nep-ino New Economics Papers
on Innovation
Issue of 2007‒02‒17
forty-two papers chosen by
Koen Frenken
Utrecht University

  1. Appendices to Internationally Comparable Science, Technology and Competitiveness Indicators By Robert H. McGuckin; Bart van Ark; Sean M. Dougherty; Robert Inklaar
  2. Innovation, Licensing, and Imitation: The Effects of Intellectual Property Rights Protection and Industrial Policy By Koichi Futagami; Tatsuro Iwaisako; Hitoshi Tanaka
  3. Do Spillovers Stimulate Incremental or Drastic Product Innovations? Hypotheses and Evidence from German Establishment Data By Jirjahn, Uwe; Kraft, Kornelius
  4. International Comparisons of R&D Expenditure: Does an R&D PPP make a difference? By Sean M. Dougherty; Robert Inklaar; Robert H. McGuckin; Bart van Ark
  5. Factors Determining the Mode of Overseas R&D by Multinationals: Empirical Evidence By ITO Banri; WAKASUGI Ryuhei
  6. Cumulative Innovation, Sampling and the Hold-up Problem By Rufus Pollock
  7. ICT adoption and productivity in developing countries: new firm level evidence from Brazil and India By Basant, R. & Commander, S. & Harrison, R. & Menezes Filho, N. A.
  8. Valuation and Exploitation of Intellectual Property By Shigeki Kamiyama; Jerry Sheehan; Catalina Martinez
  9. The Further the Better? Knowledge Intensive Service Firms' Collaboration on Innovation By Anker Lund Vinding; Ina Drejer
  10. Detecting Behavioural Additionality An Empirical Study on the Impact of Public R&D Funding on Firms’ Cooperative Behaviour in Germany By Aschhoff, Birgit; Fier, Andreas; Löhlein, Heide
  11. Corporate Skills as an Ex-Ante Incentive to R&D Investment By Mariacristina Piva; Marco Vivarelli
  12. Entry, Innovation and Exit. Evidence from the LAN switch Industry By Roberto Fontana; Lionel Nesta
  13. Global Sensing and Sensibility A Multi-Stage Matching Assessment of Competitive Advantage from Foreign Sources of Innovation By Sofka, Wolfgang; Teichert, Thorsten
  14. Persistence of Innovation: Stylised Facts and Panel Data Evidence By Bettina Peters
  15. Innovation Activities Abroad and the Effects of Liability of Foreignness: Where it Hurts By Sofka, Wolfgang
  16. R&D and Firm Performance in a Transition Economy By Czarnitzki, Dirk; Kraft, Kornelius
  17. Growth, Development, and Technological Change By Volker Grossmann; Thomas M. Steger
  18. L'analisi del capitale intellettuale per la valutazione del merito di credito By Adalberto ALBERICI
  19. Innovative work practices, information technologies and working conditions: evidence for France By Philippe Askenazy; Eve Caroli
  20. Product Intelligence: Its Conceptualization, Measurement and Impact on Consumer Satisfaction By Rijsdijk, S.A.; Hultink, E.J.; Diamantopoulos, A.
  21. Market Structure and Innovation: A Dynamic Analysis of the Global Automobile Industry By Hashmi, Aamir Rafique; Van Biesebroeck, Johannes
  22. Efficiency, technology and productivity change in Australian universities, 1998-2003 By Andrew Worthington; Boon L. Lee
  23. Intra and Inter-Organizational Knowledge Transfer Processes: Identifying the Missing Links By Markus C. Becker; Mette Præst Knudsen
  24. Lost in Translation Empirical Evidence for Liability of Foreignness as a Barrier to Knowledge Spillovers By Schmidt, Tobias; Sofka, Wolfgang
  25. Nanoteknologiastako seuraava yleiskäyttöinen teknologia? - Havaintoja Suomen näkökulmasta By Christopher Palmberg
  26. The Importance of Equity Finance for R&D Activity – Are There Differences Between Young and OldCompanies? By Mueller, Elisabeth; Zimmermann, Volker
  27. Technological and Organizational Changes, and Labor Flows: Evidence on French Establishments By Philippe Askenazy; Eva Moreno-Galbis
  28. Firm Competitive Strategies and the Likelihood of Survival. The Spanish Case By Raquel Ortega-Argilés; Rosina Moreno
  29. Efficiency and productivity change in the English higher education sector from 1996/97 to 2002/03 By Jill Johnes
  30. Cognitive distance in and between COP's and firms: where do exploitation and exploration take place, and how are they connected? By Nooteboom,Bart
  31. Political Institutions and the Development of Telecommunications By Veneta Andonova; Luis Diaz-Serrano
  32. Impacts of Biomass and Petroleum Energy Futures in Africa By Daniel M. Kammen; Majid Ezzati; Robert Bailis
  33. Creativity and Industrial Cities: A Case Study of Baltimorenomenon By Zoltan J. Acs; Monika I. Megyesi
  34. Measuring the research performance of Chinese higher education institutions using data envelopment analysis By Jill Johnes; Li Yu
  35. Destructive Creation By Calvano, Emilio
  36. Appraising Schumpeter's 'Essence' after 100 Years: From Walrasian Economics to Evolutionary Economics By Esben Sloth Andersen
  37. Sources of Knowledge and Productivity: How Robust is the Relationship? By Mosahid Khan; Kul B. Luintel
  38. Outside board members in the high-tech start-ups By Clarysse, B.; Knockaert, M.; Lockett, A.
  40. Organization, evolution, cognition and dynamic capabilities By Nooteboom,Bart
  41. Regulatory Actions under Adjustment Costs and the Resolution of Scientific Uncertainty By Hennessy, David A.; Moschini, GianCarlo
  42. A scatter search procedure for maximizing the net present value of a project under renewable resource constraints By Vanhoucke, M.

