nep-ino New Economics Papers
on Innovation
Issue of 2016‒04‒16
twenty-six papers chosen by
Uwe Cantner
University of Jena

  1. Export-Led Innovation Among European Firms. Demand and Technological Learning Effects By Fassio, Claudio
  2. Key Success Drivers in Public Research Grants: Funding the Seeds of Radical Innovation in Academia? By Albert Banal-Estañol; Inés Macho-Stadler; David Pérez-Castrillo
  3. How mergers affect innovation: Theory and evidence from the pharmaceutical industry By Haucap, Justus; Stiebale, Joel
  4. Effects of policies on patenting in wind power technologies By Schleich, Joachim; Walz, Rainer; Ragwitz, Mario
  5. The Impact of Innovation in the Multinational Firm By L. Kamran Bilir; Eduardo Morales
  6. Do tax incentives for research increase firm innovation? An RD design for R&D By Antoine Dechezleprêtre; Elias Einiö; Ralf Martin; Kieu-Trang Nguyen; John Van Reenen
  7. Design for reusability and product reuse under radical innovation By Tamer Boyaci; Vedat Verter; Michael R. Galbreth,
  8. Innovation Strategies Combining Internal and External Knowledge By Johansson, Börje; Lööf, Hans
  9. Taxation of Knowledge-Based Capital: Non-R&D Investments, Average Effective Tax Rates, Internal Vs. External KBC Development and Tax Limitations By Alessandro Modica; Thomas Neubig
  10. The Role of Information Technology in Enabling Open Innovation: Complementarity or Substitutability? By Reza Ghaffari; Benoit A. Aubert
  11. Complementarities in organizational innovation practices: evidence from French industrial firms Complementarities in organizational innovation practices: evidence from French industrial firms By Caroline Mothe; Thu Nguyen Nguyen Thi; Phu Nguyen-Van
  12. Towards modelling of innovation systems: An integrated TIS-MLP approach for wind turbines By Walz, Rainer; Köhler, Jonathan Hugh; Lerch, Christian
  13. Clans, Guilds, and Markets: Apprenticeship Institutions and Growth in the Pre-Industrial Economy By de la Croix, David; Doepke, Matthias; Mokyr, Joel
  14. The legacy of Friedrich List: The expansive reproduction system and the Korean history of industrialization By Jun, Bogang; Gerybadze, Alexander; Kim, Tai-Yoo
  15. The integration of place-based social innovations into the EU social agenda By Gert Verschraegen; Sebastiano Sabato
  16. Human-Capital Spillover, Population, and Economic Growth By Bharat Diwakar; Gilad Sorek
  17. Outsourced R&D and GDP Growth By Anne Marie Knott
  18. Velocity shifts in the creative economy: incumbent-entrant dynamics in the emergence of Japanese social games By Ernkvist, Mirko
  19. The Complex Interactions between Economic Growth and Market Concentration in a Model of Structural Change. By Tommaso Ciarli; Marco Valente
  20. Taking the Leap: The Determinants of Entrepreneurs Hiring their First Employee By Fairlie, Robert W.; Miranda, Javier
  21. Human Capital and Innovation in a Monetary Schumpeterian Growth Model By Angus C., Chu; Lei, Ning; Dongming, Zhu
  22. To What Extent the Adoption of Innovative Human Resource Practices Is Explained by Top Management Support in Chinese SMEs By Yiyang Sun; Foteini Kravariti
  23. Ethical responsibilities of R&D organizations: networking business and society By Olga Dziubaniuk
  24. Innovation and Performance of Enterprises: The Case of SMEs in Vietnam By Vu, Hoang Nam; Doan, Quang Hung
  25. Incentives for early adoption of carbon capture technology: Further considerations from a European perspective By Albert Banal-Estañol; Jeremy Eckhause; Olivier Massol
  26. What Makes a Successful Entrepreneur? Historical Evidence from Italy (XIX-XX Centuries) By Alessandro Nuvolari; Pier Angelo Toninelli; MIchelangelo Vasta

  1. By: Fassio, Claudio (LUISS School of European Political Economy)
    Abstract: This paper investigates the effect of exporting activities on the innovation strategies of European firms in France, Germany, Italy, Spain and UK. The paper puts forward the hypothesis that such a positive effect is driven two main mechanisms. The first is a technological learning effect that allows firms active in international markets to benefit from foreign knowledge spillovers in technologically advanced markets and decrease their research cost for the development of innovations. The second is a demand effect induced by fast-growing foreign markets that increase the potential output of firms. The empirical analysis, which addresses important endogeneity issues related with the strategic choice of the markets of destination operated by firms, shows that the two effects induce the adoption of different innovation strategies. While the technological learning effect positively affect the decision of firms to introduce brand new product innovations, the demand effect fosters the adoption of efficiency and imitation strategies. The paper shows that the effect of exporting activity on innovation strategies crucially depends on the type of export destinations. The lower levels of the technological learning effect which is found among the export destinations of Italian and Spanish firms might represent a possible obstacle for the ability of these countries to increase their future innovative capacities.
