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on Economics of Strategic Management |
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Issue of 2024‒09‒09
eight papers chosen by João José de Matos Ferreira, Universidade da Beira Interior |
| By: | Mr. Daniel Garcia-Macia; Alexandre Sollaci |
| Abstract: | When and how should governments use industrial policy to direct innovation to specific sectors? This paper develops a framework to analyze the costs and benefits of industrial policies for innovation. The framework is based on a model of endogenous innovation with a sectoral network of knowledge spillovers (Liu and Ma 2023), extended to capture implementation frictions and alternative policy goals. Simulations show that implementing sector-specific fiscal support is only preferable to sector-neutral support under restrictive conditions—when externalities are well measured (e.g., greenhouse gas emissions), domestic knowledge spillovers of targeted sectors are high (typically in larger economies), and administrative capacity is strong (including to avoid misallocation to politically connected sectors). If any of these conditions are not fully met, welfare impacts of industrial policy quickly become negative. The optimal allocation of support entails greater subsidies to greener sectors, but other factors such as cross-sector knowledge spillovers matter. For a sample of technologically advanced economies, existing industrial policies seem to be directing innovation to broadly the right sectors, but to an excessive degree in most economies, including China and the United States. |
| Keywords: | Industrial policy; innovation; knowledge spillovers; climate policy; AI |
| Date: | 2024–08–16 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/176 |
| By: | Irina Dezhina (Gaidar Institute for Economic Policy) |
| Abstract: | In 2023, the agenda of science and innovation sector focused on solving tasks in order to ensure technological sovereignty through the creation of own development lines - from R&D to the production of new technological items. In line with this agenda, the existing programs to support scientific organizations and universities, as well as the Russian Science Foundation competitions, were adjusted. The Russian Academy of Sciences dealt with the issues of reorganization of expert work in the country, expansion of its influence in this area, and managed to strengthen mutually beneficial partnership with NRC “Kurchatov Institute†, which during the year affiliated 13 institutes previously under the jurisdiction of the Ministry of Science and Higher Education of the Russian Federation. There were no significant developments in the innovation sector. Moreover, private sector expenditures on R&D have generally decreased. However, industry experts2 noted an increase in the interest of certain technology companies in investing in R&D due to the withdrawal of foreign technology suppliers from the Russian market |
| Keywords: | Russian economy, R&D, science, technology |
| JEL: | I2 I28 O3 O31 O32 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:gai:ppaper:ppaper-2024-1329 |
| By: | Anckaert, Paul-Emmanuel; Uhlbach, Wolf-Hendrik (Tilburg University, School of Economics and Management) |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:tiu:tiutis:aa9ac9d1-4531-43a1-bbb3-213419eb4217 |
| By: | Gustavo Herminio Salati Marcondes de Moraes (School of Applied Sciences, University of Campinas, UNICAMP, Brazil.); Dirk Meissner (National Research University Higher School of Economics); Bruno Fischer (School of Applied Sciences, University of Campinas, UNICAMP, Brazil.) |
| Keywords: | innovation, ecosystems, sustainability, regional development, sustainable development, society |
| JEL: | O31 O32 O33 O36 Q16 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:hig:wpaper:127sti2024 |
| By: | Kim, Jong Duk (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)); Koo, Kyong Hyun (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)); Kang, Gusang (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)); Kim, Hyuk-Hwang (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)) |
| Abstract: | In general, negative discussions and impressions regarding outward FDI, such as capital outflows, job losses, leakage of trade secrets, and hollowingout of domestic industries, seem to dominate. The controversy, which focused on greenfield investments in the past, seems to be widely applied to recent mergers and acquisitions (M&As). Against this backdrop, the purposeof this report is twofold: first, to improve the understanding of how the increase in Korean firms’ FDI through M&As and related innovation activities in the U.S. market affects the performance of the investing Korean firms and their domestic affiliates; and second, to provide objective long-term policy directions on outward FDI and firms’ innovation activities based on the results found using firm-level data. The following results and findings in each chapter of this report are presented as follows. On the theoretical side, based on the theoretical model developed by Akcigit, Ates, and Impullitti (2018), Chapter 2 examines the mechanisms through which FDI can affect the incentives to innovate and the financial performance of investing firms. Market integration through M&As creates a scale effect and a competitive effect. The cost of innovation also plays a role in firms’ innovation incentives and financial performance. A spillover expected from knowledge sharing resulting from access to a new market is an additional channel. Regarding the scale effect, access to large, developed markets is one of the reasons why direct investment