  1. By: Robert H. McGuckin (The Conference Board); Bart van Ark (The Conference Board and University of Groningen); Sean M. Dougherty (OECD [formerly with The Conference Board]); Robert Inklaar (The Conference Board and University of Groningen)
    Abstract: Report on US National Science Foundation Grant SRS/SES 00-99594
    Keywords: R&D, research, development, innovation, BERD
    JEL: O30 O32 O47 O57
    Date: 2006–05
  2. By: Koichi Futagami (Graduate School of Economics, Osaka University); Tatsuro Iwaisako (Faculty of Economics, Ritsumeikan University); Hitoshi Tanaka (Graduate School of Economics, Osaka University)
    Abstract: This paper examines the long-run effects of intellectual property rights (IPR) protection and industrial policies on innovation and technology transfer using a North-South quality ladder model where licensing is the main mode of technology transfer to developing countries. We show that the governments of developing countries can promote innovation and technology transfer by strengthening IPR protection, which is enforced by restricting the imitation of products. Moreover, the results also imply that subsidies on the cost of license negotiation can promote innovation and technology transfer, whereas subsidies on the cost of R&D have no effect.
    Keywords: Licensing; Imitation; Innovation; Intellectual property rights;
    JEL: F43 O33 O34
    Date: 2007–02
  3. By: Jirjahn, Uwe; Kraft, Kornelius
    Abstract: We estimate the determinants of various types of product innovation. Knowledge spillovers from rivals have a positive impact on incremental innovations. This impact is largely independent of the participation in R&D cooperations. Spillovers exert no such independent influence on drastic innovation activities. The results support the hypothesis that establishments face difficulties in using knowledge that comes from areas they are not familiar with. Establishments exploit spillovers for incremental innovations rather than for drastic innovations. To a limited degree R&D cooperations can help to overcome the difficulties in using spillovers for drastic innovations. Furthermore, our estimates provide evidence that a firm’s own R&D effort and the use of outside information are substitutive.
    Keywords: New Products, Patents, Spillovers, Learning, R&D
    JEL: L15 L60 O31 O32
    Date: 2006
  4. By: Sean M. Dougherty (OECD); Robert Inklaar (University of Groningen); Robert H. McGuckin (The Conference Board); Bart van Ark (The Conference Board and University of Groningen)
    Abstract: Purchasing power parities (PPPs) for R&D expenditure in 19 manufacturing industries are developed for France, Germany, Japan, the Netherlands and the United Kingdom relative to the United States for the years 1997 and 1987. These PPPs are based on R&D input prices for specific cost categories and differ substantially from current practice of comparing R&D expenditure using GDP PPPs and deflators. After taking into account differences in the relative price of R&D labor and materials, separate PPPs for other R&D cost categories are less essential, and a simpler version using GDP PPPs for these other categories should suffice. Our preferred PPPs are used to compare international R&D costs and intensity. The results suggest that the efforts devoted to R&D in each country are more similar across countries than is apparent using the nominal R&D intensities that are currently the norm.
    Keywords: R&D, PPP, price indexes, research, development, innovation
    JEL: C43 L16 L60 O32 O47
    Date: 2003–07
  5. By: ITO Banri; WAKASUGI Ryuhei
    Abstract: The large expansion of MNCs' overseas R&D is noteworthy. This paper investigates the factors affecting the expansion of support-oriented R&D and knowledge sourcing R&D by using qualitative data which indicate the modes of R&D conducted at a plant site and a laboratory. The empirical results suggest that (1) the export propensity of affiliate firms, relative abundance of human resources for R&D, and accumulated technological knowledge have a positive effect on both the modes of R&D at a plant site and a laboratory, and (2) the stronger enforcement of intellectual property positively affects the expansion of knowledge sourcing R&D. These results show that not only firm-specific but also country-specific factors positively affect the overseas expansion of R&D.
    Date: 2007–02
  6. By: Rufus Pollock
    Abstract: With cumulative innovation and imperfect information about the value of innovations, intellectual property rights can result in hold-up and therefore it may be better not to have them. Extending the basic cumulative innovation model to include 'sampling' by second-stage firms, we find that the lower the cost of sampling, or the larger the differential between high and low value second-stage innovations, the more likely it is that a regime without intellectual property rights will be preferable. Thus, technological change which reduces the cost of encountering and trialling new 'ideas' implies a reduction in the socially optimal level of rights such as patents and copyright.
    Keywords: Cumulative Innovation; Hold-Up; Sampling; Intellectual Property
    JEL: K3 L5 O3
    Date: 2006
  7. By: Basant, R. & Commander, S. & Harrison, R. & Menezes Filho, N. A.
    Date: 2007–10
  8. By: Shigeki Kamiyama; Jerry Sheehan; Catalina Martinez
    Abstract: As firms shift to more open models of innovation based on collaboration and external sourcing of knowledge, they are exploiting their intellectual property, notably patents, not only by incorporating protected inventions into new products, processes and services, but also by licensing them to other firms or public research organisations (PROs), using them as bargaining chips in negotiations with other firms, and as a means of attracting external financing from banks, venture capitalists and other sources... <P>Valorisation et exploitation de la propriété intellectuelle <BR>A mesure que les entreprises s’orientent vers des modèles d’innovation plus ouverts fondés sur la collaboration et l’exploitation de sources externes de connaissances, elles tirent profit de leur propriété intellectuelle, notamment de leurs brevets, non seulement en intégrant des inventions protégées dans des produits, procédés et services nouveaux, mais aussi en les concédant sous licence à d’autres entreprises ou à des organismes de recherche publics, en les utilisant comme monnaie d’échange dans les négociations engagées avec d’autres entreprises et comme un moyen d’obtenir des financements extérieurs auprès des institutions bancaires, des investisseurs en capital-risque et d’autres sources...
