nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2008‒05‒24
three papers chosen by
Rui Baptista
Technical University of Lisbon

  1. Firms in Scottish High Technology Clusters: software, life sciences, microelectronics, optoelectronics and digital media – preliminary evidence and analysis on firm size, growth and optimality By Gavin C. Reid; Vandana Ujjual
  2. Profit Raising Entry By Arijit Mukherjee; Laixun Zhao
  3. Exploiting the Modularity of Value Chains: Inter-firm Dynamics of the Taiwanese Notebook PC Industry By Kawakami, Momoko

  1. By: Gavin C. Reid; Vandana Ujjual
    Abstract: This paper reports on new primary source evidence and analysis on high technology clusters in Scotland. It focuses on the following sectors: software, life sciences, microelectronics, optoelectronics, and digital media. Evidence on a postal and e-mailed questionnaire is presented and discussed under the headings of: performance, resources, collaboration & cooperation, embeddedness, and innovation. The sampled firms are characterised as being small (viz. micro-firms and SMEs), knowledge intensive (all graduate staff), research intensive (average spend on R&D three times turnover), and internationalised (mainly selling to markets beyond Europe). Preliminary statistical evidence is presented on Gibrat’s Law (independence of growth and size) and the Schumpeterian Hypothesis (scale economies in R&D). Estimates suggest a short-run equilibrium size of just 100 employees, but a long-run equilibrium size of 1000 employees. Further, to achieve the Schumpeterian effect (of marked scale economies in R&D), estimates suggest that firms have to grow to very much larger sizes of beyond 3,000 employees. We argue that the principal way of achieving the latter scale may need to be by takeovers and mergers, rather than by internally driven growth
    Keywords: High technology, Scottish firms, Gibrat’s Law, the Schumpeterian Hypothesis.
    JEL: O18 O31 O34 O38
    Date: 2008–05
  2. By: Arijit Mukherjee; Laixun Zhao
    Abstract: Common wisdom suggests that entry reduces profits of the incumbent firms. On the contrary, we show that if the incumbents differ in marginal costs and the entrants behave like Stackelberg followers, entry may benefit the incumbents who are relatively cost efficient while it always hurts the cost inefficient incumbents. However, the outputs of all incumbents may be higher under entry.
    Keywords: Entry; Profit; Stackelberg Competition
  3. By: Kawakami, Momoko
    Abstract: This paper explores the inter-firm dynamics that govern the rise of capabilities of latecomer firms operating in global value chains. By extending and modifying the model proposed by Gereffi, Humphrey and Sturgeon [2005], I present a framework in which the rise of supplier capabilities is determined by interactions among the strategies of the firms. Based on a case study of the Taiwanese notebook PC industry, the paper will explore how the interactions among outsourcing strategies by lead firms from the developed countries, the learning strategies of Taiwanese suppliers, and the product strategy of powerful component vendors have driven the explosive growth of the industry after the 1990s. By so doing, the paper attempts to highlight the active roles firms play in determining the speed and direction of the rise in supplier capabilities.
    Keywords: Global value chains, Notebook PC industry, ODM(original design manufacturing), Taiwan, Computer, Electronic industries
    JEL: F14 L23 L63
    Date: 2008–04

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