Diffusion as a Process of Creative Adoption

This paper elaborates an integrated framework for understanding diffusion as a process of creative adoptions in the business sector. Within the context of the economics of localized technological change, adoption is viewed as a complementary component of a broader process of adjusting the technology when unexpected events in the product and factor markets push firms towards a creative reaction. When the stock of adoptions exerts a suitable combined effect both on the gross profitability of adoption and on the costs of adoption, such that the net profitability of adoption and hence the rates of new adoption follow a quadratic path, the dynamics of creative adoption can engender a S-shaped diffusion process.     

Measuring Technological Change in Greece

This paper uses the Growth Accounting methodology to estimate technological change, as well as labor and capital productivity in the various sectors of the Greek economy over the period 1988–1998. The results show that the technological level, as measured through annual growth in Total Factor Productivity, has remained practically unchanged. Meanwhile, technological change accounts for about 40% of economic growth, which is slightly lower compared with the relative performance of other O.E.C.D. countries. Finally, our main findings are, in general terms, consistent with estimates by other researchers.      

Linking technological and educational level diversities to innovation performance

In this study, we explore the extent to which diversity of educational levels among research scientists and engineers (RSEs) in the context of a firm’s level of technological diversity influences innovation performance. We used data from the 2004–2008 National R&D Survey in Singapore. The results from 366 firms across different industries indicate that when a firm’s technological domains are heterogeneous, those firms with an RSE workforce comprising similar educational levels have positive innovation performance, measured as the number of patent applications, while those comprising diverse educational levels have negative innovation performance. Our further exploration of the positive interaction between technological domain heterogeneity and similarity of educational levels suggests that firms that had a high ratio of RSEs with lower educational levels had more positive patent outcomes compared to those that had a high ratio of RSEs with higher educational levels. The results show that there are limits to the strength of technological diversity in a firm’s absorptive capacity as explained by organizational demography.     

Young innovative companies: Are they high performers in transition economies? Evidence for Vietnam

We study the economic value of both embodied technological change and Research and Development (R&D) investment as proxies for the inputs of innovative activities conducted by Vietnamese firms. Our main focus is on the profitability of young innovative companies (YICs), private innovative companies (PICs), and small and young companies (SYCs). In particular, we test whether YICs could prove successful in fostering economic development through their technological change activities. Results show that (a) although YICs are more R&D intensive and innovative than PICs and SYCs, in general they do not produce equivalent performance; however those specific YICs focusing on technological change potentially outperform their counterparts, and (b) PICs are more capable than the other types of firms in translating their innovative effort to higher profitability.     

Interaction of human and physical capital in a model of endogenous growth

A model of development is presented where growth is initially driven by physical capital accumulation, as in the neoclassical model. After a critical level of physical capital is reached, the economy ‘takes off’ and enters a stage of sustained growth driven by human capital accumulation. The link between these two stages is provided by the assumption that private incentives for human capital accumulation increase with the average levels of human and physical capital. At the early stages of development, these incentives are low so the level of human capital stays stagnant until sufficient physical capital is accumulated. Other results are that some economies may reach a steady state of physical capital before a ‘take-off’ is possible. This is especially likely for economies in which agents have low savings propensities. Such economies remain stuck in a no-growth equilibrium forever. Economies that do grow may experience endogenous cycles if the return to investment in human capital is sufficiently increasing in the level of physical capital.     

New capital accumulation in transition economies: implications for capital-labor and capital-output ratios

This paper investigates the impact of new capital accumulation on capital-labor and capital-output ratios in 26 transition economies (TE) of Central and Eastern Europe and former USSR. Using a perpetual inventory method, we estimate the amount of capital accumulated in these countries since the start of market reforms and compare it to results for developed countries and largest emerging market economies. We found that on per worker basis, capital accumulation in TE is lagging far behind that of their mature market neighbors in European Union. Disparities in capital-output ratios were not as pronounced, as higher capital-labor ratios were reached in economies with higher levels of GDP per capita. Regression analysis indicates that capital per worker was accumulated faster in TE having higher saving rates, relatively higher priced labor, closer proximity to Western Europe, and higher manufacturing share in the economy. The K/Y levels were influenced by the same determinants except for relative input costs.     

