nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2022‒11‒07
eleven papers chosen by
João José de Matos Ferreira
Universidade da Beira Interior

  1. Structural change within versus across firms: evidence from the United States By Xiang Ding; Teresa C. Fort; Stephen J. Redding; Peter K. Schott
  2. Urban Agglomeration and Firm Innovation: Evidence from Developing Asia By Chen,Liming; Hasan,Rana; Jiang,Yi
  3. The Returns to Innovation in East Asia : The Role of the Business Environment and Firms' Characteristics By De Nicola,Francesca; Chen,Pinyi
  4. The Impact of FDI on Domestic Firm Innovation : Evidence from Foreign Investment Deregulation in China By Liu,Yan-000529044; Wang,Xuan
  5. Climate Change, Gender Equality, and Firm-Level Innovation : Cross-Country Evidence By Abdulla, Eman; Lim, King Yoong; Morris, Diego; Saliba, Faten
  6. The research university, invention and industry: evidence from German history By Jeremiah Dittmar; Ralph R. Meisenzahl
  7. Are Firm Capabilities Holding Back Firms in Mozambique ? By Aga,Gemechu A.; Campos,Francisco Moraes Leitao; Conconi,Adriana; Davies,Elwyn Adriaan Robin; Geginat,Carolin
  8. Globalisation, technology and global health By Olatunji A. Shobande; Lawrence Ogbeifun; Simplice A. Asongu
  9. Firm Performance, Participation in Global Value Chains and Service Inputs : Evidence from India By Manghnani,Ruchita; Meyer,Birgit Elisabeth; Saez,Juan Sebastian; Van Der Marel,Erik Leendert
  10. Technology adoption, innovation policy and catching-up By Perilla Jiménez, Juan R.; Ziesemer, Thomas
  11. Does Competition from Informal Firms Impact R&D by Formal SMEs ? Evidence Using Firm-Level Survey Data By Amin,Mohammad

  1. By: Xiang Ding; Teresa C. Fort; Stephen J. Redding; Peter K. Schott
    Abstract: We document the role of intangible capital in manufacturing firms' substantial contribution to non-manufacturing employment growth from 1977-2019. Exploiting data on firms' "auxiliary" establishments, we develop a novel measure of proprietary in-house knowledge and show that it is associated with increased growth and industry switching. We rationalize this reallocation in a model where firms combine physical and knowledge inputs as complements, and where producing the latter in-house confers a sector-neutral productivity advantage facilitating within-firm structural transformation. Consistent with the model, manufacturing firms with auxiliary employment pivot towards services in response to a plausibly exogenous decline in their physical input prices.
    Keywords: structural transformation, professional services, intangible knowledge, economic growth
    Date: 2022–06–01
  2. By: Chen,Liming; Hasan,Rana; Jiang,Yi
    Abstract: This paper examines the relationship between urban agglomeration and firm innovation using a recently developed dataset that consistently measures city boundaries across Asia together with geo-referenced firm-level data. It finds that the spatial distribution of innovation by firms is highly concentrated within countries. Further, firms in larger cities have substantially higher propensities to introduce product and process innovations and undertake R&D activities, a result that holds for subgroups of countries and even when the largest cities are excluded from the analysis. Finally, the presence of high quality universities and highly ranked engineering departments in cities is positively associated with firm innovation, lending support to the idea that the accumulation of human capital locally is a key channel through which urban agglomeration affects innovation.
    Keywords: Innovation,Urban Governance and Management,Municipal Management and Reform,Common Carriers Industry,Food & Beverage Industry,General Manufacturing,Textiles, Apparel & Leather Industry,Pulp & Paper Industry,Construction Industry,Business Cycles and Stabilization Policies,Plastics & Rubber Industry,Skills Development and Labor Force Training,Railways Transport
    Date: 2021–11–24
  3. By: De Nicola,Francesca; Chen,Pinyi
    Abstract: The paper studies the relationship between innovation efforts, innovation outputs, andproductivity, using firm-level data from six East Asian countries. Firms are more likely to invest in innovationwhen they use technology licensed by a foreign company, are part of a large group, and have a more educated workforce.Investment in research and development can significantly boost both product and process innovation. Product innovation yields significant productivity gains. However,productivity gains from process innovation are not detectable in the sample.
