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on Technology and Industrial Dynamics |
| By: | Giovanni Dosi; Emanuele Pugliese; Pietro Santoleri |
| Abstract: | We examine market selection mechanisms and their strength for a representative cohort of US new independent firms. In particular, we explore whether and how effectively markets reward newly-born firms according to their `fitness' in terms of both labour productivity and profitability. Our analysis yields puzzling results in contrast with canonical industry dynamics models. First, we find that selection on differential growth is mainly related to productivity while profitability plays a negligible role. Second, in contrast with the growth of the fitter principle, selection appears to be driven by changes in firms' relative productivity. Third, we explore how new firms' relative fitness affects their growth performance in different sectors. Our results reveal that market selection operates quite differently across them with higher incidence for new-born firms in services, low-tech and less concentrated sectors. Fourth, concerning selection via exit, our results support the survival of the fitter principle with respect to productivity, while relative profitability does not seem to exert any significant effect on survival probabilities. However, the contribution of firm relative `fitness' to the total firm exit rates variation appears to be modest. |
| Keywords: | market selection, replicator dynamics, new firm growth, survival, Shapley decomposition |
| Date: | 2017–02–21 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2017/06&r=tid |
| By: | Ashish Arora; Sharon Belenzon; Lia Sheer |
| Abstract: | If scientific knowledge is a public good, why do firms invest in research? This paper revisits this question with new data on patent citations to corporate scientific publications. Using data on 4,736 firms for the period 1980-2006, we explore the relationship between the use of corporate research in invention and the output of corporate scientific publications. Our principal contribution is to document that corporate investment in research is closely related to its use in invention. Specifically, firms that build on their scientific publications in their inventive activity invest more in research than those that are less successful in using their research internally. Consistent with this, research that is internally used is valued more and is more productive. |
| JEL: | O31 O32 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23187&r=tid |
| By: | Broekel, Tom; Boschma, Ron |
| Abstract: | Firms’ embeddedness in knowledge networks has received much attention in literature. However, little is known about the structure of firms’ knowledge exchange with respect to different types of proximities. Based on survey data of 295 firms in 8 European regions, we show that firms’ knowledge exchange systematically differs in their geographical and cognitive dimensions. We find that firms’ innovation performance is enhanced if the firm primarily links to technologically related as well as technologically similar organizations. Connecting with organizations at different geographical levels yields positive effects as well. |
| Keywords: | geographical proximity knowledge networks technological relatedness innovation performance |
| JEL: | D85 O18 O33 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:76805&r=tid |
| By: | Stefano Bianchini (BETA, University of Strasbourg); Gabriele Pellegrino (École Polytechnique Fédérale de Lausanne & IEB) |
| Abstract: | This paper examines the effect of persistence in product and process innovations on the employment dynamics of a representative sample of Spanish manufacturing firms observed over more than 20 years. We build on a conceptual framework that links innovation persistence, employment growth and the persistence of this growth in the long-run. Using dynamic panel GMM and survival analysis techniques, we find that persistence in product innovation affects both employment growth and the sustainability of job creation over time significantly, whilst persistence in process innovation does not play any relevant role. The evidence we provide supports the notion that product innovation is more effective in spurring sustained employment growth when carried out systematically. |
| Keywords: | Firm growth, job creation, innovation, persistence in innovation, path-dependence |
| JEL: | D22 O31 O32 O33 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:doc2017-03&r=tid |
| By: | Horbach, Jens; Janser, Markus |
| Abstract: | The environmental sector is supposed to yield a dual benefit: its goods and services are in-tended to tackle environmental challenges and its establishments should create new jobs. However, it is still unclear in empirical terms whether that really is the case. This paper investigates to what extent employment growth in establishments with green products and services is higher compared to other establishments. Furthermore, the main factors determining labor demand in this field are analyzed. We use linked employment and regional data for Germany. The descriptive results show that the environmental sector is characterized by disproportionately high employment growth. The application of a generalized linear mixed model reveals that especially innovation and industry agglomeration foster employment growth in establishments in the environmental sector. Establishments without green products and services show a smaller increase in employment, even if they are also innovative. |
| JEL: | J21 Q55 R23 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145500&r=tid |
| By: | Bernhard Dachs (AIT Austrian Institute of Technology GmbH); Martin Hud (Centre for European Economic Research (ZEW)); Christian Koehler (Centre for European Economic Research (ZEW)); Bettina Peters (Centre for European Economic Research (ZEW) - Industrial Economics and International Management Research) |
