The generation and exploitation of technological change: market value and total factor productivity

In this paper we articulate and test the hypothesis that TFP is a reliable and relevant measure of firm’s innovation capabilities, and, as such, accounts for Tobin’s q indicator. With this aim, we investigate empirically the relationship between firm level total factor productivity and the Tobin’s q. Measuring Tobin’s q allows inferring the actual value of knowledge capital from stock market valuation. We use a panel of companies listed on UK and the main continental Europe financial markets (Germany, France and Italy) for the period 1995–2005. Our results confirm that TFP is a reliable indicator of firm’s innovative capabilities. When we control for firm’s R&D investments and intangible assets, the effects of TFP on market value remain highly significant. This suggests that TFP is a broader measure of innovation capability than R&D is. The validation of the Tobin’s q and TFP relationship has important implications concerning firm’s technological innovation measurement.     

A Bayesian stochastic frontier: an application to agricultural productivity growth in European countries

This paper measures and compares total factor productivity (TFP) growth in agriculture for the European Union (EU) countries and candidate countries (CC), in order to distinguish and investigate cross-country differences in agricultural productivity growth rates from 1993 to 2006. A stochastic production frontier model is estimated using a Bayesian approach capturing country-specific time-invariant heterogeneity and country-specific time-varying inefficiency. Agricultural productivity growth is found to be mostly driven by technological change. The TFP growth rates of the EU-12 countries and CC are about twice the EU-15 growth rate. Catch-up in productivity levels is observed between EU-15 and EU-12 as well as between EU-15 and CC. The results are compared for a situation in which country-specific time-invariant heterogeneity is not taken into account.     

Some comments on Antonelli and Quatraro’s paper of measuring effect of biased technology on TFP

The paper is a response to Antonelli and Quatraro’s paper named “The effects of biased technological change on total factor productivity: empirical evidence from a sample of OECD”. We point out that “so-called novel method” which is used to identify and disentangle the effects of the direction of technological change on total factor productivity (TFP) in the article is wrongly implemented. Antonelli and Quatraro introduce Solow’s methodology as part of his basic model to represent the effect of neutral technical change, ignoring the intrinsic consequence of Solow’s calculating which called technical progress productivity is far from neutral. Hence, his methodology has little significance, neither the empirical analysis. Lastly, we give a new method measuring whether the technology is appropriate to the factor endowments’ changing. That’s the effect of biased technology on TFP.     

The effects of biased technological change on total factor productivity: empirical evidence from a sample of OECD countries

Technological change is far from neutral. The empirical analysis of the rate and direction of technological change in a significant sample of 12 major OECD countries in the years 1970–2003 confirms the strong bias of new technologies. The paper implements a novel methodology to identify and disentangle the effects of the direction of technological change upon total factor productivity (TFP) and shows how the introduction of new and biased technologies affects the actual levels of TFP according to the relative local endowments. The empirical evidence confirms that the introduction of biased technologies enhances TFP when its direction matches the characteristics of local factor markets so that locally abundant inputs become more productive. When the direction of technological change favours the intensive use of production factors that are locally scarce, the actual increase of TFP is reduced.     

Faculty Entrepreneurs and Research Productivity

In this paper, we analyze the research productivity of faculty entrepreneurs at 15 research institutes using a novel database combining faculty characteristics, licensing information, and journal publication records. We address two related research questions. First, are faculty entrepreneurs more productive researchers (“star scientists”) compared to their colleagues? Second, does the productivity of faculty entrepreneurs change after they found a firm? We find that faculty entrepreneurs in general are more productive researchers than control groups. We use multiple performance criteria in our analysis: differences in mean publication rate, skewness of publication rate, and impact of publications (journal citation rate). These findings bring together previous work on star scientists by Zucker, Darby, and Brewer [Zucker, L. G., Darby M. R., &; Brewer M. B. (1998). The American Economic Review, 88, 290–306.] and tacit knowledge among university entrepreneurs by Shane [Shane, S. (2002). Management Science, 48, 122–137.] and Lowe [Lowe, R. A. (2001). In G. Libecap (Ed.) Entrepreneurial Inputs and Outcomes. Amsterdam: JAI Press, Lowe, R.A. (2006). Journal of Technology Transfer, 31(4), 412–429]. Finally, we find that faculty entrepreneurs’ productivity not only is greater than their peers but also does not decrease following the formation of a firm.     