    Date: 2006–06–30
  9. By: Anker Lund Vinding; Ina Drejer
    Abstract: Three hypotheses in relation to knowledge intensive service firms’ collaboration in relation to development of new services are explored: i) firms with a high level of absorptive capacity are more likely to collaborate on innovation than firms with a relatively low level of absorptive capacity; ii) given that the firms collaborate on innovation, the main innovation partner of knowledge intensive service firms with a high level of absorptive capacity is likely to be located further away than the main innovation partner of firms with a low level of absorptive capacity; and iii) collaboration with distant partners in the innovation process will often be of a more explorative nature than interaction with local partners, thereby associating the innovative output of cross-border collaborations with a higher degree of novelty than collaboration with local/national partners. Hypotheses i and iii are confirmed, whereas the results for hypothesis ii are inconclusive.
    Keywords: Service innovation; absorptive capacity; collaboration
    JEL: O31 L80
    Date: 2006
  10. By: Aschhoff, Birgit; Fier, Andreas; Löhlein, Heide
    Abstract: Subsidising research networks has become a popular instrument in technology policies, driven mainly by expected positive spillovers. In particular, the stimulation of R&D co-operation between scientific institutions and industry is considered as most promising. In the context of policy evaluation we analyse if public R&D funding is suitable for influencing firms’ collaborative behaviour in the intended way and where applicable, if a lasting change results. The empirical analysis is based on German CIS data and a supplemental telephone survey. Using a nearest-neighbour matching approach we find that R&D funding is indeed a particularly valuable tool for the linking of science into industry R&D partnerships. However, we also show in a bivariate probit analysis that newly initiated R&D co-operations with science are less likely to be continued after funding has ended compared to already existing co-operations. Therefore, the behavioural change induced by public funding is not necessarily longlived.
    Keywords: Public Funding, Firm Behaviour, Policy Evaluation, R&D Co-operation
    JEL: C20 H32 L22 O32 O38
    Date: 2006
  11. By: Mariacristina Piva (Università Cattolica Piacenza); Marco Vivarelli (Università Cattolica Piacenza, CSGR Warwick, Max Planck Institute of Economics Jena, and IZA)
    Abstract: Using a balanced panel of 215 Italian manufacturing firms over the 1995-2000 period, this paper investigates the determinants of R&D investment at the level of the firm. While finding further support for the well-established technology-push and demand-pull hypotheses, this study also tests the role of skill endowment in increasing a firm’s R&D investment. Consistently with the related managerial and economic literature, our basic result is that current skill endowment may significantly and positively influence a firm’s current R&D decision. These microeconometric results have been obtained using a Least Squares Dummy Variable Corrected (LSDVC) estimator, a recently-proposed panel data technique particularly suitable for small samples.
    Keywords: skills and innovation, R&D expenditures, endogenous skill bias, demand-pull, LSDVC estimator
    JEL: O31
    Date: 2007–01
  12. By: Roberto Fontana; Lionel Nesta (Observatoire Français des Conjonctures Économiques)
    Date: 2007
  13. By: Sofka, Wolfgang; Teichert, Thorsten
    Abstract: We focus on one of the core competitive capabilities of modern firms: the ability to deliver successful innovations in a globalized environment. Companies literally find themselves confronted with a world of ideas. The challenge remains to decide which impulses should be on top of the list and which at the bottom. Given limited resources and substantial investments, betting on the wrong horse can be risky and costly. Theoretically integrated in capability based view of the firm we investigate firms’ capabilities to assimilate, identify and prioritize valuable knowledge across national, cultural and social borders - a competence we call global sensing. We establish an analytical framework to examine whether global sensing activities generate competitive advantage. Consequently, we develop an empirical, multistage evaluation strategy. This strategy rests on a matching approach for a recent, broad sample of almost 1,700 German companies from both services and manufacturing. We find the strongest and most consistent support for global sensing as a strategic enabler for technological leadership. Apart from this strategic advantage we observe that foreign external sources of innovation are generally not superior to domestic ones.
    Keywords: Global innovation, global sensing, capability based view, matching estimation
    JEL: F23 O31 O32
    Date: 2006
  14. By: Bettina Peters
    Abstract: This paper investigates whether firms innovate persistently or discontinuously over time using an innovation panel data set on German manufacturing and service firms for the period 1994–2002. It turns out that innovation behaviour is permanent at the firm–level to a very large extent. Using a dynamic random effects discrete choice model and a new estimator recently proposed by Wooldrigde (2005), I further shed some light on the driving forces for this phenomenon. The econometric results show that past innovation experience is an important determinant for manufacturing as well as for service sector firms, and hence confirm the hypothesis of true state dependence. In addition, the results highlight the important role of knowledge provided by skilled employees and unobserved individual heterogeneity in explaining the persistence of innovation.
