nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2005‒10‒29
fifteen papers chosen by
Roberto Fontana
Universita Bocconi

  1. Absorptive Capacity – One Size Fits All? A Firm-level Analysis of Absorptive Capacity for Different Kinds of Knowledge By Tobias Schmidt
  2. Firm Maturity and Product Processes R&D in Swedish Manufacturing Firms By Nyström, Kristina
  3. Innovation, Appropriation and Entrepreneurial Strategy. By Stewart, Geoff
  4. Entrepreneurship, Evolution and the Human Mind By Brian Loasby
  5. Is Silence Golden? Patents versus Secrecy at the Firm Level By Kartin Hussinger
  6. Survivor: The Role of Innovation in Firm's Survival By Elena Cefis; Orietta Marsili
  7. Effects of Acquisitions on Product and Process Innovation and R&D Performance By Elena Cefis; Stephanie Rosenkranz; Utz Weitzel
  8. Horizontal integration in markets for complementary components and vertical product differentiation: A case-based analysis in the semiconductor industry By Bastian Westbrock
  9. Testing Gibrat's Legacy: A Bayesian Approach to Study the Growth of Firms By Elena Cefis; Matteo Ciccarelli; Luigi Orsenigo
  10. Does Partnering Pay Off? - Stock Market Reactions to Inter-Firm Collaboration Announcements in Germany By Carolin Häussler
  11. Integrating competition policy and innovation policy: the case of R&D cooperation By Georg von Graevenitz
  12. Entry and Exit With Information Externalities By stefano comino
  13. Industry-specificities and Size of Corporations: Determinants of Ownership Structures By Christoph van der Elst
  14. Invariances and Diversities in the Evolution of Manufacturing Industries By Giulio Bottazzi; Elena Cefis; Giovanni Dosi; Angelo Secchi
  15. Entrepreneurial engagement levels in the European Union By Isabel Grilo; Roy Thurik

  1. By: Tobias Schmidt (ZEW Mannheim)
    Abstract: The paper empirically analyses the effect of R&D activities, human resource and knowledge management, and the organisation of knowledge sharing within a firm on the absorptive capacity of innovative firms for three different types of knowledge, namely absorptive capacity to use knowledge from a firm’s own industry, knowledge from other industries and knowledge from research institutions. Using data from the German innovation survey we investigate how firms are able to exploit knowledge from external partners for successful innovation activities. The estimation results show that the determinants of absorptive capacity differ with respect to the type of knowledge absorbed for innovation activities. In particular we find that the R&D intensity does not significantly influence absorptive capacity for intra- and inter- industry knowledge. Additionally, our results suggest that absorptive capacity is path-dependent and firms can influence their ability to exploit external knowledge by encouraging individuals’ involvement in a firm’s innovation projects.
    Keywords: absorptive capacity, R&D, innovation management, innovation surveys
    JEL: O30 L20 D83
    Date: 2005–10–26
  2. By: Nyström, Kristina (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper investigates the commonly debated question about innovations and firm age. Are innovations made by incumbent firms, and does innovation therefore constitute a barrier to entry, or is innovation a way for new firms to successfully compete? The paper further investigates the relationship between firm size and innovation. Does innovation constitute a way for small firms to compete or are innovation a large firm phenomenon? In the analysis the paper explicitly distinguishes between product and process innovation. Data from 1997 and 1999 on product and process R&D, firm size and age in the Swedish manufacturing industry is used in the empirical analysis. A multinomial logit-model is used to estimate the probability of performing process and product R&D. The results show that there are complementarities between product and process R&D and very few firms conduct only process R&D. The probability of product R&D and combined product and process R&D is higher for large firms and firms that are older than 80 years. The size and age effects are more pronounced for firms that carry out both process and product R&D.
    Keywords: Product; process; R&D; firm size; firm maturity
    JEL: L11 O31 O33
    Date: 2005–10–18
  3. By: Stewart, Geoff
    Abstract: Innovation, Appropriation and Entrepreneurial Strategy Geoff Stewart Economics Division School of Social Sciences University of Southampton Abstract We analyse the strategy of an entrepreneur seeking to earn a return on a new discovery when faced by an incumbent firm and pool of potential entrants. The entrepreneur may choose to purchase the incumbent without revealing the discovery, enter the market as a competitor, or approach the incumbent with a view to some form of cooperation. Among our findings is that it is the magnitude of the discovery and its susceptibility to appropriation, rather than entry costs, that are the main determinants of whether entry will occur. Also, whilst major discoveries will always be implemented, others might be withheld. JEL classification: D23; D43; L13; O31.
    Keywords: Entrepreneur; Property rights; Appropriability; Oligopoly.
