nep-ppm New Economics Papers
on Project, Program and Portfolio Management
Issue of 2013‒01‒07
seven papers chosen by
Arvi Kuura
Parnu College - Tartu University

  1. “The determinants of contractual choice for private involvement in infrastructure projects in the United States” By Daniel Albalate; Germà Bel; R. Richard Geddes
  2. Implementing Grassroots Innovation in a Large Firm: A Conceptual Framework and In-Depth Case Study By Betz, U.A.K.; Camacho, N.M.A.; Gerards, M.; Stremersch, S.
  3. Learning from the experiments that never happened : lessons from trying to conduct randomized evaluations of matching grant programs in Africa By Campos, Francisco; Coville, Aidan; Fernandes, Ana M.; Goldstein, Markus; McKenzie, David
  4. Innovative capability and financing constraints for innovation: More money, more innovation? By Hottenrott, Hanna; Peters, Bettina
  5. How to use demand systems to evaluate risky projects, with an application to automobile production By Friberg, Richard; Huse, Cristian
  6. Collateral and repeated lending By Artashes Karapetyan; Bogdan Stacescu
  7. Subsidy and networking: The effects of direct and indirect support programs of the cluster policy By Nishimura, Junichi; Okamuro, Hiroyuki

  1. By: Daniel Albalate (Faculty of Economics, University of Barcelona); Germà Bel (Faculty of Economics, University of Barcelona); R. Richard Geddes (Department of Policy Analysis & Management, College of Human Ecology, Cornell University)
    Abstract: Reliance on private partners to help provide infrastructure investment and service delivery is increasing in the United States. Numerous studies have examined the determinants of the degree of private participation in infrastructure projects as governed by contract type. We depart from this simple public/private dichotomy by examining a rich set of contractual arrangements. We utilize both municipal and state-level data on 472 projects of various types completed between 1985 and 2008. Our estimates indicate that infrastructure characteristics, particularly those that reflect “stand alone” versus network characteristics, are key factors influencing the extent of private participation. Fiscal variables, such as a jurisdiction’s relative debt level, and basic controls, such as population and locality of government, increase the degree of private participation, while a greater tax burden reduces private participation..
    Keywords: Privatization, Contracting, Infrastructure, Risk transfer. JEL classification: H4; H54; H7; L88; L9
    Date: 2012–12
  2. By: Betz, U.A.K.; Camacho, N.M.A.; Gerards, M.; Stremersch, S.
    Abstract: In order to promote the generation of market breakthroughs and disruptive innovation, organizations increasingly promote grassroots innovation, i.e. the emergence of innovative ideas from their whole employee base. Despite this surge in interest in grassroots innovation, there is a lack of guidance on how organizations should design and implement grassroots innovation programs. A key challenge faced by organizations promoting grassroots innovation is how to motivate the right employees to submit their best ideas and persist in their quest to transform such ideas in successful new businesses. In this paper, we draw on self-determination theory (SDT) to propose a conceptual framework that organizations can use to design effective grassroots innovation programs. We offer an in-depth understanding of how top-management support and the mechanisms behind grassroots innovation programs (e.g., idea sourcing, team formation, team/idea selection and training/coaching) influence employees’ motivation to submit their best ideas and, consequently, the success of grassroots innovation programs. We argue, in line with SDT, that successful grassroots innovation programs need to promote employees’ intrinsic motivation for innovation by satisfying three innate human needs: competence, autonomy and relatedness. Through an in-depth case study (the Innospire program at Merck), we provide evidence that support our propositions and discuss how organizations can successfully implement the proposed framework.
    Keywords: corporate entrepreneurship;self-determination theory;grassroots innovation;in-depth case study
    Date: 2012–12–21
  3. By: Campos, Francisco; Coville, Aidan; Fernandes, Ana M.; Goldstein, Markus; McKenzie, David
    Abstract: Matching grants are one of the most common policy instruments used by developing country governments to try to foster technological upgrading, innovation, exports, use of business development services and other activities leading to firm growth. However, since they involve subsidizing firms, the risk is that they could crowd out private investment, subsidizing activities that firms were planning to undertake anyway, or lead to pure private gains, rather than generating the public gains that justify government intervention. As a result, rigorous evaluation of the effects of such programs is important. The authors attempted to implement randomized experiments to evaluate the impact of seven matching grant programs offered in six African countries, but in each case were unable to complete an experimental evaluation. One critique of randomized