nep-ino New Economics Papers
on Innovation
Issue of 2005‒10‒29
25 papers chosen by
Koen Frenken
Universiteit Utrecht

  1. Absorptive Capacity – One Size Fits All? A Firm-level Analysis of Absorptive Capacity for Different Kinds of Knowledge By Tobias Schmidt
  2. Firm Maturity and Product Processes R&D in Swedish Manufacturing Firms By Nyström, Kristina
  3. Effects of Acquisitions on Product and Process Innovation and R&D Performance By Elena Cefis; Stephanie Rosenkranz; Utz Weitzel
  4. Integrating competition policy and innovation policy: the case of R&D cooperation By Georg von Graevenitz
  5. Is Silence Golden? Patents versus Secrecy at the Firm Level By Kartin Hussinger
  6. Knowledge, Technology Adoption and Financial Innovation By Ana Fernandes
  7. Fixed-Prize Tournaments versus First-Price Auctions in Innovation Contests By Anja Schöttner
  8. The Location of Industry R&D and the Location of University R&D - How are They related? By Karlsson, Charlie; Andersson, Martin
  9. Growth and Innovation Strategies In Global Competition By Utz Weitzel
  10. Survivor: The Role of Innovation in Firm's Survival By Elena Cefis; Orietta Marsili
  11. Horizontal integration in markets for complementary components and vertical product differentiation: A case-based analysis in the semiconductor industry By Bastian Westbrock
  12. The climate change challenge and transitions for radical changes in the European steel industry By Christophe Rynikiewicz
  13. Information and Communication Technology (ICT) Adoption and Utilisation, Skill Constraints and Firm By John Forth; Geoff Mason
  14. The Productivity impact of E-Commerce in the UK, 2001: Evidence from microdata By Ana Rincon-Aznar; Catherine (Kate) Robinson; Michela Vecchi
  15. Innovation, Appropriation and Entrepreneurial Strategy. By Stewart, Geoff
  16. International Trade and Product Variety - a firm level study By Andersson, Martin
  17. Exporting vs. Outsourcing by MNC Subsidiaries: Which Determines FDI Spillovers? By Blyde, Juan; Kugler, Maurice; Stein, Ernesto
  18. Testing the Pooling Assumption in an Industry Panel of R&D Investment: What Do We Learn? By Bettina Becker; Stephen Hall
  19. Diffusion of Mobile Phones in China By Sangwan, S.; Pau, L-F.
  20. Information and Communication Technology (ICT) Skill Gaps and Company-Level Performance: Evidence fr By John Forth; Geoff Mason
  21. From Planning to Mature: on the Determinants of Open Source Take Off By Stefano Comino; Fabio M. Manenti; Maria Laura Parisi
  22. NOBEL, LE JEU DE LA DECOUVERTE SCIENTIFIQUE By David Chavalarias; Sylvain Charron; Vincent Roger De Gardelle; Paul Bourgine
  23. Entrepreneurship, Evolution and the Human Mind By Brian Loasby
  24. The Impact of High-Level Skill Shortages on Firm-Level Performance: Evidence from the UK Technical Graduate Labour Market By John Forth; Geoff Mason
  25. How Should Europe's ICT Ambitions look like? An Interpretative Review of the Facts By Richard Nahuis; Henry van der Wiel

  1. By: Tobias Schmidt (ZEW Mannheim)
    Abstract: The paper empirically analyses the effect of R&D activities, human resource and knowledge management, and the organisation of knowledge sharing within a firm on the absorptive capacity of innovative firms for three different types of knowledge, namely absorptive capacity to use knowledge from a firm’s own industry, knowledge from other industries and knowledge from research institutions. Using data from the German innovation survey we investigate how firms are able to exploit knowledge from external partners for successful innovation activities. The estimation results show that the determinants of absorptive capacity differ with respect to the type of knowledge absorbed for innovation activities. In particular we find that the R&D intensity does not significantly influence absorptive capacity for intra- and inter- industry knowledge. Additionally, our results suggest that absorptive capacity is path-dependent and firms can influence their ability to exploit external knowledge by encouraging individuals’ involvement in a firm’s innovation projects.