    Keywords: Exports; Innovation strategies; European Union economics
    JEL: F10 O33 P51
    Date: 2015–03–05
  2. By: Albert Banal-Estañol; Inés Macho-Stadler; David Pérez-Castrillo
    Abstract: We study what makes a research grant application successful in terms of ability, type of research, experience, and demographics of the applicants. But our main objective is to investigate whether public funding organizations support the teams that are most likely to undertake transformative or "radical" research. Making use of the literature on recombinant innovation, we characterize such "radical teams" as those formed by eclectic and non-usual collaborators, and those that are heterogeneous and scientifically diverse. Our results, using data from the UK's Engineering and Physical Sciences Research Council (EPSRC), show that the more able, more basic, and more senior researchers, working in a top university, are more likely to be successful. But, radical teams are less likely to be funded by funding bodies. Our analysis of the research output of the awarded projects suggests that, voluntarily or involuntarily, the evaluation process in these organizations is biased against radical teams.
    Keywords: radical innovation, funding organizations, research grants
    JEL: O32 I23
    Date: 2016–03
  3. By: Haucap, Justus; Stiebale, Joel
    Abstract: This papers analyses how horizontal mergers affect innovation activities of the merged entity and its non-merging competitors. We develop an oligopoly model with heterogeneous firms to derive empirically testable implications. Our model predicts that a merger is more likely to be profitable in an innovation intensive industry. For a high degree of firm heterogeneity, a merger reduces innovation of both the merged entity and non-merging competitors in an industry with high R&D intensity. Using data on horizontal mergers among pharmaceutical firms in Europe, we find that our empirical results are consistent with many predictions of the theoretical model. Our main result is that after a merger, patenting and R&D of the merged entity and its non-merging rivals declines substantially. The effects are concentrated in markets with high innovation intensity and a high degree of firm heterogeneity. The results are robust towards alternative specifications, using an instrumental variable strategy, and applying a propensity score matching estimator.
    Keywords: mergers & acquisitions,innovation,R&D incentives,merger policy
    JEL: D22 L13 L4 G34 O31
    Date: 2016
  4. By: Schleich, Joachim; Walz, Rainer; Ragwitz, Mario
    Abstract: This paper explores factors driving innovation in wind power technologies in OECD countries by employing count data panel econometrics. Transnational patent data in wind power technologies serve as the indicator for innovation. In addition to classical supply side policies, the set of explanatory variables also reflects insights from the systems of innovation and policy analysis literature. The findings suggest that patenting is positively related to public R&D in wind power (reflecting supply side regulation), to the stock of wind capacity (learning effects), to the number of patents per capita (innovation capacity), to the share of Green party voters (legitimacy of technology), to targets for electricity from renewable energy sources, to the stability of the regulatory framework, and also to power prices (profitability). Feed-in-tariffs, which have been the predominant support mechanism for electricity from renewables, are not found to be positively related to patenting activity - unless they are implemented within a stable regulatory framework. These findings are robust to alternative model specifications and distributional assumptions.
