nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2017‒10‒08
fifteen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. A Long-Run Perspective on the Spatial Concentration of Manufacturing Industries in the United States. By Crafts, Nicholas; Alexander Klein, Alexander
  2. Employment Effects of Innovations over the Business Cycle: Firm-Level Evidence from European Countries By Peters, Bettina; Hud, Martin; Dachs, Bernhard; Köhler, Christian
  3. R&D Output Sharing in a Mixed Duopoly and Incentive Subsidy Policy By Lee, Sang-Ho; Muminov, Timur
  4. How does inequality affect long-run growth? By Roxana Gutiérrez-Romero
  5. The Quality of Management Practices in Finnish Manufacturing Establishments By Maliranta, Mika; Ohlsbom, Roope
  6. Competition, Selection, and Productivity Growth in the Chilean Manufacturing Industry By Roberto Álvarez; Aldo González
  7. The Relationship between R&D and Competition: Reconciling Theory and Evidence By Nikolay Chernyshev
  8. Product Market Competition and Employer Provided Training in Germany By John S. Heywood; Uwe Jirjahn; Annika Pfister
  9. Imports and Intellectual Property Rights on Innovation in China By Chu, Angus C.; Shen, Guobing; Zhang, Xun
  10. R&D Cyclicality and Composition Effects: A Unifying Approach By Nikolay Chernyshev
  11. Enabling Factors in Firms Adoption of New Digital Technologies. An Empirical Inquiry on a Manufacturing Region By Giancarlo Corò; Dejan Pejcic; Mario Volpe
  12. Lost in Transition? Drivers and Barriers in the Eco-Innovation Road to the Circular Economy By Ana de Jesus; Sandro Mendonça
  13. High-Growth Entrepreneurship By J. David Brown; John S. Earle; Mee Jung Kim; Kyung Min Lee
  14. The Growth and Human Capital Structure of New Firms over the Business Cycle By Murmann, Martin
  15. Do Policy Mix Characteristics Matter for Low-Carbon Innovation? A Survey-Based Exploration for Renewable Power Generation Technologies in Germany By Karoline S. Rogge; Joachim Schleich

  1. By: Crafts, Nicholas (University of Warwick); Alexander Klein, Alexander (University of Kent)
    Abstract: We construct spatially-weighted indices of the geographic concentration of U.S. manufacturing industries during the period 1880 to 1997 using data from the Census of Manufactures. Several important new results emerge from this exercise. First, we find that average spatial concentration was much lower in the late 20th- than in the late 19th-century and that this was the outcome of a continuing reduction over time. Second, the persistent tendency to greater spatial dispersion was characteristic of most manufacturing industries. Third, even so, economically and statistically significant spatial concentration was pervasive throughout this period.Keywords: manufacturing belt; spatial concentration; transport costs. JEL Classification: N62; N92; R12.
    Date: 2017
  2. By: Peters, Bettina; Hud, Martin; Dachs, Bernhard; Köhler, Christian
    Abstract: We investigate employment effects of innovations over the business cycle using data of manufacturing firms from 26 EU countries for the period 1998-2010. Using a structural model, our empirical analysis reveals three important findings: 1) The net effect of product innovation on employment growth is pro-cyclical. It is positive in all BC phases except for the recession. 2) Product innovators are more resilient to recessions than non-product innovators. 3) We only find resilience for SMEs.
    JEL: O33 J23 C26 D2
    Date: 2017
  3. By: Lee, Sang-Ho; Muminov, Timur
    Abstract: This study investigates the incentives for R&D output sharing in a mixed duopoly and shows that public firm chooses full sharing of their R&D output, whereas private firm enjoys free-riding. We then devise an agreement-based incentive R&D subsidy scheme, which can internalize R&D spillovers and induce both firms to earn higher payoffs through full sharing of their R&D output. We also show that an R&D subsidy policy is welfare-superior to a production subsidy policy.
