nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2020‒03‒30
eleven papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Unlocking the radical potential of German innovators How can R&D policy foster radical innovation? By Hesse, Kolja
  2. Mass Migration and Technological Change By Andersson, David; Karadja, Mounir; Prawitz, Erik
  4. Occupational entry regulations and their effects on productivity in services: Firm-level evidence By Giuseppe Nicoletti; Indre Bambalaite; Christina von Rueden
  5. The value of firm networks: A natural experiment on board connections By Faia, Ester; Mayer, Maximilian; Pezone, Vincenzo
  6. Value creation and value appropriation In innovative coopetition projects By Paul Chiambaretto; Jonathan Maurice; Marc Willinger
  7. Patterns of innovation, advanced technology use and business practices in Canadian firms By Fernando Galindo-Rueda; Fabien Verger; Sylvain Ouellet
  8. Between Firm Changes in Earnings Inequality: The Dominant Role of Industry Effects By John Haltiwanger; James R. Spletzer
  9. Business visits, technology transfer and productivity growth By Piva, Mariacristina; Tani, Massimiliano; Vivarelli, Marco
  10. There is Not One But Many AI: A Network Perspective on Regional Demand in AI Skills By Stephany, Fabian
  11. Does Birthplace Diversity Affect Economic Complexity? Cross-country Evidence By Dany Bahar; Hillel Rapoport; Riccardo Turati

  1. By: Hesse, Kolja (University of Bremen)
    Abstract: Recently, the outstanding potential of radical innovations has been acknowledged to foster the economic development of countries and regions. However, due to market imperfection, economic actors do not engage in radical innovation to a socially desirable degree. Hence, governments have established measures to compensate the under-investment in private R&D. For instance, in Germany and on the European level innovation agencies have been established to support innovations that move the technological frontier. In the light of this development, this study aims to answer the question whether direct funding of R&D projects in general and collaborative R&D grants in particular can support the emergence of radical innovations. Furthermore, this study scrutinises on the effect of policy-induced cross-innovation activities on radical innovation processes. Although many scholars advise policy makers to support activities inducing cross-fertilisation in order to enhance radical innovation, we lack evidence whether the funding of such research projects actually has an effect. The results can be of interest for scholars as well as policy makers aiming to support this type of innovation.
    Keywords: R&D subsidies; R&D collaboration; cross-innovation activities; radical innovation; treatment effects
    JEL: C30 H20 O31 O38
    Date: 2020–03–27
  2. By: Andersson, David; Karadja, Mounir; Prawitz, Erik (Research Institute of Industrial Economics)
    Abstract: This paper studies the effect of emigration on technological change in sending locations after one of the largest migration events in human history, the mass migration from Europe to the United States in the 19th century. To establish causality, we adopt an instrumental variable strategy that combines local growing-season frost shocks with proximity to emigration ports. We document two sets of results. First, using novel data on technological patents, we find that emigration led to an increase in innovative activity in sending municipalities. Moreover, the increase in innovation is coupled with an increased adoption of new technologies in both the agricultural and industrial sectors. Second, in terms of local economic development, we find that emigration led to higher unskilled wages in agriculture, a shift towards employment in the nascent industrial sector, a larger presence of incorporated firms, as well as higher tax revenues.
    Date: 2020–03–20
  3. By: Francesco Aiello (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria); Paola Cardamone (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria); Lidia Mannarino (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria); Valeria Pupo (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria)
    Abstract: This article focuses on the relationship between external research and development (R&D) and firm innovation output. Using a sample of Italian manufacturing firms in the period of 2007-2009, the role played by external R&D is evaluated, investigating differences between family and non-family firms. Results show that the R&D acquired from external sources has a positive impact, especially on family firms, suggesting that family companies have a greater capacity to translate external R&D into tangible economic benefits. This result is consistent with those obtained when we consider the combination of internal and external R&D, as well as the family involvement in governance and management.
    Keywords: Family firms, R&D investment, Innovative sales, Italian manufacturing industry
    JEL: O32 G34 C24
    Date: 2020–02
  4. By: Giuseppe Nicoletti; Indre Bambalaite; Christina von Rueden
    Abstract: This paper assesses the possible dynamic effects of occupational entry regulations (OER) on productivity. It combines firm-level productivity data with a new cross-country policy indicator measuring the stringency of OER by the presence of administrative burdens, qualifications requirements, and mobility restrictions, for five professional and ten personal services. The evidence suggests that bold reforms easing OER, especially those concerning qualification requirements, could help increase the contribution of personal and professional services to aggregate productivity growth via two channels: the acceleration of their catch up to best global practices (within-firm channel), where firms in regulated sectors could gain up to 2.5 percentage points of productivity on average; and a higher contribution of labour reallocation to firms’ employment growth (between-firm channel), which could increase by up to 10 percent for the most productive firms.
    Keywords: catch-up, occupational licensing, productivity, reallocation, regulations
    JEL: J44 O43 L5 O57 L16 C21
    Date: 2020–03–31
  5. By: Faia, Ester; Mayer, Maximilian; Pezone, Vincenzo
    Abstract: This paper presents causal evidence of the effects of boardroom networks on firm value. We exploit exogenous variation in network centrality arising from a ban on interlocking directorates of Italian financial and insurance companies. We leverage this shock to show that firms that become more central in the network as a result of the shock experience positive abnormal returns around the announcement date. We find that information dissemination plays a central role: results are driven by firms that have higher idiosyncratic volatility, low analyst coverage, and more uncertainty surrounding their earnings forecasts. We also find that firms benefit more from boardroom centrality when they are more central in the input-output network, as this reinforces information complementarities, or when they are less central in the cross-ownership network, as well as when they suffer from low profitability and low growth opportunities. Network centrality also results in higher compensation for board directors.
