nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2019‒04‒22
eleven papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. External R&D Acquisition and Product Innovation By OA Carboni; G. Medda
  2. How Effective are Innovation Support Programs to Stimulate Innovation? Evidence from Paraguay By Diego Aboal; Gustavo Rojas; Belén Servín; Paz Queraltó
  3. Robots and Firms By Michael Koch; Ilya Manuylov; Marcel Smolka
  4. Decomposing a decomposition: Within-country differences and the role of structural change in productivity growth By Escobar, Octavio; Mühlen, Henning
  5. The Comparative Advantage of Firms By Johannes Boehm; Swati Dhingra; John Morrow
  6. Global Value Chain Integration and Productivity: The Case of Turkish Manufacturing Firms By Yilmaz Kiliçaslan; Ugur Aytun; Oytun Meçik
  7. Market Concentration and the Productivity Slowdown By Olmstead-Rumsey, Jane
  8. Innovative Events By Nathan, Max; Rosso, Anna
  9. The Role of Labor Market Frictions in Structural Transformation By Khalid El Fayoumi; Gregory Auclair
  10. Overhead Labour and Skill-Biased Technological Change: The Role of Product Diversification By Choong Hyun Nam
  11. Knowledge networks in the German bioeconomy: Network structure of publicly funded R&D networks By Bogner, Kristina

  1. By: OA Carboni; G. Medda
    Abstract: The outsourcing of R&D activities is considered an important way to acquire external technological information that can be integrated into a firm's own knowledge endowment. Given the complex relationship between R&D partnerships and innovation performance, it becomes of paramount importance for scholars, managers and policy-makers to understand whether and how outsourcing benefits the firm. This paper tries to assess the impact that external sources of R&D may have on product innovation, differentiating between R&D supplied by universities and other companies. The empirical analysis is based on a large and representative sample of European manufacturing companies. The analysis considers R&D an endogenous decision in investigating its effect on product innovation. An instrumental variable two-step estimation method is employed to deal with this issue. The results suggest that R&D intensity, or the share of R&D acquired from external sources, has a positive and significant effect on product innovation. Furthermore, we find evidence of an inverse U-shaped relationship between R&D outsourcing and innovation, meaning that on average, costs start to outweigh benefits as the R&D collaboration projects increase. We also estimate high returns from R&D acquired from universities on the probability to achieve product innovations, while having firms in the same group as research partners has the largest effect on innovative product sales. The results have straightforward implications for the practice of R&D managers. In order to gain advantages from partnership in research, innovation managers need to jointly exploit these different types of collaboration activities and their potential synergies. Given that the innovative firms in the sample desire additional credit which actually they do not obtain, R&D managers should also be concerned with the financing sources firms have access to. Finally, the analysis suggests that managers ought to identify the appropriate level of external acquisition in order to fully benefit on innovation.
    Keywords: External R&D;research partners;innovation performance;IV model
    Date: 2019
  2. By: Diego Aboal; Gustavo Rojas; Belén Servín; Paz Queraltó
    Abstract: In this paper we evaluate the impact of two programs to support innovation in micro, small and medium enterprises in Paraguay. This article has two contributions to literature. First, the evidence on the impact of this type of programs in developing countries is still scarce. Second, we evaluate the impacts on some variables that have been largely overlooked in the literature, such as innovation activities other than R&D. The evaluation finds positive and significant effects on the probability of carrying out various innovation activities, on the probability of achieving different types of innovation and on the incorporation of technical personnel to the firms. A negative effect on R&D was found, which might be showing a displacement effect of this innovation activity by others. The most robust results are those related to the impact of the program on process and product innovation. The impacts on innovation activities and employment are less robust to alternative specifications and samples.
    Keywords: Innovation support programs, innovation, impact evaluation, Paraguay
    JEL: O31 O32 O38 C21
    Date: 2019–04–11
  3. By: Michael Koch (University of Bayreuth); Ilya Manuylov (Department of Economics and Business Economics, Aarhus University, Denmark); Marcel Smolka (Department of Economics and Business Economics, Aarhus University, Denmark)
    Abstract: We study the implications of robot adoption at the level of individual firms using a rich panel data-set of Spanish manufacturing firms over a 27-year period (1990-2016). We focus on three central questions: (1) Which firms adopt robots? (2) What are the labor market effects of robot adoption at the firm level? (3) How does firm heterogeneity in robot adoption affect the industry equilibrium? To address these questions, we look at our data through the lens of recent attempts in the literature to formalize the implications of robot technology. As for the first question, we establish robust evidence that ex-ante larger and more productive firms are more likely to adopt robots, while ex-ante more skill-intensive firms are less likely to do so. As for the second question, we find that robot adoption generates substantial output gains in the vicinity of 20-25% within four years, reduces the labor cost share by 5-7%-points, and leads to net job creation at a rate of 10%. These results are robust to controlling for non-random selection into robot adoption through a difference-in-differences approach combined with a propensity score reweighting estimator. Finally, we reveal substantial job losses in firms that do not adopt robots, and a productivity-enhancing reallocation of labor across firms, away from non-adopters, and toward adopters.