    Keywords: Agreement-based R&D subsidy; Mixed duopoly; Production output subsidy; R&D output sharing
    JEL: H21 L13 L32
    Date: 2017–10–02
  4. By: Roxana Gutiérrez-Romero
    Abstract: This article shows that countries with higher historical levels of income inequality, dating back to the early 1800s, experienced lower rates of growth centuries after in terms of number of firms created, number of employees hired, firms’ output, value added and profit margin. To increase the understanding as the channels through which historical inequality deterred growth, the article exploits the differences across industries’ intensities in skilled labour, physical capital, dependence on external finance and written contracts across 28 sectors in 57 countries during the 1985–2010 period. It is shown that industries relatively more in need of external finance and contracts experienced lower firm creation growth in countries with higher levels of past inequality. Similarly, industries intensive in skilled labour and physical capital experienced lower rate of growth in the number of employees hired, firms’ output and real value in more unequal countries.
    Keywords: Inequality, Entrepreneurship, panel study
    JEL: O11 O47 C5
    Date: 2017–09
  5. By: Maliranta, Mika; Ohlsbom, Roope
    Abstract: There is a lack of comprehensive information on the quality of management in Finland as compared to other countries. Funded by the Strategic Research Council, the Skills, Education and the Future of Work research project has started filling this gap. As part of the project, an extensive survey concerning management practices has been implemented for Finnish manufacturing establishments. Its design meticulously follows the Management and Organizational Practices Survey (MOPS), a survey conducted by the US Census Bureau. The United States is a useful benchmark for international comparisons, because its management practices have been recognised as the best in the world in studies that utilise a long-standing survey project called the World Management Survey (WMS). Even though the WMS is an open-ended interview survey, whereas the MOPS is based on closed-ended questions, the two surveys are based on the same theoretical framework. This report introduces the Finnish Management and Organizational Practices (FMOP) survey data and presents some interesting preliminary observations. The FMOP data do not contain establishments that belong to firms with fewer than 50 employees. When calculating averages for Finnish manufacturing, two different imputation methods are used to estimate management scores for these missing establishments: a baseline and a (very) conservative one. Our conservative method provides us with an approximate lower limit for the scores. The analysis reveals large dispersion in management practices between establishments and that the average management score for manufacturing is 0.52, with a lower limit of 0.46. Furthermore, a clear positive connection is found between number of employees and management. Rather than looking at unweighted averages, it is more relevant, in terms of competitiveness, to study how much of the workforce is allocated into well-managed establishments. A decomposition of industry management practices shows that labour is more heavily allocated to larger establishments with higher quality management. The allocation effect is between 29% and 20% of the aggregate (employment weighted) average management score, depending on the imputation method applied. Further analysis shows that, even though the allocation effect is significant in size, it appears to be substantially smaller than in the United States. This reflects the fact that, when compared to Finland, a much larger share of the US workforce is employed by very large, well-managed establishments. The management scores are only slightly behind those of the US and, depending on the imputation method, and either a bit higher than or on par with those of Germany. This suggests that management practices in Finnish manufacturing are on an internationally competitive, high quality level.
    Keywords: Management practises, productivity, competitiveness, reallocation
    JEL: L2 M2 O32 O33
    Date: 2017–09–27
  6. By: Roberto Álvarez; Aldo González
    Abstract: Recent evidence for several countries shows a decline in TFP growth. However, there is not much evidence for developing countries and much less regarding the impact of competition in product markets. In this paper, we analyze the impact of competition on selection and productivity growth in Chile. Our results indicate that competition has a positive effect on TFP growth and the probability of exit for lagging firms. Our results are robust to alternative methodologies for calculating TFP and to the inclusion of other variables that may affect firms’ TFP growth.
    Date: 2017–09
  7. By: Nikolay Chernyshev (University of St Andrews)
    Abstract: The hypothesis of a hump-shaped relationship between innovation and competition due to Aghion, Bloom, Blundell, Griffith, and Howitt (2005), has been tested for different data sets without garnering conclusive support. In this paper we argue that this lack of agreement is because of a difference in approaches to measuring innovation (either in terms of R&D outcomes or by R&D effort). We develop a unified tractable general-equilibrium framework, in which, while R&D outcomes are a hump-shaped function of competition, R&D effort can be observed to be either increasing, decreasing, or hump-shaped. This enables our paper, first, to reconcile the conclusions by Aghion et al. (2005) with more recent results and, second, to inform further attempts to identify the hump-shaped relationship in data.