    Keywords: innovation,supply-side regulation,demand-side regulation,wind power,patent analysis,count data econometrics
    Date: 2016
  5. By: L. Kamran Bilir; Eduardo Morales
    Abstract: When firms operate production plants in multiple countries, technological improvements developed in one country may be shared with firm sites abroad for efficiency gain. We develop a dynamic model that allows for such intrafirm transfer, and apply it to measure the impact of innovation on performance for a panel of U.S. multinationals. Our estimates indicate U.S. parent R&D raises performance significantly at firm locations abroad, and also complements R&D by affiliates. Parent R&D is a substantially more important determinant of firm performance than affiliate R&D. We identify these R&D effects using variation in location-specific innovation policies.
    JEL: F00 F23 O30
    Date: 2016–04
  6. By: Antoine Dechezleprêtre; Elias Einiö; Ralf Martin; Kieu-Trang Nguyen; John Van Reenen
    Abstract: We present the first evidence showing causal impact of research and development (R&D) tax incentives on innovation outcomes. We exploit a change in the asset-based size thresholds for eligibility for R&D tax subsidies and implement a Regression Discontinuity Design using administrative tax data on the population of UK firms. There are statistically and economically significant effects of the tax change on both R&D and patenting, with no evidence of a decline in the quality of innovation. R&D tax price elasticities are large at about 2.6, probably because the treated group is from a sub-population subject to financial constraints. There does not appear to be prepolicy manipulation of assets around the thresholds that could undermine our design, but firms do adjust assets to take advantage of the subsidy post-policy. We estimate that over 2006-11 business R&D would be around 10% lower in the absence of the tax relief scheme.
    Date: 2016–03
  7. By: Tamer Boyaci (ESMT European School of Management and Technology); Vedat Verter (Desautels Faculty of Management, McGill University); Michael R. Galbreth, (Moore School of Business, University of South Carolina)
    Abstract: Many industries, including consumer electronics and telecommunications equipment, are characterized with short product life-cycles, constant technological innovations, rapid product introductions, and fast obsolescence. Firms in such industries need to make frequent design changes to incorporate innovations, and the effort to keep up with the rate of technological change often leaves little room for the consideration of product reuse. In this paper, we study the design for reusability and product reuse decisions in the presence of both a known rate of incremental innovations and a stochastic rate of radical innovations over time. We formulate this problem as a Markov Decision Process. Our steady-state results confirm the conventional wisdom that a higher probability of radical innovations would lead to reductions in the firm's investments in reusability as well as the amount of reuse the firm ends up doing. Interestingly, the design for reusability decreases much more slowly than the actual reuse. We identify some specific scenarios, however, where there is no tradeoff between the possibility of radical innovations and the firms reusability and reuse decisions. Based on over 425,000 problem instances generated over the entire range of model parameters, we also provide insights into the negative impact of radical innovations on firm profits, but show that the environmental impact of increased radical innovation is not necessarily negative. Our results also have several implications for policy makers seeking to encourage reuse.
    Keywords: Reusability, reuse, innovation, Markov decision process
    Date: 2016–03–18
  8. By: Johansson, Börje (Jönköping International Business School (JIBS), Centre of Excellence for Science and Innovation Studies (CESIS) & Royal Institute of Technology (KTH)); Lööf, Hans (Centre of Excellence for Science and Innovation Studies (CESIS) & Royal Institute of Technology (KTH))
    Abstract: We introduce a framework for analyzing renewal efforts of firms with distinct categories of innovation and adoption strategies, comprising a firm’s development off its internal knowledge, its access to local knowledge sources and its access to global knowledge sources. A fundamentall aspect is the formation and maintenance of the firm’s renewal capabilities. In this way the analysis provide an explanation of remaining heterogeneity among firms belonging to the same industry such that one group performs above average for long sequences of time, whereas others continue to pperform below average. The analysis applies Swedish data when presenting alternative approaches to provide empirical support in favour of the outlined model of how long-run firm performance associates with each firm’s sustained efforts to combine interal and external knowledge sources.
