nep-knm New Economics Papers
on Knowledge Management and Knowledge Economy
Issue of 2014‒11‒17
nine papers chosen by
Laura Ştefănescu
Centrul European de Studii Manageriale în Administrarea Afacerilor

  1. Endogenous Growth and Research Activity under Private Information By Oscar Mauricio Valencia
  2. Striving Towards a Holistic Innovation Policy in European Countries - But Linearity Still Prevails! By Edquist , Charles
  3. The Case of the Top Technology Region/Eindhoven-Leuven-Aachen Triangle (TTR-ELAt) – Regions and Innovation: Collaborating Across Borders By Claire Nauwelaers; Karen Maguire; Giulia Ajmone Marsan
  4. The Case of Ireland-Northern Ireland (United Kingdom) – Regions and Innovation: Collaborating Across Borders By Claire Nauwelaers; Karen Maguire; Giulia Ajmone Marsan
  5. Knowledge = Technology + Human Capital and the Lucas and Romer Production Functions By Amavilah, Voxi Heinrich
  6. The Impact of R&D Subsidies on Labor Productivity By Pajarinen, Mika; Rouvinen, Petri
  7. Technology and employment:The job creation effect of business R&D By Francesco Bogliacino; Mariacristina Piva
  8. Are New EU Member States Improving Their Institutional Effectiveness for Global Knowledge-based Economy? TOPSIS Analysis for the Years 2000-2010 By Adam P. Balcerzak; Michal Bernard Pietrzak
  9. Hofstede’s Cultural Indicators, Knowledge Economy and Entrepreneurship in Arab Countries By Driouchi, Ahmed; Gamar, Alae

