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on Microeconomics |
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Issue of 2009‒02‒14
thirteen papers chosen by Joao Carlos Correia Leitao Technical University of Lisbon |
| By: | Rammer, Christian; Czarnitzki, Dirk; Spielkamp, Alfred |
| Abstract: | This paper investigates the impact of in-house R&D and innovation management practices on innovation success in small and medium-sized firms (SMEs). While there is little doubt about the significance of technology competence for generating successful innovations, inhouse R&D activities may be a particular challenge for SMEs due to high risk exposure, high fixed costs, high minimum investment and severe financial constraints. SMEs may thus opt for refraining from R&D and relying more on innovation management tools in order to achieve innovation success. We analyse whether such a strategy can pay off. Based on data from the German CIS we find that R&D activities are a main driver for innovation success if combined with external R&D, using external innovation sources or by entering into cooperation agreements. SMEs without in-house R&D can yield a similar innovation success if they effectively apply human resource management tools or team work to facilitate innovation processes. |
| Keywords: | Innovation Success, R&D, Innovation Management, SMEs |
| JEL: | L25 O31 O32 O38 O47 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:7434&r=mic |
| By: | Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group, Jena, Germany); Kerstin Pull (University of Tübingen, Department of Economics and Business Administration); Manfred Stadler (University of Tübingen, Department of Economics and Business Administration) |
| Abstract: | We study interaction effects between intra-firm conflicts and interfirm competition on a duopolistic market with seller firms employing one or more agents and implementing tournament incentives. We show that inter-firm competition leads to higher incentive intensity, higher efforts and output levels but lower profits. |
| Keywords: | Tournament, Worker compensation, Strategic competition |
| JEL: | C72 L22 M52 |
| Date: | 2009–01–30 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2009-007&r=mic |
| By: | Winand Emons; Claude Fluet |
| Abstract: | Two firms produce a product with a horizontal and a vertical characteristic. We call the vertical characteristics quality. The difference in the quality levels determines how the firms share the market. Firms know the quality levels, consumers do not. Under non-comparative advertising a firm may signal its own quality. Under comparative advertising firms may signal the quality differential. In both scenarios the firms may attempt to mislead at a cost. If firms advertise, in both scenarios equilibria are revealing. Under comparative advertising the firms never advertise together which they may do under non-comparative advertising. |
| Keywords: | Advertising, costly state falsification, signalling |
| JEL: | D82 K41 K42 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:lacicr:0902&r=mic |
| By: | Morone, Piergiuseppe; Petraglia, Carmelo; Testa, Giuseppina |
| Abstract: | Abstract: In this paper we assess the relevance of both knowledge creation and diffusion processes in affecting Italian SMEs’ propensity to innovate. In doing so a knowledge production function (KPF) is estimated for a representative sample of small and medium manufacturing firms over the period 1998-2003. To account for endogeneity of R&D effort in the KPF, we estimate a Heckman selection model on R&D decisions and obtain two main results. First, we do not find the probability of being engaged in intramural R&D activities to be significantly related to firm size. Second, for those firms engaged in R&D activities, the intensity of R&D effort increases with firm size. Then, the KPF is estimated for three different samples of firms using a standard probit where the probability that SMEs will innovate depends upon intramural R&D effort, regional and industrial spillovers and a vector of interaction and control variables. The main results obtained from this second set of regressions are the following: first, we find the probability to innovate to be positively related to sectoral spillovers, the magnitude of such impact being decreasing in firms’ size. Second, knowledge diffusion via geographical proximity enhances the probability of the recipient firm to innovate only if it has an appropriate endowment of human capital. |
| Keywords: | Innovation; knowledge; spillovers; firm size |
| JEL: | L6 O3 C25 |
| Date: | 2008–12–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:13329&r=mic |
| By: | Gorodnichenko, Yuriy (University of Michigan); Svejnar, Jan (University of Michigan); Terrell, Katherine (University of Michigan) |