    Keywords: Adoption; Innovation; Innovation outcome; Knowledge sources and networks; Combined internal and external knowledge
    JEL: F21 O30 O31 R11
    Date: 2016–04–06
  9. By: Alessandro Modica; Thomas Neubig
    Abstract: This paper extends the tax analysis of knowledge-based capital (KBC) in several dimensions. The paper analyses non-R&D KBC: computer software, architectural and engineering designs, and economic competencies which account for over 70% of total KBC. The paper analyses the tax treatment of internally-developed KBC which is used in production by the developer versus KBC sold to third-party producers. The current tax rules generally favour internally-developed KBC, which disadvantages many SMEs and start-up companies specializing in innovation. The analysis reports two average effective tax rates (ETRs) depending on investors’ considerations of their investment opportunities. When KBC is unique, earns excess returns due to market power, or involves financing-constraints, ETRs are high despite immediate expensing. The paper also analyses the effects of tax limitations, where many SMEs and start-up companies can’t benefit from tax credits and deductions until having sufficient tax liability. L'imposition du capital intellectuel : Investissements non liés à la R-D, taux moyens effectifs d'imposition, développement interne/externe du capital intellectuel et restrictions fiscales Ce document prolonge l’analyse fiscale du capital intellectuel dans différents domaines. Il analyse le capital intellectuel non lié à la R-D : les logiciels informatiques, la conception architecturale et technique, et les compétences économiques qui représentent plus de 70 % du capital intellectuel total. Ce document examine le traitement fiscal du capital intellectuel développé en interne, qui est employé en production par le développeur, par rapport au capital intellectuel vendu à des producteurs tiers. Les règles fiscales actuelles favorisent généralement le capital intellectuel développé en interne, ce qui pénalise de nombreuses PME et jeunes entreprises qui se spécialisent dans l’innovation. L’analyse met en évidence deux taux moyens effectifs d’imposition (TMEI) en fonction de l’évaluation par les investisseurs des opportunités d’investissement. Lorsque le capital intellectuel est unique, génère un rendement excessif en raison de l’existence d’un pouvoir de marché ou implique des contraintes de financement, les TMEI sont élevés malgré une passation immédiate en charges. Ce document analyse également les conséquences des restrictions fiscales, sous l’effet desquelles de nombreuses PME et jeunes entreprises ne peuvent pas bénéficier de crédits et d’allégements d’impôts tant que le montant de leur impôt n’atteint pas un niveau suffisant.
    Date: 2016–03–10
  10. By: Reza Ghaffari; Benoit A. Aubert
    Abstract: This paper conceptualizes the role (complementarity or substitutability) of a set of IT-enabled capabilities in effectively facilitating inbound open innovation - the strategy to open up the organization’s internal innovation process to external ideas and partners. These IT-enabled capabilities have been argued to contribute significantly to innovation in organizations.
    Keywords: Innovation, Open innovation, Information Technology, IT capabilities,
    Date: 2016–04–08
  11. By: Caroline Mothe (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc); Thu Nguyen Nguyen Thi (CEPS/INSTEAD - Centre d'Etudes de Populations, de Pauvreté et de Politiques Socio-Economiques / International Networks for Studies in Technology, Environment, Alternatives, Development - Centre d'Etudes de Populations, de Pauvreté et de Politiques Socio-Economiques / International Networks for Studies in Technology, Environment, Alternatives, Development); Phu Nguyen-Van (BETA - Bureau d'Economie Théorique et Appliquée - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Organizational innovation favours technological innovation. Yet the question of which organizational practices should be combined—that is, their compatibility—remains unanswered. This empirical investigation of patterns of complementarity considers three organizational practices: business practices, workplace organization, and external relations. Firm-level data drawn from the 2008 French Community Innovation Survey and supermodularity tests confirm the crucial role of organizational innovation in increasing firms’ innovation. The pattern of complementarity among organizational practices differs according to the type of innovation (i.e., product or process), as well as the type of measure used to assess technological innovation performance. These results highlight the complexity of managing organizational practices to encourage firm innovation.
