nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2005‒05‒14
fifteen papers chosen by
Francesco Lissoni
Universita degli Studi di Brescia

  1. European Productivity Gaps: Is R&D the Solution? By Christoph Meister; Bart Verspagen
  2. The Survival of New Ventures in Dynamic versus Static Markets By Andrew Burke; Holger Görg; Aoife Hanley
  3. The Impact of Intellectual Property Rights on International Self-Employed Rates By Andrew Burke; Stuart Fraser
  4. Nascent entrepreneurship and the level of economic development By Sander Wennekers; André van Stel; Roy Thurik; Paul Reynolds
  5. Firm Location, Corporate Structure, R&D Investment, Innovation and Productivity By Johansson, Börje; Lööf, Hans; Rader Olsson, Amy
  6. Implications of Product Patents : Lessons from Japan By Reiko Aoki; Tomoko Saiki
  7. Is Academic Science Raising Innovative Productivity? Theory and Evidence from Firm-Level Data By Lee Branstetter; Reiko Aoki
  8. Characterizing the Production Process: A Disaggregated Analysis of Italian Manufacturing Firms By Giulio Bottazzi; Marco Grazzi; Angelo Secchi
  9. Animal Spirits, Lumpy Investment, and Endogenous Business Cycles By Giovanni Dosi; Giorgio Fagiolo; Andrea Roventini
  10. A Note on Equilibrium Selection in Polya-Urn Coordination Games By Giorgio Fagiolo
  11. Commercialisation Strategies of Technology based European SMEs: Markets for Technology vs. Markets for Products By Paola Giuri; Alessandra Luzzi
  12. Intellectual Property Rights and Market Dynamics By Fabrizio Cesaroni; Paola Giuri
  13. ICT, Skills and Organisational Change: Evidence from a Panel of Italian Manufacturing Firms By Paola Giuri; Salvatore Torrisi; Natalia Zinovyeva
  14. Conditional Nonparametric Frontier Models for Convex and Non Convex Technologies: a Unifying Approach By Cinzia Daraio; Leopold Simar
  15. Structural changes and competitiveness in Spanish manufacturing industry: Analysis of some relationships By Antonio Fonfría; Isabel Alvarez; Carlos Díaz de la Guardia

  1. By: Christoph Meister; Bart Verspagen
    Abstract: This paper investigates the potential impact of increased business R&D efforts in Europe on the total factor productivity gap between European and U.S. industry. The paper addresses Europe’s ambition, expressed at the 2000 Lisbon Summit to become “the most competitive and dynamic knowledge-based economy in the world”, and the 3% R&D intensity target for Europe formulated at the 2002 Barcelona Summit. Based on existing empirical models from the literature on productivity and R&D expenditures, we provide projections on the expected productivity impacts of increased R&D in manufacturing industries. The results suggest that raising European R&D is not a complete solution to the European productivity backlog relative to the U.S. We also find that the most dramatic impacts may be expected from raising R&D in so-called low-tech sectors.
    Keywords: Technology, Economic growth, R&D, Europe, United States
    JEL: O38 O47 P52
    Date: 2005
  2. By: Andrew Burke; Holger Görg; Aoife Hanley
    Abstract: The paper uses a unique dataset comprise almost the population of 179,306 new ventures who enter the UK market in 1998. The central hypothesis is that the survival function of new ventures has a different specification in dynamic compared to static markets. Estimation of a hazard function supports this hypothesis. In dynamic markets the survival of new ventures is positively related to industry concentration and negatively related to industry growth. The opposite is found to be true for static markets. The results shed new insights into the competitive dynamics of new ventures, optimal strategies for firm survival and also highlight some important effects for competition policy.
    Keywords: new firms, start-ups, survival, turbulence, dynamic markets
    JEL: L11 M13
    Date: 2005–05
  3. By: Andrew Burke; Stuart Fraser
    Abstract: The importance of IPR regimes for large firm innovation is well documented but less is known about their impact on typically less innovative self-employed entrepreneurship. The paper estimates the net effect of the various elements that comprise an IPR regime including the political system, the laws, conventions and institutions as well as a general familiarity with and respect for IPR related products. Cumulatively, the analysis indicates that a well developed IPR regime raises self-employment rates significantly; by as much as 31% among males and 13% among females. Since the self-employed sector is possibly the only segment of the enterprise base where IPRs may be expected (and frequently assumed) to have a negative effect the research finding of a positive effect provides a useful contribution to our empirical understanding of the welfare effects of IPRs on the entrepreneurial economy more widely. The research also indicates that the formulation of effective enterprise policy which attempts to stimulate the less innovative self-employed sector of the entrepreneurial economy- particularly in developing countries - may need to look beyond the usual focus on industrial policy and consider wider political economy IPR determinants of self-employment activity.
