nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2005‒12‒09
thirteen papers chosen by
Roberto Fontana
Universita Bocconi

  1. The Effects of Entry on Incumbent Innovation and Productivity By Aghion, Philippe; Blundell, Richard William; Griffith, Rachel; Howitt, Peter; Prantl, Susanne
  2. The Knowledge Spillover Theory of Entrepreneurship By Acs, Zoltán J; Audretsch, David B; Braunerhjelm, Pontus; Carlsson, Bo
  3. Entrepreneurial Access and Absorption of Knowledge Spillovers: Strategic Board and Managerial Composition for Competitive Advantage By Audretsch, David B; Lehmann, Erik E
  4. Effects of Acquisitions on Product and Process Innovation and R&D Performance By Cefis, Elena; Rosenkranz, Stephanie; Weitzel, Utz
  5. Growth and Entrepreneurship: An Empirial Assessment By Zoltan J. Acs; David B. Audretsch; Pontus Braunerhjelm; Bo Carlsson
  6. Renascent Men or Entrepreneurship as a One-Night Stand: Entrepreneurial Intentions Subsequent to Firm Exit By Audretsch, David B; Meijaard, Joris; Stam, Erik
  7. New firm performance and territorial driving forces By Silvia Gorenstein; Raul Dichiara; Gustavo Burachik; Andrea Castellano; Valentina Viego
  8. The Impact of Entry and Competition by Open Source Software on Innovation Activity By Jürgen Bitzer; Philipp J.H. Schröder
  9. Advertising, Competition and Entry in Media Industries By Claude Crampes; Carole Haritchabalet; Bruno Jullien
  10. Job-Hopping in Silicon Valley: Some Evidence Concerning the Micro-Foundations of a High Technology Cluster By Bruce Fallick; Charles A. Fleischman; James B. Rebitzer
  11. Subsidizing Technological Innovations in the Presence of R&D Spillovers By Carsten Helm; Anja Schöttner
  12. Entrepreneurial Founder Effects in the Growth of Regional Clusters: How Early Succes is a Key Determinant By Michael S. Dahl; Christian Ø.R. Pedersen; Bent Dalum
  13. When to Exit a Product: Evidence from the U.S. Motion-Pictures Exhibition Market. By Darlene Chisholm; George Norman

  1. By: Aghion, Philippe; Blundell, Richard William; Griffith, Rachel; Howitt, Peter; Prantl, Susanne
    Abstract: How does firm entry affect innovation incentives and productivity growth in incumbent firms? Micro-data suggests that there is heterogeneity across industries - incumbents in technologically advanced industries react positively to entry, but not in laggard industries. To explain this pattern, we introduce entry into a Schumpeterian growth model with multiple sectors which differ by their distance to the technological frontier. We show that entry threat spurs innovation incentives in technologically advanced sectors - successful innovation allows incumbents to prevent entry. In laggard sectors it discourages innovation - increased entry reduces incumbents' expected rents from innovating. We find that the empirical patterns hold using rich micro-level productivity growth and patent panel data for the UK, and controlling for the endogeneity of entry by exploiting the large number of policy reforms undertaken during the Thatcher era.
    Keywords: entry; growth; innovation
    JEL: D21 F21 L10 O31
    Date: 2005–10
  2. By: Acs, Zoltán J; Audretsch, David B; Braunerhjelm, Pontus; Carlsson, Bo
    Abstract: Contemporary theories of entrepreneurship generally focus on the decision-making context of the individual. The recognition of opportunities and the decision to commercialize them is the focal concern. While the prevalent view in the entrepreneurship literature is that opportunities are exogenous, the most prevalent theory of innovation in the economics literature suggests that opportunities are endogenous. This paper bridges the gap between the entrepreneurship and economic literature on opportunity by developing a knowledge spillover theory of entrepreneurship. The basic argument is that knowledge created endogenously via R&D results in knowledge spillovers. Such spillovers give rise to opportunities to be identified and exploited by entrepreneurs. Our results show that there is a strong relationship between knowledge spillovers and new venture creation.
