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on Economics of Strategic Management |
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Issue of 2025–01–13
fourteen papers chosen by João José de Matos Ferreira, Universidade da Beira Interior |
| By: | Serafica, Ramonette B.; Oren, Queen Cel A. |
| Abstract: | The Philippine Development Plan 2023–2028 recognizes innovation as one of the drivers of growth in the services sector, creating a strategic framework to reinvigorate the sector and strengthen creativity and innovation. To help formulate the appropriate strategies and policies, this paper examines the evidence on innovation in service industries using the 2021 Survey of Innovation Activities of Establishments, which provided broader sector coverage. The survey was conducted during the pandemic when firms had to pivot to new modes of service delivery to survive. It gives a more nuanced profile and innovation behaviors of services firms and seeks to identify the effects and determinants of innovation across the services subsectors. Among the four types of innovation, organizational innovation was the most common type of innovation introduced in most service sectors, followed by marketing, process, and product innovation. For most of the services subsectors, the most common innovation activity of the establishments was “Training for innovative activities”. Across all services subsectors, cost factors are identified as the most common barrier considered of high significance. Organizations that employ at least one FIRe technology, obtain funding, use platforms, engage in R&D activities (whether outsourced or in-house), or use knowledge management methods are more likely to be innovation active and produce at least one type of innovation. The survey also reveals greater reliance on internal and market sources of information while the utilization of institutional and other sources of information, such as incubators, scientific journals or technical publications, and regulatory bodies was low for most subsectors. Universities or other higher education institutions were also not popular cooperation partners. In terms of knowledge management, regularly updating internal databases or manuals was the most popular practice while a policy to bring in external experts from universities, research institutes, or other establishments to participate in project teams was the least common practice across the subsectors. The Philippine Innovation Act (RA 11293) provides different interventions to address the various impediments related to cost factors, knowledge factors, market factors, and legal or regulatory factors (Albert et al. 2023). Given the diversity of services, a one-size-fits-all strategy will not be effective. While this study presents a snapshot of the innovation profiles of the different subsectors, in-depth analysis of the innovation ecosystem is required to develop industry-specific innovation roadmaps. Comments on this paper are welcome within 60 days from the date of posting. Email publications@pids.gov.ph. |
| Keywords: | innovation;services;product innovation;process innovation;marketing innovation;organizational innovation |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:phd:dpaper:dp_2024-14 |
| By: | Maczulskij, Terhi |
| Abstract: | Abstract This study examines the relationship between immigration and firmlevel innovation in the Finnish manufacturing sector. The analysis leverages unique matched data, including employees’ immigration status, firm-level patenting, process and product innovation activities, and innovation inputs spanning the 2000–2018 period. To address the potential endogeneity of a firm’s immigrant employment, an instrumental variables approach is employed using the historical geographic distribution of immigrants in the region where the firm is located. The results reveal that an increase in immigrant employment positively influences process and product innovation, and skilled foreign knowledge boosts the number of patent applications. Additionally, immigration leads to reduced external R&D expenditures, indicating that immigrant workers may substitute outsourced innovation inputs. The study also finds no evidence that immigration adversely affects native workers’ employment in Finnish firms. By contrast, it may benefit natives with complementary skills. |
| Keywords: | Firm-level, Immigration, Innovation |
| JEL: | D22 F22 O30 |
| Date: | 2025–01–02 |
| URL: | https://d.repec.org/n?u=RePEc:rif:wpaper:124 |
| By: | Mr. Serhan Cevik; Sadhna Naik; Keyra Primus |
| Abstract: | European countries are lagging behind in productivity growth, with significant productivity gaps across industries. In this study, we use comparable industry-level data to explore the patterns and sources of total factor productivity (TFP) growth across 28 countries in Europe over the period 1995–2020. Our empirical results highlight four main points: (i) TFP growth is driven largely by the extent to which countries are involved in scientific and technological innovation as the leader country or benefiting from stronger knowledge spillovers; (ii) the technological gap is associated with TFP growth as countries move towards the technological frontier by adopting new innovations and technologies; (iii) increased investment in information and communications technology (ICT) capital and research and development (R&D) contributes significantly to higher TFP growth; and (iv)the impact of human capital tends to be stronger when a country is closer to the technological frontier. The core findings of this study call for policy measures and structural reforms to promote innovation and facilitate the diffusion of new and existing technologies across Europe. |