    Keywords: Inverted-U (hump-shaped) relationship, research and development, vertical innovation, Cournot-competition
    JEL: L13 O31 O41
    Date: 2017–09–27
  8. By: John S. Heywood; Uwe Jirjahn; Annika Pfister
    Abstract: Using German establishment data, this paper examines the relationship between product market competition and the extent of employer provided training. We demonstrate that high product market competition is associated with increased training except when the competition is so severe as to threaten liquidation to a firm. We take this as evidence of an inverted U-shaped relationship. We also make clear that while this relationship is very evident for the service sector it is largely missing for manufacturing where we confirm earlier results of no relationship.
    Keywords: Competition, Employer Provided Training, Manufacturing, Services
    JEL: J24 L00 M53
    Date: 2017
  9. By: Chu, Angus C.; Shen, Guobing; Zhang, Xun
    Abstract: In an open-economy R&D-based growth model with two intermediate production sectors, we find that strengthening intellectual property rights (IPR) has a positive effect on innovation in the sector that uses domestic inputs but both positive and negative effects on innovation in the sector that uses foreign inputs. We test these results using an empirical analysis of matching samples that combine Chinese provincial IPR data with industrial enterprises database and customs database.
    Keywords: Intellectual property rights; imports; knowledge spillovers; innovation
    JEL: F43 O31 O34
    Date: 2017–09
  10. By: Nikolay Chernyshev (University of St Andrews)
    Abstract: Existing empirical studies do not concur on whether R&D spending is procyclical or countercyclical: the former hypothesis is supported by studies of aggregate R&D spending, whereas the latter is vindicated by firm-level evidence. In this paper, we reconcile the two facts by advancing a general equilibrium framework, in which, while a single firm's R&D spending profile is countercyclical, aggregate R&D spending is procyclical owing to procyclical fluctuations in the number of R&D performers. Our findings suggest that economic crises might be beneficial for economic performance by fostering individual R&D effort. An advantage of our framework is that it brings together conflicting pieces of empirical evidence, while incorporating and building upon Schumpeter's hypothesis of countercyclical innovation.
    Keywords: Economic cycles, opportunity cost hypothesis, procyclicality of R&D, countercyclicality of R&D
    JEL: E23 E32 L13 L23 O31
    Date: 2017–09–27
  11. By: Giancarlo Corò (Department of Economics, University Of Venice Cà Foscari); Dejan Pejcic (Department of Economics, University Of Venice Cà Foscari); Mario Volpe (Department of Economics, University Of Venice Cà Foscari)
    Abstract: This paper provides an analysis on the diffusion of the last generation digital technologies (Industry 4.0) in the Veneto region, one of the main manufacturing territory in Italy. Our attention focuses on factors that enable firms to adopt these technologies, with attention to three main aspects: the human capital endowment, the international openness, and the financial structure. Empirical analysis is based on a sample of firms that operate in manufacturing, construction and business services. Our analysis shows a heterogeneous diffusion of Industry 4.0 technologies across different industries, allowing the identification of distinct technologies frontiers among sectors. The logit regression shows a positive relation between the adoption of digital technologies and the openness to international markets, as well as with a highly skilled and highly educated human capital. The digital users show better productivity indexes than other firms, but at the same time financial performances are less clear. Hence, the firms that adopt new digital technologies have a more balanced financial structure, but they do not show higher profitability ratios than non-users. This result depends on a longer run return on investment and in a different distributive policy inside the firm.
    Keywords: Digital innovation, Industry 4.0, Enabling factors, Technological upgrading
    JEL: O33 L60 J24
    Date: 2017
  12. By: Ana de Jesus (CENSE - Universidade Nova de Lisboa, Lisbon, Portugal); Sandro Mendonça (Instituto Universitário de Lisboa (ISCTE-IUL), Business Research Unit (BRU-IUL), Lisboa, Portugal; Research Unit on Complexity and Economics (UECE-ISEG), Lisboa, Portugal; Business, SPRU, University of Sussex, Brighton, UK)
    Abstract: Understanding which drivers and barriers exist in the development of a Circular Economy (CE) is a relevant and timely endeavour. The aim of this paper is to contribute to this debate by analysing evidence regarding the different factors helping and hampering the development of a CE. Specifically, this paper focuses on the eco-innovation (EI) pathway towards a CE, and tries to coordinate available but fragmented findings regarding how “transformative innovation” can foster this transition while removing obstacles to sustainability. Drawing upon a new corpus of both academic and non-academic literature, this work offers a framework for analysis, as well as an evidence-based survey of the challenges, for a green structural change of the economy. We argue that the combination of the innovation systems’ view with the more recent “transformation turn” in innovation studies may provide an appropriate perspective for understanding the transition to a CE. Ultimately, the paper aims to capitalise on these insights to contribute to the design of policy guidelines and organisational strategies.