    Keywords: entrepreneurship; knowledge; management science; opportunity
    JEL: J24 M13 O3 R1
    Date: 2005–11
  3. By: Audretsch, David B; Lehmann, Erik E
    Abstract: The resource theory of the firm implies that knowledge is a key resource bestowing a competitive advantage for entrepreneurial firms. However, it remains rather unclear up to now, how new ventures and small business can access knowledge resources. The purpose of this paper is to suggest two strategies in particular that facilitate entrepreneurial access to and absorption of external knowledge spillovers: the attraction of managers and directors with an academic background. Based on data on board composition of 295 high technology firms, the results clearly demonstrate the strong link between geographical proximity to research intense universities and board composition.
    Keywords: board composition; corporate governance; entrepreneurship; university spillover
    Date: 2005–11
  4. By: Cefis, Elena; Rosenkranz, Stephanie; Weitzel, Utz
    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: cost reduction; dynamic efficiency; innovation; mergers and acquisitions; product differentiation
    JEL: C72 L1 L13 O32
    Date: 2005–10
  5. By: Zoltan J. Acs; David B. Audretsch; Pontus Braunerhjelm; Bo Carlsson
    Abstract: This paper suggests that the spillover of knowledge may not occur automatically as has typically been assumed in models of endogenous growth. Rather, a mechanism is required that serves as a conduit for the spillover and commercialization of knowledge from the source creating it to the firm actually commercializing the new ideas. In this paper, entrepreneurship is identified as one such mechanism facilitating the spillover of knowledge. Using a panel of entrepreneurship data for 18 countries, empirical evidence is found that in addition to measures of R&D and human capital, entrepreneurial activity also serves to promote economic growth.
    Keywords: Entrepreneurship, Growth
    Date: 2005–11
  6. By: Audretsch, David B; Meijaard, Joris; Stam, Erik
    Abstract: While a large literature has emerged focusing on nascent entrepreneurship, the propensity for ex-entrepreneurs to consider re-entering into entrepreneurship, or what we term here as renascent entrepreneurship, has been generally overlooked. According to the theory of selection and passive learning (Jovanovic, 1982), while there is a lot to be learned about the underlying but unobservable endowment of entrepreneurial skills from entering into entrepreneurship, there is virtually nothing that can be additionally learned from subsequently re-entering into entrepreneurship following termination of a previous firm. This paper suggests a different view of learning, where the entrepreneur can utilize her capacity to absorb and learn from the initial entrepreneurial experience, thereby augmenting her initial endowment of entrepreneurial skills. This leads to the theoretical prediction that those ex-entrepreneurs with characteristics more conducive to augmenting entrepreneurial abilities are more likely to become renascent entrepreneurs. Based on the empirical evidence from a database consisting of ex-entrepreneurs, we conclude that those ex-entrepreneurs with the characteristics facilitating the augmentation of entrepreneurial skills exhibit a higher propensity for becoming renascent entrepreneurs. This would suggest that there are two types of learning gained from entrepreneurship - both passive learning about the underlying endowment of entrepreneurial skills, but also active learning in that the (ex)entrepreneur learns how to do it better.
    Keywords: entrepreneurial learning; entrepreneurship; firm exit; nascent entrepreneurship; renascent entrepreneurship; restart
    JEL: J24 J23 M13
    Date: 2005–11
  7. By: Silvia Gorenstein (UNSUR); Raul Dichiara (UNSUR); Gustavo Burachik (UNSUR); Andrea Castellano (UNSUR); Valentina Viego (UNSUR)
    Abstract: The article analyses recent approaches on entry and post-entry performance by new firms, with particular focus on its applicability to small manufacturing firms recently borned in Argentina. The analysis is based on a sample of small firms created in the period 1990-2000 in three intermediate cities in Buenos Aires province (Argentina) in manufacturing sector. The survey collected data about microeconomic and mesoeconomic elements influencing firm performance. Results indicate that tradability is a key factor influencing firm performance. New firms entering markets where the spatial markets are reduced face limited perspectives on expansion. In turn, tradability is also affected by entrepeneurial motivation and, especially in underveloped regions, macroeconomic variables.