    Keywords: Innovation; persistence; state dependence; unobserved heterogeneity; dynamic random effects panel probit model
    JEL: O31 C23 C25 L20
    Date: 2006
  15. By: Sofka, Wolfgang
    Abstract: The innovation activities of foreign subsidiaries have been identified as an important source of competitive advantage for multinational corporations. The success of these engagements depends heavily on tapping host country pools of localized expertise. To achieve this foreign subsidiaries have to overcome cultural and social barriers (liability of foreignness). We derive potential stumbling blocks in the innovation process theoretically and argue that these materialize as neglected projects, cancellations or budget overruns. We test these hypotheses empirically for more than 1,000 firms with innovation activities in Germany from various sectors. We find that foreign-controlled firms are not challenged by liability of foreignness at the project mobilization stage. The lack of local embeddedness becomes more binding as projects have to be prioritized and managed which we identify as more frequent mistakes and delays. We argue that this is the result of shared practices within the multinational firm that do not readily fit into the local context. Finally, we derive management recommendations how foreign innovation engagements can achieve similar levels of effectiveness and efficiency as host country competitors.
    Keywords: Liability of foreignness, offshoring R&D, internationalization, innovation management
    JEL: D83 F23 O31 O32
    Date: 2006
  16. By: Czarnitzki, Dirk; Kraft, Kornelius
    Abstract: We estimate the effects of R&D on firms' credit ratings and on financial distress. The main purpose is the comparison of firms in Western Germany and Eastern Germany as a transitional economy. Innovative activity has a positive impact on firm value proxied by ratings in Western Germany, but a negative impact in Eastern Germany. We also consider future financial distress, and find that R&D in Eastern German firms leads to higher default risk, in contrast to Western Germany. There, R&D enhances future performance. This result is highly politically relevant, since the high level of subsidies present in Eastern Germany may be subject to misallocation.
    Keywords: Transitional Economy, Credit Rating, Bankruptcy, Innovation, Policy
    JEL: L33 O12 O31 O38 P27
    Date: 2006
  17. By: Volker Grossmann (University of Fribourg, CESifo and IZA); Thomas M. Steger (ETH Zurich and CESifo)
    Abstract: The theory of endogenous technical change has deeply contributed to our understanding of the fundamental sources of economic growth and development. In this chapter we survey important contributions in the field by focussing on the basic structure of endogenous growth models with horizontal as well as vertical innovation and emphasizing important implications for growth policy. We address issues like the scale effect problem, directed technological change to understand the evolution of wage inequality, long-run divergence between the innovating North and the imitating South due to inappropriate technology in the South, the relationship between trade and growth, competition and R&D, and the role of imperfect capital markets for R&D-based growth.
    Keywords: endogenous technical change, economic growth, horizontal innovations, scale effects, vertical innovations
    JEL: O10 O30 O40
    Date: 2007–01
  18. By: Adalberto ALBERICI
    Abstract: The article aims at investigating the potential of intellectual capital statement as a source of information for the credit worthiness evaluation of firms asking for loans. Information about intangible assets can significantly supplement the traditional analysis based on financial data.To this purpose, the article examines the model developed by the Danish Ministry of Science, Technology and Innovation, for drawing up and analysing an intellectual capital report. Even though the Danish model is in the forefront, it still shows some limits, which reduce the potential of IC statements. Moreover some barriers still exist, which limit the spreading of IC reports, causing detrimental information asymmetries between firms and banks. Since many cultural bounds persist between them, there is still a long way before overcoming all difficulties
    Keywords: Intellectual capital, statement, credit worthiness evaluation, firms, loans, intangible assets, intellectual capital, Danish Ministry of Science- Technology and Innovation, Danish model, information asymmetries
    JEL: G32
    Date: 2007–02
  19. By: Philippe Askenazy; Eve Caroli
    Abstract: We investigate the impact of new work practices and information and communication technologies (ICT) on working conditions in France. We use a unique French dataset providing information on individual workers for the year 1998. New work practices include the use of quality norms, job rotation, collective discussions on work organization and working time flexibility. Working conditions are captured by occupational injuries as well as indicators of mental strain. We find that workers involved in the new practices face working conditions that are significantly worse than those of workers in non innovative work practices. But, the picture is mixed for ICT that seem to make the workplace safer and less risky.
    Keywords: New work practices, technology, working conditions, occupational injuries.
    JEL: J28 L23
    Date: 2006
  20. By: Rijsdijk, S.A.; Hultink, E.J.; Diamantopoulos, A. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: In the last decade, companies have developed a large number of intelligent products. Due to the use of information technology, these products, for example, are able to work autonomously, cooperate with other products, or adapt to changing circumstances. Although intelligent products appear an attractive category of products, they have received little attention in the literature. The present article provides a conceptualization of the new construct of product intelligence and describes the development procedure of a measure for the construct. In addition, the article sets up and empirically tests a conceptual framework in which product intelligence leads to consumer satisfaction through the innovation attributes of relative advantage, compatibility, and complexity. Managerial implications for new product development and marketing of intelligent products are considered and suggestions for further research provided.
    Keywords: Intelligent products;Smart products;Adoption;Innovation;New product development;
    Date: 2007–01–22
  21. By: Hashmi, Aamir Rafique; Van Biesebroeck, Johannes
    Abstract: The question that how market structure and innovation are related has been extensively studied in the literature. However, there is hardly any notable study on this question for the global automobile industry. We fill this gap by studying the relationship between market structure and innovation in the global automobile industry for the 1980-2005 period. We use the dynamic industry framework of Ericson and Pakes (Review of Economic Studies, 1995) and estimate the parameters of the model using a two-step procedure proposed by Bajari et al (Econometrica, forthcoming). Since the global auto industry has seen a lot of consolidation since 1980, mergers are an important ingredient of our model. After estimating the parameters of the model, we simulate the industry forward and study how changing market structure (mainly due to mergers) affects innovative activity at the firm as well as the industry level. Our findings are the following. (1) The effect of market structure on innovation in the global auto industry depends on the initial state of the industry. If the industry is not very concentrated, as it was in 1980, some consolidation may increase the innovative activity. However, if the industry is already concentrated, as in 2005, further consolidation may reduce the innovation incentives. (2) Mergers reduce the value of merging firms though they may increase the aggregate value of the industry. (3) Mergers between big firms eventually reduce consumers' utility.
