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on Technology and Industrial Dynamics |
| By: | Alex Coad (Panthéon-Sorbonne Economie et LEM) |
| Abstract: | Serial correlation in annual growth rates carries a lot of information on growth processes - it allows us to directly observe firm performance as well asto test hypotheses. Using a 7-year balanced panel of 10 000 French manufacturing firms, we observe that small firms typically are subject to negative correlation of growth rates, whereas larger firms display positive correlation. Furthermore, we find that those small firms that experience extreme positive or negative growth in any one year are unlikely to repeat this performance in the following year. |
| Keywords: | Serial correlation, firm growth, quantile regression. |
| JEL: | L11 L25 |
| Date: | 2006–06 |
| URL: | http://d.repec.org/n?u=RePEc:mse:wpsorb:r06051&r=tid |
| By: | Siebert, Ralph; von Graevenitz, Georg |
| Abstract: | Licensing in a patent thicket allows firms to either avoid or resolve hold-up. Firms’ R&D incentives depend on whether they license ex ante or ex post. We develop a model of a patent portfolio race, which allows for endogenous R&D efforts, to study firms’ choice between ex ante and ex post licensing. The model shows that firms’ relationships in product markets and technology space jointly determine the type of licensing contract chosen. In particular, product market competitors are more likely to avoid patent portfolio races, since the threat of hold-up increases. On the other hand, more valuable technologies are more likely to give rise to patent portfolio races. We also discuss the welfare implications of these results. |
| Keywords: | hold-up problem; innovation; licensing; patent race; patent thicket; research joint ventures |
| JEL: | L13 L49 L63 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5753&r=tid |
| By: | Simon C. Parker; C. Mirjam van Praag |
| Abstract: | We analyse the decision to become an entrepreneur by either taking over an established business or starting a new venture from scratch. A model is developed which predicts how several individual- and firm-specific characteristics influence entrepreneurs'entry mode. The new venture creation mode is associated with higher levels of schooling and wealth, whereas managerial experience, new venture start-up capital requirements and risk promote the takeover mode. Entrepreneurs whose parents run a family firm are predicted to invest the least in schooling, since schooling reduces search costs and these individuals have the lowest probability of needing to search for a business opportunity outside their family. A sample of data on entrepreneurs from the Netherlands provides broad support for the theory; implications for policy-makers concerned about the survival of family firms lacking within-family successors are discussed. |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:esi:egpdis:2006-26&r=tid |
| By: | Farrell, Joseph; Klemperer, Paul |
| Abstract: | Switching costs and network effects bind customers to vendors if products are incompatible, locking customers or even markets in to early choices. Lock-in hinders customers from changing suppliers in response to (predictable or unpredictable) changes in efficiency, and gives vendors lucrative ex post market power - over the same buyer in the case of switching costs (or brand loyalty), or over others with network effects. Firms compete ex ante for this ex post power, using penetration pricing, introductory offers, and price wars. Such 'competition for the market' or 'life-cycle competition' can adequately replace ordinary compatible competition, and can even be fiercer than compatible competition by weakening differentiation. More often, however, incompatible competition not only involves direct efficiency losses but also softens competition and magnifies incumbency advantages. With network effects, established firms have little incentive to offer better deals when buyers’ and complementors’ expectations hinge on non-efficiency factors (especially history such as past market shares), and although competition between incompatible networks is initially unstable and sensitive to competitive offers and random events, it later 'tips' to monopoly, after which entry is hard, often even too hard given incompatibility. And while switching costs can encourage small-scale entry, they discourage sellers from raiding one another’s existing customers, and so also discourage more aggressive entry. Because of these competitive effects, even inefficient incompatible competition is often more profitable than compatible competition, especially for dominant firms with installed-base or expectational advantages. Thus firms probably seek incompatibility too often. We therefore favour thoughtfully pro-compatibility public policy. |
| Keywords: | coordination; indirect network effects; lock-in; network effects; network externalities; switching costs |
| JEL: | D42 D43 L12 L13 L14 L15 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5798&r=tid |
| By: | Favero, Carlo A; Giglio, Stefano W; Honorati, Maddalena; Panunzi, Fausto |
| Abstract: | In this paper, we study the performance of Italian listed family firms in the period 1998-2003. We measure their performance by using both accounting and market data. We first study the relative performance of family firms compared to widely held firms. Then we investigate whether performance is affected by the type of family firm (i.e., whether the CEO is a member of the family or is an outsider). We find that the data and the methodology used to measure performance strongly affect the results. When performance is measured by accounting data (ROA), using a static model, we find evidence in favour of a superior performance of family firms. Such evidence is not confirmed by the application of the same model to market measures of performance. However, we report statistical evidence that the correct econometric specification for market data is a dynamic model. The results of estimation of the dynamic model for the market measures of performance are more consistent with those based on the static model for the accounting measures of performance. |
| Keywords: | corporate performance; family firms; management style |
| JEL: | G32 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5786&r=tid |
| By: | Melamed, Ran; Shiff, Gil; Trajtenberg, Manuel |
| Abstract: | The goal of this paper is to lay out a methodology and corresponding computer algorithms, that allow us to extract the detailed data on inventors contained in patents, and harness it for economic research. Patent data has long been used in empirical research in economics, and yet the information on the identity (i.e. the names and location) of the patents’ inventors has seldom been deployed in a large scale, primarily because of the “who is who” problem: the name of a given inventor may be spelled differently across her/his patents, and the exact same name may correspond to different inventors (i.e. the “John Smith” problem). Given that there are over 2 million patents with 2 inventors per patent on average, the “who is who” problem applies to over 4 million “records”, which is obviously too large to tackle manually. We have thus developed an elaborate methodology and computerized procedure to address this problem in a comprehensive way. The end result is a list of 1.6 million unique inventors from all over the world, with detailed data on their patenting histories, their employers, co-inventors, etc. Forty percent of them have more than one patent, and 70,000 have more than 10 patents. We can trace those multiple inventors across time and space, and thus study the causes and consequences of their mobility across countries, regions, and employers. Given the increasing availability of large computerized data sets on individuals, there may be plenty of opportunities to deploy this methodology to other areas of economic research as well. |
| Keywords: | computer software; inventors; mobility; patents |
| JEL: | C81 C88 O30 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5833&r=tid |