experiments is publication bias, whereby only those experiments with"interesting"results get published. The hope is to mitigate this bias by learning from the experiments that never happened. This paper describes the three main proximate reasons for lack of implementation: continued project delays, politicians not willing to allow random assignment, and low program take-up; and then delves into the underlying causes of these occurring. Political economy, overly stringent eligibility criteria that do not take account of where value-added may be highest, a lack of attention to detail in"last mile"issues, incentives facing project implementation staff, and the way impact evaluations are funded, and all help explain the failure of randomization. Lessons are drawn from these experiences for both the implementation and the possible evaluation of future projects.
    Keywords: Microfinance,Banks&Banking Reform,Access to Finance,ICT Policy and Strategies,E-Business
    Date: 2012–12–01
  4. By: Hottenrott, Hanna; Peters, Bettina
    Abstract: This study presents a novel empirical approach to identify financing constraints for innovation based on the concept of an ideal test (Hall 2008). Firms were offered a hypothetical payment and were asked to choose between alternatives of use. If they selected additional innovation projects, they must have had some unexploited investment opportunities that were not profitable using more costly external finance. We attribute constraints for innovation not only to lacking financing, but also to firms' innovative capability. Econometric results show that financial constraints do not depend on the availability of internal funds per se, but that they are driven by innovative capability. --
    Keywords: innovation,financing constraints,innovative capability,multivariate probit models
    JEL: O31 O32 C35
    Date: 2012
  5. By: Friberg, Richard; Huse, Cristian
    Abstract: This article introduces a method to quantify the effect of a firm’s strategic choices on the risk profile of its profits at different horizons. We combine a demand system for differentiated products with counterfactual paths of risk factors. Prices, costs and quantities respond endogenously to the counterfactual state of the world. The draws on risk factors are generated using copulas, in a way that flexibly can be adapted to the risks faced in various industries. We illustrate the method by studying how the US operations of German carmakers BMW and Porsche are affected by the decision to relocate production, i.e. operational hedging. We find that for plausible costs of building a plant, production in the US is attractive for BMW, but not for Porsche.
    Keywords: demand estimation; Exchange rate exposure; operational hedging; risk management
    JEL: F23 L16 L62
    Date: 2012–12
  6. By: Artashes Karapetyan (Norges Bank (Central Bank of Norway)); Bogdan Stacescu (BI Norwegian Business School,)
    Abstract: Lending is often associated with significant asymmetric information issues between suppliers of funds and their potential borrowers. Banks can screen their borrowers, or can require them to post collateral in order to select creditworthy projects. We find that the potential for longer-term relationships increases banks' preference for screening. This is because posting collateral only provides the information that the current project of a given borrower is of good quality, whereas screening provides information that can be used in evaluating future projects as well as the current ones.
    Keywords: Collateral, Screening, Bank relationships
    JEL: G21 L13
    Date: 2012–12–18
  7. By: Nishimura, Junichi; Okamuro, Hiroyuki
    Abstract: Industrial clusters have attracted considerable attention worldwide for their expected contribution to regional innovation. Recently, policymakers in various countries have developed specific cluster policies. However, there exist few empirical studies on cluster policies. Focusing on the Industrial Cluster Project (ICP) in Japan initiated by the Ministry of Economy, Trade and Industry in 2001, we address two research questions on the support programs of the cluster policies: if the project participants who exploit various support programs are more successful in network formation within the cluster than others, and which kind of support program contributes to firm performance. We pay special attention to the differences between direct R&D support and indirect networking/coordination support. The estimation results, which are based on recent original survey data, suggest that cluster participants who exploit support programs (especially indirect support measures) expand the industry-university-government network after participating in the ICP. Moreover, we find that not every support program contributes to firm performance; firms should therefore select the program that is most aligned with their aims. Indirect support programs have an extensive and strong impact on output whereas direct R&D support has only a weak effect.
    Keywords: cluster policy, industrial cluster, R&D support, subsidy, networking
    JEL: O25 O38 R11
    Date: 2012–12

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