    Keywords: absorptive capacity, R&D, innovation management, innovation surveys
    JEL: O30 L20 D83
    Date: 2005–10–26
  2. By: Nyström, Kristina (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper investigates the commonly debated question about innovations and firm age. Are innovations made by incumbent firms, and does innovation therefore constitute a barrier to entry, or is innovation a way for new firms to successfully compete? The paper further investigates the relationship between firm size and innovation. Does innovation constitute a way for small firms to compete or are innovation a large firm phenomenon? In the analysis the paper explicitly distinguishes between product and process innovation. Data from 1997 and 1999 on product and process R&D, firm size and age in the Swedish manufacturing industry is used in the empirical analysis. A multinomial logit-model is used to estimate the probability of performing process and product R&D. The results show that there are complementarities between product and process R&D and very few firms conduct only process R&D. The probability of product R&D and combined product and process R&D is higher for large firms and firms that are older than 80 years. The size and age effects are more pronounced for firms that carry out both process and product R&D.
    Keywords: Product; process; R&D; firm size; firm maturity
    JEL: L11 O31 O33
    Date: 2005–10–18
  3. By: Elena Cefis; Stephanie Rosenkranz; Utz Weitzel
    Abstract: Using a game theoretical model on firms' simultaneous investments in product and process innovation, we deduct and empirically test hypotheses on the optimal R&D portfolio, investment, performance, and dynamic efficiency of R&D for acquisitions and in independently competing firms. We use Community Innovation Survey data on Italian manufacturing firms. Theoretical and empirical results show that firms involved in acquisitions invest in different R&D portfolios and invest at least as much in aggregate R&D as independent firms. The empirical results do not support our hypothesis on dynamic efficiency since acquisitions lead to inferior R&D performance.
    Keywords: Mergers and Acquisitions, Innovation, Dynamic Efficiency, Cost Reduction, Product Differentiation
    JEL: C72 L1 L13 O32
    Date: 2005–06
  4. By: Georg von Graevenitz (Ludwig-Maximilians-Universität München, University of Munich, Kaulbachstr. 45, D-80539 Munich, Germany)
    Abstract: I develop a model of R&D cooperation with uncertain research outcomes. In this model asymmetric outcomes of R&D competition emerge naturally. Therefore ex-ante and ex-post R&D cooperation can be studied as alternatives for firms. Using this model I compare welfare losses under ex-ante and ex-post R&D cooperation as the degree of product market competition varies. It emerges that the relative size of these welfare losses is monotonically related to the degree of product market competition and the degree of technological opportunity. The implications of these results for the interaction of competition policy and innovation policy are discussed.
    Keywords: Competition Policy, Innovation Policy, R&D Cooperation, Licensing, Research Joint Venture, Oligopolistic R&D
    JEL: L13 L49 O31
    Date: 2005–02
  5. By: Kartin Hussinger (Center for European Economic Research (ZEW), P.O. Box 103443, D-68304 Mannheim, Germany)
    Abstract: In the 1990s, patenting schemes changed in many respects: upcoming new technologies accelerated the shift from price competition towards competition based on technical inventions, a worldwide surge in patenting took place, and the 'patent thicket' arose as a consequence of strategic patenting. This study analyzes the importance of patenting versus secrecy as an effective alternative to protect intellectual property in the inventions' market phase. The sales figure with new products is introduced as a new measure for the importance of tools to protect IP among product innovating firms. Focusing on German manufacturing in 2000, it turns out that patents are important to protect intellectual property in the market, whereas secrecy seems to be rather important for inventions that are not commercialized yet.
    Keywords: Innovation, Appropriation, Patents, Secrecy
    JEL: C34 C35 O33 O34
    Date: 2005–03
  6. By: Ana Fernandes
    Abstract: Why are new financial instruments created? This paper proposes the view that financial development arises as a response to the contractual needs of emerging technologies. Exogenous technological progress generates a demand for new financial instruments in order to share risk or overcome private information, for example. A model of the dynamics of technology adoption and the evolution of financial instruments that support such adoption is presented. Early adoption may be required for financial markets to learn the technology; once learned, financial innovation boosts adoption further. Financial learning emerges as a source of technological diffusion. The analysis identifies a causality link from technology to growth which is nonetheless consistent with empirical findings of a positive effect of current financial development on future growth
    Keywords: Technology adoption; financial innovation; learning
    JEL: G20 N20 O30
    Date: 2005–06
  7. By: Anja Schöttner
    Abstract: This paper analyzes a procurement setting with two identical firms and stochastic innovations. In contrast to the previous literature, I show that a procurer who cannot charge entry fees may prefer a fixed-prize tournament to a first-price auction since holding an auction may leave higher rents to firms when the innovation technology is subject to large random factors.
