nep-sbm New Economics Papers
on Small Business Management
Issue of 2014‒12‒24
twenty papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Does Connectivity Impact Innovation Performance in Rural Regions? By Pia Wassmann; Daniel Schiller; Stephan Thomsen
  2. The innovation and its territorial factors: An analysis in the micro-regions of São Paulo. By Suelene Mascarini
  3. Does issuing equities help R&D activity? Evidence from unlisted Italian high-tech manufacturing firms By Silvia Magri
  4. Hiring New Ideas: International Migration and Firm Innovation in New Zealand By Keith McLeod; Richard Fabling; David C. Maré
  5. Innovation in creative cities: Evidence from British small firms By Lee, Neil; Rodriguez-Pose, Andres
  6. Can Unemployment Insurance Spur Entrepreneurial Activity? By Johan Hombert; Antoinette Schoar; David Sraer; David Thesmar
  7. Does Board Diversity Influence Firms' Innovative Activity? Evidence from the firm-level micro data in Japan (Japanese) By INUI Tomohiko; NAKAMURO Makiko; EDAMURA Kazuma; OZAWA Junko
  8. New firm formation and its effect on employment growth in declining regions By Heike Delfmann; Sierdjan Koster
  9. R&D and Regional Regeneration. The Case of Alba Subregion in Romania By Zizi Goschin; Georgiana-Gloria Goschin
  10. Energy Use Patterns and Firm Performance: Evidence from Indian Industries By Santosh Kumar Sahu
  11. Managing the Family Firm: Evidence from CEOs at Work By Oriana Bandiera; Andrea Prat; Raffaella Sadun
  12. What types of firms tend to be more innovative: A study on Germany By Stephan Brunow; Valentina Nafts
  13. Market potential, start-up size and the survival of new firms By Klaesson, Johan; Klaesson, Charlie
  14. Determinants of success and failure in the internationalisation of the cork business: A tale of two Iberian family firms By João Lopes; Amélia Branco; Francisco Parejo; Jose Rangel
  15. Firms’ Innovation, Constrains and Productivity: the Case of Peru By Mario Tello
  16. European Cluster Networks ? Insights from 7th EU Framework Program By Mirko Titze; Matthias Brachert
  17. Regulations and Entrepreneurship: Evidence from Developed and Developing Countries By Claudia Alvarez; José Ernesto Amorós; David Urbano
  18. Science and Technology Parks in Italy: main features and analysis of their effects on the firms hosted By Danilo Liberati; Marco Marinucci; Giulia Martina Tanzi
  19. A Virtuous Cumulative Growth Circle among Innovation, Inclusion and Sustainability? A Structuralist-Keynesian Analysis with an Application on Europe By Giulio Guarini; Giuseppe Garofalo; Alessandro Federici
  20. Research intensive clusters and regional innovation systems: a case study of mechatronics in Apulia By Massimo Florio; Julie Pellegrin; Emanuela Sirtori

  1. By: Pia Wassmann; Daniel Schiller; Stephan Thomsen
    Abstract: There is a broad consensus in the literature in that R&D is a precondition for innovation and in turn, for economic growth. On the regional level, this implies that regions with a high stock of R&D should reveal better results when it comes to economic performance. This presumption has lead policy-makers to focus especially on strengthening the regional stock of R&D as an instrument to foster the regional innovation performance. However, the relation between regional R&D and economic growth may not be as straightforward and an exclusive concentration on R&D may not be appropriate for stimulating regional innovation. Thus, empirical evidence shows that some regions perform well in economic terms, irrespective of their relatively low values of R&D. One of these regions is the German region of Lower Bavaria. This region performs well above the German average in terms of economic growth and employment. At the same time, the regional performance on the traditional R&D indicators as patents or the share of human resources in science and technology is below average. Yet, despite the disadvantageous values on the latter, a recent study of regional firms has indicated that over 60% have introduced either a technological or non-technological innovation in the past three years. One explanation for this contra-intuitive finding emerges from the potential connectivity of regional firms, enabling them to acquire R&D from external knowledge sources. This aspect is in focus of this paper. Thus, based on original firm-level data, we investigate how connectivity impacts innovation performance of firms in the low R&D region of Lower Bavaria. The idea that innovation is a result of an interactive process and that firms have to acquire external knowledge in order to innovate is certainly not new. However, despite the fact that regional connectivity especially of low R&D regions has gained considerable importance, not at least reflected by the current EU innovation policy debate, there are only a few studies that assess the association between cooperation and innovation in regions with low internal R&D in a systematic, quantitative manner. Rather, the majority of studies focus on high-tech regions with strong initial R&D. With the emphasis on a rural region with mainly low- and medium-tech industries, this paper aims to bridge this gap and to study the relation in a type of region that has not been comprehensively examined, yet. Moreover, by distinguishing between the geographical and functional dimension of cooperation as well as by the consideration of both, technological and non-technological forms of innovation, we provide a more encompassing view on how firms in this type of regions use cooperation to increase their innovation potential.