    Keywords: Complementarity, Organizational innovation, Supermodularity, Technological innovation
    Date: 2015
  12. By: Walz, Rainer; Köhler, Jonathan Hugh; Lerch, Christian
    Abstract: Meeting sustainability challenges requires not only innovations but also transitions towards sustainability paths. Studies which use technological innovation systems and multi-level-perspective approaches show that the development of innovation systems is a complex process, with many direct and indirect interdependencies of the different variables. The paper looks into the feasibility to support such analysis with system dynamics models. It is analysed how a combined TIS-MLP approach could form the conceptual basis for analysing the dynamics which drives the development of the system to be modelled. The feasibility of such a concept is further investigated by implementing it for China and Germany using wind energy as a case study. In order to develop a perspective how to build the model in technical terms, the dynamics of the innovation systems is translated in software based causal loop diagrams. In addition to methodological insights about the feasibility of modelling, the paper also yields insights into differences and similarities in the drivers of system dynamics in both countries. Furthermore, general conclusions for the potential of regime shift in countries catching up and the relation to leapfrogging are drawn. Thus, the paper augments more general conceptual advances with an evidence based case study and extends theoretical analysis towards empirical modelling.
    Keywords: sustainability transitions,system dynamics,wind energy,technological innovation systems,multi level perspective,system dynamics
    Date: 2016
  13. By: de la Croix, David (Université catholique de Louvain); Doepke, Matthias (Northwestern University); Mokyr, Joel (Northwestern University)
    Abstract: In the centuries leading up to the Industrial Revolution, Western Europe gradually pulled ahead of other world regions in terms of technological creativity, population growth, and income per capita. We argue that superior institutions for the creation and dissemination of productive knowledge help explain the European advantage. We build a model of technological progress in a pre-industrial economy that emphasizes the person-to-person transmission of tacit knowledge. The young learn as apprentices from the old. Institutions such as the family, the clan, the guild, and the market organize who learns from whom. We argue that medieval European institutions such as guilds, and specific features such as journeymanship, can explain the rise of Europe relative to regions that relied on the transmission of knowledge within extended families or clans.
    Keywords: dissemination of knowledge, guilds, clans, apprenticeship
    JEL: E02 J24 N10 N30 O33 O43
    Date: 2016–03
  14. By: Jun, Bogang; Gerybadze, Alexander; Kim, Tai-Yoo
    Abstract: This study revisits the theory of Friedrich List from a more comprehensive and modernized perspective and applies it to the Korean history of industrialization. Although List is well known as the scholar who insisted on the protection of infant industry, his argument on protectionism is a part of the broader picture depicted in his book The National System of Political Economy (1841). This study follows his theoretical legacy in various fields of study. Although we can find his theoretical influence in several fields of research such as the national innovation system, concept of national competitiveness, and theory of developmental state, these studies fail to embrace all the arguments of List. Additionally, theses models focus more heavily on the explanation of historical and regional development phenomena without providing general principles of economic development behind the phenomena. This study therefore aims to suggest the expansive reproduction system as a generalized and modernized version of List's theory and to show its example by using the Korean history of industrialization. Consequently, we argue that the economic development of Korea has been achieved by putting the theory of List into practice.
    Keywords: Friedrich List,Economic Development,Korean Economic History,Economic Policy
    Date: 2016
  15. By: Gert Verschraegen; Sebastiano Sabato
    Abstract: This report examines how place-based socially innovative policies and actions can be better integrated into the broader European Union (EU) social agenda. On the basis of previous work and a roundtable taking place in the context of the Improve project, it a) identifies some main challenges for upscaling and consolidating place-based social innovation throughout the European multi-level governance system; b) analyses whether social innovation dovetails with the broader European policy goals of territorial cohesion and public participation, and c) proposes some cautious policy recommendations with regard to how EU resources can be used to better support socially innovative practices. Three main conclusions can be drawn from our analysis. Firstly, the EU supports social innovation both directly (by providing different kinds of resources for local socially innovative projects, not limited to financial resources) and indirectly, by supporting European umbrella organisations operating in the field of poverty and social inclusion. Yet, the degree of innovativeness of EU supported projects differs. Secondly, although EU support for place-based social innovation is significant, it is not consistent throughout the whole life cycle of social innovation. EU support is particularly effective in the early stages of socially innovative projects (conception and start-up). Institutionalisation of those projects depends on domestic circumstances (including welfare regimes’ peculiarities) and, what is more surprising given the emphasis at the EU level, EU resources are no used for up-scaling local socially innovative practices. Thirdly, an important challenge is to adapt the increasingly top-down approach in the support of socially innovative projects, with scarce attention being paid to the involvement and empowerment of socially excluded groups.