    Keywords: Automation, Robots, Firms, Productivity, Technology
    JEL: D22 F14 J24 O14
    Date: 2019–04–08
  4. By: Escobar, Octavio; Mühlen, Henning
    Abstract: In this article, we investigate the relevance of structural change in country-wide productivity growth considering within-country differences. For this purpose, we propose a two-step decomposition approach that accounts for differences among subnational units. To highlight the relevance of our procedure compared to the prevalent approach in the existing development literature (which usually neglects subnational differences), we show an application with data for the Mexican economy. Specifically, we contrast findings obtained from country-sector data on the one hand with those obtained from (more disaggregated) state-sector data on the other hand. One main insight is that the qualitative and quantitative results differ substantially between the two approaches. Our procedure reveals that structural change appeared to be growth-reducing during the period from 2005 to 2016. We show that this negative effect is driven mainly by the reallocation of (low-skilled) labor within subnational units.
    Keywords: decomposition approach,economic development,labor reallocation,regional differences,structural change
    JEL: L16 O10 O18 R11
    Date: 2019
  5. By: Johannes Boehm; Swati Dhingra; John Morrow
    Abstract: Multiproduct firms dominate production, and their product turnover contributes substantially to aggregate growth. Theories propose that multiproduct firms grow by diversifying into products which need the same know-how or capabilities, but are less clear on what these capabilities are. Input-output tables show firms co-produce in industries that share intermediate inputs, suggesting input capabilities drive multiproduct production patterns. We provide evidence for this in Indian manufacturing: the similarity of a firm's input mix to an industry's input mix predicts entry into that industry. We identify the direction of causality from the removal of size-based entry barriers in input markets which made firms more likely to enter industries that were similar in input use to their initial input mix. We rationalize this finding with a model of industry choice and economies of scope to estimate the importance of input capabilities in determining comparative advantage. Complementarities driven by input capabilities make a firm on average 5% (and up to 15%) more likely to produce in an industry. Entry barriers in input markets constrained the comparative advantage of firms and were equivalent to a 10.5 percentage point tariff on inputs.
    Keywords: multiproduct firms, firm capabilities, vertical input linkages, comparative advantage, economies of scope, size-based policies
    JEL: F11 L25 M2 O3
    Date: 2019–04
  6. By: Yilmaz Kiliçaslan (Anadolu University); Ugur Aytun; Oytun Meçik
    Abstract: In this study, we examine how firms’ positions (supplier, consumer, or both) in both global and domestic value chains (GVC andDVC) affect their productivity. This is said to be the first attempt in exploring the impact of integration of firms to the GVCs on productivity generation in Turkish manufacturing industry at the firm level. The analysis is based on firm level data obtained from Turkish Statistical Institute (TurkStat) and covers the period from 2003 to 2015. The data used in the analysis includes all firms employing 20 or more employees in Turkish manufacturing industry. Our findings based on both fixed-effects and GMM estimations show that while supplier position on domestic chain has negative effect on productivity, the same position in GVC vanishes this effect. Consumer position in the GVC, on the other hand, provide more benefits to SMEs than to large-scale firms.
    Date: 2019
  7. By: Olmstead-Rumsey, Jane
    Abstract: Since around 2000, U.S. aggregate productivity growth has slowed and product market (sales) concentration has risen. At the same time, productivity differences among firms in the same sector appear to have risen dramatically. In this paper I propose a rich model of competition and innovation to explain the coincidence of these three observations. In the model a key parameter governing all three phenomena is the probability that innovating firms make radical innovations. Thus one explanation for rising concentration, slower productivity growth, and wider technology differences among firms is that the incidence of radical innovations has slowed relative to the 1990s, when the internet and other information technology radically transformed production and sales technology in many sectors.