The impact of court errors on liability sharing and safety regulation for environmental/industrial accidents

We focus in this paper on the effects of court errors on the optimal sharing of liability between firms and financiers, as an environmental policy instrument. Using a structural model of the interactions between firms, financial institutions, governments and courts we show, through numerical simulations, the distortions in liability sharing between firms and financiers that the imperfect implementation of government policies implies. We consider in particular the role played by the efficiency of the courts in jointly avoiding Type I (finding an innocent firm guilty of inappropriate care) and Type II (finding a guilty firm not guilty of inappropriate care) errors. This role is considered in a context where liability sharing is already distorted (when compared with first best values) due not only to the courts’ own imperfect assessment of safety care levels exerted by firms but also to the presence of moral hazard and adverse selection in financial contracting. There is also not congruence of objectives between firms and financiers on the one hand and social welfare maximization on the other. Our results indicate that an increase in the efficiency of court system in avoiding errors raises safety care level, thereby reducing the probability of accident, and allowing the social welfare maximizing government to impose a lower liability [higher] share for firms [financiers] as well as a lower standard level of care.     

How firms organize for successful innovation in a hostile environment

Managers in a business environment marked by rapid technological change face major challenges when making strategic decisions. A risk-averse, conservative strategy may be a safe route, but might lead to missing marketplace opportunities. This paper investigates whether a hostile business environment adversely affects either a firm's rate of technological innovation or its rate of success with new product launches. It also examines what successful innovating firms do, in terms of strategic posture and organizational structure, to adapt to hostile conditions. A model depicting relationships between environmental conditions, firm responses, innovation rates, and new product success was constructed and tested in an empirical study of 142 U.S. firms involved in technological innovation. The final section discusses managerial implications of the findings.     

Event Studies and the Law: Part I: Technique and Corporate Litigation

Event studies are among the most successful uses of econometricsin policy analysis. By providing an anchor for measuring theimpact of events on investor wealth, the methodology offersa fruitful means for evaluating the welfare implications ofprivate and government actions. This article is the first ina set of two that review the use and impact of the event studymethodology in the legal domain. This article begins by brieflyreviewing the event study methodology and its strengths andlimitations for policy analysis. It then reviews in detail howevent studies have been used to evaluate the wealth effectsof corporate litigation: defendants experience economicallymeaningful and statistically significant wealth losses uponthe filing of the suit, whereas plaintiff firms experience nosignificant wealth effects upon filing a lawsuit. Also, thereis a significant wealth increase for defendant firms when theysettle a suit with another firm, in contrast to other typesof plaintiffs, and in contrast to the settling plaintiff firms.These findings suggest that, at a minimum, lawsuits are nota value-enhancing way for corporations to settle their disagreementswith other corporations. In addition, the market appears toimpose a higher sanction on firms than actual criminal sanctions,and reputational losses are of equal magnitude for civil finesas for criminal ones. The article concludes with some recommendationsfor researchers: the standards for conducting an event studyare well established; researchers can increase the power ofan event study by increasing the sample size, and by narrowingthe public announcement period to as short a time frame as possible.The companion article reviews the use of event studies in corporatelaw and regulation.     

Entrepreneurship and University Technology Transfer

This paper argues that it is important to devote greater attention to the study of entrepreneurship in technology transfer in the light of greater government attention, the growth in the phenomenon, the need to identify how wealth can be created from spin-outs, changes in the cultures of universities and differences with technological entrepreneurship in general. The paper summarizes the contributions made by the papers presented in the special issue in terms of their levels of analysis. At the spin-out level, issues are raised concerning identification of typologies of spin-out firms, the evolution of spin-outs and external resources. At the university level, issues concerning policies, internal resources and processes are discussed. An agenda for further research is elaborated which relates to the need to examine further levels of analysis: the academic entrepreneurs themselves and how they recognize opportunities and shape their ideas to meet the market; the nature of internal university environments, processes and resources; and the nature of the scientific discipline which may have implications for the process of creation and development of spin-out ventures.     

Not searching,but finding: how innovation shapes perceptions about universities and public research organisations

Previous research about firms’ perceptions on the usefulness of public research has not distinguished between technological innovators and non-innovators. With the exception of openness of search, we find that factors shaping such perceptions differ in both types of firms. Non-innovators need market power and the presence of an R&D department to profit from public knowledge. Innovators need less sheltered environments and lesser R&D effort, though the availability of resources and absorptive capacity is necessary. Using a sample of 1,031 Spanish manufacturing firms, we conclude that practical experience in technological innovation enhances firms’ perceptions on the usefulness of public research, not directly but by enabling certain internal changes, i.e. it produces encounters between corporate choices and public research.     

China’s Integration in East Asia:Production Sharing, FDI & High-Tech Trade

China has taken advantage of the globalisation process and has become an assembly country for firms in Asia, which have extended their production and trade networks to China. China’s position in the segmentation of the production processes has fostered its trade in high-technology products. However the rapid technological upgrading of China’s trade is associated with an increasing dependence on foreign capital and technology. The emergence of China has led to the reorganisation of production in Asia and to a triangular trade pattern: firms in advanced Asian economies use China as an export base and instead of exporting finished goods to the US and Europe, now export intermediate goods to their affiliates in China.     