    Keywords: innovation; connectivity; low-tech industries; rural region; R&D; Germany;
    JEL: R11 O18 O31 L25
    Date: 2014–11
  2. By: Suelene Mascarini
    Abstract: This paper aims to examine empirically, through the application of the Knowledge Production Function, how the innovation in micro-region of São Paulo can be affected for some territorial factors. In the literature, and assumed here, the innovative results, measured by patents, are linked to the quantity and quality of innovative inputs and characteristics of the regions that are configured as an input. In this sense, stands the importance of positive externalities that are generated by the spatial concentration of producers and support institutions that are able to contribute to the efforts of innovative firms. In addition, this paper emphasizes the role of local production structures in the regions of São Paulo, since both the regional diversification and regional specialization are mentioned as important factors in the innovation process. The main results suggested that although the level of R&D investments were important for generating local innovation, ie, the generation of local patents, this relationship does not occur clearly in the regions of São Paulo. In addition, local productive structure or density linkages of firms that interacts are certainly important factors and compensatory for innovation process.
    Keywords: Geography and Innovation; Patents; Knowledge Production Function.
    JEL: O31 R12 R15
    Date: 2014–11
  3. By: Silvia Magri (Bank of Italy)
    Abstract: This paper evaluates the causal effect of issuing equities on the probability that a firm will engage in R&D activity. Equity is a preferable source of external finance for innovation than debt. It does not require collateral, does not exacerbate moral hazard problems connected with the substitution of high-risk for low-risk projects, quite common when using debt, and, unlike debt, does not increase the probability of bankruptcy; equity also allows investors to reap the entire benefit of returns on successful innovative projects. The paper focuses on high-tech firms for which asymmetric information problems are more pervasive. Implementing an instrumental variable estimation, we find that issuing equity increases the probability of the firm making R&D expenditure by 30-40 per cent. We detect considerable heterogeneity across firms: the impact of issuing equity is significant only for small, young, and more highly leveraged firms. We also find interesting evidence that issuing equity increases R&D expenditure in relation to sales.
    Keywords: R&D, innovation, equity issues, high-tech firms
    JEL: G21 G32 O31 O32
    Date: 2014–10
  4. By: Keith McLeod (Ministry of Business, Innovation and Employment); Richard Fabling (Motu Economic and Public Policy Research); David C. Maré (Motu Economic and Public Policy Research)
    Abstract: Poor productivity performance has been identified as a significant issue for New Zealand, and innovation is seen as a key mechanism for improving productivity growth. Understanding the drivers of firm innovation therefore represents an important step towards improving New Zealand’s economic performance. In this paper, we combine firm-level innovation data with worker characteristics to examine links between innovation and the presence of new arrivals – both immigrants and returning New Zealanders – in the firm’s workforce. Across a range of measures we find positive relationships between firm-level innovation and the share of new arrivals. These relationships weaken once we account for variation in firm characteristics (firm size, industry, R&D expenditure) and other worker characteristics (including the share of new and/or high skilled workers). Within new arrivals, innovation outcomes are most strongly associated with high skilled workers, though magnitudes vary depending on whether workers are returning New Zealanders or immigrants. Firms with a higher share of high skilled recent migrants were more likely to report introducing new marketing methods, new goods and services, or goods and services new to New Zealand. Firms with a higher share of high skilled returning New Zealanders were more likely to report introducing new organisational and managerial practices, and (as with migrants) goods and services new to New Zealand.