    Keywords: innovation contest, auction, tournament, quality
    JEL: D44 H57 L15
    Date: 2005–08
  8. By: Karlsson, Charlie (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Andersson, Martin (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: During the years, a large number of formal studies have presented evidences of a positive impact of university R&D on firm performance in general and on the location of industrial R&D, in particular. The question is does it also work the other way around? Does industrial R&D function as an attractor for university R&D? What are the behavioural relationships between industrial R&D and university R&D and vice versa? The fact that knowledge flows seem to be spatially bounded implies that proximity matters for the relationships between industrial and university R&D. We argue that spatial proximity should be measured using accessibility measures. Furthermore, accessibility measures can be used to model interaction opportunities at different spatial scales: local, intra-regional and inter-regional. Against this background, the purpose of this paper is to analyse the locational relationship between industry R&D and university R&D in Sweden using a simultaneous equation approach. Our results indicate that the location of industrial R&D is quite sensitive to the location of university R&D, and that the location of university R&D is sensitive to the location of industrial R&D. However, the latter result is achieved only when we take away one outlier in the data.
    Keywords: R&D; Industry; University; Accessibility; Location
    JEL: C30 H50 L10 O30 R10
    Date: 2005–10–18
  9. By: Utz Weitzel
    Abstract: This paper develops a model of firm dynamics in global competition and experimentally analyzes multinational growth strategies and optimal coordination of innovative activities. It shows that growth and innovation strategies of operatively engaged headquarters (business or corporate) with a geocentric focus dominate alternative concepts, like ethnocentric, financial or flexible headquarters. The analysis identifies two crucial strategic advantages for successful multinational companies: economies of stability and global learning.
    Keywords: Multinational Enterprise (MNE), Research and Development (R&D) Multinational Organization, Firm Dynamics, Innovation
    JEL: F2 L2 M1 M2
    Date: 2005–09
  10. By: Elena Cefis; Orietta Marsili
    Abstract: This paper explores the relationship between innovation and the survival of manufacturing firms in the Netherlands. The determinants of the survival probability of a firm, traditionally identified in the size and age of a firm, are extended to include the ability of a firm to introduce an innovation in the market. The empirical analysis combines economic and demographic data from the Business Register of the population of firms active in the Netherlands with data on innovation derived from the second Community Innovation Survey. The survival probability of a firm is estimated by using a non-parametric approach: Transition Probability Matrices were calculating over different time periods. We observe that, in general, innovation has a positive and significant effect on firms' survival that increases as time lengthens. Furthermore, our results confirm that small and young firms are those most exposed to the risk of exit, but at the same time those that benefit most of innovation to survive in the market, especially in the longer term.
    Keywords: Firms Survival, Innovation, Firms Exit, Transition Probability Matrices
    JEL: L11 O30 D21 C14 L25
    Date: 2003–11
  11. By: Bastian Westbrock
    Abstract: Observations of recent mergers and acquisitions (M&A) in the semiconductor and computer industry indicate that activities concentrate on the technology leaders in this market. The author examines the influence of players' heterogeneous product technologies on their involvement in M&A. He provides a rationale for the influence with the help of a case study and a two-stage non cooperative game. The case is about an acquisition wave between suppliers in two semiconductor component markets. Exemplary for the whole industry, acquisition activities concentrated on the technology leader in one of the component markets. Technological heterogeneity is represented within a vertically differentiated product space in the model.
    Keywords: semiconductor industry, computer industry, horizontal integration, complementary product, product differentiation
    JEL: L11 L13 L63
    Date: 2004–11
  12. By: Christophe Rynikiewicz (LEPII - Laboratoire d'Economie de la Production et de l'Intégration Internationale - - CNRS : FRE2664 - Université Pierre Mendès-France - Grenoble II)
    Abstract: Cet article vise à identifier les transitions technologiques en cours dans la sidérurgie européenne. Les limites actuelles du système socio-technique centré autour du haut-fourneau, impliquent en effet des changements dans les modes production, de distribution et de consommation d'acier. L'agenda évolue de la recherche de process plus propre (« cleaner production ») vers des innovations de système. Les technologies radicales ULCOS (Ultra Low CO2 Steelmaking) doivent répondre à la modification de l'environnement de sélection mais leur adoption et diffusion dépendra fortement du niveau de la contrainte « carbone » et des fondamentaux identifiés par l'économie industrielle et l'approche évolutionniste.<br />Les experts du secteur ont aussi identifié le besoin d'un agenda de recherche dédié aux modes de consommation de matériaux à long terme. L'évolution du contenu en matériaux et énergie des infrastructures, produits et services (mobilité, logement, chauffage, éclairage…) est fortement susceptible d'évoluer, en particulier dans le cadre de contraintes « carbone » fortes. L'approche « PSS » ou « product-service-system » dans le transport et la construction peut devenir une opportunité pour la sidérurgie du 21eme siècle.