| Keywords: | Total factor productivity; technology; R&D; innovation; human capital; Europe; productivity development; developments in Europe; core finding; TFP slowdown; TFP difference; Productivity; Capital spending; Global |
| Date: | 2024–12–20 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/258 |
| By: | Jo, Karam (Korea Development Institute); Kim, Seula (Pennsylvania State University) |
| Abstract: | We study how frictions in learning others' technology, termed "imperfect technology spillovers, " impact firm innovation strategies and the aggregate economy through changes in innovation composition. We develop an endogenous growth model that generates strategic innovation decisions, where multi-product firms improve their products via own-innovation and enter new product markets through creative destruction under learning frictions. In our model, firms with technological advantages intensify own-innovation as learning frictions enable them to protect their markets from competitors, thereby reducing creative destruction of rivals. This pattern gets more pronounced when competitive pressure increases exogenously. Using U.S. administrative firm-level data, we provide regression results supporting the model predictions. |
| Keywords: | innovation, technology spillover, endogenous growth, competition |
| JEL: | L11 L25 O31 O33 O41 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17581 |
| By: | Koski, Heli; Kuosmanen, Natalia; Kuusi, Tero |
| Abstract: | Abstract This brief presents key findings from Etla’s “Innovation-Driven Pathways to Economic Growth” project, which deepen the understanding of the mechanisms behind innovation-driven growth and evaluate the role of innovation policy in promoting sustainable growth in Finland. The findings underscore the critical role of foreign inventors and skilled employees in driving innovation and economic renewal. Immigration of highly skilled individuals enhances knowledge and diversity, boosting the effectiveness of innovation policy measures, such as R&D subsidies. Fully realizing this potential requires the effective integration of foreign experts into research and innovation activities. Supporting the green transition simultaneously presents Finland with significant opportunities to strengthen its competitiveness. While Finland’s share of green production currently lags behind international leaders, the country’s industrial structure and high-tech expertise provide a solid foundation for growth. Effectively targeted R&D subsidies can boost productivity and improve societal welfare. Targeting support for high-innovation-capacity companies can accelerate structural economic reforms. However, policymakers must consider adjustment costs, which can reduce the impact of growth policies. |
| Keywords: | Innovations, Immigration, Productivity, Economic growth |
| JEL: | D23 F22 J61 O3 |
| Date: | 2024–12–11 |
| URL: | https://d.repec.org/n?u=RePEc:rif:briefs:147 |
| By: | Christian Chacua (Harvard's Growth Lab); Shreyas Gadgin Matha; Matte Hartog (Center for International Development at Harvard University); Ricardo Hausmann (Harvard's Growth Lab); Muhammed A. Yildirim (Center for International Development at Harvard University) |
| Abstract: | Recent geopolitical challenges have revived the implementation of industrial and innovation policies. Ongoing discussions focus on supporting cutting-edge industries and strategic technologies but hardly pay attention to their impact on economic growth. In light of this, we discuss the design of innovation policies to address current development challenges while considering the complex nature of productive activities. Our approach conceives economic development and technological progress as a process of accumulation and diversification of knowledge. This process is limited by the tacit nature of knowledge and by countries’ binding constraints to growth. Consequently, effective innovation policies should be place-based and multidimensional, leveraging countries’ existing capabilities and addressing countries’ current problems. This contrasts policies that lead to economic efficiencies, such as copying other countries’ solutions to problems that countries do not currently have. |
| Keywords: | innovation policy, industrial policy, economic complexity, knowhow |
| JEL: | O25 O30 O38 F60 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:glh:wpfacu:234 |
| By: | Cavalcanti, T.; Mohaddes, K.; Nian, H.; Yin, H. |
| Abstract: | This paper explores the long-term impact of air pollution on firm-level R&D human capital composition and innovation, as well as the strategies firms adopt to mitigate these effects. Using a spatial regression discontinuity design based on China’s Huai River heating policy and exploring a novel dataset with detailed information on firm-level R&D sector, we show that prolonged exposure to air pollution significantly reduces the proportion of R&D workers with advanced degrees, such as PhDs and master’s degrees. To counteract these challenges, firms in polluted areas increase their reliance on external strategies, such as acquiring technology and collaborating with universities, and adopt internal measures, including enhanced welfare subsidies for R&D staff and greater investment in experimental instruments. Despite these efforts, firms in polluted areas still produce lower R&D value compared to those in cleaner regions. Our results highlight the key importance of internal human capital in complementing external technological investments. |