    Keywords: Innovation, workforce composition, immigrants, returning New Zealanders
    JEL: O31 J24 J61
    Date: 2014–11
  5. By: Lee, Neil; Rodriguez-Pose, Andres
    Abstract: Creative cities are seen as important sites for the generation of new ideas, products and processes. Yet, beyond case studies of a few high-profile cities, there is little empirical evidence on the link between local creative industries concentration and innovation. This paper addresses this gap with an analysis of around 1,300 UK SMEs. The results suggest that firms in local economies with high shares of creative industries employment are significantly more likely to introduce entirely new products and processes than firms elsewhere, but not innovations which are simply new to the firm. This effect is not exclusive to creative industries firms and seems to be largely due to firms in medium sized, rather than large, cities. The results imply that creative cities may have functional specialisations in new content creation and so firms are more innovative in them.
    Keywords: cities; creative cities; creative industries; creativity; innovation
    JEL: O31 O38 R11 R58
    Date: 2014–11
  6. By: Johan Hombert; Antoinette Schoar; David Sraer; David Thesmar
    Abstract: We study a large-scale French reform that provided generous downside insurance for unemployed individuals starting a business. We study whether this reform affects the composition of people who are drawn into entrepreneurship. New firms started in response to the reform are, on average, smaller, but have similar growth expectations and education levels compared to start-ups before the reform. They are also as likely to survive or to hire. In aggregate, the effect of the reform on employment is largely offset by large crowd-out effects. However, because new firms are more productive, the reform has the impact of raising aggregate productivity. These results suggest that the dispersion of entrepreneurial abilities is small in the data, so that the facilitation of entry leads to sizable Schumpeterian dynamics at the firm-level.
    JEL: G3 H25 J65
    Date: 2014–11
  7. By: INUI Tomohiko; NAKAMURO Makiko; EDAMURA Kazuma; OZAWA Junko
    Abstract: This paper empirically examines the impact of board diversity on firms' innovative activity, taking advantage of the unique firm-level dataset in the period 2000-2011 in Japan. We constructed measurements of the degree of board diversity by using various characteristics of board members such as gender, age, tenure, and education, and found no significant impacts on firm innovative activity after controlling for the firms' fixed effects. However, when we restricted the sample to a group of firms with a high foreign ownership ratio or globalized firms, we found the presence of female board members is positively associated with promoting firms' innovative activity as measured by research and development (R&D) intensity. Our finding suggests that board diversity is not associated with the innovation across firms in general, but if a firm has already accumulated the management skills to handle the diversified voices and opinions from board members, this helps it to become more innovative.
    Date: 2014–12
  8. By: Heike Delfmann; Sierdjan Koster
    Abstract: New firm formation is often highly prioritized by local governments, particularly for regions that are declining. Entrepreneurship can play an important role in keeping declining regions vital through job creation. Yet, the way in which new firm formation exerts its influence on employment growth is not yet evident. Are start-ups in those areas equally productive in influencing employment change as they are in growing regions? Although there is a large and growing body of research on new firm formation and employment, there is still a knowledge gap concerning the impact of the context on the effect of new firm formation. Previously the focus has been on growth. New firm formation can contribute direct and indirectly to regional employment. The indirect effects are thought to have a larger impact on the long term, and indirect effects are not per sé positively related to employment growth. Focusing on the regional context, we investigate whether the relationship differs depending decline or growth, and by the degree of urbanization, to determine both long and short term employment effects. In order to establish the impact of new firm formation on employment rates, the paper examines panel data of firm dynamics and employment growth retrieved from the LISA database covering the whole of the Netherlands on a municipality level (418 regions) between 1996-2010. This data is complemented with data on population density, size, growth and decline from the Statistic Netherlands.
