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on Technology and Industrial Dynamics |
| By: | Nicholas Bloom; Erik Brynjolfsson; Lucia Foster; Ron Jarmin; Megha Patnaik; Itay Saporta-Eksten; John Van Reenen |
| Abstract: | The Census Bureau recently conducted a survey of management practices in over 30,000 plants across the US, the first large-scale survey of management in America. Analyzing these data reveals several striking results. First, more structured management practices are tightly linked to higher levels of IT intensity in terms of a higher expenditure on IT and more on-line sales. Likewise, more structured management is strongly linked with superior performance: establishments adopting more structured practices for performance monitoring, target setting and incentives enjoy greater productivity and profitability, higher rates of innovation and faster employment growth. Second, there is a substantial dispersion of management practices across the establishments. We find that 18% of establishments have adopted at least 75% of these more structured management practices, while 27% of establishments adopted less than 50% of these. Third, more structured management practices are more likely to be found in establishments that export, who are larger (or are part of bigger firms), and have more educated employees. Establishments in the South and Midwest have more structured practices on average than those in the Northeast and West. Finally, we find adoption of structured management practices has increased between 2005 and 2010 for surviving establishments, particularly for those practices involving data collection and analysis. |
| Keywords: | IT; Management; Productivity; Organization |
| JEL: | M1 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:60267&r=tid |
| By: | Carlo Altomonte; Tommaso Aquilante; Gábor Békés; Gianmarco I. P. Ottaviano |
| Abstract: | We use a representative and cross-country comparable sample of manufacturing firms (EFIGE) to document patterns of interaction among firm-level internationalization, innovation and productivity across seven European countries (Austria, France, Germany, Hungary, Italy, Spain, United Kingdom). We find strong evidence of positive association among the three firm-level characteristics across countries and sectors. We also find that the positive correlation between internationalization and innovation survives after controlling for productivity, with some evidence of causality running from the latter to the former. Our analysis suggests that export promotion per se is unlikely to lead to sustainable internationalization because internationalization goes beyond export and because, in the medium-to-long term, internationalization is driven by innovation. We recommend coordination and integration of internationalization and innovation policies ‘under one roof’ at both the national and EU levels, and propose a bigger coordinating role for EU institutions. |
| Keywords: | Internationalization; innovation; firm-level data; exports; foreign direct investment; outsourcing |
| JEL: | F13 F23 O31 O38 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:60275&r=tid |
| By: | Foellmi, Reto; Legge, Stefan; Tiemann, Alexa |
| Abstract: | This paper examines how trade liberalization affects investments in R&D at the firm level. We provide a model with entrepreneurs differing in their wealth endowment, causing them to rely differently on external funds. In the presence of capital market imperfections, this implies heterogeneous access to external funds such that poor entrepreneurs run smaller firms, are less likely to invest in R&D, and more likely to exit the market. Decreasing trade costs resulting from tariff reductions exacerbate these characteristics. Using firm-level panel data on seven Latin American countries for 2006 and 2010, we find support for our theoretical predictions. While recent studies emphasize a positive impact of trade liberalization on firms' productivity-enhancing activities, we provide novel evidence showing that financial constraints can impair the effect on R&D efforts. These results suggest that imperfect capital markets can prevent welfare gains from trade liberalization to materialize. |
| Keywords: | Financial constraints, innovation, trade liberalization |
| JEL: | F14 O12 O16 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:usg:econwp:2015:03&r=tid |
| By: | Brown, James R. (Department of Finance, Iowa State University); Martinsson, Gustav (Institute for Financial Research (SIFR) & Centre of Excellence for Science and Innovation Studies (CESIS)); Petersen, Bruce C. (Department of Economics, Washington University in St. Louis) |
| Abstract: | Information problems and lack of collateral value should make R&D more susceptible to financing frictions than other investments, yet existing evidence on whether financing constraints limit R&D is decidedly mixed, particularly in studies of non-U.S. firms. We study a large sample of European firms and also find little evidence of binding finance constraints when we estimate standard investment-cash flow regressions. However, we find strong evidence that the availability of finance matters for R&D once we directly control for: i) firm efforts to smooth R&D with cash reserves, and ii) firm use of external equity finance. Our study provides a framework for evaluating financing constraints when firms rely extensively on external finance and endogenously manage buffer stocks of liquidity to keep investment smooth, and our findings show that controlling for this smoothing behavior is critical for uncovering the full effect of financing constraints. Our findings also indicate a major role for external equity in financing R&D, highlighting a causal channel through which stock market development and liberalization can promote economic growth by increasing firm-level innovative activity. |