    Keywords: Social innovation, Europe 2020, poverty and social exclusion, participatory governance, usages of Europe
    JEL: I3 L3 Z18
  16. By: Bharat Diwakar; Gilad Sorek
    Abstract: We study two-sector R&D model with endogenous human capital accumulation. Allowing for fractional human capital spillover from parents to their o¤spring, which are subject to congestion in fertility rate, we establish non-monotonic relations between population growth and economic growth. These non-monotonic relations, which are polynomial in general, are determined by the base level of human capital spillover and the magnitude of the congestion e¤ect: a U shape relation can arise under low congestion factor, whereas a hump shape may present for high congestion factor.
    Keywords: Innovation-Based Growth; Population Growth; Human-Capital Spillover
    JEL: O31 O40
    Date: 2016–03
  17. By: Anne Marie Knott
    Abstract: Endogenous growth theory holds that growth should increase with R&D. However coarse comparison between R&D and US GDP growth over the past forty years indicates that inflation scientific labor increased 2.5 times, while GDP growth was at best stagnant. The leading explanation for the disconnect between theory and the empirical record is that R&D has gotten harder. I develop and test an alternative view that firms have become worse at it. I find no evidence R&D has gotten harder. Instead I find firms’ R&D productivity declined 65%, and that the main culprit in the decline is outsourced R&D, which is unproductive for the funding firm. This offers hope firms’ R&D productivity and economic growth may be fairly easily restored by bringing outsourced R&D back in-house.
    Date: 2016–03
  18. By: Ernkvist, Mirko (The Ratio Institute)
    Abstract: The Japanese innovation system has been characterized as more prone to disruptive innovation by incumbent firms rather than de novo entrepreneurial entrants (H. W. Chesbrough, 1999). We draw upon the notion that creative industry competition in a high velocity environment is fundamentally different from an environment of more moderate velocity, exploring the notion that velocity shifts following disruptive innovation could be a key underlying mechanism for transformation by entrants in institutional settings that favor incumbents. A higher velocity environment provides a cognitive barrier to incumbent firms’ R&D by making established design heuristics obsolete, introducing novel market analytic methods and shifting established industry logics towards speed, constant iteration and services. The velocity shift in the transition from video games to social games required new specialized assets and new ways of accessing customer preferences though real-time data mining techniques that also challenged engrained cognitive frames of how game design should be pursued. Unlike previous disruptive innovation in the game industry, social games enabled new entrants to rapidly become market leaders. The case points towards a more nuanced view of the influence of disruptive innovation during velocity shifts in creative industries. For studies of technological entrepreneurship, this implies that the velocity shifts following disruptive innovation could provide a previously overlooked important mechanism in understanding how entrants have been able to challenge incumbent firms in Japan.
    Keywords: disruptive innovation; social games; velocity shifts; industry emergence
    JEL: L26 L82 M12 N85 O32
    Date: 2015–12–31
  19. By: Tommaso Ciarli (SPRU, University of Sussex, UK); Marco Valente (University of L'Aquila, IT)
    Abstract: We study the relation between variety, market concentration, and economic growth, along different phases of economic development which entail a number of changes to the structure of production and consumption in the economy. We focus on three aspects of structural change, which are connected and are correlated to variety, market concentration, and economic growth: (i) product quality; (ii) firms’ mark-ups; and (iii) imitation of consumer preferences for price and quality. We model the interactions among several aspects of structural change such as firm size and hierarchical structure, innovation in capital vintages, the emergence of social classes, income distribution, and consumer preferences across and within classes. We find that market concentration has a significant and positive impact on economic growth only in the presence of sufficiently large demand. The strongest effects emerge in the presence of a more skewed firm size distribution and firms producing higher priced and higher quality goods. We find also that this effect is influenced strongly by different aspects of structural change. Changes in the behaviour (or income) of the less wealthy income classes is crucial as is investment in new capital vintages, and the emergence of diverse income classes with heterogeneous consumption preferences. In contrast, we find that supply side product variety, cœteris paribus, has no significant effect on growth.