    Date: 2004–02–19
  4. By: Brian Loasby
    Date: 2005–09
  5. By: Kartin Hussinger (Center for European Economic Research (ZEW), P.O. Box 103443, D-68304 Mannheim, Germany)
    Abstract: In the 1990s, patenting schemes changed in many respects: upcoming new technologies accelerated the shift from price competition towards competition based on technical inventions, a worldwide surge in patenting took place, and the 'patent thicket' arose as a consequence of strategic patenting. This study analyzes the importance of patenting versus secrecy as an effective alternative to protect intellectual property in the inventions' market phase. The sales figure with new products is introduced as a new measure for the importance of tools to protect IP among product innovating firms. Focusing on German manufacturing in 2000, it turns out that patents are important to protect intellectual property in the market, whereas secrecy seems to be rather important for inventions that are not commercialized yet.
    Keywords: Innovation, Appropriation, Patents, Secrecy
    JEL: C34 C35 O33 O34
    Date: 2005–03
  6. By: Elena Cefis; Orietta Marsili
    Abstract: This paper explores the relationship between innovation and the survival of manufacturing firms in the Netherlands. The determinants of the survival probability of a firm, traditionally identified in the size and age of a firm, are extended to include the ability of a firm to introduce an innovation in the market. The empirical analysis combines economic and demographic data from the Business Register of the population of firms active in the Netherlands with data on innovation derived from the second Community Innovation Survey. The survival probability of a firm is estimated by using a non-parametric approach: Transition Probability Matrices were calculating over different time periods. We observe that, in general, innovation has a positive and significant effect on firms' survival that increases as time lengthens. Furthermore, our results confirm that small and young firms are those most exposed to the risk of exit, but at the same time those that benefit most of innovation to survive in the market, especially in the longer term.
    Keywords: Firms Survival, Innovation, Firms Exit, Transition Probability Matrices
    JEL: L11 O30 D21 C14 L25
    Date: 2003–11
  7. By: Elena Cefis; Stephanie Rosenkranz; Utz Weitzel
    Abstract: Using a game theoretical model on firms' simultaneous investments in product and process innovation, we deduct and empirically test hypotheses on the optimal R&D portfolio, investment, performance, and dynamic efficiency of R&D for acquisitions and in independently competing firms. We use Community Innovation Survey data on Italian manufacturing firms. Theoretical and empirical results show that firms involved in acquisitions invest in different R&D portfolios and invest at least as much in aggregate R&D as independent firms. The empirical results do not support our hypothesis on dynamic efficiency since acquisitions lead to inferior R&D performance.
    Keywords: Mergers and Acquisitions, Innovation, Dynamic Efficiency, Cost Reduction, Product Differentiation
    JEL: C72 L1 L13 O32
    Date: 2005–06
  8. By: Bastian Westbrock
    Abstract: Observations of recent mergers and acquisitions (M&A) in the semiconductor and computer industry indicate that activities concentrate on the technology leaders in this market. The author examines the influence of players' heterogeneous product technologies on their involvement in M&A. He provides a rationale for the influence with the help of a case study and a two-stage non cooperative game. The case is about an acquisition wave between suppliers in two semiconductor component markets. Exemplary for the whole industry, acquisition activities concentrated on the technology leader in one of the component markets. Technological heterogeneity is represented within a vertically differentiated product space in the model.
    Keywords: semiconductor industry, computer industry, horizontal integration, complementary product, product differentiation
    JEL: L11 L13 L63
    Date: 2004–11
  9. By: Elena Cefis; Matteo Ciccarelli; Luigi Orsenigo
    Abstract: Gibrat's law is a referent model of corporate growth dynamics. This paper employs Bayesian panel data methods to test for Gibrat's law and its implications. Using a Pharmaceutical Industry Database (1987-1998), we find evidence against Gibrat's law on average, within or across industries. Estimated steady states differ across firms, and firm sizes and growth rates don't converge within the same industry to a common limiting distribution. There is only weak evidence of mean reversion: initial larger firms do not grow relatively slower than smaller firms. Differences in growth rates and in size steady state are persistent and firm-specific, rather than sizespecific.
    Keywords: Gibrat's Law, Firm Growth, Pharmaceutical Industry, Heterogeneity, Bayesian Estimation
    JEL: C11 C23 D21 L11 L25
    Date: 2004–11
  10. By: Carolin Häussler (Institute for Innovation Research, Technology Management, and Entrepreneurship, University of Munich, Kaulbachstr. 45, D-80539 Munich, Germany)
    Abstract: The dramatic increase in interorganizational partnering in the last two decades raises questions for scholars and managers regarding the value impact of inter-firm collaborations. Using event study methodology, this paper tests whether stock market reactions differ when a collaboration formation or termination is announced. In addition, the study provides an in-depth analysis of potential determinants of stock market reactions to collaboration formation announcements. The sample consists of 1037 announcements in German stock markets from 1997 to 2002. The results show that an unexpected termination announcement decreases firm valuation, and a formation announcement increases firm valuation. Further, certain collaborations are more favorable than others, depending on firm industry, age, size, collaboration constellations, and equity versus non-equity investment in partner firm. The results open avenues for further research on partnering strategies.