    Keywords: changement climatique;eco-efficacité;industrie sidérurgique;innovation
    Date: 2005–10–20
  13. By: John Forth; Geoff Mason
    Abstract: In the context of the skill-biased technological revolution associated with Information and Communication Technologies (ICTs), firms with relatively high (low) proportions of skilled workers can be expected to have a comparative advantage (disadvantage) in minimising the costs both of ICT adoption and of learning how to make best use of ICTs. In this paper we make use of benchmarking survey data for UK enterprises between 1997-99, combined with post-survey financial data for the same enterprises, in order to assess the impact of ICT skill constraints on financial performance at firm level. The results provide clear evidence that ICT skill constraints have an indirect negative impact on firm performance as a result of the restrictions that such skill deficiencies place on ICT adoption and on the intensity of use of ICTs (once they have been installed). However, there is only weak evidence of skill constraints impinging directly on firm performance at given levels of ICT adoption and utilisation.
    Date: 2004–05
  14. By: Ana Rincon-Aznar; Catherine (Kate) Robinson; Michela Vecchi
    Abstract: This paper considers the impact of e-commerce on establishment level productivity for all sectors of the economy, using data from the UK E-commerce survey. E-Commerce represents the operational application of technology in the production process and may be regarded as an innovation driven change in workplace practice.Using a production function approach to measuring productivity, we find that OLS estimation fails to adequately account for the selectivity bias amongst enterprises that use e-commerce. Using a treatment effect estimator, we find that both e-buying and e-selling have significant and positive impacts on productivity.
    Date: 2005–05
  15. By: Stewart, Geoff
    Abstract: Innovation, Appropriation and Entrepreneurial Strategy Geoff Stewart Economics Division School of Social Sciences University of Southampton Abstract We analyse the strategy of an entrepreneur seeking to earn a return on a new discovery when faced by an incumbent firm and pool of potential entrants. The entrepreneur may choose to purchase the incumbent without revealing the discovery, enter the market as a competitor, or approach the incumbent with a view to some form of cooperation. Among our findings is that it is the magnitude of the discovery and its susceptibility to appropriation, rather than entry costs, that are the main determinants of whether entry will occur. Also, whilst major discoveries will always be implemented, others might be withheld. JEL classification: D23; D43; L13; O31.
    Keywords: Entrepreneur; Property rights; Appropriability; Oligopoly.
    Date: 2004–02–19
  16. By: Andersson, Martin (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper adds to the knowledge of the relationship between international trade and product variety by analyzing the relationship between variety in export supply and exports at the firm-level. Using highly detailed firm-level export data in 2003, the paper finds clear empirical evidence for gains from variety in export supply at the level of individual firms. By applying a decomposition methodology related to Hummels & Klenow (2004), it is shown that these gains can be attributed to a larger amount of markets served and larger export sales per market, roughly on a 50-50 basis. The paper also examines how the export variety of firms varies with distance and GDP across markets. The variety of a firm’s export flows to a market increases with the market’s GDP but decreases with distance. The paper estimates that 15 % of the larger export sales to a market with larger GDP can be attributed to a larger number of products exported to the market. Moreover, the paper finds empirical support for quality differentiation on the behalf of individual firms among markets with different GDP. About one third of the effect of GDP on the total value of the export flows to a market can be ascribed to higher average prices per kilogram of the export products. Products shipped over longer distances tend also to have higher average prices per kilogram.