    Keywords: new firms, post-entry performance, transability
    JEL: L
    Date: 2005–11–25
  8. By: Jürgen Bitzer (Free University Berlin); Philipp J.H. Schröder (Aarhus School of Business)
    Abstract: This paper presents the stylized facts of open source software innovation and provides empirical evidence on the impact of increased competition by OSS on the innovative activity in the software industry. Furthermore, we introduce a simple formal model that captures the innovation impact of OSS entry by examining a change in market structure from monopoly to duopoly under the assumption that software producers compete in technology rather than price or quantities. The paper identifies a pro-innovative effect of OSS competition.
    Keywords: open source software, innovation, strategic interaction
    JEL: L13 L30 L86
    Date: 2005–12–02
  9. By: Claude Crampes; Carole Haritchabalet; Bruno Jullien
    Abstract: This paper presents a model of media competition with free entry when media operators are financed both from advertisers and customers. The relation between advertising receipts and sales receipts, which are both complementary and antagonist, is different if media operators impose a price or a quantity to advertisers. When consumers dislike advertising, media operators are better off setting an advertising price than an advertising quantity. We establish a relationship between the equilibrium levels (advertising and entry) and the advertising technology. In particular, media operators’ profit is not affected by the introduction of advertising when they impose advertising quantities and when advertising exhibits constant returns to scale in the audience size. Under constant or increasing returns to scale in the audience size, we find an excessive level of entry and an insufficient level of advertising.
    Keywords: media, advertising, free entry, two-sided markets
    JEL: L13 L82
    Date: 2005
  10. By: Bruce Fallick (Federal Reserve System); Charles A. Fleischman (Federal Reserve System); James B. Rebitzer (Case Western Reserve University, The Levy Economics Institute, & The National Bureau of Economic Research)
    Abstract: Observers of Silicon Valley’s computer cluster report that employees move rapidly between competing firms, but evidence supporting this claim is scarce. Job-hopping is important in computer clusters because it facilitates the reallocation of talent and resources toward firms with superior innovations. Using new data on labor mobility, we find higher rates of job-hopping for college-educated men in Silicon Valley’s computer industry than in computer clusters located out of the state. Mobility rates in other California computer clusters are similar to Silicon Valley’s, suggesting some role for features of California law that make non-compete agreements unenforceable. Consistent with our model of innovation, mobility rates outside of computer industries are no higher in California than elsewhere.
    Keywords: agglomerations, clusters, non-compete agreements, human capital, innovation, Silicon Valley, modular production.
    JEL: R12 L63 O3 J63
    Date: 2005–12–02
  11. By: Carsten Helm (Institut für Volkswirtschaftslehre (Department of Economics), Technische Universität Darmstadt (Darmstadt University of Technology)); Anja Schöttner (School of Business and Economics, Humboldt University Berlin)
    Abstract: We analyze a situation where a principal wants to induce firms to produce an output, e.g. electricity from renewable energy sources. Firms can undertake non-contractible investments to reduce production costs of the output. Parts of these investments spills over and also reduce production costs of the other firm. Comparing the general price subsidy and an innovation tournament, we find that the principal's expected cost of implementing a given expected output are always higher under the tournament, even though this scheme may lead to more innovation.
    Keywords: R&D spillovers, tournaments, subsidies, moral hazard
    JEL: Q55 D82 H23 D43
    Date: 2005–11
  12. By: Michael S. Dahl; Christian Ø.R. Pedersen; Bent Dalum
    Abstract: How can the growth of regional clusters be explained? This paper studies in great detail the growth of the wireless communication cluster in Northern Denmark. Unlike the dominant theories, we argue that initial success of the first firms are the main driving force behind the generation of new firms that eventually lead to the formation of clusters. The success of the first firms tend to generate spinoffs, which becomes successful themselves due to the background of the founders.
    Keywords: Agglomeration; Clusters; Spin-offs; Knowledge Diffusion
    JEL: R10 O13 J60 L63
    Date: 2005
  13. By: Darlene Chisholm; George Norman
    Abstract: When is it optimal for a multi-product firm to exit a product? We analyze strategic product exit using data on motion-pictures exhibition choices in a major metropolitan first-run market to estimate the survivor function for films at a given theatre. This analysis indicates that a film’s survival at a particular theatre is affected by intra-firm relative performance and interfirm competitive pressures. We find that theatres within chains avoid business stealing. Preliminary analysis further suggests that theatres compete for market share with neighboring theatres by increasing the time to exit when the competing theatre is owned by a different chain.
    Date: 2005

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