nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2011‒05‒24
four papers chosen by
Rui Baptista
Technical University of Lisbon

  1. Entrepreneurial innovations and taxation By Haufler, Andreas; Norbäck, Pehr-Johan; Persson, Lars
  2. Innovation decision of Tunisian service firms: an empirical analysis By Sdiri, Hanen; Ayadi, Mohamed
  3. Are Exporters More Likely to Introduce Product Innovations? By Massimiliano Bratti; Giulia Felice
  4. Immigration and Innovation By David C Maré; Richard Fabling; Steven Stillman

  1. By: Haufler, Andreas; Norbäck, Pehr-Johan; Persson, Lars
    Abstract: In many countries entrepreneurship is promoted through tax reductions for small businesses and by various government support schemes. We analyze the effects of such policies to subsidize small businesses in a setting where both the risk-return characteristics of the selected innovation project and the mode of commercialization chosen by entrepreneurs (market entry versus sale to an incumbent firm) are endogenous. We show that government programs to support small businesses foster market entry by entrepreneurs but, at the same time, give an incentive to choose low risk projects, due to the existence of limited loss o®set provisions. This points to a basic trade-off be- tween the goals of raising competition in technology-intensive markets and the desire of governments to foster risky `breakthrough' innovations.
    Keywords: business taxation; innovation; market entry
    JEL: H25 L13 M13 O31
    Date: 2011–05
  2. By: Sdiri, Hanen; Ayadi, Mohamed
    Abstract: Innovation is widely recognised as a key driver of economic growth and competitiveness. But, some works focus especially on analyzing the determinants and the effects of innovation while distinguishing between its various types (product innovation, process innovation, radical innovation and incremental innovation). The analysis of the determinants is certainly important, but few research efforts testing the way in which firms make the decision to innovate. Based on a sample of 108 Tunisian service firms, the purpose of the paper is to explain the way in which firms make the decision to innovate: simultaneous (one-stage model) or sequential (two-stage model). We find that the two-stage model has a statistically-significant advantage in predicting the innovation. In practice, the sequential model illustrates well the innovation making-decision procedures.
    Keywords: Innovation; Decision making; Service sector.
    JEL: O32 O31 L80
    Date: 2011
  3. By: Massimiliano Bratti (University of Milan and IZA); Giulia Felice (University of Milan and Centro Studi Luca d\'Agliano)
    Abstract: We analyze the relationship between a firm\'s export status and its product innovation activity by using a rich firm-level survey on Italian manufacturing. We find that the positive association between exporting and product innovativeness is robust to controlling for many sources of firm\'s observable heterogeneity. Use of an instrumental variables strategy allows us also to conclude that this association can be qualified as a causal relation: a firm\'s export status induces product innovations (learning by exporting). This effect emerges over and above the correlation accounted for by some of the main channels commonly emphasized by the existing literature. In the light of this evidence, we discuss the sources from which the residual effect of exporting on product innovation that we observe may originate.
    Keywords: Exporters, Firms, Italy, Manufacturing, Product Innovation
    JEL: F1 L2 O3
    Date: 2011–05–09
  4. By: David C Maré (Motu Economic and Public Policy Research); Richard Fabling (Reserve Bank of New Zealand); Steven Stillman (Motu Economic and Public Policy Research, IZA and CReAM)
    Abstract: We combine firm-level innovation data with area-level Census data to examine the relationship between local workforce characteristics, especially the presence of immigrants and local skills, and the likelihood of innovation by firms. We examine a range of innovation outcomes, and test the relationship for selected subgroups of firms. We find a positive relationship between local workforce characteristics and average innovation outcomes in labour market areas, but this is accounted for by variation in firm characteristics such as firm size, industry, and research and development expenditure. Controlling for these influences, we find no systematic evidence of an independent link between local workforce characteristics and innovation.
    Keywords: Innovation; Immigration; Local labour market
    JEL: O31 R30
    Date: 2011–05

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