    Date: 2020
  6. By: Paul Chiambaretto (MRM - Montpellier Research in Management - UM1 - Université Montpellier 1 - UM3 - Université Paul-Valéry - Montpellier 3 - UM2 - Université Montpellier 2 - Sciences et Techniques - UPVD - Université de Perpignan Via Domitia - Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School - UM - Université de Montpellier); Jonathan Maurice (TSM - Toulouse School of Management Research - CNRS - Centre National de la Recherche Scientifique - TSM - Toulouse School of Management - UT1 - Université Toulouse 1 Capitole - UT1 - Université Toulouse 1 Capitole); Marc Willinger (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: This article provides a formal model of the value creation-appropriation dilemma in the coopetition for innovation, i.e., alliances among competing firms. The model determines the levels of cooperation that maximize the profit of each firm in an innovative coopetition agreement regardless of the number of firms and their respective budget endowments dedicated to the coopetitive project. We answer the following questions. Within an innovative coopetition agreement, will the partners cooperate more or less when their budget endowments change? What is the impact on profit? When is it profitable to accept a new partner into the agreement? What happens to the remaining firms when a partner withdraws from the agreement? We show that when the coopetitive budget of the focal firm increases, the focal firm allocates a larger part of this budget to value creation activities and increases its profit. In contrast, when a partnering firm increases its coopetitive budget, the focal firm reduces its budget for value creation activities to maintain a sufficient budget for value appropriation activities. We also show that the addition of a competitor with a large coopetitive budget to the innovative coopetition agreement decreases the cooperation of the focal firm but increases the profit of the initial partnering firms. In contrast, the exit of a partnering firm with a large coopetitive budget from the agreement intensifies the cooperation among the remaining firms but reduces their profit
    Keywords: coopetition,value creation,value appropriation,innovative coopetition projects,game theory
    Date: 2020
  7. By: Fernando Galindo-Rueda (OECD); Fabien Verger (OECD); Sylvain Ouellet (Statistics Canada)
    Abstract: This paper uses a distributed microdata analysis approach to map patterns of technology adoption in Canadian firms, exploring the relationship between technology adoption, business practices and innovation. Prepared by the OECD NESTI secretariat in collaboration with Statistics Canada, the paper leverages a unique enterprise database combining information on innovation, technology adoption and the use of selected business practices. This work suggests a number of possible pathways for selecting and defining priority technology and business practices for data collection and reporting, implementing recommendations in the 2018 Oslo Manual on enablers and objectives of business innovation, and identifying potential synergies between business innovation, management and ICT, and other surveys focused on various aspects of technology adoption.
    Date: 2020–03–19
  8. By: John Haltiwanger; James R. Spletzer
    Abstract: We find that most of the rising between firm earnings inequality that dominates the overall increase in inequality in the U.S. is accounted for by industry effects. These industry effects stem from rising inter-industry earnings differentials and not from changing distribution of employment across industries. We also find the rising inter-industry earnings differentials are almost completely accounted for by occupation effects. These results link together the key findings from separate components of the recent literature: one focuses on firm effects and the other on occupation effects. The link via industry effects challenges conventional wisdom.
    Date: 2020–02
  9. By: Piva, Mariacristina; Tani, Massimiliano; Vivarelli, Marco
    Abstract: This paper builds on and considerably extends Piva, Tani and Vivarelli (2018), confirming the key role of Business Visits as a productivity enhancing channel of technology transfer. Our analysis is based on a unique database on business visits sourced from the U.S. National Business Travel Association, merged with OECD and World Bank data and resulting in an unbalanced panel covering 33 sectors and 14 countries over the period 1998-2013 (3,574 longitudinal observations). We find evidence that BVs contribute to fostering labour productivity in a significant way. While this is consistent with what found by the previous (scant) empirical literature on the subject, we also find that short-term mobility exhibits decreasing returns, being more crucial in those sectors characterized by less mobility and by lower productivity performances.
    Keywords: Business visits,Labour mobility,Knowledge diffusion,R&D,Productivity
    JEL: J61 O33
    Date: 2020
  10. By: Stephany, Fabian
    Abstract: This work proposes a network perspective in order to empirically identify the relevant ICT skills related to AI, to what extent they are systemically related, and how their composition varies across regions. With the example of 5,227 job openings from Germany advertised as postings in Artificial Intelligence, relevant skills are identified and connected in a network fashion. Two skills are connected, if they are jointly required by the same job advertisement. Similarly, regional skill networks can be constructed: Job postings are screened by city location and skill networks are constructed for this set of regional postings exclusively. The resulting networks depict the regional city ecosystem of AI skills currently in demand.
    Date: 2020–03–02
  11. By: Dany Bahar (Center for International Development at Harvard University); Hillel Rapoport; Riccardo Turati
    Abstract: We empirically investigate the relationship between a country’s economic complexity and the diversity in the birthplaces of its immigrants. Our cross-country analysis suggests that countries with higher birthplace diversity by one standard deviation are more economically complex by 0.1 to 0.18 standard deviations above the mean. This holds particularly for diversity among highly educated migrants and for countries at intermediate levels of economic complexity. We address endogeneity concerns by instrumenting diversity through predicted stocks from a pseudo-gravity model as well as from a standard shift-share approach. Finally, we provide evidence suggesting that birthplace diversity boosts economic complexity by increasing the diversification of the host country’s export basket.
    Keywords: economic complexity, birthplace diversity, immigration, growth
    JEL: F22 O31 O33
    Date: 2020–03

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