    Keywords: Firm valuation, inter-firm collaboration, expectations, stock market reactions
    JEL: G14 L22 D23
    Date: 2004–12
  11. By: Georg von Graevenitz (Ludwig-Maximilians-Universität München, University of Munich, Kaulbachstr. 45, D-80539 Munich, Germany)
    Abstract: I develop a model of R&D cooperation with uncertain research outcomes. In this model asymmetric outcomes of R&D competition emerge naturally. Therefore ex-ante and ex-post R&D cooperation can be studied as alternatives for firms. Using this model I compare welfare losses under ex-ante and ex-post R&D cooperation as the degree of product market competition varies. It emerges that the relative size of these welfare losses is monotonically related to the degree of product market competition and the degree of technological opportunity. The implications of these results for the interaction of competition policy and innovation policy are discussed.
    Keywords: Competition Policy, Innovation Policy, R&D Cooperation, Licensing, Research Joint Venture, Oligopolistic R&D
    JEL: L13 L49 O31
    Date: 2005–02
  12. By: stefano comino (Dipartimento di Economia, Università di Trento)
    Abstract: In the paper we analyze how the possibility of revealing information to a competitor alters the entry/investment behavior of a first entrant. We show that once it has entered the market, the firm might refrain from making further profitable investments in order to hide information from the competitor. Moreover, we show that before entering the market, the first entrant anticipates that there is a strategic advantage in choosing an initially small scale of entry: in this way it 'commits' itself to revealing the true state of the market with its subsequent decisions and this fact is beneficial since it induces the competitor to postpone entry into market.
    Keywords: Entry, Information Externalities, Wait and See, First Entrant, Strategic Behavior
    JEL: D82 D83 L11
    Date: 2005–10–21
  13. By: Christoph van der Elst
    Abstract: This paper analyses ownership concentration in six European countries and empirically studies the rent-seeking theory. This theory states that ownership concentration not only depends on the level of investor protection but also on company-specific and industry-specific parameters. This study analyses the sector specific ownership patterns of listed corporations. The results only partially confirm the influence of industryspecific characteristics. Different industries are characterised by different shareholder concentration patterns. Hence and in light of the rent-seeking theory it is plausible that company's specific characteristics, like the identity of the largest shareholder, the risk of the firm, etc. influence rent-seeking behavior.
    Keywords: Voting-block statistics, industry characteristics, size, determinants of ownership concentration
    JEL: G32
    Date: 2004–06
  14. By: Giulio Bottazzi; Elena Cefis; Giovanni Dosi; Angelo Secchi
    Abstract: In this work we explore some basic properties of the size distributions of firms and of their growth processes both at aggregate and disaggregate levels. First, we investigate which properties of firm's size distributions and growth dynamics are robust under disaggregation. Second, at a disaggregate level, we try to identify those features which are generic and hold across all or most of the considered three digit sectors distinguishing them from sector-specific ones. Concerning firm growth, we mainly focus on the characterization of the distribution of growth rates, studying, again, the possible differences between sectors and between levels of aggregation. Finally, we begin to explore the relations between measures of size distributions and the nature of the underlying growth processes and discuss some admittedly unresolved puzzles.
    Keywords: Firms growth, Firm Size Distribution, Fat Tails, Kernel Estimation
    JEL: L11 O30 D21 C14 L25
    Date: 2003–11
  15. By: Isabel Grilo; Roy Thurik
    Abstract: A multinomial logit model and survey data from the 25 EU member states and the US are used to establish the effect of demographic and other variables on various entrepreneurial engagement levels. These engagement levels range from "never thought about starting a business" to "thinking about it", "taking steps for starting up", "having a young business", "having an older business" and "no longer being an entrepreneur". Data of the 2004 Entrepreneurship Flash Eurobarometer survey containing over 13,500 ob-servations is used. Other than demographic variables such as gender, age, education level and whether par-ents are self-employed, the set of explanatory variables used includes country specific effects, measures of risk tolerance, internal and external locus of control and four perceptions of 'obstacles'. The 'obstacle' vari-ables include the perception by respondents of administrative complexities, of availability of financial sup-port, of accessibility of information for start-up and whether the current economic climate is favorable. Among the four perception variables only administrative complexities displays an unambiguous obstacle profile in that its presence has a significant negative impact on higher entrepreneurial engagement levels. Country effects suggest a clear underperformance of Europe relative to the US in less mature entrepreneu-rial phases.
    Keywords: determinants of entrepreneurship, nascent entrepreneurship, multinomial logit, barriers to entry, Europe
    JEL: M13 H10 J23 R12
    Date: 2005–10

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