    Keywords: Competition and Innovation; Automobile Industry; Dynamic Games
    JEL: O31 L62 L13
    Date: 2007–02–13
  22. By: Andrew Worthington; Boon L. Lee (School of Economics and Finance, Queensland University of Technology)
    Abstract: In this study, productivity growth in thirty-five Australian universities is investigated using nonparametric frontier techniques over the period 1998 to 2003. The inputs included in the analysis are full-time equivalent academic and non-academic staff, non-labour expenditure and undergraduate and postgraduate student load and the outputs are undergraduate, postgraduate and PhD completions, national competitive and industry grants and publications. Using Malmquist indices, productivity growth is decomposed into technical efficiency and technological change. The results indicate that annual productivity growth averaged 3.3 percent across all universities, with a range between -1.8 percent and 13.0 percent, and was largely attributable to technological progress. However, separate analyses of research-only and teaching-only productivity indicate that most of this gain was attributable to improvements in research-only productivity associated with pure technical and some scale efficiency improvements. While teaching-only productivity also contributed, the largest source of gain in that instance was technological progress offset by a slight fall in technical efficiency.
    Keywords: Productivity; technical and scale efficiency; technological progress; Malmquist indices; universities.
  23. By: Markus C. Becker; Mette Præst Knudsen
    Abstract: Inspired by the resource- and knowledge-based views, much attention has been focused on knowledge transfer as a process of strategic importance. Still, many open questions regarding knowledge transfer processes need to be addressed to complete our understanding. For instance, what are the barriers to knowledge transfer, and what are the facilitators? A review of the literature reveals that it is divided into two streams: articles on intra-firm knowledge flows and articles on inter-firm knowledge flows. Part of the incompleteness of our understanding of knowledge transfer processes, we argue, derives from the fact that it is unclear in which way intra- and inter-firm knowledge flows are different. The paper investigates three questions: first, how knowledge transfer is defined differently in intra- and inter-firm knowledge flows; second: how barriers to knowledge transfer processes differ; and thirdly: what we need to know to be able to formulate a management view of organizational knowledge flows, whether intra- or inter-organizational. The concluding section argues five research questions whose answers may enable research to formulate a management view of knowledge flows.
    Keywords: Review; internal knowledge flows; external knowledge flows; definition; barriers to knowledge flows
    JEL: D83 L20 L22 O32
    Date: 2006
  24. By: Schmidt, Tobias; Sofka, Wolfgang
    Abstract: Entering host country networks of knowledge flows (new competencies, innovative technologies, and lead-market knowledge) is a major rationale of multinational firms for investing abroad. Foreign firms find it difficult to overcome cultural and social barriers which make their foreign engagements more strenuous and error prone (liability of foreignness). In our analysis we break down the complex mechanisms behind knowledge spillovers and identify conceptual links with liability of foreignness. We hypothesise that liability of foreignness acts as a filter for foreign firms, restricting their access to host country knowledge. We use a broad sample of roughly 1,000 firms in Germany to empirically test the existence of liabilities of foreignness in leveraging knowledge spillovers. Our particular setting allows us to distinguish between upstream (suppliers, academia) and downstream (customers) liabilities of foreignness. We find that multinational firms can compete on an equal footing with host country rivals when it comes to generating impulses for innovations from suppliers and academia. They are significantly challenged by liabilities of foreignness, though, where customers are involved. We suggest that the frictional losses from a lack of social and cultural embeddedness (liability of foreignness) in the host country are especially relevant when promising lead customers have to be identified and their tacit and often unarticulated impulses have to be transferred, understood and prioritised.
    Keywords: Liability of foreignness, knowledge spillover, globalisation, trivariate probit
    JEL: D83 F23 O31 O32
    Date: 2006
  25. By: Christopher Palmberg
    JEL: O40 O33 O38
    Date: 2007–02–08
  26. By: Mueller, Elisabeth; Zimmermann, Volker
    Abstract: This paper analyzes the importance of equity finance for the R&D activity of small and medium-sized enterprises. We use information on almost 6000 German SMEs from a company survey. Using the intensity of banking competition at the district level as instrument to control for endogeneity, we find that a higher equity ratio is conducive to more R&D for young but not for old companies. Equity may be a constraining factor for young companies which have to rely on the original equity investment of their owners since they have not yet accumulated retained earnings and can relay less on outside financing. The positive influence is found for R&D intensity but not for the decision whether to perform R&D. Equity financing is therefore especially important for the most innovative, young companies.
    Keywords: activity, equity finance, small and medium-sized enterprises
    JEL: G32 O32
    Date: 2006
  27. By: Philippe Askenazy (Paris Sciences Economiques and IZA); Eva Moreno-Galbis (Université du Mans)
    Abstract: This paper investigates the effects of organizational and technological changes on job stability of different occupational categories in France. We conduct an empirical analysis in which we make extensive use of a unique data set on a representative sample of French establishments. Working with various indicators of labor flows (gross labor flows, hiring rate, firing rate, net labor flows and churning flows), we find that the use of new technology seems to have a positive effect on aggregate job turnover and, more specifically, turnover among manual workers. In contrast, innovative workplace organizational practices are related to lower turnover among clerical workers and intermediate professionals and have a positive effect on churning among managers.