    Keywords: economic growth; structural change; market concentration; consumer dynamics; product variety; agent based simulations
    JEL: O11 O41 O33 C63
    Date: 2016–06
  20. By: Fairlie, Robert W. (University of California, Santa Cruz); Miranda, Javier (U.S. Census Bureau)
    Abstract: Job creation is one of the most important aspects of entrepreneurship, but we know relatively little about the hiring patterns and decisions of startups. Longitudinal data from the Integrated Longitudinal Business Database (iLBD), Kauffman Firm Survey (KFS), and the Growing America through Entrepreneurship (GATE) experiment are used to provide some of the first evidence in the literature on the determinants of taking the leap from a non-employer to employer firm among startups. Several interesting patterns emerge regarding the dynamics of non-employer startups hiring their first employee. Hiring rates among the universe of non-employer startups are very low, but increase when the population of non-employers is focused on more growth-oriented businesses such as incorporated and EIN businesses. If non-employer startups hire, the bulk of hiring occurs in the first few years of existence. After this point in time relatively few non-employer startups hire an employee. Focusing on more growth- and employment-oriented startups in the KFS, we find that Asian-owned and Hispanic-owned startups have higher rates of hiring their first employee than white-owned startups. Female-owned startups are roughly 10 percentage points less likely to hire their first employee by the first, second and seventh years after startup. The education level of the owner, however, is not found to be associated with the probability of hiring an employee. Among business characteristics, we find evidence that business assets and intellectual property are associated with hiring the first employee. Using data from the largest random experiment providing entrepreneurship training in the United States ever conducted, we do not find evidence that entrepreneurship training increases the likelihood that non-employers hire their first employee.
    Keywords: entrepreneurship, job creation, Kauffman Firm Survey, iLBD, startups, entrepreneurship training, small business, GATE experiment
    JEL: L26
    Date: 2016–03
  21. By: Angus C., Chu; Lei, Ning; Dongming, Zhu
    Abstract: This study explores the growth and welfare effects of monetary policy in a scale-invariant Schumpeterian growth model with endogenous human capital accumulation. We model money demand via a cash-in-advance (CIA) constraint on R&D investment. Our results can be summarized as follows. We find that an increase in the nominal interest rate leads to a decrease in R&D and human capital investment, which in turn reduces the long-run growth rates of technology and output. This result stands in stark contrast to the case of exogenous human capital accumulation in which the long-run growth rates of technology and output are independent of the nominal interest rate. Simulating the transitional dynamics, we find that the additional long-run growth effect under endogenous human capital accumulation amplifies the welfare effect of monetary policy. Decreasing the nominal interest rate from 10% to 0% leads to a welfare gain that is equivalent to a permanent increase in consumption of 2.82% (2.38%) under endogenous (exogenous) human capital accumulation.
    Keywords: monetary policy, economic growth, R&D, human capital
    JEL: E41 O3 O4
    Date: 2016–03
  22. By: Yiyang Sun (The University of Manchester); Foteini Kravariti (The University of Manchester)
    Abstract: This study focuses on innovative human resource practices (HRPs) in SMEs. It investigates whether top management support influences the decision to adopt HRPs and the degree of their implementation under the umbrella of management innovation. A quantitative data analysis is utilised in order to explore this topic among 185 SMEs in China by testing research hypotheses stemming from existing literature conclusions. The results demonstrate that there is a positive relationship between top management support and key innovative HRPs. Additionally, top management support significantly contributes to the adoption of extensive training and development followed by pay based on performance appraisal, job security and sophisticated selection. Given that all research hypotheses are statistically confirmed, we conclude that top management support can be an influential factor with regard to the adoption of innovative HRPs in SMEs. Hence, we suggest that the management innovation perspective as a theoretical underpinning is beneficial in determining motivational factors which shape the types of innovative HRPs adopted, and thus have a potential impact on organizational performance.