Capturing Technological Opportunity Via Japan's Star Scientists: Evidence from Japanese Firms' Biotech Patents and Products

Using detailed data on biotechnology in Japan, we find that identifiable collaborations between particular university star scientists and firms have a large positive impact on firms' research productivity, increasing the average firm's biotech patents by 34 percent, products in development by 27 percent, and products on the market by 8 percent as of 1989–1990. However, there is little evidence of geographically localized knowledge spillovers. In early industry formation, star scientists holding tacit knowledge required to practice recombinant DNA (genetic engineering) were of great economic value, leading to incentives motivating their participation in technology transfer. In Japan, the legal and institutional context implies that firm scientists work in the stars' university laboratories in contrast to America where the stars are more likely to work in the firm's labs. As a result, star collaborations in Japan are less localized around their research universities so that the universities' local economic development impact is lessened. Stars' scientific productivity is increased less during collaborations with firms in Japan as compared to the U.S.     

Absorptive capacity and post-acquisition inventor productivity

Inventors often experience a low productivity after their company has been subject to a merger or acquisition (M&As). It is of central managerial interest to identify factors facilitating the integration of new inventive staff and thereby counteracting innovation declines after M&As. This paper provides empirical evidence into the role of acquiring firms?? absorptive capacity for the post-merger patent productivity of the acquired inventors. Based on a sample of 544 inventors employed by European acquisition targets in the period 2000?C2001 it is shown that the post-merger productivity of acquired inventors is significantly higher within acquiring firms with a distinct absorptive capacity. It can be concluded that absorptive capacity is a firm capability that enhances the integration of inventors after firm takeovers.     

FDI spillovers on firm survival in Italy: absorptive capacity matters!

The aim of this paper is to explore the effects of spillovers driven by competition and forward and backward linkages between foreign firms and Italian firms. We adopt the firm dynamics framework, which allows us to test the impact of foreign firms’ activity on the probability that local firms will exit. The empirical analysis relies on continuous survival models (Cox proportional hazard models) and uses a representative firm level database from the period of 2002–2010 with data concerning more than 4,000 Italian manufacturing firms. Our estimates regarding the whole sample show that horizontal and vertical linkages have no impact on firm survival. To further test this finding, we perform a more disaggregated analysis that allows for heterogeneity across firms and sectors. We obtain evidence that the effects of FDI spillovers on firm survival follow specific patterns at both the intra- and inter-industry levels based on differences in productivity between Italian firms and foreign firms and on the technological intensity of the industry. Foreign firms’ activity reduces the exit probability of competitors and of downstream local customers (through forward linkages) with low productivity gap but has no impact on high productivity gap firms. Firms in high technology intensive sectors do not benefit from horizontal FDI while in low and medium technology sectors they do. Differences in absorptive capacity may explain these results. However, we also find that vertical linkages with foreign firms in the upstream supplying industries spur firm duration in medium and high tech sectors.     

Productivity growth, trade and FDI nexus: evidence from the Canadian manufacturing sector

Using the confined exponential and logistic models of technology diffusion, this paper investigates the roles played by international trade and FDI in explaining productivity growth through both technology transfer and domestic innovation, with the technology transfer also occurring independently. Using panel data on Canadian manufacturing industries, we first find a robust role for the autonomous and international trade embodied technology transfer in explaining TFP growth. Second, international trade and FDI (as well as research and development) all contribute to productivity growth through the rate of innovation. Finally, we find that the exponential and logistic models of technology diffusion may have different implications for the growth dynamics in a technologically lagging country.     