    Keywords: Employment growth; population decline; new firm formation; urban and rural regions; direct and indirect effects;
    JEL: M13 R11 O18
    Date: 2014–11
  9. By: Zizi Goschin; Georgiana-Gloria Goschin
    Abstract: Innovation and competitiveness are important factors for promoting economic growth not only nationally, but regionally as well. In Romania, research, development and innovation could be among the factors that are accountable for the increasing regional disparities, as the territorial distribution of R&D resources is very unbalanced. Romania is currently trying to define a regional strategy for R&D, as well as appropriate policies and priorities for innovation at regional level. In this context we address the issue of the regional intensity of R&D as one of the main determinants of economic growth in Alba county (subregion NUTS 3) in Romania. The Alba subregion can be considered an obvious example of a successful economic transformation since its GDP per capita increased more than 2 times in 10 years, based on a high rate of economic growth. We have analysed the regional intensity of R&D, measured as the share of total research and development expenditures in regional GDP, and have developed an economic growth model that aimed to capture the influence of R&D intensity alongside labour productivity, employment rate, human capital, the share of manufacturing in total economic activity, the extent of private entrepreneurship, and a dummy variable for economic crisis. The results point to a highly significant impact of research and development intensity on the long-run economic development of Alba county, as measured by GDP per capita. This positive effect of R&D on the economic performance in Alba county can be largely attributed to the creation and modernization of the business support infrastructure aimed at developing industrial parks, business incubators, industrial and scientific clusters, technological and logistic platforms, centers for research and transfer of technology, etc. These structures are designed to support business development in areas affected by industrial restructuring, but also economic activities in other areas with development potential in the county, providing favorable conditions for productive SME development, which can further contribute to economic development and job creation in both the underdeveloped and the rising areas in this subregion.
    Keywords: economic growth; regional regeneration; Alba county; Romania
    JEL: R11 R58
    Date: 2014–11
  10. By: Santosh Kumar Sahu (Madras School of Economics)
    Abstract: This paper is an attempt to understand the relationship between firm performances based on energy use patterns of Indian manufacturing industries. Determinates of firm performances are estimated for the full sample and for the sample of firms using similar energy sources. Econometric analysis of the data collected from the CMIE PROWESS at firm level from 2005-2013 reveals that the determinants of profitability vary across groups. Energy intensity is positively related to profitability for three models except for the firms using natural gas as primary source of energy. R and D intensity is positively related to profitability for the full sample and for the firms using petroleum. For the firms using coal as primary source of energy, less R and D intensive firms are found to be profitable. For all the cases, firm size is found to be nonlinearly related to profitability. In the policy front, shifting primary energy source from coal and petroleum to natural gas; firms can become energy efficient and profitable.
    Keywords: Energy Use, Firm Performance, Indian Manufacturing, Energy Intensity, Profitability
    JEL: Q4 B23
    Date: 2014–09
  11. By: Oriana Bandiera; Andrea Prat; Raffaella Sadun
    Abstract: CEOs affect the performance of the firms they manage, and family CEOs seem to weaken it. Yet little is known about what top executives actually do, and whether it differs by firm ownership. We study CEOs in the Indian manufacturing sector, where family ownership is widespread and the productivity dispersion across firms is substantial. Time use analysis of 356 CEOs of listed firms yields three sets of findings. First, there is substantial variation in the number of hours CEOs devote to work activities, and longer working hours are associated with higher firm productivity, growth, profitability and CEO pay. Second, family CEOs record 8% fewer working hours relative to professional CEOs. The difference in hours worked is more pronounced in low competition environments and does not seem to be explained by measurement error. Third, difference in diffrences estimates with respect to the cost of effort, due to weather shocks and popular sport events, reveal that the observed difference between family and professional CEOs is consistent with heterogeneous preferences for work versus leisure. Evidence from six other countries reveals similar findings in economies at different stages of development.