    Keywords: self-employment, intellectual property rights, imitation
    JEL: L2 O33 O34 L2
    Date: 2005–05
  4. By: Sander Wennekers; André van Stel; Roy Thurik; Paul Reynolds
    Abstract: Based upon two strands of literature, this paper hypothesizes a U-shaped relationship between a country's rate of entrepreneurial dynamics and its level of economic development. This would imply a different scope for entrepreneurship policy across subsequent stages of development. Regressing GEM's 2002 data for nascent entrepreneurship in 36 countries on the level of economic development as measured either by per capita income or by an index for innovative capacity, we find support for a U-shaped relationship. Testing our results against several control variables, evidence is again found for this relationship with economic development, in addition to significant effects of the business ownership rate (+), social security expenditure (-), aggregate taxes (+) and population growth (+). The results suggest that a 'natural rate' of nascent entrepreneurship is to some extent governed by 'laws' related to the level of economic development. For the most advanced nations, improving incentive structures for business start-ups and promoting the commercial exploitation of scientific findings offer the most promising approach for public policy. Developing nations, however, may be better off pursuing the exploitation of scale economies, fostering foreign direct investment and promoting management education.
    Keywords: Nascent entrepreneurship, economic development
    JEL: J23 L16 M13 O11
    Date: 2005–01
  5. By: Johansson, Börje (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Lööf, Hans (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Rader Olsson, Amy (CEFIN)
    Abstract: This study elucidates how firm location and corporate structure influence R&D-intensity, external collaboration on innovation, return on R&D and economic performance. The study, based on 1,907 firm level observations, essentially compare a functional region with four other regional areas in Sweden. In this context, the Stockholm region is assumed as an integrated functional urban region with innovation-proximity characteristics. The paper examines systematically the influence of location versus various firm characteristics. The econometric results suggest the following: First, a typical Stockholm firm has a significantly larger likelihood than other firms of being engaged in innovation activities. Second, among innovative firms, the R&D intensity and global collaboration on innovation is primarily determined by its corporate structure, not geographic location. Third, the embeddedness in regional and national scientific and vertical innovation systems is relatively more intense outside Stockholm. Finally, the advantage of being located within Sweden’s most strongest concentration of R&D spending, universities, human capital and multinational enterprises with their global networks is reflected by a superior return on R&D investments and higher productivity, when controlling for firm size, human capital, physical capital, R&D-intensity, market orientation and sector classification.
    Keywords: Regional economy; multinational companies; R&D; innovation; innovation system
    JEL: C21 G34 L22 O33
    Date: 2005–05–09
  6. By: Reiko Aoki; Tomoko Saiki
    Abstract: Product (material) patents were introduced to Japan in 1976. We examine data prior to 1976 and years immediately following to determine the law's effect on domestic pharmaceutical market, innovation by pharmaceutical firms, and relationship of the Japanese market to the rest of the world. There is evidence that the domestic market became more concentrated and quality of pharmaceutical innovation changed after the introduction. This is because introduction of product patents is different from simple strengthening of existing technology protection such as increasing breadth.
    Date: 2005–04
  7. By: Lee Branstetter; Reiko Aoki
    Date: 2005–04
  8. By: Giulio Bottazzi; Marco Grazzi; Angelo Secchi
    Abstract: This paper provides a description of the production process by comparing different frameworks in which to analyze the relations between inputs and output. The analysis is performed on a representative sample of Italian manufacturing firms. We employ both parametric and non-parametric analysis. The last allows to detect presence of heterogeneity in the way the production is carried out within each sector. We review some traditional issues in the econometrics of production function estimation and explain how some of them can be solved exploiting the cross-sectional time-series nature of data. Results of the econometric analysis show that coefficients estimates tend to be robust with respect to different models employed. Analysis of levels of labor productivity confirms presence of significant intra-sector heterogeneity which persists over time.
    Keywords: Input and output relation, Panel data, Returns to scale .
  9. By: Giovanni Dosi; Giorgio Fagiolo; Andrea Roventini
    Abstract: In this paper, we present an evolutionary model of industry dynamics yielding en- dogenous business cycles with 'Keynesian' features. The model describes an economy composed of firms and consumers/workers. Firms belong to two industries. The first one performs R&D and produces heterogeneous machine tools. Firms in the second industry invest in new machines and produce a homogenous consumption good. Consumers sell their labor and fully consume their income. In line with the empirical literature on investment patterns, we assume that the investment decisions by firms are lumpy and constrained by their financial structures. Moreover, drawing from behavioral theories of the firm, we assume boundedly rational expectation formation. Simulation results show that the model is able to deliver self-sustaining patterns of growth characterized by the presence of endogenous business cycles. The model can also replicate the most important stylized facts concerning micro- and macro-economic dynamics. Indeed, we find that investment is more volatile than GDP; consumption is less volatile than GDP; investment, consumption and change in stocks are procyclical and coincident variables; employment is procyclical; unemployment rate is countercyclical; firm size distributions are skewed but depart from log-normality; firm growth distributions are tent-shaped.
    Keywords: Evolutionary Dynamics, Agent-Based Computational Economics, Animal Spirits, Lumpy Investment, Output Fluctuations, Endogenous Business Cycles.