    Keywords: Innovation,Educational Sciences,Labor Markets,Construction Industry,Plastics & Rubber Industry,General Manufacturing,Common Carriers Industry,Pulp & Paper Industry,Business Cycles and Stabilization Policies,Food & Beverage Industry,Textiles, Apparel & Leather Industry,Business Environment
    Date: 2022–02–01
  4. By: Liu,Yan-000529044; Wang,Xuan
    Abstract: This paper studies the impact of foreign direct investment on domestic firms’ innovation in China. It provides causal evidence by exploiting China’s foreign direct investment deregulation in 2002 and employs a difference-in-difference estimation strategy. Using a matched firm-patent data set from 1998 to 2007, the results show that the quantity and quality of domestic firms’ innovation benefit from foreign direct investment. Moreover, the paper emphasizes the importance of knowledge spillover from foreign direct investment in similar technology domains. The analysis examines the role of horizontal foreign direct investment and foreign direct investment in technologically close industries—industries that share similar technology domains. The findings show that foreign direct investment in technologically close industries generates much bigger positive spillovers than horizontal foreign direct investment. The paper also shows that knowledge spillover from foreign direct investment in similar technology domains is not driven by input-out linkages. Moreover, the spillover effect is stronger in cities with higher human capital stock and firms with higher absorptive capacity.
    Keywords: General Manufacturing,Textiles, Apparel&Leather Industry,Business Cycles and Stabilization Policies,Pulp&Paper Industry,Construction Industry,Plastics&Rubber Industry,Common Carriers Industry,Food&Beverage Industry,Intellectual Property Rights,Legal Products,Common Property Resource Development,Social Policy,Regulatory Regimes,Legal Reform,Judicial System Reform,Legislation,Real&Intellectual Property Law,Trade Law,Foreign Trade Promotion and Regulation,Investment and Investment Climate,International Trade and Trade Rules
    Date: 2021–05–24
  5. By: Abdulla, Eman (Department of Economics, University of Warwick); Lim, King Yoong (International Business School Suzhou, Xian Jiaotong-Liverpool University); Morris, Diego (Nottingham Business School, Nottingham Trent University); Saliba, Faten (International Monetary Fund)
    Abstract: This paper examines the nexus between gender equality, climate change, and innovation at the firm level. Based on three hypotheses derived from a novel theoretical framework linking climate change and gender equality to within-firm innovation activities, we use a cross-section dataset of 87, 996 firms across 36 industries in 103 countries, surveyed across different waves during the 2010-2020 periods to implement an instrumental variable strategy and show that environmental policies unambiguously induce firm-level process and product innovation, through its influence on the endogenous bargaining power of women in society and firms. We document that female productivity has both a direct effect on innovation (0.1-1.3% increase in the likelihood of innovation) and an indirect effect (serving as the intermediation for the environment-innovation nexus). Contrarily, greenhouse gas emissions by themselves have an ambiguous effect on innovation. The type of greenhouse gas emissions and the measure of innovation both contribute to this ambiguity. Overall, our results show that it is not the physics of climate change that induces innovation but rather the countervailing human responses to policies that mitigate climate change that stimulate innovation.
    Keywords: Climate change ; firm-level analysis ; gender equality ; innovation. JEL Codes: D24 ; J16 ; L25 ; O32 ; Q58
    Date: 2022
  6. By: Jeremiah Dittmar; Ralph R. Meisenzahl
    Abstract: We examine the role of universities in knowledge production and industrial change using historical evidence. Political shocks led to a profound pro-science shift in German universities around 1800. To study the consequences, we construct novel microdata. We find that invention and manufacturing developed similarly in cities closer to and farther from universities in the 1700s and shifted towards universities and accelerated in the early 1800s. The shift in manufacturing was strongest in new and high knowledge industries. After 1800, the adoption of mechanized technology and the number and share of firms winning international awards for innovation were higher near universities.
    Keywords: industrialization, invention, universities, cities
    Date: 2022–06–30
  7. By: Aga,Gemechu A.; Campos,Francisco Moraes Leitao; Conconi,Adriana; Davies,Elwyn Adriaan Robin; Geginat,Carolin
    Abstract: Firm capabilities—the abilities and practices to operate and innovate—are considered important drivers of firm performance. While the analysis of their importance is well established in developed countries, its study in the African context is more recent. The paper uses a new representative sample of enterprises in Mozambique comprising data on management and organizational practices, as well as skills, to study the importance of firm capabilities in Mozambique. The analysis suggests that the private sector in Mozambique scores below other developing countries in all dimensions of firm capabilities. Enterprises engaging in more contractual relationships demonstrate stronger firm capabilities. Firm capabilities are key drivers of performance; controlling for other input factors, firms in Mozambique with better firm capabilities perform better. The relationship is robust to various measures of performance and to including various firm and manager characteristics. The analysis finds that for smaller firms, non-exporters, and female-owned enterprises, their gap in business performance can be explained by differences in management practices. The results suggest Mozambique should explore mechanisms of expanding firm capabilities in targeted types of firms.