Evaluating Productivity Growth Measures in the EU

In this paper we evaluate the productivity growth of the member countries in the European Union (EU) before and after the enforcement of the Maastricht convergence criteria in 1992. Total factor productivity was measured by employing the growth-accounting approach and Tornqvist indices. The evaluation of productivity growth was performed by employing the non-parametric method of Data Envelopment Analysis (DEA) in particular years and within three time periods. DEA was also used to evaluate the relative efficiency of EU members with respect to the convergence criteria with important implications for their economic integration. TFP growth was found to have contributed the most in the EU, while its share in the latest recessions was the smallest as compared to labor and capital share.     

Productivity slowdown and misallocation in the post-recession: What prevents recovery?

This study explores the effects of the 2008 global economic crisis on the labor allocation and productivity in Luxembourg. The analysis is based on firm-level data from manufacturing and non-financial service sectors and finds a dramatic productivity slowdown after 2008. The study reveals that the cleansing effect of recession did not function effectively which would otherwise improve the efficiency in the labor allocation and counterbalance the productivity slowdown. The firm entry and job creation rates are lower in the post-crisis period, but the job destruction is not significantly altered by the crisis. The findings call attention for the strict employment protection legislation that possibly plays a role in preventing reallocation towards more efficient establishments. Relaxing the employment protection legislation simultaneously with facilitating the entry and growth of young firms is expected to promote creative destruction, improve allocative efficiency and speed up the post-crisis recovery.     

Business dynamics,industry productivity growth,and the distribution of firm-level performance: evidence for the role of ICT using Dutch firm-level data

We present evidence on industry productivity growth and business dynamics in Dutch industries for the period 2007–2012, and investigate whether there is a role for ICT intensity in explaining differences across industries. Moreover, we relate ICT intensity to various distributional characteristics of firm performance, such as the dispersion of labor productivity and turnover, concentration and turbulence of market shares, and the efficiency of resource allocation. In the first part of the paper we follow a decomposition approach, whereas in the second part we apply a regression based analysis. The results suggest that productivity growth is higher in ICT production and industries with high ICT usage, but that ICT also increases differences in firm performance and leads to concentration of markets. In addition, there is evidence that markets are more efficient in ICT intensive industries.     

Exports and productivity of Russian firms: in search of causality

This paper uses a census of Russian manufacturing firms to study the relationship between exports and productivity at the firm level. The period studied, 1996–2002, implies that the results are affected by the Russian financial crisis of 1998. Exporters are shown to be more productive and larger than non-exporters, seemingly an effect of more productive firms self-selecting into the export market, rather than learning effects. But learning effects are significant among new entrants. Additionally, in examining the effect of the direction of exports on productivity, the finding is that the difference in the productivity level of firms exporting to the OECD and the CIS is insignificant.

Is Canadian intellectual property leaving Canada? A study of nanotechnology patenting

In this study we explore the patent ownership for the innovations created by Canadian nanotechnology inventors. We find that although there is a great innovative potential and inventive productivity among Canadian researchers, a lot of the intellectual property actually leaves the country: Around 50% of the nanotechnology patents invented by Canadian inventors are owned by foreign assignees. We also note the predominance of private companies among the patent owners. Almost one-third of all the Canadian-invented nanotechnology patents is assigned to a single American firm, Xerox Corporation. Furthermore, we explore the role of Canadian nanotechnology star inventors. The results show that the fruits of their great inventive productivity are collected outside Canada.     

“Strength at Home” Group Intervention for Military Populations Engaging in Intimate Partner Violence: Pilot Findings

In this brief report, we present information on the Strength at Home intervention to treat male active duty or military veteran perpetrators of intimate partner violence (IPV) as well as preliminary pilot study findings. Strength at Home is a 12-session cognitive-behavioral group intervention developed by the authors that is based on a social information processing model of IPV perpetration. Six men referred to two intervention groups and five collateral female partners participated in this pilot study. Findings indicated large reductions for most indices of physical and psychological IPV from pre-treatment to 6-month follow-up. These initial results are promising though the small sample size and other study limitations preclude our ability to draw firm conclusions.     

