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on Small Business Management |
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Issue of 2011‒06‒18
three papers chosen by Joao Carlos Correia Leitao University of Beira Interior and Technical University of Lisbon |
| By: | Ceren Ozgen (Department of Spatial Economics, VU University Amsterdam); Peter Nijkamp (Department of Spatial Economics, VU University Amsterdam); Jacques Poot (National Institute of Demographic and Economic Analysis (NIDEA), University of Waikato) |
| Abstract: | The concentration of people with diverse socio-cultural backgrounds in particular geographic areas may boost the creation of new ideas, knowledge spillovers, entrepreneurship, and economic growth. In this paper we measure the impact of the size, skills, and diversity of immigration on the innovativeness of host regions. For this purpose we construct a panel of data on 170 regions in Europe (NUTS 2 level) for the periods 1991-1995 and 2001-2005. Innovation outcomes are measured by means of the number of patent applications per million inhabitants. Given the geographical concentration and subsequent diffusion of innovation activity, and the spatial selectivity of immigrants’ location choices, we take account of spatial dependence and of the endogeneity of immigrant settlement in our econometric modelling. We use the location of McDonald’s restaurants as a novel instrument for immigration. The results confirm that innovation is clearly a function of regional accessibility, industrial structure, human capital, and GDP growth. In addition, patent applications are positively affected by the diversity of the immigrant community beyond a critical minimum level. An increase in the fractionalization index by 0.1 from the regional mean of 0.5 increases patent applications per million inhabitants by about 0.2 percent. Moreover, the average skill level of immigrants (proxied by global regions of origin) also affects patent applications. In contrast, an increasing share of foreigners in the population does not conclusively impact on patent applications. Therefore, a distinct composition of immigrants from different backgrounds is a more important driving force for innovation than the sheer size of the immigrant population in a certain locality. |
| Keywords: | immigration, cultural diversity, economic growth, innovation, spatial autocorrelation |
| JEL: | J61 O31 R23 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:nor:wpaper:2011008&r=sbm |
| By: | Catozzella, Alessandra (University of Pavia); Vivarelli, Marco (Università Cattolica del Sacro Cuore) |
| Abstract: | Building on a standard policy evaluation literature mainly aimed at estimating the additional effect of subsidies on either firms' innovative expenditures or innovative outputs only, this paper tries to move one step further, combining the two (input and output) dimensions of innovation into a unique efficiency perspective. To this aim, the impact of public funding on the ratio between innovative sales and innovative expenditures (innovative productivity) is estimated using a sample of firm-level data drawn from the third Italian Community Innovation Survey (CIS). A bivariate endogenous switching model has been developed in order to free the analysis of any ex ante sources of sample selection and firm heterogeneity, at the same time getting rid of the two sources of endogeneity potentially affecting the results, i.e. the possible simultaneity between subsidy allocation and the qualitative composition of the innovative output, as well as the endogeneity of public support with respect to innovative performance. Results show that innovative productivity is negatively affected by the innovation subsidy; far from 'doing better' as a result of government intervention, supported firms appear to exhaust their advantage through merely increasing their innovative expenditures. |
| Keywords: | bivariate endogenous switching model, product innovation, policy evaluation, innovation subsidy |
| JEL: | O32 O38 |
| Date: | 2011–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5746&r=sbm |
| By: | Hans Koster (VU University Amsterdam); Jos N. van Ommeren (VU University Amsterdam); Piet Rietveld (VU University Amsterdam) |
| Abstract: | This paper examines the effects of specialisation (within-sector clustering) and diversity (between-sector clustering) on business services profitability and location choice. We apply a semiparametric Poisson sorting model allowing for firm-specific effects. We find that for most firms, profitability of business services firms is substantially higher close to specialised clusters of business services firms. A standard deviation increase in business services specialisation leads to on average a 40 percent increase in the probability that a business services firm locates there, supporting theories of Marshall, Arrow and Romer. It is also profitable for most business services firms to locate near a group of firms that belong to the same sector, not necessarily business services firms, so diversity is negatively related to location decisions. Almost all firms either benefit from within-sector clustering or between-sector clustering. Within-sector clusters are particularly profitable for large mature firms, whereas between-sector clusters are relatively more profitable for smaller innovative firms. |
| Keywords: | Sorting; Agglomeration Economies; Specialisation; Diversity; Heterogeneity; Semiparametric Estimation |
| JEL: | R12 R14 R39 |
| Date: | 2011–06–06 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20110085&r=sbm |