    Keywords: Common Carriers Industry,Food&Beverage Industry,Pulp&Paper Industry,Plastics&Rubber Industry,Business Cycles and Stabilization Policies,General Manufacturing,Textiles, Apparel&Leather Industry,Construction Industry,Educational Sciences,Financial Sector Policy,Hydrology
    Date: 2021–06–30
  8. By: Olatunji A. Shobande (University of Aberdeen, UK); Lawrence Ogbeifun (University of Mississippi, USA); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: This study explored whether globalisation and technology are harmful to health for a global panel dataset of 52 countries for the period of 1990–2019. The study focused on four continents: Africa, the Americas, Asia/Oceania, and Europe. We used four advanced econometric methodologies, which include the standard panel fixed effect (FE), Arellano-Bover/Blundell-Bond dynamic panel analysis, Hausman-Taylor specification, and Two-Stage Least Squares (FE-2SLS)/Lewbel-2SLS approach. Our empirical evidence highlights the significance of globalisation and technology in promoting global health. Our findings are not only of interest because it suggests that globalisation has varied impact on global health indicators, but they indicate that technology is useful in tracking, monitoring, and promoting global health. In addition, our empirical evidence indicates that a truly health-centered process of globalisation and technological innovation can only be realised by ensuring that the interests of countries and vulnerable populations to health risks are adequately considered in international decision-making regarding global economic integration. We suggest that achieving the aspiration of global health will entail the use of globalisation and information technology to extend human activities and provide equal access to global health.
    Keywords: globalisation; technology; global health
    Date: 2022–01
  9. By: Manghnani,Ruchita; Meyer,Birgit Elisabeth; Saez,Juan Sebastian; Van Der Marel,Erik Leendert
    Abstract: This paper explores the relationship between the use of service inputs, participation in globalvalue chains, and firm productivity. Services play the role of both an intermediate input in production and acoordinator. Using a detailed Indian firm-level data set from 1990–2017, the paper estimates the productivity premiumassociated with varying depths of global value chain integration and different intensities and types of servicesused in the production. The study finds that firms in global value chains have a productivity premium between 13 and 22percent relative to domestic firms, with some variation based on the depth of global value chain integration and thesector to which the firm belongs. Both the type of service inputs used (composition of services) and the origin ofservices (whether sourced domestically or from abroad) matter for firm performance. While higher aggregate serviceinput use (as captured by the share of expenditure on service inputs) is not necessarily associated with anincrease in productivity, increased use of complex services and information technology services is associated withhigher productivity. The use of imported services is associated with higher productivity. Moreover, firms thatare more deeply integrated in global value chains benefit more from importing services.
    Keywords: Food & Beverage Industry,Construction Industry,Plastics & Rubber Industry,Business Cycles and Stabilization Policies,Common Carriers Industry,General Manufacturing,Textiles, Apparel & Leather Industry,Pulp & Paper Industry,International Trade and Trade Rules,Industrial and Consumer Services and Products,Transport and Trade Logistics,Financial Sector Policy
    Date: 2021–10–19
  10. By: Perilla Jiménez, Juan R.; Ziesemer, Thomas (Macro, International & Labour Economics, Mt Economic Research Inst on Innov/Techn, RS: GSBE MORSE)
    Abstract: A model is proposed where economic growth is driven by innovation along the diffusion and adoption of technology from the frontier. Business innovation investments are related to households savings, which generates equilibria with low levels of, and equilibria with high levels of, innovation. Low-level equilibria are unstable. Starting from a position with low levels of investment and innovation, increasing investments are associated with high but decreasing dependence on international technology diffusion. A major objective of policy-making is to increase investment sufficiently in the lower end to reach the high level steady state. An economic rationale is provided for the existence of productivity improving equilibria, where distance to frontier countries is reduced owing to a tax and subsidy mechanism designed to boost innovation.
    JEL: C62 O33 O38 O40
    Date: 2022–07–21
  11. By: Amin,Mohammad
    Abstract: The informal sector is an important source of livelihoods and jobs for a vast majority of peoplein developing countries. However, there is concern that it may undermine growth and development of the formal sector.For instance, the growth literature indicates that research and development activity and innovation are a key driver oflong-term growth. How does the competition that formal sector firms face from informal sector firms affect researchand development activity by the formal firms The present paper attempts to answer this question using firm-levelsurvey data for small and medium-size enterprises in a large cross-section of mostly developing countries. The resultsshow that higher informal competition leads to greater a likelihood of spending on research and development by formalfirms. For the most conservative baseline specification, a one standard deviation increase in informal competitionleads to an increase of 5.2 percentage points in the likelihood of spending on research and development by formalfirms. This is a large increase given that less than 18 percent of the firms in the sample engage in research anddevelopment activity. Further, consistent with the “parasite” view of informality, the positive impact ofinformal competition on research and development activity is magnified when the business environment is less conducive tooperating in the formal sector compared with informal sector due to factors such as higher corruption, weaker rule oflaw, more burdensome business regulations, and a higher tax rate on profits. As expected, there is no impact of informalcompetition on research and development activity among large firms. The main findings are robust to several controls,alternative specifications, and endogeneity checks.
    Keywords: Labor Markets,Business Environment,Financial Sector Policy,Legal Products,Judicial System Reform,Regulatory Regimes,Legal Reform,Legislation,Social Policy
    Date: 2021–11–30

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