    Keywords: labor flows, information and communication technologies, organizational change
    JEL: J23 J41 J63 L23 O33
    Date: 2007–01
  28. By: Raquel Ortega-Argilés; Rosina Moreno
    Abstract: This paper analyses the impact that some managerial competitive strategies followed by a firm may have on its survival. We have not only considered the classic strategies related to the passive learning process defined by Jovanovic (e.g., R&D or advertisement expenses), but we have also taken into account the active learning process ideas given by Ericson and Pakes. This way, we study the effect of product and process innovative strategies, with a detailed desegregation of their functions, on firm’s survival likelihood. Several non-parametric, semi-parametric and parametric techniques are computed to check the effect of the active learning theory on business survival in a set of Spanish manufacturing firms (1990-2001).
    Keywords: firm survival, active learning theory, duration analysis.
    JEL: L11 M13
    Date: 2007–02
  29. By: Jill Johnes
    Abstract: This study uses data envelopment analysis (DEA) and a distance function approach to derive Malmquist productivity indexes for 113 English higher education institutions (HEIs) over the period 1996/97 to 2002/03. The analysis finds that over the period of the study HEIs have experienced an annual average increase in Malmquist productivity of 1.5%. On investigating the components of this productivity change, however, it becomes apparent that HEIs have enjoyed an annual average of 2.3% increase in technology combined with a decrease in technical efficiency of -0.8%. The finding of the importance of technology change (relative to technical efficiency change) in the Malmquist productivity indexes for HEIs is in line with previous studies (Flegg et al 2004; Worthington & Lee 2005), but the finding of negative technical efficiency change is new. Further examination of the indexes reveals differences between the subgroups of HEIs in England. Pre-1992 HEIs have experienced much lower Malmquist productivity (and technology change) than post-1992 and colleges which belong to the Standing Conference of Principals Ltd (SCOP). Further examination reveals that, for pre- and post-1992 institutions, technology change may be related positively to change in the ratio of students to staff, while technical efficiency change may be negatively related to change in the student staff ratio. Thus rapid changes in the higher education sector may have a positive effect on the technology of production but this may be achieved at the cost of lower technical efficiency.
    Keywords: higher education; efficiency measurement; data envelopment analysis; distance functions; productivity change; Malmquist index
    Date: 2006
  30. By: Nooteboom,Bart (Tilburg University, Center for Economic Research)
    Abstract: This paper contributes to the analysis of where and how both exploitation and exploration may take place inside and between communities and organizations. It connects with the discussion of differences between communities of practice and epistemic communities. The analysis allows for differences in cognition within communities of practice ('cognitive distance'). Such distance yields potential novelty but creates problems in utilizing that potential. In communities of practice and epistemic communities different trade-offs are made between the advantages and disadvantages of cognitive distance. Communities of practice are more oriented at exploitation, at relatively small cognitive distance. Exploration may take place in epistemic communities, with larger internal cognitive distance, but may also arise from interaction between different communities of practice, utilizing the distance between them. Organizations serve to provide the basis for the governance of such interaction. This, however, does limit the cognitive distance, and hence exploration potential, within an organization. For more radical exploration, interaction is needed between organizations, at the price of greater efforts to set up and govern collaboration. Next to communities of practice, epistemic communities and organizations, the analysis also includes communities of professionals across different organizations. They also have a role to play in a wider system of organizational forms for exploitation and exploration.
    Keywords: innovation;exploration and exploitation;communities of practice
    JEL: D02 D21 L22 O31 O32
    Date: 2007
  31. By: Veneta Andonova (Universidad de los Andes); Luis Diaz-Serrano (Universitat Rovira i Virgili, CREB and IZA)
    Abstract: It has traditionally been argued that the development of telecommunications infrastructure is dependent on the quality of countries’ political institutions. We estimate the effect of political institutions on the diffusion of three telecommunications services and find it to be much smaller in cellular telephony than in the others. By evaluating the importance of institutions for technologies rather than for industries, we reveal important growth opportunities for developing countries and offer policy implications for alleviating differences between countries in international telecommunications development.
    Keywords: political constraints, telecommunications, GMM, economic development
    JEL: O1 O3
    Date: 2007–01
  32. By: Daniel M. Kammen; Majid Ezzati; Robert Bailis
    Abstract: We analyzed the mortality impacts and greenhouse gas (GHG) emissions produced by household energy use in Africa. Under a business-as-usual (BAU) scenario, household indoor air pollution will cause an estimated 9.8 million premature deaths by the year 2030. Gradual and rapid transitions to charcoal would delay 1.0 million and 2.8 million deaths, respectively; similar transitions to petroleum fuels would delay 1.3 million and 3.7 million deaths. Cumulative BAU GHG emissions will be 6.7 billion tons of carbon by 2050, which is 5.6% of Africa’s total emissions. Large shifts to the use of fossil fuels would reduce GHG emissions by 1 to 10%. Charcoalintensive future scenarios using current practices increase emissions by 140 to 190%; the increase can be reduced to 5 to 36% using currently available technologies for sustainable production or potentially reduced even more with investment in technological innovation.
    Keywords: Biomass, Petroleum, Energy, Africa
  33. By: Zoltan J. Acs; Monika I. Megyesi
    Abstract: Creativity is changing the way cities approach economic development and formulate policy. Creative metropolises base their economic development strategies, at least partly, on building communities attractive to the creative class worker. While there are countless examples of high-tech regions transforming into creative economies, traditionally industrial cities have received much less attention in this regard. This research draws on Baltimore to assess the potential of transforming a traditionally industrial region into a creative economy. It analyses Baltimore’s performance on dimensions of talent, tolerance, technology, and territory both as a stand-alone metropolitan area and in comparison to similar industrial metropolises. Using data from the US Census Bureau and research on creativity measures, this case study concludes that Baltimore has the opportunity to capitalize on the creative economy because of its openness to diversity, established technology base, and appealing territorial amenities. An important consideration in the transformation towards a creative economy is Baltimore's geographic proximity and access to the largest reservoir of creative talent in the US: Washington, DC.