Waste not, want not—A look at the impact of manufacturing extension centers

Manufacturing extension centers have helped small manufacturers improve performance on the shop floor and thereby reduce costs. This article presents a case study of a metal working firm that was able to increase productivity and profits by instituting measures recommended by a field agent working for the Florida Manufacturing Technology Center (FMTC). As a result of services provided, the company was able to boost manufacturing throughput and increase production efficiencies. Using a simulation model, the article explores how small changes in manufacturing performance can result in significant cost reduction. It then discusses the consequences of alternative strategies designed to enhance the value of goods sold, rather than lower the costs of production. It concludes by arguing that manufacturing extension centers should help companies become more distinctive as well as more efficient.     

University R&D and Firm Productivity: Evidence from Italy

Ed Mansfield wrote several papers on the private returns to basic research (e.g. Mansfield, 1980) and the influence of academic research on industrial innovation (e.g. Mansfield, 1991). We extend this line of research by assessing the impact of university research on total factor productivity growth of Italian manufacturing firms. The econometric analysis is based on reduced-form estimation of the R&D capital stock model, including controls for two potential sources of sample selection bias, as proposed by Crepon et?al (1998) and Piga and Vivarelli (2004). Our results suggest that while there are positive returns to collaborative research with other firms, collaborative research with universities does not appear to directly stimulate productivity. We interpret this result as consistent with recent evidence (e.g. Hall et?al 2001, 2003) suggesting that firms engage in collaborative research with universities when appropriability conditions are weak.     

Control rights, bureaucratic corruption and the allocation of resources

In a two-sector model, we show that corruption is endogenously determined by the model parameters. It depends on the fraction of unskilled labor and the relative TFP differential between skilled and unskilled sector. First, for a larger proportion of unskilled labor force, there is widespread corruption and for smaller share of unskilled labor force, there is no corruption. For the intermediate level, equilibrium depends on the number of corrupt bureaucrats and there are multiple equilibria. Second, corruption decreases with the relative TFP differential between skilled and unskilled sector. For the intermediate level of TFP differential, there are multiple equilibria. On its consequences, corruption causes rise in the wage inequality between skilled and unskilled workers. It distorts the allocation of resources, which results in the output and the welfare losses, and it is associated with the higher tax rate.     

Symmetry,proportionality and productivity bias hypothesis: evidence from panel-VAR models

By imposing symmetry and proportionality conditions and using the asymptotic theory of panel-VAR models, this study examines the behavior of real exchange rates and productivity bias hypothesis for New Zealand vis-a-vis her major trading partners and the proposed free trade area. The evidence clearly rejects the strong version of the PPP hypothesis but the weak version of the PPP hypothesis receives some support. The findings also indicate that productivity differentials among countries are one of the major sources that contribute to the deviation of the PPP-based exchange rate from the equilibrium rate. Policy implications for the proposed free trade agreement are offered.     

How Green Was My Valley? An Examination of Tournament Theory as a Governance Mechanism in Silicon Valley Law Firms

The tournament model is a widely used mechanism to control opportunistic behavior by associates in law firms. However, this mechanism can only operate in certain economic (and social) circumstances. When those circumstances do not exist, the model breaks down, and with it the ability to control opportunism in the absence of some alternative mechanism. Prior research has not investigated whether the utilization of a tournament model prevents the opportunistic behaviors identified as grabbing, leaving, and shirking. In order to test the limits of the tournament model, it is necessary to find particular historical moments when the economic environment radically challenges assumptions/premises of the model. The dot-com bubble in Silicon Valley provides precisely such a time and place. This article demonstrates limits to the applicability of tournament theory. Those limits are to be found in the economic environment in circumstances in which: (1) exogenous reward structures offer many multiples of internal rewards; (2) demonstrably high short-term rewards outside the firm starkly contrast with the delayed long-term rewards inside the firm; (3) the managerial strata reduce their emphasis on long-term recruiting of potential partners in favor of short-term productivity by young associates; and (4) firms develop departmental leverage ratios in excess of their capacity to monitor, mentor, and train recruits.