| Keywords: | Financing innovation; R&D financing constraints; Finance and growth; Stock market development; Value of liquidity |
| JEL: | G31 G32 |
| Date: | 2015–01–21 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0394&r=tid |
| By: | Bianchini, Stefano; Krafft, Jackie; Quatraro, Francesco; Ravix, Jacques (University of Turin) |
| Abstract: | This paper investigates the relationship between corporate governance (CG) and innovation according to firms’ age by combining insights from the recent strand of contributions analysing CG and innovation with the lifecycle literature. We find a negative relationship between CG and innovation which is stronger for young firms than for mature ones. The empirical analysis is carried out on a sample of firms drawn from the ISSR isk Metrics database and observed over the period 2003 -2008. The parametric methodology provides results that are consistent with the literature and supports the idea that mature firms are better off than young ones. We check for possible non-linearities by implementing a non-parametric analysis and suggest that the negative relationship between CG and innovation is mostly driven by higher values of CG. |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:uto:dipeco:201504&r=tid |
| By: | Roychoudhury, Saurav; Bhowmik, Anuj; Chattopadhyay, Srobonti |
| Abstract: | We consider a two period career concern model where corporate governance is a decisive factor for innovation efforts by a manager. In the beginning of the frst period, a manager decides whether to innovate. Prior to the innovation decision, the ability of the manager is unknown to the firm but known to the manager and an expected wage is paid based on a probability distribution of managerial abilities. The success of the innovation is both a function of the managerial ability and the product market competition and the beliefs about the managerial ability is updated if the manager innovates and the wage is set for the second period accordingly. Our model predicts that the rate of innovation would be higher under a more democratic governance structure and relatively low product market competition. Using a panel dataset from 1990s, compiled from Aghion et al.(2013b) and Gompers, Ishii,and Metrick (2003), containing time-varying information of patent citations, R&D, product market competition, and Governance index, we show that there is a robust association between innovation and the quality of governance and this relationship is strongest in industries with relatively low competition. |
| Keywords: | Governance, Compeition |
| JEL: | G3 |
| Date: | 2015–01–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:61557&r=tid |
| By: | Antoine Dechezlepretre; Ralf Martin; Myra Mohnen |
| Abstract: | How much should governments subsidize the development of new clean technologies? We use patent citation data to investigate the relative intensity of knowledge spillovers in clean and dirty technologies in two technological fields: energy production and transportation. We introduce a new methodology that takes into account the whole history of patent citations to capture the indirect knowledge spillovers generated by patents. We find that conditional on a wide range of potential confounding factors clean patents receive on average 43% more citations than dirty patents. Knowledge spillovers from clean technologies are comparable in scale to those observed in the IT sector. The radical novelty of clean technologies relative to more incremental dirty inventions seems to account for their superiority. Our results can support public support for clean R&D. They also suggest that green policies might be able to boost economic growth through induced knowledge spillovers. |
| Keywords: | Innovation spill-overs; Climate Change; Growth; Patents; Clean technology; Optimal climate policy |
| JEL: | H23 O30 O54 O55 Q58 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:60501&r=tid |
| By: | Iain Cockburn; Jean O. Lanjouw; Mark Schankerman |
| Abstract: | This paper studies how patent rights and price regulation affect how fast new drugs are launched in different countries, using newly constructed data on launches of 642 new drugs in 76 countries for the period 1983-2002, and information on the duration and content of patent and price control regimes. Price regulation strongly delays launch, while longer and more extensive patent protection accelerates it. Health policy institutions, and economic and demographic factors that make markets more profitable, also speed up diffusion. The effects are robust to using instruments to control for endogeneity of policy regimes. The results point to an important role for patents and other policy choices in driving the diffusion of new innovations. This project was initiated by Jean (Jenny) Lanjouw. Tragically, Jenny died in late 2005, but had asked us to complete the project. This took much longer than expected because it involved complete reconstruction of the data set and empirical work. It is essentially a new paper in its current form, but it remains an important part of Jenny’s legacy and a topic to which she devoted much of her intellectual and policy efforts. We hope she would be satisfied with our work which, for us, was a labor of love. |
| Keywords: | Patents; pharmaceuticals; diffusion; drug launches; price regulation |
| JEL: | I18 K19 L65 O31 O33 O34 O38 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:60450&r=tid |