    Keywords: creativity, creative class, creativity index, creative cities, talent, technology, tolerance, territory, bohemian index, gay index, old industrial cities, Baltimore, economic development, economic growth, entrepreneurship
    Date: 2007–02
  34. By: Jill Johnes; Li Yu
    Abstract: This study uses data envelopment analysis (DEA) to examine the relative efficiency of over 100 selected Chinese regular universities. Various models are developed to measure the research efficiency of these higher education institutions (HEIs) using data for 2003 and 2004. The findings show that the level of efficiency depends on whether or not a subjective measure of research output (based on experts’ opinions of the HEIs) is included as an output in the model. Mean efficiency is higher when the reputation variable is included (around 90%) than when it is not (mean efficiency is around 55% in this case). However, the rankings of the universities are remarkably insensitive to whether or not this variable is included. Bootstrapping procedures are used to find the 95% confidence intervals for the efficiencies, and indicate that the best and worst performing institutions are significantly different from each other; only the middle-performing 30% of HEIs cannot be distinguished from each other in terms of their performance. Further investigation suggests that regional location, source of funding and whether the university is comprehensive or specialist may all contribute to the observed differences in performance. The regional differences are consistent but not significant at conventional levels of significance; the efficiencies differ significantly by administrative type when the subjective measure of research output is excluded from the analysis; comprehensive universities consistently and significantly outperform specialist institutions. The possibility of regional differences in performance is particularly worrying since the already economically disadvantaged Western region may suffer a continued lag in development if its HEIs are less efficient than those in the better developed Central and coastal regions.
    Keywords: data envelopment analysis; efficiency measurement; Chinese higher education
    Date: 2006
  35. By: Calvano, Emilio (GREMAQ, Université de Toulouse 1 and Dept. of Economics, Stockholm School of Economics)
    Abstract: "Destructive Creation" is the deliberate introduction of new, perhaps improved generations of durable goods that destroy, directly or indirectly, the usage value of units previously sold inducing consumers to repeat their purchase. This paper discusses this practice by a single seller in an infinite-horizon, discrete time model with heterogeneous consumers. Despite the lack of commitment power over future prices and introduction policies, this practice restores partially or totally market power even though consumers anticipate opportunistic behavior. However, the monopoly resorts "too much" to this mechanism from an ex-ante, profit maximizing perspective. High prices in earlier periods allow the seller to commit to defer innovation and therefore to maintain buyers' confidence over "durability". The paper characterizes the equilibrium properties of the resulting innovation cycles such as existence, uniqueness and asymptotic stability and discusses potential regulatory remedies in those instances where destructive creation generates economic inefficiencies. This theory applies, among others, to markets characterized by network externalities, compatibility issues, standard setting, social consumption and signal provision and may help explain many restrictive aftermarket practices as well as excessive add-on pricing without relying on any leverage hypothesis.
    Keywords: durable goods; aftermarkets; planned obsolescence;
    JEL: D42 L12 L15 O31
    Date: 2006–12–22
  36. By: Esben Sloth Andersen
    Abstract: Schumpeter’s unique type of evolutionary analysis can hardly be understood unless we recognise that he developed it in relation to a study of the strength and weaknesses of the Walrasian form of Neoclassical Economics. This development was largely performed in his first book Wesen und Hauptinhalt der theoretischen Nationalökonomie. This German-language book - which in English might be called ‘Essence and Scope of Theoretical Economics’ - was published a century ago (in 1908). Different readings of Wesen provide many clues about the emergence and structure of Schumpeter’s programme for teaching and research. This programme included a modernisation of static economic analysis but he concentrated on the difficult extension of economic analysis to cover economic evolution. Schumpeter thought that this extension required a break with basic neoclassical assumptions, but he tried to avoid controversy by presenting it as only requiring the introduction of innovative entrepreneurs into the set-up of the Walrasian System. Actually, he could easily define the function of his type of entrepreneurs in this manner, but the analysis of the overall process of evolution required a radical reinterpretation of the system of general economic equilibrium. He thus made clear that he could not accept the standard interpretation of the quick Walrasian process of adaptation (tâtonnement). Instead, he saw the innovative transformation of routine behaviour as a relatively slow and conflict-ridden process. This reinterpretation helped him to sketch out his theory of economic business cycles as reflecting the waveform process of economic evolution under capitalism.
    Keywords: Economic statics; evolutionary dynamics; business cycles; Joseph A. Schumpeter; Léon Walras
    JEL: B31 E30 O31
    Date: 2006
  37. By: Mosahid Khan; Kul B. Luintel
    Abstract: We estimate domestic productivity relationships for a sample of 16 OECD countries through probably the most general specification yet. We identify ten key determinants of productivity - all derived from different theoretical models. Our specification may address the potential problem of omitted variables. The issues of cross-country heterogeneity and endogeneity are addressed. The sources of knowledge appear robust in driving productivity; however, other determinants postulated by different theoretical models are also significant. The productivity relationships are heterogeneous across OECD countries implying that country-specific factors may play an important role in domestic productivity policy. <P>Quelle est la robustesse de la relation entre sources de connaissances et productivité ? <BR>Nous estimons des relations concernant la productivité intérieure pour un échantillon de 16 pays de l'OCDE, en utilisant une spécification qui est probablement la plus générale ayant été employée jusqu'ici. Nous identifions dix déterminants essentiels de la productivité, tous obtenus à partir de modèles théoriques différents. Notre spécification peut permettre de remédier au problème potentiel soulevé par l'omission de certaines variables. Les problèmes d'hétérogénéité entre pays et d'endogénéité sont également traités. La relation de détermination existant entre les sources de connaissances et la productivité semble robuste, mais d'autres déterminants retenus par différents modèles théoriques jouent également un rôle significatif. Les relations concernant la productivité sont hétérogènes entre les pays de l'OCDE, ce qui tend à indiquer que des facteurs nationaux spécifiques peuvent jouer un rôle important dans la politique relative à la productivité intérieure.