    Keywords: circular economy; eco-innovation; barriers; drivers; survey
    Date: 2017–09
  13. By: J. David Brown; John S. Earle; Mee Jung Kim; Kyung Min Lee
    Abstract: We study the patterns and determinants of job creation for a large cohort of start-up firms. Analysis of the universe of U.S. employers reveals strong persistence in employment size from firm birth to age seven, with a small fraction of firms accounting for most employment at both ages, patterns that are little explained by finely disaggregated industry controls or amount of finance. Linking to data from the Survey of Business Owners on characteristics of 54,700 founders of 36,400 start-ups, and defining “high growth” as the top 5% of firms in the size distribution at age zero and seven, we find that women have a 30% lower probability of founding high-growth entrepreneurships at both ages. A similar gap for African-Americans at start-up disappears by age seven. Other differences with respect to race, ethnicity, and nativity are modest. Founder age is initially positively associated with high growth probability but the profile flattens after seven years and even becomes slightly negative. The education profile is initially concave, with advanced degree recipients no more likely to found high growth firms than high school graduates, but the former catch up to those with bachelor’s degrees by firm age seven, while the latter do not. Most other relationships of high growth with founder characteristics are highly persistent over time. Prior business ownership is strongly positively associated, and veteran experience negatively associated, with high growth. A larger founding team raises the probability of high growth, while diversity (by gender, age, race/ethnicity, or nativity) either lowers the probability or has little effect. More start-up capital raises the high-growth propensity of firms founded by a sole proprietor, women, minorities, immigrants, veterans, novice entrepreneurs, and those who are younger or with less education. Perhaps surprisingly, women, minorities, and those with less education tend to choose high growth industries, but fewer of them achieve high growth compared to their industry peers.
    Date: 2017–01
  14. By: Murmann, Martin
    Abstract: Recent research based on aggregate data suggests that employment in young firms is more negatively impacted during economic crises than employment in incumbent firms. Using firm-level data, we show that under constant human capital of the firms' founders, employment growth in less than 1 1/2-year-old start-ups reacts countercyclically and employment growth in older start-ups reacts procyclically. The young start-ups realize their countercyclical growth by hiring qualified labor market entrants.
    JEL: E32 J23 L26 M13 L25 L11 D22
    Date: 2017
  15. By: Karoline S. Rogge (SPRU – Science Policy Research Unit, University of Sussex, Brighton, UK; Fraunhofer Institute Systems and Innovation Research (ISI), Karlsruhe, Germany); Joachim Schleich (Fraunhofer Institute Systems and Innovation Research (ISI), Karlsruhe, Germany; Grenoble Ecole de Management, Grenoble, France; Virginia Polytechnic Institute & State University, Blacksburg, VA, USA)
    Abstract: Policy mixes may play a crucial role in redirecting and accelerating innovation towards low-carbon solutions, thus addressing a key societal challenge. Towards this end, the characteristics of such policy mixes have been argued to be of great relevance, yet with little empirical evidence backing up such claims. In this paper we explore this link between policy mix characteristics and low-carbon innovation, using the research case of the transition of the German electricity system towards renewable energy. Our empirical insights are based on an innovation survey among German manufacturers of renewable power generation technologies which builds on the Community Innovation Survey, but which we adjusted to better capture companies’ perceptions of the policy mix. Employing a bivariate Tobit model we find that companies’ perceptions regarding the consistency and credibility of the policy mix are positively associated with the level of their innovation expenditures for renewable energies, and this positive link intensifies when considering the mutual interdependence of these policy mix characteristics. In contrast, we find no support for such a direct link for the comprehensiveness of the instrument mix or the coherence of policy processes. These findings suggests that future research on low-carbon and eco-innovation more broadly should pay greater attention to the characteristics of policy mixes, rather than focusing on policy instruments only. It also implies a need to rethink the consideration of policy in innovation surveys to enable better informed policy advice regarding the greening of innovation.
    Keywords: policy mix, credibility, consistency, coherence, comprehensiveness, ecoinnovation, renewable energy, sustainability transition, decarbonization
    Date: 2017–09

This nep-tid issue is ©2017 by Fulvio Castellacci. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.