    Keywords: Endogenous growth; market concentration; market power; productivity slowdown; superstar firms
    JEL: E23 L1 O3 O4
    Date: 2019–04–10
  8. By: Nathan, Max (University of Birmingham); Rosso, Anna (University of Milan)
    Abstract: We take a fresh look at firms' innovation-productivity linkages, using novel data capturing new aspects of innovative activity. We combine UK administrative microdata, media and website content to develop experimental metrics – new product/service launches – for a large panel of SMEs. Extensive validation and descriptive exercises show that launches complement patents, trademarks and innovation surveys. We also establish connections between launches and previous innovative activity. We then link IP, launches and productivity, controlling for media exposure and firm heterogeneity. Launch activity is associated with higher SME productivity, especially in the service sector. High-quality launches and medium-size firms help drive this result.
    Keywords: innovation, productivity, ICT, data science
    JEL: L86
    Date: 2019–03
  9. By: Khalid El Fayoumi (Free University of Berlin and DIW Berlin); Gregory Auclair
    Abstract: Against what theory predicts, large productivity gaps across sectors persist and the process of structural transformation is stagnant in many developing economies. This wedge between observed and optimal labor allocations suggests the presence of institutional and market frictions, which impose costs on the reallocation of labor from low to high productivity sectors, thus leading to sub-optimal allocations and a loss in aggregate labor productivity. Using a panel of crosscountry sector-level data, we estimate a dynamic panel error correction model that captures the dynamic adjustment of labor flows across sectors. We find that, on average, labor flows from low to high productivity sectors, closing around 15.4 percent of labor productivity gaps each year. The pace of this flow varies across country income groups and geographical regions, with high-income countries enjoying a more fluid structural transformation process than lower income countries. Heterogeneity also arises across sectors, suggesting a positive role for sectoral policies. With regard to labor market regulations, we find a significant positive association between the pace of labor reallocation across sectors and the freedom level of labor market institutions. However, in contrast to neo-classical intuition, we find that lowering firing costs slows the structural transformation process. Results suggest that the discouraging effect of having lower job security on the labor supply side is stronger than the benefits that firms gain from more flexible labor market conditions. Hence, policy reforms need to steer between the goal of easing job creation and destruction, while supporting labor supply incentives to reallocate and shift industries through strong social nets, labor protection, and risk sharing.
    Date: 2019
  10. By: Choong Hyun Nam (Economic Research Institute, Bank of Korea)
    Abstract: This paper tries to explain why a certain type of technology is skill-biased. In contrast with existing literature, this paper regards skilled workers as overhead labour, and presents a model wherein skilled workers constitute a fixed input, required to produce a new product. The demand for skill increases with product variety, and information technology is skill-biased because it raises product variety by lowering the fixed cost of product creation. However, skill-biased change does not necessarily raise measured productivity because product diversification reallocates resources into fixed inputs, which is consistent with the historical fact that skill-biased change did not always accompany productivity growth.
    Keywords: Skill demand, Product innovation, Inequality, Productivity
    JEL: E24 J31 L1 O3 O4
    Date: 2019–04–08
  11. By: Bogner, Kristina
    Abstract: Aiming at fostering the transition towards a sustainable knowledge-based Bioeconomy (SKBBE), the German Federal Government funds joint and single research projects in predefined socially desirable fields as, for instance, in the Bioeconomy. To analyse whether this policy intervention actually fosters cooperation and knowledge transfer as intended, researchers have to evaluate the network structure of the resulting R&D network on a regular basis. Using both descriptive statistics and social network analysis, I investigate how the publicly funded R&D network in the German Bioeconomy has developed over the last 30 years and how this development can be assessed from a knowledge diffusion point of view. This study shows that the R&D network in the German Bioeconomy has grown tremendously over time and thereby completely changed its initial structure. While from a traditional perspective the development of the network characteristics in isolation seems harmful to knowledge diffusion, taking into account the reasons for these changes shows a different picture. However, this might only hold for the diffusion of mere techno-economic knowledge. It is questionable whether the artificially generated network structure also is favourable for the diffusion of other types of knowledge, e.g. dedicated knowledge necessary for the transformation towards an SKBBE.
    Keywords: knowledge,dedicated knowledge,knowledge diffusion,social networks,R&D networks,Förderkatalog,sustainable knowledge-based Bioeconomy (SKBBE)
    Date: 2019

This nep-tid issue is ©2019 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.