009 (financial crisis). The economic performance of innovative firms was also affected by the pandemic, but considerably less than the performance of non-innovative ones. Changes in the innovation patterns are also observed. Possible implications for decision-makers are derived.
    Keywords: Innovation; Growth; COVID-19; Europe.
    JEL: O31 O12 O52
    Date: 2021–06

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