    Keywords: HRM, innovative HRPs, management innovation, top management support, SMEs, Chinese SMEs
  23. By: Olga Dziubaniuk (Åbo Akademi University)
    Abstract: This empirical research contributes to the understanding of how actions of networking companies are going beyond their networks picture and impact on society. For the structural analysis of this phenomenon the concept of ethical embeddedness is applied which assumes that business organizations are embedded in a broader social network and have mutual interconnection of their functions. The research proposes that embeddedness of businesses may be exemplified via ethicality of responsibilities that specific business actors employ. Therefore, the research adopts Industrial network approach to investigate ethical embeddedness of business organizations in society and their impact on its current and future development. The “social face†of industrial markets has being extensively discussed in the works of K. Polanyi (e.g. 1968) who collaborated on the concept of social embeddedness of the economic interaction. Granovetter (1985) has developed this idea even further by emphasizing that companies interact in social environment and the social networking is not dividable form the business networks. The concept of ethical embeddedness is adopted for this study (Lindfelt & Törnroos, 2006) which can be explained as ethical values in relations to economic values that are created in a particular business network.Empirically, this framed as a case-study research is grounded on the interviewed representatives of R&D organizations engaged in medical devices R&D activities. They excellently exemplify ethical considerations of embedded ethical responsibilities toward society as their general aim along profit achievement is to improve social welfare. Additionally, those organizations are highly dependent on the network of business partners, governmental and other institutional actors which make them perfectly suitable for this research. The research question of this study is articulated as the following: how embedded ethicality of businesses impact on interconnection between society and business organizations? In general, conceptually, this research paper contributes to the development of the concept of ethical embeddedness and to Industrial network approach theory. From the practical perspective, it aims to illustrate the attractiveness of investment in development technologies that are able to improve social welfare; the ethical value embedded in business activities and its impact on society and business partnership. Current interest to the ethical issues requires filling a research gap in lacking empirical evidences of ethical and, consequently, socially significant managerial practices executed in business networks that influence on general public good.
    Keywords: Business ethics, social responsibility, business networks, industrial marketing, ethical embeddedness
    JEL: L14 O32 M14
  24. By: Vu, Hoang Nam; Doan, Quang Hung
    Abstract: Innovation is widely recognized as a key determinant of enterprise performance. It is, however, not clear how innovation affects performance of small-and-medium enterprises (SMEs) in transition economies. Based on data collected from surveys of SMEs in Vietnam from 2005 to 2011 this study shows that the human capital of owners/managers of SMEs, the quality of workers, and public physical infrastructure positively affect innovation and the performance of SMEs. More importantly, the study finds that innovation in products, production process, and marketing is a decisive factor for higher performance of SMEs in Vietnam.
    Keywords: Innovation, SMEs, Vietnam
    JEL: D22 J54 L11 L25 O3
    Date: 2015–01
  25. By: Albert Banal-Estañol (Université de Londres - Université de Londres); Jeremy Eckhause (RAND Corp - RAND Corp); Olivier Massol (IFPEN - IFP Energies Nouvelles - IFP Energies Nouvelles, IFP School - IFP Energies Nouvelles)
    Abstract: This note details two comments on a recent policy proposal in Comello and Reichelstein (2014) aimed at favoring the early adoption of Carbon Capture (CC) technology in the next generation of thermal-based power plants to be installed in the United States. First, we examine the implications of a worst-case scenario in which no new CC is adopted internationally beyond what is in place in 2014. Second, we show the potential, under the original proposed subsidy, for the emergence of coordination failures capable of hampering the desired early CC deployment. We propose and evaluate modified schedules of tax-credits sufficient to overcome these concerns. These additions strengthen the argument in the original article: namely, though higher incentive levels are necessary, our findings confirm that the cost of the proposed policy is not out of reach.
    Keywords: Coordination failure,Levelized cost,Learning effects,Tax incentives,Carbon Capture and Storage
    Date: 2016
  26. By: Alessandro Nuvolari; Pier Angelo Toninelli; MIchelangelo Vasta
    Abstract: in this paper we employ a “quantitative” prosopographical approach to study the nature and the determinants of entrepreneurial success. Our main source is the “Biographical Dictionary of Italian Entrepreneurs” which contains very detailed information on 608 major Italian entrepreneurs active over more than two centuries. Our findings indicate the multidimensional nature of entrepreneurial success, comprising both a strictly economic and a “celebrity” dimension. Concerning the determinants of success, our findings point to the “political” nature of Italian capitalism.
    JEL: N73 N74 N83 N84 L26
    Date: 2016–01

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