    Date: 2013–12
  12. By: Stephan Brunow; Valentina Nafts
    Abstract: Innovation is a key driver of technological progress and growth in a knowledge-based economy. There are various motives for individual firms to innovate: improving quality secures market leadership, introducing new products leads the firm into new markets, adopting new technologies could be seen as a catch-up strategy within an industry or an improvement of the firm's own products when the technology adopted is based on ideas from other industries. Firms can perform innovation activities in one or more of these areas or in none of them. We therefore raise the question of what types of firms tend to be more innovative, i.e. which firms innovate in more of these areas. For this purpose we employ firm-level survey data and combine it with administrative data from Germany's social security system. An ordered logit model is estimated using a variety of characteristics which describe the workforce employed and other firm-related variables, the regional environment where the firm is located, as well as industry and region fixed effects.
    Keywords: firm innovation; labor diversity; ordered logit; regional economic environment
    JEL: J O R
    Date: 2014–11
  13. By: Klaesson, Johan (Jönköping International Business School (JIBS) & Centre of Excellence for Science and Innovation Studies (CESIS)); Klaesson, Charlie (Jönköping International Business School (JIBS) & Centre of Excellence for Science and Innovation Studies (CESIS))
    Abstract: Abstract: Many phenomena in the economy are influenced by geography. The size of new firm start-ups vary in many dimensions, among them industry and geography. The purpose of this paper is to explore the determinants of the geographical distribution of the size of new firms. Re¬gional size itself can be expected to influence the size of the new firm. Given that there are fixed costs present in the new firms small and low-density regions will demand a larger size of the new firm. The reason for this is that in small regions the firm may not be able to find customers nearby, but need to sell its produce over some distance. This means that the firm must house capacities to do so and this increases the fixed cost component and hence forces the firm to produce a larger amount of the output. Another possible reason can be found in the availability of producer services. In small regions, the number of producer services is more limited and, hence, force the firms to produce some of these services in-house. Gener¬ally, the overall diversity found in small regions is smaller compared to large re-gions. This means that the variation in goods and services available in the market will be smaller, once again forcing the new firm to do more things within the firm. In addition, it is ex¬pected that there is a relationship between entry rate and the size of the entrants.
    Keywords: Entry; Start-up size; Market Potential; Region; Industry; Sweden
    JEL: C21 L11 M13 R11 R12
    Date: 2014–11–26
  14. By: João Lopes; Amélia Branco; Francisco Parejo; Jose Rangel
    Abstract: The trajectories of internationalisation followed by family firms can be viewed from several theoretical approaches ? phases of the internationalisation process; international entrepreneurship, sociological perspective, family business theory. An historical perspective of the internationalised family firms, allowing the integration of these several approaches, is useful to a deep understanding of the internationalisation process of different sectors and countries. The main purpose of this paper is to identify the facilitating and the restricting factors during the internationalisation path of family firms, considering their competitive advantages, the ownership structure and management attitudes, innovation and intangible assets and other relevant factors, internal and/or external to the firm. It makes a long run analysis (more than one century) of two companies acting in the cork business in Spain and Portugal: Mundet and Amorim&Irmãos. One of these companies - Mundet ? has been closed in the 1980s and the other - Amorim&Irmãos ? became, and is by now, the leading company in the cork worldwide business. The careful comparison of these two stories, one of failure and the other of success, allows an accurate identification of the determinants of a successful internationalisation. In fact, it is useful for understanding several characteristics of both firms, some similar and other different, allowing the test of several hypothesis in the context of the theoretical approach to the internationalisation of family firms. First of all, both are family firms operating in the same business and since their origin orientated to foreign markets. Second, their story went along much of the twentieth century and so both faced similar national and international constraints but in the end both became leading firms in the cork business, although in different time periods. Third, their location choices were different and, although in both cases benefiting from agglomeration forces in certain phases of the business, they were also important determinants of the opposite destinies of these two emblematic Iberian cork family firms.