  1. By: Oscar Mauricio Valencia
    Abstract: This paper examines an endogenous growth model with occupational choice in which innovators produce ideas. Each innovator has private knowledge of their production costs. Developers offer innovators non-linear contract schemes that affect the number of active innovators and the economic growth rate. Two main results are obtained. First, the equilibrium contract under asymmetric information leads to the selection of highly-talented workers in R&D activities and higher profits for developers. Second, the efficiency-rent extraction tradeoff lowers the economic growth rate with respect to the full information case.
    Keywords: Adverse Selection, Innovation, Endogenous Growth.
    JEL: D82
    Date: 2014–09–15
  2. By: Edquist , Charles (CIRCLE, Lund University)
    Abstract: The concept of a holistic innovation policy is defined in this article, with discussions of what it is, why it is relevant, and how it can be implemented to enhance product innovation. It is shown that the innovation systems approach has diffused rapidly during the latest decades and has completely replaced the linear view in the field of innovation research. The majority of European countries are striving in the direction of developing a more holistic innovation policy. However, it is concluded that the innovation policies in European countries are still dominantly linear despite the fact that holistic policy seems to be the driving vision. Innovation policy is behindhand. Why innovation policy is still linear is also preliminarily discussed. Policymakers attending conferences on innovation are practically always in favor of holistic (systemic, broad-based, comprehensive, etc) innovation policies, have abandoned the linear view by learning from innovation research. The division between “linear” and “holistic” seems to be located within the community where innovation policies are designed and implemented, a community composed of policymakers (administrators/bureaucrats) and elected politicians. Perhaps the dividing line is between these two groups in that politicians, who actually make the decisions, may still reflexively believe in the linear view. Nevertheless, there seems to be a failure in communication between researchers and politicians in the field of innovation and there is therefore a strong need to involve innovation researchers in policy design and implementation to a much higher degree. Another way to increase the degree of holism could be to separate innovation policy from research policy, since their integration tends to cement the linear character of innovation policy. The empirical results are based on a questionnaire sent to twenty-three EU Member States, out of which nineteen (83%) responded. Part of the work for this article was carried out for the European Research and Innovation Area Committee (ERAC) of the European Commission (DG RTD).
    Keywords: Innovation; innovation policy; holistic innovation policy; research policy; the linear view; systems of innovation
    JEL: L38 M38 O25 O31 O32 O33
    Date: 2014–10–29
  3. By: Claire Nauwelaers; Karen Maguire; Giulia Ajmone Marsan
    Abstract: The Top Technology Region/Eindhoven-Leuven-Aachen triangle (TTR-ELAt) is an initiative to support cross-border collaboration in a densely populated network of small and medium-sized cities located at the heart of western Europe with an annual economic output of USD 244 billion. The collaboration spans three countries, four science and technology policy regimes and six sub-regions. The collaboration centres on a shared recognition of technological strengths (chemicals and advanced materials, high-tech systems and health sciences). The area seeks to better capitalise on its skilled workforce, multinational enterprises and strong research facilities. While building on decades of cross-border activities, the TTR-ELAt seeks to overcome cumbersome governance issues to create the benefits of agglomeration with complementarity expertise so as to increase international attractiveness. This case study is part of the project Regions and Innovation: Collaborating Across Borders. A summary of this working paper appears in a report of the same name.
    JEL: L52 L53 O14 O18 O38 R11 R58
    Date: 2013–12–11
  4. By: Claire Nauwelaers; Karen Maguire; Giulia Ajmone Marsan
    Abstract: The island of Ireland, which includes both Ireland and Northern Ireland (United Kingdom), is home to 6.4 million people and has a combined economic output of USD 205 billion. Several cross-border institutions were created in response to the 1998 Belfast/Good Friday Agreement to recreate functional economic linkages across the border. InterTradeIreland is a rare example internationally of a cross-border entity to promote trade and innovation that is co-funded by respective governments. These efforts have led to stability in funding such programmes. The differences between the public sector driven economy in Northern Ireland and the dual economy of Ireland (outward looking multinationals and the local small and medium-sized enterprise base) are a challenge for cross-border efforts. This case study is part of the project Regions and Innovation: Collaborating Across Borders. A summary of this working paper appears in a report of the same name.
    JEL: L52 L53 O14 O18 O38 R11 R58
    Date: 2013–12–12
  5. By: Amavilah, Voxi Heinrich
    Abstract: The Lucas and Romer production functions are currently the two most popular descriptions of the new growth theories in which knowledge is endogenous to economic growth and technological change. However, in both production functions the relationship between technology and human capital is implicit, and human capital is measured as an area. The latter is inconsistent with common understanding by which knowledge can be deep and wide and evolving over and in time, meaning human capital is 3D. This paper takes human capital as being 3D and frames it in Lucas and Romer production functions. Both functions bunch knowledge together, i.e., human capital and technological knowledge are strictly inseparable. Analysis and intuition find that if we take human capital to be a volume, the Lucas production function is most appropriate for use at the micro-economic level where emphasis is on production knowledge. At the macroeconomic level the Romer production function appears more reasonable, as knowledge is far more than just production knowledge. A limitation of the paper is how to actually calculate human capital as a volume and then to estimate the production functions empirically. The limitation represents a fruitful direction for future research.
    Keywords: Knowledge, technology, 3D human capital, Lucas production function, Romer production function
    JEL: O15 O3 O33 O4
    Date: 2014–09–24
  6. By: Pajarinen, Mika; Rouvinen, Petri
    Abstract: We summarize and compare previous studies considering the impact of R&D subsidies on firm-level labor productivity. These studies conclude quite consistently that the subsidies provided by Tekes do not have statistically significant impact on its client firms’ labor productivity. These studies go astray from the outset, however, as they neither measure what Tekes is set out to do nor correspond to its stated missions. Furthermore, serious methodological issues remain unaddressed both by these studies and by the literature at large. Our findings call for extensive effort in developing a more appropriate tool box for evaluating the impacts of innovation policy.
    Keywords: Tekes, t&k-tuet, tuottavuus, vaikuttavuus
    JEL: L52 L53 O25
    Date: 2014–10–23
  7. By: Francesco Bogliacino (Fundación Universitaria Konrad Lorenz, Bogotá - Universidad Nacional de Colombia, Bogotá); Mariacristina Piva (DISCE, Università Cattolica; DISCE, Università Cattolica)
    Abstract: After discussing theory regarding the consequences of technological change on employment, our aim is to test the possible job creation effect of business R&D expenditures, using a unique longitudinal database covering 677 European firms (1990-2008). The main outcome from the dynamic LSDVC (Least Squared Dummy Variable Corrected) estimate is the labour-friendly nature of companies’ R&D, the coefficient of which turns out to be statistically significant. However, the positive impact of R&D on employment is only detectable in services and high-tech manufacturing. This is something that should be borne in mind by European policy makers having employment as one of their aims.
    Keywords: Innovation, Employment, Manufacturing, Services, LSDVC
    JEL: O33
    Date: 2014–09
  8. By: Adam P. Balcerzak (Nicolaus Copernicus University, Poland); Michal Bernard Pietrzak
    Abstract: The article is devoted to measuring the effectiveness of institutional systems of EU countries in terms of their relevance to the requirements of global knowledge-based economy. The main aim of the article is to evaluate the progress obtained by New Member States in the years 2000-2010. The second aim is to assess the impact of economic disturbances that could be seen in the global economy after 2007 on the institutional reforms of EU countries. The analysis is conducted on the basis of institutional economics - transaction cost theory. The empirical part is based on the modified TOPSIS method. Data from Fraser Institute has been used. The research suggest that the integration of Central European countries with the EU has influenced the improvement in the effectiveness of their institutional systems. Global crisis forced the European countries to implement regulations leading to some improvements of institutional effectiveness.
    Keywords: institutional economics, effectiveness of institutional system, transaction cost theory, global knowledge-based economy, European Union, TOPSIS method
    JEL: D02 O1 C38
    Date: 2014–10
  9. By: Driouchi, Ahmed; Gamar, Alae
    Abstract: Abstract: This paper looks at the links between cultural variables, knowledge indices and entrepreneurship in Arab countries. It uses the Hofstede’s cultural dimensions and World Bank data to show how these variables are connected. The outputs from Arab countries are also compared to those from the Eastern European economies. The outcomes do clearly indicate the existence of links between cultural dimensions, access to knowledge and enterprise creation with of a gap between Arab and Eastern European Economies. The results show also that entrepreneurship is linked to cultural variables in Arab countries. This implies that further economic and social policies are needed to ensure the promotion of the culture of the knowledge economy and entrepreneurship in Arab countries.
    Keywords: Keywords: Hofstede dimensions, Knowledge economy, Entrepreneurship, Arab countries, Eastern Europe
    JEL: L2 O1
    Date: 2014–09–20

This nep-knm issue is ©2014 by Laura Ştefănescu. 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.