    Keywords: exports; product variety; international trade; multi-product firms
    JEL: D21 F12 O40
    Date: 2005–10–18
  17. By: Blyde, Juan; Kugler, Maurice; Stein, Ernesto
    Abstract: Export orientation of multinational corporations (MNCs) has seldom been incorporated in the analysis of spillovers from foreign direct investment (FDI). Also, until recently empirical research dealt mainly with intra-industry spillovers from FDI with restrictive treatment of inter-industry effects. Yet, to the extent that local producers are not in the competitive fringe of MNCs, both spillovers from export oriented subsidiaries and inter-industry spillovers may be more likely. First, when MNCs use the host country as export platform, domestic firms are by and large not competitors to subsidiaries. Then, there would be no incentives to restrict technical information flows. Our results using panel data from Venezuelan manufacturing point to FDI spillovers, mainly between but also within industries, from export-oriented MNCs to large domestic firms. Second, MNCs that outsource have an incentive to transfer technical knowledge to local upstream suppliers. When we allow for spillovers to take place across sectors, we find evidence that backward linkages are a channel of technology diffusion from export-oriented MNCs to domestic manufacturers. Furthermore, small and medium plants do not experience productivity gains ensuing FDI while large domestic producers experience higher productivity growth, suggesting the importance of differences in absorptive capacity.
    Keywords: Export platform; Local outsourcing; FDI Spillovers; Absorptive capacity; Generic knowhow. JEL Classification: O41, F43, F21, F23, C52.
    Date: 2004–09–01
  18. By: Bettina Becker; Stephen Hall
    Abstract: In this paper we test the pooling assumption for the determinants of industry R&D investment. Most studies consider pooled estimates, but if the parameters differ across industries, pooled coefficients will not provide reliable estimates of individual industry effects. Moreover, pooled coefficients may not even be consistent estimates of the average. For a panel of UK manufacturing industries we find that pooling is only valid for output fluctuations, lagged R&D and real interest rates. Implementing the test results into our model, we find government funding is only significant for low-tech R&D. Skilled labour and foreign R&D matter only in high-tech industries.
    Date: 2004–05
  19. By: Sangwan, S.; Pau, L-F. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Diffusion of mobile communication has induced great societal changes in China. Factors at global market, communications industry and end-user market levels are driving the adoption at a high rate. Firstly, China?s economic emergence together with e.g. accession to WTO has led to foreign investment increase in telecom and communications industry. Secondly, a parallel deregulation and reengineering of the telecom industry ensured an introduction of competition in the domestic terminals market and facilitated manufacturing in China. Finally, overall growth in China has increased purchasing power enabling consumers to adopt new technologies. At the market level, challenges and future growth depends on a favorable business environment both for local and multinationals organizations, operators and service providers, and most importantly to the distribution channels (retailers and resellers). Market mechanisms such as improvement in payment methods, regulations for content providers, branded and low-end mobile phones marketing, applications and support in Chinese language are required for a systematic and not just sporadic adoption of mobile devices. Product development and innovation, improvement in distribution infrastructure, mobile services operators skill enhancement are some measures that can growth of mobile communication and increase in average consumer spending.
    Keywords: China;Mobile phones diffusion;Market developments;China?s industrial policy;
    Date: 2005–10–14
  20. By: John Forth; Geoff Mason
    Abstract: This paper draws on the ICT Professionals Survey (carried out between December 2000-February 2001) and matching post-survey financial data to examine the determinants of ICT-related ‘internal skill gaps’ and their impact on company sales performance. The most common reasons for internal skill gaps (ICT professionals lacking full proficiency in their current jobs) are reported as ‘lack of skills or experience of new technologies’ and ‘failure to train and develop staff’. Multivariate analysis reveals a significant negative relationship between the severity of ICT skill gaps and company sales performance, after controlling for capital assets, labour inputs, sector, region and other company characteristics. The analysis also provides some evidence of positive and statistically significant links between sales performance and provision of structured ICT training.
    Date: 2004–05
  21. By: Stefano Comino; Fabio M. Manenti; Maria Laura Parisi
    Abstract: Thanks to a recent and vast empirical literature, we know in details how the most popular open source projects are organized and why they succeed. However, open source is not only Linux: in this paper we use a large data-set obtained from to estimate the main determinants of the progress in the development of a stable and mature code of an open source software. We show that projects geared towards sophisticated users (i.e. system administrators) or projects aimed at developing tools for the Internet, multimedia and software have greater chances to reach an advanced development stage. On the contrary, projects devoted to the production of applications for games and telecommunication as well as projects distributed under highly restrictive licensing terms (GPL) have a significantly smaller probability to advance. Interestingly, we find that the size of the "community of developers" increases the chances of progress but this effect decreases as the community gets larger, a signal of possible coordination problems. Finally, we show that the determinants of projects' development stage change with the age of the project in many dimensions thus supporting the common perception of open source as an extremely dynamic phenomenon.
