nep-tid 2008-02-09 papers

on Technology and Industrial Dynamics

Issue of 2008‒02‒09
two papers chosen by
Rui Baptista
Technical University of Lisbon

The Process of Creative Construction: Knowledge Spillovers, Entrepreneurship and Economic Growth By Rajshree Agarwal; David Audretsch; MB Sarkar
Vertical Integration and Technology: Theory and Evidence By Daron Acemoglu; Philippe Aghion; Rachel Griffith; Fabrizio Zilibotti

The Process of Creative Construction: Knowledge Spillovers, Entrepreneurship and Economic Growth

By:	Rajshree Agarwal (University of Illinois at Urbana Champaign); David Audretsch (Max Planck Institute of Economics); MB Sarkar (University of Central Florida)
Abstract:	Questioning the underlying assumptions of the process of creative destruction, we conceptualize an alternative process of creative construction that may characterize the dynamics between entrants and incumbents. We discuss the underlying mechanism of knowledge spillover strategic entrepreneurship whereby knowledge investments by existing organizations, when coupled with entrepreneurial action by individuals embedded in their context, results in new venture creation, heterogeneity in performance and subsequent growth in industries, regions and economies. The framework has implications for future research in entrepreneurship, strategy and economic growth.
Keywords:	growth, spillovers, creative destruction, entrepreneurship
JEL:	L16 L21 M13 O11 O40 O57
Date:	2008–01–30
URL:	http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2008-008&r=tid

Vertical Integration and Technology: Theory and Evidence

By:	Daron Acemoglu; Philippe Aghion; Rachel Griffith; Fabrizio Zilibotti
Abstract:	This paper investigates the determinants of vertical integration. We first derive a number of predictions regarding the relationship between technology intensity and vertical integration from a simple incomplete contracts model. Then, we investigate these predictions using plant-level data for the UK manufacturing sector. Most importantly, and consistent with theory, we find that the technology intensities of downstream (producer) and upstream (supplier) industries have opposite effects on the likelihood of vertical integration. Also consistent with theory, both these effects are stronger when the supplying industry accounts for a large fraction of the producer’s costs. These results are generally robust and hold with alternative measures of technology intensity, with alternative estimation strategies, and with or without controlling for a number of firm and industry-level characteristics.
Keywords:	Hold-up, incomplete contracts, internal organization of the firm, investment, residual rights of control, R&D, technology, UK manufacturing, vertical integration.
JEL:	L22 L23 L24 L60
Date:	2007–12
URL:	http://d.repec.org/n?u=RePEc:zur:iewwpx:342&r=tid

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