| Keywords: | adaptive strategies, air pollution, firm value, innovation, R&D human capital composition |
| Date: | 2024–11–06 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camjip:2428 |
| By: | Cavalcanti, T.; Mohaddes, K.; Nian, H.; Yin, H. |
| Abstract: | This paper explores the long-term impact of air pollution on firm-level R&D human capital composition and innovation, as well as the strategies firms adopt to mitigate these effects. Using a spatial regression discontinuity design based on China’s Huai River heating policy and exploring a novel dataset with detailed information on firm-level R&D sector, we show that prolonged exposure to air pollution significantly reduces the proportion of R&D workers with advanced degrees, such as PhDs and master’s degrees. To counteract these challenges, firms in polluted areas increase their reliance on external strategies, such as acquiring technology and collaborating with universities, and adopt internal measures, including enhanced welfare subsidies for R&D staff and greater investment in experimental instruments. Despite these efforts, firms in polluted areas still produce lower R&D value compared to those in cleaner regions. Our results highlight the key importance of internal human capital in complementing external technological investments. |
| Keywords: | adaptive strategies, air pollution, firm value, innovation, R&D human capital composition |
| Date: | 2024–11–06 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camdae:2466 |
| By: | Meissner, Leonie P.; Peterson, Sonja; Semrau, Finn Ole |
| Abstract: | In a race against global warming, the world must accelerate the development and adoption of environmental innovations (EIs). In this literature review, we explore the role of governments in promoting EIs across stages of maturity and assess the potential to reduce emissions. Theoretical frameworks on market imperfections underline the necessity of governmental Research and Development (R&D) support. While emission pricing remains the most cost-efficient climate policy, it fails as a stand-alone instrument to sufficiently encourage EI. Overall, the optimal approach is a policy mix complementing emission pricing with governmental R&D support. The theoretical finding is backed by empirical studies on the developmentand deployment of renewable energies, which also show that investment in R&D can effectively reduce emissions. The review concludes by dissecting two pivotalpolicy initiatives, the US Inflation Reduction Act and the European Green New Deal Industrial Plan, evaluating their potential to effectively contribute to decarbonization. |
| Keywords: | green/eco-/environmental innovation, R&D support, climate policy, innovation policy |
| JEL: | O32 O38 Q54 Q55 Q58 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkie:306604 |
| By: | Christian Chacua (Harvard's Growth Lab); Shreyas Gadgin Matha; Matte Hartog (Center for International Development at Harvard University); Ricardo Hausmann (Harvard's Growth Lab); Muhammed A. Yildirim (Center for International Development at Harvard University) |
| Abstract: | Technological know-how in a country shapes its growth potential and competitiveness. Scientific publications, patents, and international trade data offer complementary insights into how ideas from science, technology, and production evolve, combine, and are transformed into capabilities. Analyzing their trajectories enables a more comprehensive and multifaceted understanding of the whole innovation process, from generating ideas to internationally commercializing products. We analyze the production patterns in these three domains, documenting the differences between advanced and emerging market economies. We find that future income, patenting, and publishing growth correlate with the economic complexity indices calculated from these domains. Capabilities embedded in the country also shape future diversification opportunities and make the innovation process path dependent. Lastly, we also show that diversification opportunities can be inferred across innovation domains. |
| Keywords: | economic complexity, innovation complexity, scientific complexity |
| JEL: | O25 O30 O38 F60 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:glh:wpfacu:235 |
| By: | Danial Lashkari; Jeremy Pearce |
| Abstract: | In a previous post, we provided evidence for a broad-based slowdown in productivity growth across industries and firms in the U.S. manufacturing sector starting in 2010. Since firms’ investment in research and development (R&D) for new technologies constitutes a central driver of productivity growth, in this post we ask if the observed slowdown in productivity may be due to a decline in R&D. We find that “R&D intensity” has been increasing at both the firm and industry level, even as productivity growth declines. This points to a decline in the effectiveness of R&D in generating productivity growth in U.S. manufacturing. |