    JEL: F23 L73 N60 O14 R12
    Date: 2014–11
  15. By: Mario Tello (Departamento de Economía - Pontificia Universidad Católica del Perú)
    Abstract: Based upon a standard Crepon, Duguet and Mairesse (1998), CDM, model and data at firms’ level, this paper analyzes the interrelationship between firms’ science, technology and innovation (STI) activities and their labor productivity in Peru for the year 2004. The effects of some constraints (i.e., investment innovation risks, market structure distortions and financial constraints) on firms’ decision and amount of investment on STI (or STI investment intensity) are also estimated. Subject to data limitations, the analysis suggests that firms’ size is an important factor in their decision to invest upon STI activities. In the same way, firms’ market share is a key factor in the determination of the level of investment on STI. On the other hand, investment risks and financial restriction seem to affect negatively to firms decision and amount of investment on STI respectively. However, their statistical effects vary among the six ISIC branches considered. The effects of market structure or anticompetitive practices were not clear in sign and statistical significance. Regarding the factors that foster innovation outputs or outcomes (such as new products, processes, commercial and organizational innovations) firms STI investment intensity, their degree of cooperation (collaboration) with other entities and the endowment of STI infrastructure are important factors that promote innovation outputs. Finally, although capital-labor ratio and human capital were determinants factors of firms’ labor productivity the effects of innovation outputs on labor productivity were not statistically significant or robust. JEL Classification-JEL: L6, O31
    Keywords: Science, technology and innovation, labor productivity and technological innovation, CDM model.
    Date: 2014
  16. By: Mirko Titze; Matthias Brachert
    Abstract: The EU Framework Programme (FP) belongs to the most important instruments promoting transnational collaborative R&D projects in Europe. Its main objective is to initiate cross-border complementarities in order to exploit knowledge resources and to conduct large scale research. Within the EU FPs the applicants are free to choose partners from all over Europe. The key question of our paper is: Which determinants affect the emergence of intra- and interregional collaborations within EU Framework Programmes? One might assume that geographical factors do not matter since trade barriers have been eliminated in the Single European Market. Though, there is a controversial debate on the importance of geographical proximity for the exchange of knowledge. Our paper relies on two theoretical concepts. First, we apply the global cluster networks conception developed by Bathelt and Li (2013). Within this concept it is argued that clustered organizations are more likely to set up collaborative R&D efforts with other similar clustered organizations to keep up with wider industry developments. Conversely, non-cluster organizations are less likely to get integrated cluster destinations. Second, we tie in with the proximity debate discussed in Boschma (2005). According to this concept geographical proximity addresses only one facet. Beyond physical distance other forms of proximity are existent such as social, cognitive, organisational and institutional proximity. It is argued that physical distance is neither a necessary nor a sufficient condition for interactive learning processes. Though, it may facilitate the other dimensions of proximity. In line with these strands of research we investigate the determinants of the number of cross-region collaborations within EU FPs. The analysis is focused on regional level (NUTS 2). Moreover, we differentiate between two technology fields, biotechnology and aerospace. In doing so, we are capable to capture technology specific characteristics. We apply a spatial interaction modelling framework that bases on a gravity type (Scherngell and Barber 2009). The empirical analysis is carried out using a negative binomial specification. We found evidence that geographical factors still matter ? but technological proximity seems to be more importantly. Moreover, we prove that the mere size in terms of employment and establishments is not necessarily required to establish cross-region collaborations. Also small actors have been chosen as partners in collaborative R&D networks across Europe.
    JEL: D85 L14 R12 R15
    Date: 2014–11
  17. By: Claudia Alvarez; José Ernesto Amorós; David Urbano (School of Business and Economics, Universidad del Desarrollo)
    Abstract: This paper uses an institutional approach to examine the effect of regulations on entrepreneurial activity, comparing developed and developing countries. Through an unbalanced panel data set of 49 countries over the period 2001-2010 and using a combination of international databases we find a positive influence of government spending and entrepreneurship legislation on entrepreneurial activity. It was also found that regulations may have different impacts on entrepreneurship according to the country’s economic development. Thus, in developed economies unemployment legislation is positively related to entrepreneurship, while this relationship is negative in other cases. This paper offers new insights both from a conceptual perspective (advancing theory concerning the factors that influence entrepreneurial activity) and a practical viewpoint (for the design of government policies to foster entrepreneurship).