    Keywords: software market,open source software,development status,intended audience,license
    JEL: O38 L51 L63
    Date: 2005
  22. By: David Chavalarias (CREA - Centre de recherche en épistémologie appliquée - CNRS : UMR7656 - Polytechnique - X); Sylvain Charron (CREA - Centre de recherche en épistémologie appliquée - CNRS : UMR7656 - Polytechnique - X); Vincent Roger De Gardelle (CREA - Centre de recherche en épistémologie appliquée - CNRS : UMR7656 - Polytechnique - X); Paul Bourgine (CREA - Centre de recherche en épistémologie appliquée - CNRS : UMR7656 - Polytechnique - X)
    Abstract: Popper a rompu avec une tradition épistémologique ancienne en introduisant une dissymétrie entre vérifiabilité et réfutation. Cette conception a d'importantes répercussions sur la manière d'envisager la croissance des connaissances scientifiques et l'activité du chercheur. La vérité, qui avait pu être considérée comme un but pour la recherche scientifique, est placée hors d'atteinte. Sans indicateur évident pour marquer le terme de ses recherches, le chercheur doit alors faire, en fonction de ses motivations, un compromis entre l'exploration des théories possibles et des manières de les tester, et l'exploitation de théories qui auront été suffisamment corroborées. Si les thèses épistémologiques de Popper sont pertinentes, ce compromis exploration/exploitation au niveau du chercheur a des conséquences notables sur le développement des connaissances scientifiques et notamment, sur la fiabilité des théories acceptées. Ce sont ces conséquences que nous nous proposons d'étudier par une approche analytique, expérimentale et computationnelle, dont nous présentons ici les grandes lignes et les premiers résultats. Au delà de préoccupations purement épistémologiques, cette étude cherche à proposer un schéma générique pour l'approche d'un vaste ensemble de phénomènes d'élaboration collective et distribuée de connaissances ou d'artefacts.
    Keywords: découverte collective, développement de la connaissance, compromis exploration/exploitation, épistemologie popperienne, knowledge managment distribué
    Date: 2005–10–16
  23. By: Brian Loasby
    Date: 2005–09
  24. By: John Forth; Geoff Mason
    Abstract: This paper uses data from the 1998 Technical Graduates Employers Survey, combined with post-survey financial data, to examine the effects of high-level skill shortages on firm-level performance in the UK. We focus specifically on enterprise difficulties in recruiting engineers and scientists with skills related to Information and Communication Technologies (ICTs). In contrast to most other surveys of skill shortages, these data distinguish clearly between external recruitment difficulties which are largely attributable to low numbers of job applicants and recruitment problems which are primarily due to shortcomings in the quality of job applicants.Cross-sectional and panel regression analysis of the determinants of sales per employee at firm level suggests that quality-related difficulties in recruiting ICTskilled engineers and scientists do not have any statistically significant effects on performance. However, quantity-based difficulties in recruiting technical graduates with ICT skills are significantly negatively related to average sales per employee. The mechanisms by which unfilled positions for ICT-skilled engineers and scientists may contribute to relatively weak performance include slower development of new products and services, failure to meet delivery dates, higher costs of employing temporary and contract staff, loss of new customer orders and lack of forward planning.
    Date: 2004–05
  25. By: Richard Nahuis; Henry van der Wiel
    Abstract: In this Discussion Paper we analyse how Europe's ICT ambition can be translated into a policy agenda. To achieve this, we provide a quantitative overview of the importance of ICT and the relative position of Europe versus the US. Next we provide a discussion of potential explanations for the differences in ICT use and production. We find that Europe's position with respect to ICT use and production is not only worse compared to that of the US. In some areas Europe is ahead of the US, whereas in others Europe lags on an aggregate level. Our main conclusion is that Europe should not aim at creating an ICT-production cluster but it should aim at removing barriers to ICT use. The reasons are as follows. It is not a sensible strategy to specialise in industries where one has a comparative disadvantage. Moreover, the largest benefit from ICT is in its use not in its production. JEL classification: H89, D2, E61
    JEL: H89 D2 E61
    Date: 2005–04

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