|
on Technology and Industrial Dynamics |
| By: | Alexander Cuntz |
| Abstract: | This paper addresses the key determinants of merger failure, in par- ticular the role of innovation (post-merger performance) and technology (ex-ante selection) when rms decide to separate. After a brief review of the existing literature we introduce a model of process innovation where merged firms exibit intra-merger spillover of knowledge under different mar- ket regimes, depending on whether firms integrate vertically or horizontally. Secondly, we describe an ideal matching pattern for ex-ante selection cri- teria of technological partnering, abstracting from nancial market power issues. In a final section we test the model implications for merger failure for M&A data from the US biotechnology industry in the 90s. We find that post-merger innovation performance, in particular with large spillovers, in- creases the probability of survival, while we have no evidence that market power effects do so in long run. Additionally, we find extensive technology sourcing activity by firms (already in the 90s) which contradicts the notion of failure and suits well the open innovation paradigm. |
| Keywords: | merger failure, innovation performance, technology, matching, open innovation, biotechnology |
| JEL: | O30 L22 L25 C78 L65 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2008-029&r=tid |
| By: | Bronwyn H. Hall (of California at Berkeley and University of Maastricht); Alessandro Maffioli (Inter-American Development Bank) |
| Abstract: | The paper surveys impact evaluations of government Technology Development Funds (TDF) in Argentina, Brazil, Chile and Panama. All the evaluations were done at the recipient (firm) level using data from innovation surveys, industrial surveys, and administrative records of the granting units, together with quasi-experimental econometric techniques to minimize the effects of any selection bias. TDF effectiveness is found to depend on the financing mechanism used, on the presence of non-financial constraints, on firm-university interaction, and on the characteristics of the target beneficiaries. The surveyed evaluations considered four levels of potential impact: R&D input additionality, behavioural additionality, increases in innovative output, and improvements in performance. The evidence suggests that TDF do not crowd out private investment and that they positively affect R&D intensity. In addition, participation in TDF induces a more proactive attitude of beneficiary firms towards innovation activities. However, the analysis does not find much statistically significant impact on patents or new product sales and the evidence on firm performance is mixed, with positive results in terms of firm growth, but little corresponding positive impact on measures of firm productivity. |
| Keywords: | Innovation and R&D, Policy Evalution |
| JEL: | O32 O38 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:idb:ovewps:0108&r=tid |
| By: | Shi Qi (Department of Economics, University of Minnesota) |
| Abstract: | This paper studies how advertising influences firms’ incentives to invest in R&D. The link between advertising and industry innovation is important, not only because advertising can spur R&D by spreading product knowledge, but also because advertising can discourage new innovative firms from entering the industry. This paper finds that a worse advertising technology can result in local improvements in industry innovation rates. Globally, however, a complete ban on advertising always reduce industry growth. This result is significant because industry advertising spending is quantitatively significant and there are potential connections between public policy towards advertising and R&D. This paper presents a variant of the Grossman and Helpman (1991) quality ladder model. The key difference is that the model in this paper allows advertising to gradually spread product awareness among consumers. This model differs from the entry deterrence literature by assuming perfect price discrimination. Technically, this assumption allows a fully tractable model and analytical characterization of a stationary equilibrium in a dynamic setting, which is not previously available. In terms of economic analysis, this assumption eliminates the extra profit incentives for new firms to enter early, and makes incumbent firms more inclined to use advertising as a deterrent. |
| Keywords: | Advertising, Entry Deterrence, Innovation |
| JEL: | L15 L25 M37 |
| Date: | 2008–03–24 |
| URL: | http://d.repec.org/n?u=RePEc:min:wpaper:2008-1&r=tid |
| By: | Thomas J. Holmes; David K. Levine; James A. Schmitz, Jr. |
| Abstract: | When considering the incentive of a monopolist to adopt an innovation, the textbook model assumes that it can instantaneously and seamlessly introduce the new technology. In fact, firms often face major problems in integrating new technologies. In some cases, firms have to (temporarily) produce at levels substantially below capacity upon adoption. We call such phenomena switchover disruptions, and present extensive evidence on them. If firms face switchover disruptions, then they may temporarily lose some unit sales upon adoption. If the firm loses unit sales, then a cost of adoption is the foregone rents on the sales of those units. Hence, greater market power will mean higher prices on those lost units of output, and hence a reduced incentive to innovate. We introduce switchover disruptions into some standard models in the literature, show they can overturn some famous results, and then show they can help explain evidence that firms in more competitive environments are more likely to adopt technologies and increase productivity. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmsr:402&r=tid |
| By: | Nobuo Kobayashi (School of Economics, Kwansei Gakuin University) |
| Abstract: | This study mainly investigated two issues: firstly, the existence of a positive relationship between the accumulation of knowledge stocks in regional industries and their value addition, and secondly, the spillover effects of knowledge stocks from the central cities to the surrounding regions, by using patent data as knowledge stock indicators. The empirical result suggests that there are positive impacts of knowledge accumulation to value addition, and there are positive spillover effects to the surrounding regions. The spillover effects are especially clearer when the creators of knowledge stocks are diversified in central cities, and when the industrial structure of surrounding regions is similar to the central cities. |
| Keywords: | knowledge accumulation, patent, spillover effect, regional industry |
| JEL: | O18 O34 R11 R15 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:kgu:wpaper:39&r=tid |
| By: | Erzo G.J. Luttmer |
| Abstract: | Given a common technology for replicating blueprints, high-quality blueprints will be replicated more quickly than low-quality blueprints. If quality begets quality, and firms are identifed with collections of blueprints derived from the same initial blueprint, then, along a balanced growth path, Gibrat’s Law holds for every type of firm. A firm size distribution with the thick right tail observed in the data can then arise only when the number of blueprints in the economy grows over time, or else firms cannot grow at a positive rate on average. But when calibrated to match the observed firm entry rate and the right tail of the size distribution, this model implies that the median age among firms with more than 10,000 employees is about 750 years. The problem is Gibrat’s Law. If the relative quality of a firm’s blueprints depreciates as the firm ages, then the firm’s growth rate slows down over time. By allowing for rapid and noisy initial growth, this version of the model can explain high observed entry rates, a thick-tailed size distribution, and the relatively young age of large U.S. corporations. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmwp:657&r=tid |
| By: | Yu, Li; Hurley, Terrance M; Kliebenstein, James; Orazem, Peter |
| Abstract: | Economists have long puzzled over the fact that large firms pay higher wages than small firms, even after controlling for worker’s observed productive characteristics. One possible explanation has been that firm size is correlated with unobserved productive attributes which confound firm size with other productive characteristics. This study investigates the size-wage premium in the context of firms competing within a single market for a relatively homogeneous product: hogs. We pay particular attention to the matching process by which workers are linked to farms of different size and technology use, and whether the matching process may explain differences in wages across farms. The study relies on four surveys of employees on hog farms collected in 1990, 1995, 2000, and 2005. We find that there are large wage premia paid to workers on larger farms that persist over time. Although more educated and experienced workers are more likely to work on larger and more technologically advanced hog farms, the positive relationships between wages and both farm size and technology adoption remain large and statistically significant even after controlling for differences in observable worker attributes and in the observed sorting process of workers across farms. |
| Keywords: | Pork, Hog Farms, Wages, Technology, Propensity Score, Size, Wage Premium |
| JEL: | J4 |
| Date: | 2008–04–19 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genres:12921&r=tid |