| Keywords: | productivity; manufacturing; innovation; competition; economic growth |
| JEL: | O33 O40 |
| Date: | 2025–01–06 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednls:99374 |
| By: | Omerovic Smajlovic, Mirheta |
| Abstract: | This doctoral dissertation investigates digital transformation (DT) within traditional organisational contexts, analyzing both managerial and technological dimensions. The research emphasizes how traditional organisations, faced with the imperative to adapt despite rapid digital disruptions, manage and implement DT strategies effectively to remain competitive in a digital landscape. The thesis first researches the organisational aspects of DT, focusing on the dynamics between management and technology. It scrutinizes the alignment process necessary for integrating advanced digital technologies with existing business strategies and resources. Special attention is given to managerial challenges such as adapting leadership, communication, and organisational culture to support a digitally-enabled workforce. This section of the research highlights the critical role of management in facilitating DT through strategic adaptations that enhance organisational flexibility and responsiveness. Secondly, the dissertation delves into the technological facets of DT, centering on how traditional organisations incorporate digital technologies like the Internet of Things (IoT) and Artificial Intelligence (AI) to transform their operational and BMs. It discusses the profound impact of these technologies on organisational structures and processes, illustrating how they lead to the blurring of traditional industry boundaries and create new competitive realities. This part of the study also explores how IoT and AI contribute to innovative BMs and value creation, emphasizing the need for organisations to evolve from conventional methods to integrated, technology-driven approaches. A significant aspect of the thesis is its focus on the catalytic role of the COVID-19 pandemic in accelerating DT. It assesses how the crisis has shifted organisational management and leadership, urging a reevaluation of digital strategies and an increased commitment to digital initiatives. The pandemic has underscored the necessity for organisations to be agile and proactive in their digital approaches, ensuring long-term sustainability in a rapidly changing environment. The research further identifies and addresses the gaps in existing DT literature, particularly the need for clear, actionable strategies that traditional organisations can employ to navigate their digital journeys. By integrating theoretical insights with practical applications, the dissertation offers a comprehensive framework for understanding and executing DT in traditional settings. In conclusion, this doctoral dissertation provides a nuanced understanding of the complex interplay between management and technology in the context of DT. It offers valuable insights for traditional organisations aiming to leverage digital technologies for enhanced competitiveness and efficiency, contributing to the broader discourse on digital innovation and organisational change. |
| Date: | 2024–12–04 |
| URL: | https://d.repec.org/n?u=RePEc:dar:wpaper:150812 |
| By: | Jin Liu |
| Abstract: | Multinational firms colocate production and innovation by offshoring them to the same host country or region. In this paper, I examine the determinants of multinational firms’ production and innovation locations. Exploiting plausibly exogenous variations in tariffs, I find complementarities between production and innovation within host countries and regions. To evaluate manufacturing reshoring policies, I develop a quantitative multicountry offshoring location choice model. I allow for rich colocation benefits and cross-country interdependencies and prove supermodularity of the model to solve this otherwise NP-hard problem. I find the effects of manufacturing reshoring policies are nonlinear, contingent upon firm heterogeneity, and they accumulate dynamically. |
| Keywords: | multinational firms, colocation of production and innovation, offshoring |
| JEL: | F14 F23 L23 O32 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:24-64 |
| By: | SCHWAAG SERGER Sylvia; RADOSEVIC Slavo |
| Abstract: | The evolving policy-making landscape demands a new conceptualization of the interaction between policy research and policy context. This is particularly crucial in the realm of transformative innovation policy, which involves a multitude of stakeholders and instruments in its formulation and execution. Moreover, the dynamics of both innovation and science for policy are shaped by the interplay of state, markets, and society, underscoring the need for a fresh and innovative approach. As the landscape of policy research and innovation policy continues to evolve, it becomes increasingly important to reevaluate the science for policy approach. This paper strongly advocates that policy research should no longer function in isolation as a single input into the policy-making process. Instead, it should be integrated as one of several inputs that collectively and iteratively shape innovation policy, thereby strengthening the core argument of the paper. |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc139533 |