is a rational choice for a firm’s innovation. Large markets tend to have more intermediate resources to use and a larger pool of information to share. However, access to a new market through FDI can change the competitive structure that the investing companies face. Direct access to a foreign market creates higher expected profits if an investing firm’s innovation is successful. Still, if it is not, the firm may face stiffer competition or be forced out of the market. The degree of monopoly power is indeed the main factor determining the profits of successful innovations. However, the firm’s current profit only lasts until the next innovation occurs, and if there is no subsequentinnovation that is better than that the competitor’s, the company’s profit will decrease or it will be exited from the market. To survive, companies need to continuously invest and work on innovation. The spillover of technologies and the knowledge embedded in the R&D performed or in the patents filed as part of these efforts are another channel through which companies strive for better quality and innovation. (the rest omitted) |
| Keywords: | outward FDI; mergers and acquisitions; firms innovation activities; long term policy directions |
| Date: | 2023–12–29 |
| URL: | https://d.repec.org/n?u=RePEc:ris:kieppa:2023_022 |
| By: | Kang, Gusang (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)) |
| Abstract: | This study examines how 'killer acquisitions' in the digital platform market have impacted innovation performance post-merger. This analysis focuses particularly on M&As among various types of corporate consolidations by digital platforms. It estimates factors influencing the probability of M&A by digital platforms and uses the technological similarity index between the acquiring digital platform and the acquired company as a key explanatory variable. Then, using the technological similarity index, the analysis categorizes the M&A cases involving digital platforms into 'killer acquisitions' and 'non-killer acquisitions' and compares innovation performance by type of acquisition. The analysis focused on identifying "killer acquisitions" by examining the technology similarity index between firms before and after M&As conducted by GAFAM. Killer acquisitions were defined as those with minimal change in the technology similarity index pre- and post-transaction. The study found that killer acquisitions negatively impact innovation, as measured by a significant decline in the number of patent applications from acquired companies, compared to non-killer acquisitions where patent applications tended to increase post-acquisition. These findings highlight the need for methodologies, such as the technological similarity index, to better identify and regulate such anti-competitive acquisitions in the digital platform sector. |
| Keywords: | Corporate Innovation; killer acquisitions; non-killer acquisitions; M&A |
| Date: | 2024–08–10 |
| URL: | https://d.repec.org/n?u=RePEc:ris:kiepwe:2024_025 |
| By: | Preißner, Stephanie; Raasch, Christina; Schweisfurth, Tim |
| Abstract: | This study investigates the sources of disruptive innovation. The disruptive innovation literature suggests that these do not originate from existing customers, in contrast to what is predicted by the user innovation literature. We compile a unique content-analytical dataset based on 60 innovations identified as disruptive by the disruptive innovation literature. Using multinomial and binomial regression, we find that 43% of the sample disruptive innovations were originally developed by users. Disruptive innovations are more likely to originate from users (producers) if the environment has high turbulence in customer preferences (technology). Disruptive innovations that involve high functional (technological) novelty tend to be developed by users (producers). Users are also more likely to be the source of disruptive process innovations and to innovate in environments with weaker appropriability. Our article forges new links between the disruptive and the user innovation literatures, and offers guidance to managers on the likely source of disruptive threats. |
| Keywords: | appropriability regime, disruptive innovation, environmental turbulence, functional novelty, radical innovation, user innovation |
| Date: | 2023 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkie:293964 |
| By: | Marc Schmitt |
| Abstract: | The integration of Artificial Intelligence (AI) into corporate strategy has become a pivotal focus for organizations aiming to maintain a competitive advantage in the digital age. As AI reshapes business operations and drives innovation, the need for specialized leadership to effectively manage these changes becomes increasingly apparent. In this paper, I explore the role of the Chief AI Officer (CAIO) within the C-suite, emphasizing the necessity of this position for successful AI strategy, integration, and governance. I analyze future scenarios based on current trends in three key areas: the AI Economy, AI Organization, and Competition in the Age of AI. These explorations lay the foundation for identifying the antecedents (environmental, structural, and strategic factors) that justify the inclusion of a CAIO in top management teams. This sets the stage for a comprehensive examination of the CAIO's role and the broader implications of AI leadership. This paper advances the discussion on AI leadership by providing a rationale for the strategic integration of AI at the executive level and examining the role of the Chief AI Officer within organizations. |
| Date: | 2024–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2407.10247 |