    Keywords: productivité multifactorielle, dynamic heterogeneity, methods of moments
    JEL: C15 F12 F2 O3 O4
    Date: 2006–07–28
  38. By: Clarysse, B.; Knockaert, M.; Lockett, A.
    Abstract: Board composition in large organizations has been subject to much empirical research, however, little attention has been focused on board composition in start-ups, and more specifically high tech start-ups. This lack of research is surprising given that many high tech start-ups have multiple equity stakeholders such as venture capitalists or public research organizations, such as universities. Given that high tech start-ups are commonly resource-poor these external stakeholders may play an important role in accessing critical external resources. Drawing on agency theory, resource dependence theory and social network theory we examine the tensions that exist between the founding team and external equity stakeholders in determining the presence of outside board members. In particular we focus on whether or not the outside board members have either complementary or substitute human capital to the founding team. We test our model on a sample of 140 high tech start-ups in Flanders. Our results indicate that high tech start-ups with a public research organization as an external equity stakeholder are more likely to develop boards with outside board members with complementary skills to the founding team. Conversely, in high tech start-ups where the founding team has had autonomy, or where a venture capitalist is an external equity stakeholder, the board tends to consist of outside board members with similar or substitute human capital to the founding team. Our findings the presence of an external equity stakeholder does not guarantee that outside board members have complementary human capital to the founding team.
    Date: 2006–10–04
  39. By: Clevo Wilson; Clem Tisdell (School of Economics and Finance, Queensland University of Technology)
    Abstract: This paper examines impacts, both positive and negative, of globalisation on the selection of a limited gene pool in livestock and agricultural production. This concentration has increased yields at high rates. It is associated with modern forms of production that are an integral part of a globalised economic system. Such strategies, at least in the short run, reduce production costs and cater for the demands of an increasing population and the needs of modern societies. As will be demonstrated, the ascribed economic benefits of such forms of production also lead to the promotion of such production by donor agencies and are linked to overseas aid, in some instances. On the other hand, specialised systems of production are not without their drawbacks. Such systems of production make many breeds (eg. ‘all-round’ breeds) obsolete for commercial use. This often leads to their gradual extinction because of the low economic values placed on them. When concentration of production relies on a few breeds it inevitably leads to several lock-in dimensions in the use of some production inputs. The lock-in aspects of this form of production, processes involved in the disappearance of breeds and their implications for sustainable development are amongst the issues discussed in this paper.
  40. By: Nooteboom,Bart (Tilburg University, Center for Economic Research)
    Abstract: Using insights from 'embodied cognition' and a resulting 'cognitive theory of the firm', I aim to contribute to the further development of evolutionary theory of organizations, in the specification of organizations as 'interactors' that carry organizational competencies as 'replicators', within industries as 'populations'. Especially, I analyze how, if at all, 'dynamic capabilities' can be fitted into evolutionary theory. I propose that the prime purpose of an organization is to serve as a cognitive 'focusing device'. Here, cognition has a wide meaning, including perception, interpretation, sense making, and value judgements. I analyse how this yields organizations as cohesive wholes, and differences within and between industries. I propose the following sources of variation: replication in communication, novel combinations of existing knowledge, and a path of discovery by which exploitation leads to exploration. These yield a proposal for dynamic capabilities. I discuss in what sense, and to what extent these sources of variation are 'blind', as postulated in evolutionary theory.
    Keywords: evolutionary economics;organization;cognition;dynamic capabilities
    JEL: D21 L22 O31 B52
    Date: 2007
  41. By: Hennessy, David A.; Moschini, GianCarlo
    Abstract: Food system regulators often decide whether to ban existing practices or approve new technologies without conclusive scientific evidence on possible damage and knowing that resolution is likely in the future. In a model with three decision points and stochastic resolution of uncertainty, we study interactions between expected losses due to regulation and information availability when a regulator is deciding on an early reversible ban and on a later reversible ban. Adjustment costs create inertia concerning intermediate signals such that earlier decisions are not overturned, and also a bias against imposing an early ban. The prospect of more later-stage information can increase or decrease the incentive to ban early, but research decreases the incentive to ban early.
    Date: 2007–02–14
  42. By: Vanhoucke, M.
    Abstract: In this paper, we present a meta-heuristic algorithm for the well-known resource-constrained project scheduling problem with discounted cash flows. This optimization procedure maximizes the net present value of project subject to the precedence and renewable resource constraints. The problem is known to be NP-hard. We investigate the use of a enhanced bi-directional generation scheme and a recursive forward/backward improvement method and embed them in a meta-heuristic scatter search framework. We generate a large dataset of project instances under a controlled design and report detailed computational results. The solutions and project instances can be downloaded from a website in order to facilitate comparison with future research attempts.
    Keywords: Resource-constrained project scheduling; Net present value; Scatter search
    Date: 2006–10–04

This nep-ino issue is ©2007 by Koen Frenken. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.