| Abstract: | Globalization brings opportunities and pressures for domestic firms in emerging markets to innovate and improve their competitive position. Using data on firms in 27 transition economies, the authors test for the effects of globalization through the impact of increased competition and foreign direct investment on domestic firms's efforts to innovate (raise their capability) by upgrading their technology, improving the quality of their product or service, or acquiring certification. They find that competition has a negative effect on innovation, especially for firms further from the efficiency frontier, and we do not find support for an inverted U effect of competition on innovation. The authors show that the supply chain of multinational enterprises and international trade are important channels for domestic firms' innovation. They detect no evidence that firms in a more pro-business environment are more likely to display a positive or inverted U relationship between competition and innovation, or that they are more sensitive to foreign presence. |
| Keywords: | competition; innovation; emerging markets; spillovers |
| JEL: | F23 O16 P23 |
| Date: | 2009–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4808&r=mic |
| By: | Edmond Baranes; François Mirabel; Jean-Christophe Poudou |
| Abstract: | In this paper, we study how competition on downstream gas markets is influenced by sourcing decisions in the supply chain. We analyze the sequential relationships between storage decisions and intermediate pricing in spot markets. We show that an upstream leadership in the access to storage facilities leads a dominant firm to adopt strategic storage decision. This strategy consists in stockpiling more than supplied in the downstream market. This behavior is a part of a raising rival's cost strategy for the leader. Furthermore in some cases, optimal regulation of gas storage access may not prevent such a behavior. |
| Keywords: | Storage, spot market, gas markets, regulation |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:mop:lasrwp:2008.24&r=mic |
| By: | Jacob A. Bikker; Laura Spierdijk |
| Abstract: | The first part of this paper provides a systematic discussion of the structural problems of competition on financial markets as observed from the demand and from the supply side, using a diagnostic framework. Potential impediments to competition are concentration, entry barriers, lack of transparency, product complexity, switching and search costs, financial illiteracy, lack of consumer power and weak intermediaries. In response to such financial market failures, we suggest a number of possible policy reactions. The second part of the paper investigates ways to measure competition and provides empirical figures on banking competition in 101 separate countries and assesses the market structure as monopolistic (or a perfect cartel), perfectly competitive or monopolistic competitive. Also, banking competition is explained, using explanatory variables of market structure, contestability, inter-industry competition, and institutional and macro economic conditions. This analysis provides possible instruments for reform in order to help promote competition. Next, the impact of banking consolidation is examined. Finally, developments in competition are observed over time, generally pointing to a downward trend. |
| Keywords: | competition, concentration, entry barriers, transparency, consolidation, contestability, institutional conditions, restrictions on activities or investment, regulation, Panzar-Rosse model. |
| JEL: | G21 G28 L1 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:use:tkiwps:0901&r=mic |
| By: | Philippe Aghion; John Van Reenen; Luigi Zingales |
| Abstract: | We find that institutional ownership in publicly traded companies is associated with more innovation(measured by cite-weighted patents). To explore the mechanism through which this link arises, webuild a model that nests the lazy-manager hypothesis with career-concerns, where institutional ownersincrease managerial incentives to innovate by reducing the career risk of risky projects. The datasupports the career concerns model. First, whereas the lazy manager hypothesis predicts a substitutioneffect between institutional ownership and product market competition (and managerial entrenchmentgenerally), the career-concern model allows for complementarity. Empirically, we reject substitutioneffects. Second, CEOs are less likely to be fired in the face of profit downturns when institutionalownership is higher. Finally, using instrumental variables, policy changes and disaggregating by typeof owner we find that the effect of institutions on innovation does not appear to be due to endogenousselection. |
| Keywords: | Innovation, institutional ownership, career concerns, R&D, productivity |
| JEL: | O31 O32 O33 G20 G32 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0911&r=mic |
| By: | Beschorner, Patrick Frank Ernst |
| Abstract: | Under ex ante access regulation entrants often claim that access fees are excessive. I show that this is only the case if further entry is admitted. If the entrant is protected from further entry it would agree with the incumbent upon a strictly positive access fee which may exceed the efficient level. Ex post regulation facilitates this type of collusion and should be abandoned. |
| Keywords: | entry deterrence, access regulation, network infrastructure, vertical differentiation |