    Keywords: Entrepreneurship, entrepreneurial activity, regulations, institutional economics, developed and developing economies, GEM.
    JEL: L26 D02 E02
    Date: 2014–11
  18. By: Danilo Liberati (Bank of Italy); Marco Marinucci (Bank of Italy); Giulia Martina Tanzi (Bank of Italy)
    Abstract: We analyse the results of a survey conducted by the Bank of Italy in the spring of 2012 on Italian science and technology parks. First we describe the main features of science parks in Italy. Then we investigate whether they have been effective in improving the economic performance and innovative capacity of the firms located within them. We find a pronounced heterogeneity between science and technology parks, whose cooperation with public research institutions is characterized by physical proximity. Although the business situation of firms located in science and technology parks tends on average to be better than that of similar �non-park� firms, a difference-in-differences estimation shows that entering a science and technology park did not generally improve firms� business performance and their propensity to innovate compared with external counterparts.
    Keywords: Scientific and Technology Parks, Matching, Difference in Differences
    JEL: C31 L25 O31
    Date: 2014–10
  19. By: Giulio Guarini (University of Tuscia, Viterbo, Italy); Giuseppe Garofalo (University of Tuscia, Viterbo, Italy); Alessandro Federici (ENEA, Italy)
    Abstract: The Europe 2020 Strategy has been built on three pillars: smart, sustainable and inclusive growth. The aim of the paper is to provide, thanks to Dynamic Panel data models, an econometric analysis of the potential cumulative circle among the abovementioned three pillars, with a specific focus on how labour productivity and environmental intensity interact with each other, and how they may help improving employment. With reference to the effect of sustainable factors on smart factors, main results of this paper confirm the 'dual externality principle': eco-innovations may both provide R&D spillovers and reduce environmental negative externalities; depending on the Porter’s hypothesis, environmental regulations may stimulate eco-innovation in order to reduce regulation costs. Furthermore, an increase of energy intensity tends to stimulate cost-saving innovations. Concerning the effect of smart factors on sustainable factors, the 'pollution haven hypothesis' is confirmed: trade openness increases pollution because of more relaxed environmental regulation, delocalization and specialization. Finally, the positive impact of smart and sustainability factors on employment depends on the complementarity between the first two pillars. Europe 2020 goals are essential in order to overcome the current economic, social, and ecological crisis: this paper highlights how this implies to go beyond the widely adopted 'austerity policy framework' and to implement some proposals able to generate, stimulate and sustain the abovementioned cumulative circle. Main political points are: the proactive role of public institutions, to avoid innovation market failures and to generate an 'innovation multiplier' starting from public investments; the territorial perspective of strategy; the coordination among macroeconomic policies on the one hand, and industrial, innovation, environmental, and trade policies on the other.
    Keywords: inclusion, innovation, sustainability, Europe 2020 Strategy
    JEL: O3 O4 Q5
    Date: 2014–12
  20. By: Massimo Florio (DEAS, Universita' di Milano); Julie Pellegrin (CSIL Centre for Industrial Studies); Emanuela Sirtori (CSIL Centre for Industrial Studies)
    Abstract: This paper discusses some conditions under which the Cohesion Policy of the European Union can effectively contribute to enhance R&I in Europe and the extent to which it offers a relevant framework for devising Research & Innovation policies at regional level overcoming possible tensions and maximising potentials for synergy. To do so, the paper mainly relies on an in-depth illustrative case study of an Italian Southern region, Apulia. The paper describes the regional innovation system put in place by the Apulia Region and analyses the value added that can be attributed to such a system as far as innovation and economic development promotion are concerned; on this basis, findings from the case study are generalised in a set of lessons learned with hopefully more general relevance: these are discussed in Section 4.
    Keywords: Research intensive clusters; regional innovation systems; mechatronics
    JEL: L26 L62 R58
    Date: 2014–11–07

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