| Abstract: | A growing literature investigates how firms’ innovation input reacts to changes in the business cycle. However, so far there is no evidence whether there is cyclicality in the effects of innovation on firm performance as well. In this paper, we investigate the employment effects of innovations over the business cycle. Our analysis employs a large data set of manufacturing firms from 26 European countries over the period from 1998 to 2010. Using the structural model of Harrison et al. (2014), our empirical analysis reveals four important findings: First, the net effect of product innovation on employment growth is pro-cyclical. It turns out to be positive in all business cycle phases except for the recession. Second, product innovators are more resilient to recessions than non-product innovators. Even during recessions they are able to substitute demand losses from old products by demand gains of new products to a substantial degree. As a result their net employment losses are significantly lower in recessions than those of non-product innovators. Third, we only find resilience for SMEs but not for large firms. Fourth, process and organizational innovations displace labor primarily during upturn and downturn periods. |
| Keywords: | Innovation, employment, business cycle, resilience, Europe |
| JEL: | O33 J23 C26 D2 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:sru:ssewps:2017-03&r=tid |
| By: | Maria Teresa Costa-Campi (Universitat de Barcelona & IEB); Néstor Duch-Brown (Institute for Prospective Technological Studies); José García-Quevedo (Universitat de Barcelona & IEB) |
| Abstract: | Investment by energy firms in innovation can have substantial economic and environmental impacts and benefits. Internal R&D is the main input and driver of the innovation process, but innovation involves other activities, including capital purchases and other current expenditures. While the R&D activities of energy firms have been analysed, few studies have examined the typology of their innovation activities. Here, we analyse the impact of the main characteristics of the sector’s firms on their decisions to invest in each of three types of innovation activity: namely internal R&D; external R&D; and, the acquisition of advanced machinery, equipment or software. In conducting this analysis, we take the potential persistence of innovation activities into account. We also examine the role that different innovation objectives have on firms’ investment decisions. Given that engagement in a specific type of innovation may result from decisions that are not taken independently of each other, we analyse whether there is any complementarity between the three innovation activities. In carrying out the empirical analysis, we draw on data for private energy firms included in the Technological Innovation Panel (PITEC) for Spanish firms for the period 2004-2013. We use panel triprobit models to examine potential complementarity. |
| Keywords: | Energy, R&D, innovation, regulation, complementarity |
| JEL: | L94 Q40 O32 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:doc2016-28&r=tid |
| By: | Armand, Alex; Mendi, Pedro |
| Abstract: | Fluctuations in aggregate demand can influence the decision to invest in innovation. This paper focuses on this choice when fluctuations are heterogeneous across productive strata of the economy. To guide the empirical analysis, we model firms’ decision to invest in innovation. In our framework, firms are heterogeneous and demand shocks are exogenous. We show that drops in aggregate expenditure reduce the proportion of firms investing in innovation. We then study investment behaviour in a panel of Spanish innovative manufacturing firms. These firms are all investing in internal R&D in 2004 and are yearly surveyed until 2013. During the Great Recession, firms experienced large contractions in aggregate consumption. The reduction reached 10% of its pre-crisis trend. We proxy heterogeneous fluctuations in demand with entry and exit rates in the productive stratum of each firm. Rates incorporate all firms, including non-innovative firms. Higher exit rates are associated with reductions of 2 to 3% in the share of firms investing in innovation. The drop is larger for smaller firms, which also experience larger decreases in sales. These results are in line with our theoretical predictions. Our estimates are robust to the inclusion of indicators of time-varying credit constraints. For these constraints, we observe a marginal role among innovative firms. |
| Keywords: | R&D, Innovation, Firm entry, Firm exit, Great Recession. |
| JEL: | L22 O31 O32 |
| Date: | 2017–02–16 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:76884&r=tid |
| By: | Carlo Ciccarelli (University of Rome Tor Vergata, Department of Economics and Finance); Alessandro Nuvolari (Sant’Anna School of Advanced Studies, Institute of Economics) |
| Abstract: | The locomotive industry was one of the relatively sophisticated “high-tech” sectors in which Italy, a latecomer country, was successful before 1913. Using technical data on the performance of different vintages of locomotives, we construct a new industry-level index of technical change. We also study the impact of different policy instruments (import duties, non-tariff trade barriers and other discretionary interventions) in shaping the development of the industry. Our reassessment reveals the sound technological performance of Italian locomotives; the successful growth of this industry; and the critical role played by non-tariff barriers in its development. |
| Keywords: | technical progress, locomotive industry, non-tariff barriers, Italy, 19th century |
| JEL: | N73 O25 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:workqs:qse_38&r=tid |
| By: | Qing Liu (University of International Business and Economics); Larry D QiuAuthor-Workplace-Name: The University of Hong Kong |
| Abstract: | Innovation plays a key role in economic growth. In this paper, we investigate the effects of intermediate input tariff reduction on the innovation activities of domestic firms. Input tariff reduction has two opposite effects on the innovation decision of a firm: it may promote innovation because the cost of innovation activities decreases, but it may also result in a decrease in innovation because foreign technologies become cheaper. We use Chinese firm-level data from 1998 to 2007, which features a drastic input tariff cut in 2002 because of China's WTO accession, and find that input tariff cut results in less innovation undertaken by Chinese firms. The findings are obtained using the difference-in-differences technique and are robust to various specifications checks of the model. We also provide a theoretical framework to generate insights to the empirical findings. |
| JEL: | F13 F15 O14 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:hkm:wpaper:022017&r=tid |