  10. By: Giorgio Fagiolo
    Abstract: We study equilibrium selection in coordination games played by a population whose size increases over time. In each time period, a new player enters the economy, observes current strategy shares and irreversibly chooses a strategy on the basis of expected payoffs. We employ a simple Polya-Urn scheme to discuss the efficiency of long-run equilibria under alternative individual decision rules (e.g. best-reply, logit, etc.). We show that the system delivers a predictable outcome only when agents employ either a linear or a logit probability rule. If agents employ deterministic best-reply rules, Pareto-efficient coordination can occur, but the actual outcome depends on initial conditions and chance. In all other cases, coexistence of strategies characterizes equilibrium configurations.
    Keywords: Coordination Games, Equilibrium Selection, Pareto-Efficient vs. Risk- Dominant Equilibrium, Polya-Urn Schemes.
  11. By: Paola Giuri; Alessandra Luzzi
    Abstract: This paper focuses on European small-medium "serial innovators" at the beginning of the 1990s and provides an empirical basis to answer the following questions: who are the upstream specialized small-medium technology producers? How are they distributed across countries? Are there technologies in which they show a relative advantage? By focusing on firms? history, activities, and the description of events obtained by different data sources, we also investigates if technology based SMEs choose to implement a strategy based on the commercialisation of their technologies or if they invest in the complementary assets of production, marketing and distribution becoming micro-chandlerian firms. Through this analysis we are able to propose a taxonomy of technology based SMEs? strategies in the market for technology, in the market for embedded technologies and in the market for products.
    Keywords: SMEs, Technology Strategies, Licensing.
  12. By: Fabrizio Cesaroni; Paola Giuri
    Abstract: Two opposite models are currently operating in the modern economy, the strong intellectual property rights (IPR) model, and the open source/open science model. They have traditionally been applied to alternative institutional contexts. The strong IPR model has been associated to the business environment, while the open science model has been associated to the academic or research system. More recently, a strengthening of the IPR system has occurred in the public research system, and open science models have been adopted in private sectors like the open source software. This paper discusses these different models and their implications on the innovative activity of firms and economies, and the market dynamics. One of the main benefits deriving from a strong IPR system is that it encourages the entry of new technology-based firms and the commercialisation of technologies in markets for technologies. At the same time, an increased patent protection is also associated to potential costs, such as those arising from a excessive fragmentation of property rights, an abuse of patent protection for strategic reasons (sleeping and blocking patents), and an increase in litigation costs.
    Keywords: Intellectual Property Rights, Patents, Patent Policy, Open Science, Open Source Software, Technology Commercialisation and Diffusion
  13. By: Paola Giuri; Salvatore Torrisi; Natalia Zinovyeva
    Abstract: This paper explores the complementarity between skills, organizational change and investments in information and communication technology (ICT). Our work contributes to the literature on the effects of ICT by testing the hypothesis of complementarity in a panel of 540 Italian manufacturing firms during the period 1995-2000. Our analysis provides strong support to the hypothesis of complementarity between skills and ICT (which is at the core of the skill-biased technical change theory). We also find some evidence in favour of the skill-biased organizational change hypothesis. The results obtained by drawing on different statistical methods suggest that interactions among ICT, skills and organizational change are complex and non-linear and difficult to explain.
    Keywords: Organisational Change, ICT Investment, Workplace Organization, Human Capital, Productivity
  14. By: Cinzia Daraio; Leopold Simar
    Abstract: The explanation of productivity differentials is very important to identify the economic conditions that create inefficiency and to improve managerial performance. In literature two main approaches have been developed: one-stage approaches and two-stage approaches. Daraio and Simar (2003) propose a full nonparametric methodology based on conditional FDH and conditional order-m frontiers without any convexity assumption on the technology. On the one hand, convexity has always been assumed in mainstream production theory and general equilibrium. On the other hand, in many empirical applications, the convexity assumption can be reasonable and sometimes natural. Leading by these considerations, in this paper we propose a unifying approach to introduce external-environmental variables in nonparametric frontier models for convex and non convex technologies. Developing further the work done in Daraio and Simar (2003) we introduce a conditional DEA estimator, i.e., an estimator of production frontier of DEA type conditioned to some external-environmental variables which are neither inputs nor outputs under the control of the producer. A robust version of this conditional estimator is also proposed. These various measures of efficiency provide also indicators of convexity. Illustrations through simulated and real data (mutual funds) examples are reported.
    Keywords: Convexity, External-Environmental Factors, Production Frontier, Nonparametric Estimation, Robust Estimation.
  15. By: Antonio Fonfría (Universidad Complutense de Madrid. Facultad de Ciencias Económicas y Empresariales. Dpto. Economía aplicada.); Isabel Alvarez (Universidad Complutense de Madrid. Facultad de Ciencias Económicas y Empresariales. Dpto. Economía aplicada.); Carlos Díaz de la Guardia (Universidad Complutense de Madrid. Facultad de Ciencias Económicas y Empresariales. Dpto. Economía aplicada.)
    Abstract: This paper analyses the main changes occurred in the productive structure of Spanish manufacturing industry in the last years, by relating them to variations in economic results observed therein and their realtionships. The analysis was carried out to three figures on the NACE and registers variables relative to the economic structure and performance of sectors.
    Date: 2005

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