| JEL: | K21 K23 L42 L51 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:7473&r=mic |
| By: | de Mel, Suresh (University of Peradeniya); McKenzie, David (World Bank); Woodruff, Christopher (University of California, San Diego) |
| Abstract: | Innovation is key to technology adoption and creation, and to explaining the vast differences in productivity across and within countries. Despite the central role of the entrepreneur in the innovation process, data limitations have restricted standard analysis of the determinants of innovation to consideration of the role of firm characteristics. We develop a model of innovation which incorporates the role of both owner and firm characteristics, and use this to determine how product, process, marketing and organizational innovations should vary with firm size and competition. We then use a new large representative survey from Sri Lanka to test this model and to examine whether and how owner characteristics matter for innovation. The survey also allows analysis of the incidence of innovation in micro and small firms, which have traditionally been overlooked in the study of innovation, despite these firms comprising the majority of firms in developing countries. More than one quarter of microenterprises are found to be engaging in innovation, with marketing innovations the most common. As predicted by our model, firm size is found to have a stronger positive effect, and competition a stronger negative effect, on process and organizational innovations than on product innovations. Owner ability, personality traits, and ethnicity are found to have a significant and substantial impact on the likelihood of a firm innovating, confirming the importance of the entrepreneur in the innovation process. |
| Keywords: | innovation, microenterprises, SMEs, development |
| JEL: | O31 L26 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3962&r=mic |
| By: | Laura Abramovsky; Helen Simpson |
| Abstract: | We investigate evidence for spatially mediated knowledge transfer from university research. We examine whether firms locate their R&D labs in proximity to university research departments, and whether those that do are more likely to co-operate with, or source information from universities in the course of their innovative activities. We find evidence that pharmaceutical firms locate their R&D facilities near to frontier chemistry research departments, consistent with accessing localised knowledge spillovers, but also linked to the presence of science parks. In industries such as chemicals and vehicles there is less evidence of immediate co-location with universities, but those innovative firms that do locate near to relevant research departments are more likely to engage with universities. |
| Keywords: | Innovation, Geography, spillovers, public research |
| JEL: | O3 R11 R13 I23 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:bri:cmpowp:08/200&r=mic |
| By: | Andreas Panagopoulos; In-Uck Park |
| Abstract: | The impact of IP protection on the innovation incentives of startup firms is examined in a dynamic model where an incumbent faces a sequence of potential startups and the incumbent's chance of winning an infringement lawsuit increases with the size of its patent portfolio. It is shown that takeover deals generate extra benefits for the incumbent via its enhanced future bargaining positions, a part of which accrues to the current startup as an increased bargaining share. This increased bargaining share can be large enough to justify the startup's innovation activity that would not have taken place otherwise. This effect may be greatest under moderate levels of IP protection, because the increase in the bargaining share, being proportional to the marginal benefits brought by the last patent added to the portfolio, would be too small if the protection was too weak while it would taper off too quickly if the protection was excessive. |
| Keywords: | Patent litigation, takeovers, patent portfolios |
| JEL: | O31 O34 L21 L24 K0 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:bri:cmpowp:08/201&r=mic |
| By: | Igor D. Livshits (University of Western Ontario); James C. MacGee (University of Western Ontario) |
| Abstract: | A key feature of recent work on barriers to technology adoption is the assumption that monopoly rights of insiders are limited by the ability of industry outsiders to enter. This paper endogenizes the decision of a government to provide barriers to technology adoption alone or in combination with barriers to entry of outsiders. Using a political economy model, we find that a government provides barriers to both technology adoption and outsider entry. If governments are not too "corrupt", restricting their ability to provide barriers to entry may eliminate barriers to adoption. However, for sufficiently "corrupt" governments, prohibiting barriers to entry leads to more extreme barriers to technology adoption. |
| Keywords: | monopoly rights; technology adoption; lobbying; entry |
| JEL: | O4 F43 D72 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:uwo:epuwoc:20087&r=mic |