nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2006‒08‒12
six papers chosen by
Roberto Fontana
Universita Bocconi

  1. The evolution of the Dutch dairy industry and the rise of cooperatives: Combining transaction cost and evolutionary approaches By Koen Frenken; Gerben van der Steege
  2. The evolution of inventor networks in the Silicon Valley and Boston regions By Lee Fleming; Koen Frenken
  3. Market power in the beef packing industry: is it time for a new approach? By L. Hunnicutt
  4. An evolutionary model of firms' institutional behavior focusing on labor decisions By Sandra Tavares Silva; Aurora A.C. Teixeira
  5. Plant Turnover and TFP Dynamics in Japanese Manufacturing By Kyoji Fukao; Young Gak Kim; Hyeog Ug Kwon
  6. Speed of innovation in high technology firms: geographic and organizational strategies By E. Echeverri-Carroll; L. Hunnicutt

  1. By: Koen Frenken; Gerben van der Steege
    Abstract: The thesis advanced in this paper holds that any transaction cost explanation of the diffusion of a particular organizational form requires an evolutionary analysis of differential performance of competing organizational forms over time. Using data on 1141 dairy factories in The Netherlands, we find evidence that cooperative factories performed significantly better than private factories, which can be explained by cooperatives’ lower transaction costs. However, superior performance is observed only in the Northern part, while cooperatives were more dominant in the Southern part. This suggests that entry conditions for cooperative factories in the South were more favourable than in the North.
    Keywords: transaction cost economics, survival analysis, industry lifecycle, dairy industry, cooperatives
    Date: 2006–07
  2. By: Lee Fleming; Koen Frenken
    Abstract: While networks are widely thought to enhance regional innovative capability, there exist few longitudinal studies of their formation and evolution over time. Based on an analysis of all patenting inventors in the U.S. from 1975 to 2002, we observe dramatic aggregation of the regional inventor network in Silicon Valley around 1989. Based on network statistics, we argue that the sudden rise of giant networks in Silicon Valley can be understood as a phase transition during which small isolated networks form one giant component. By contrast, such a transition in Boston occurred much later and much less dramatically. We do not find convincing evidence that this marked difference between the two regions is due to regional differences in the propensity to collaborate or the involvement of universities in patenting. Interviews with key network players suggest that contingent labor mobility between established firms in Silicon Valley, in particular resulting from IBM’s policy as a central player in patenting activity, promoted inter-organizational networking, leading to larger inventor networks.
    Keywords: evolutionary economic, inventor networks
    Date: 2006–07
  3. By: L. Hunnicutt
    Abstract: Consolidations in the U.S. beef packing industry have prompted concern within the government and interest among academics over whether packers possess and are able to exercise market power. Economists have generated numerous studies to test for and measure market power in beef packing, but the empirical studies have failed to provide definitive results on the presence of market power and whether any existing market power is exercised. The thesis of this paper is that the standard approach to measuring market power, conjectural variations, is based on a model which may not accurately describe competition between packing firms. I first discuss the institutional factors of beef packing that are not captured by the conjectural variations approach. I then present a theoretical extension of the CV approach which is based on a more realistic description of competition between packing firms. The paper concludes by suggesting alternative techniques for measuring market power.
  4. By: Sandra Tavares Silva (CEMPRE, Faculdade de Economia do Porto, Universidade do Porto); Aurora A.C. Teixeira (CEMPRE, Faculdade de Economia do Porto, Universidade do Porto)
    Abstract: The understanding of the economy's aggregate growth patterns is a fundamental objective of economic growth theorizing. However, the micro constructions are strongly linked to economic growth and so cannot be neglected in such process. This paper is concerned with this problem, proposing a formal mechanism to establish the bridge between macro regularities and micro evolutionary behavior. Within a micro to macro or bottom-up perspective, the adopted approach is focused in the influence of firms’ ‘institutional settings’ on economic growth and in the industry dynamics that lies behind more aggregate behaviors. The analysis associates such settings to firms’ labor choices in terms of hiring/firing policies and to their screening capabilities. Building a computer simulation model which deals with the nature and evolution of the knowledge that guides firms’ efforts to improve their institutional settings, we were able to draw some important implications. The results show that firm’s ability to change its ‘institutional setting’ is crucial for its survival. In a model without a learning mechanism the results show significant turbulence in terms of exit and entry of firms and no significant connection with the firm’s ‘institutional set’. In the LearnModel, the outcome is much more stable, with initial firms surviving for long period of time. Results also suggest that the presence of a learning mechanism is particularly striking in what concerns firms’ behavior and industry’s dynamics. The survival probability depends on firms’ hiring efficiency and on their ability to react to environmental changes. Since firms’ hiring efficiency and their learning rates depend on their accumulated non-routine workers, the results seem to imply some ‘lock-in’ paths. Firms with initial low values of relative non-routine workers have lower chances of survival. However, firms with initial high values of relative non-routine workers will survive if and only if they rapidly improve their hiring efficiency.
    Keywords: evolutionary, industrial dynamics, learning, labor decisions
    JEL: D21 D83 L22 M51
    Date: 2006–08
  5. By: Kyoji Fukao; Young Gak Kim; Hyeog Ug Kwon
    Abstract: This study analyzes the cause of the slowdown in Japan's TFP growth during the 1990s. Many preceding studies, examining the issue at the macro- or industry-level, have found that the slowdown was primarily due to the stagnation in TFP growth in the manufacturing sector. Using establishment level panel data covering the entire sector, we investigate the causes of the TFP slowdown and find that the reallocation of resources from less efficient to more efficient firms was very slow and limited. This "low metabolism" seems to be an important reason for the slowdown in Japan's TFP growth.
    JEL: O4 O53
    Date: 2006–08
  6. By: E. Echeverri-Carroll; L. Hunnicutt
    Abstract: Competition in high technology is increasingly based on rapid innovation. But what conditions quicken innovation? Some suggest innovation is faster in firms with many related organizations located nearby. Others propose relationships with customers and suppliers as key factors in rapid innovation. We attempt to differentiate between these hypotheses. We find that local amenities determine firm location, but not innovation speed. Instead relationships with suppliers and customers are the main determinants of innovation speed.

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