Sequence of techniques

This paper analyzes the sequence of techniques in an explicitly dynamic version of the Dobb-Sen choice of techniques model. It is proven that when the modern (capital intensive) technique dominates in an optimal full employment steady state, traditional capital accumulation is characteristic of an optimal path in the labor surplus phase when: (1) traditional capital has the higher maximal growth rate and (2) the initial capital stock is ‘sufficiently poor’. The switch date from traditional to modern capital accumulation is shown to be a function of the maximal growth rate and steady shadow price of labor for each technique and the optimal phasing out of traditional capital is characterized. These results are placed in the context of the choice of techniques controversy between Dobb, Sen and Kalecki and its relevance to early Soviet economic development.     

Strategies for successful technological development

The challenges stemming from globalization coupled with more rapid, fundamental technological development compels firms to develop more effective ways to manage. The corporate landscape will change as some firms successfully traverse turbulent periods of industry evolution while others do not. Firms may increase their chances of success by developing a portfolio of alliances in technology development, emphasizing organizational learning, and altering traditional views of strategy and control.     

Sustainability of patent-based competitive advantage in the U.S. communications services industry

Patents have long been assumed to provide firms with competitive advantage, but longitudinal results suggest that some types of patent content provide more enduring advantage than others do. The duration of advantage appeared to wane with time in the highly-dynamic U.S. communications-services industry during a period when technological changes occurred rapidly within it (1998–2012). Results suggest patents integrating technology streams that were different from the technologies of focal-patents’ grants contributed more to sustaining firms’ profit margins during this period than did focal patents that exploited extant technological knowledge. We found that firms who continually pushed their organization’s knowledge envelope outward to incorporate more unknown technologies sustained higher profit margins for a longer duration of time than did firms whose patented inventions were predominantlyincremental—even within difficult settings where competition grew so intense that firms’ average operating margins were deteriorating.     

Managing technological dependence in the developing countries: Analysis at the firm level

This paper explores the strategies pursued by the firms in the Developing Countries to cope with technological dependence. It is proposed that the firms in the Developing Countries are showing trends toward developing an organizational infrastructure to facilitate technological innovations in order to reduce their technological dependence to the foreign suppliers of technology. This proposition is tested by utilizing the data collected from 61 Turkish firms. The implication of the emerging trends for the practicing managers are also offered.     

The Role of University Spinout Companies in an Emerging Technology: The Case of Nanotechnology

This study examines the role of university spin-out (USO) companies in the emergence of a new technology, in our case nanotechnology. Three unique data-sets based on patents, co-publications, and firm data pertaining to the unfolding field of nanotechnology in the UK were developed. Subsequent analysis suggests that USOs play an important though not a dominant role. Furthermore, the results indicate that USOs in certain subfields of nanotechnology do not have a strong and growing proprietary technology base, raising questions about the commercial sustainability of these ventures. Overall, we observed that USOs are important contributors to technological change in specific subfields of nanotechnology, but that other actors, notably, large firms and (non-university affiliated) new technology-based firms are even more significant agents of technological change.     

Legal Environment,Firm-level Corporate Governance and Expropriation of Minority Shareholders in Asia

Claessens et al. (2000, Journal of Financial Economics 58(1–2), 81–112) show that corporate control is substantially enhanced by using pyramid structures and cross-holdings by firms in nine East Asian countries. Claessens et al. (1999, SSRN Working Paper; 2002, Journal of Finance 57(2), 2741–2771) provide empirical evidence regarding expropriation arising from the separation of cash flow from voting rights in Asian firms. Their analysis suggests a high degree of expropriation in Hong Kong, Indonesia, Malaysia, and Thailand. We re-examine the problem of expropriation in Asian firms reported by earlier research. We explore firm-level governance-control structure interactions, and control-legal environment interaction for a set of Asian firms for which we are able to obtain relevant data for all the required variables. The major contribution of this paper is that it jointly examines ownership-control structure, firm-level governance and country-level legal protection available to external suppliers of capital. Using post-crisis data, we find a strong country effect in governance. In general, high control firms in countries with weak legal protection have lower firm-level governance scores in general. On the other hand, high control firms, in countries which have a stronger legal protection environment, signal their intention to not expropriate minority shareholders’ wealth by voluntarily adopting measures to strengthen their discipline and responsibility scores. Contrary to earlier findings, we do not find a relationship between control-ownership wedge and firm value. Furthermore, we do not find any relation between firm-level governance and firm value as measured by Tobin’s Q.