Innovation and ICT in service firms: towards a multidimensional approach for impact assessment

This article focuses on the multimodal character of innovation in services firms as the analytical framework by which to assess the role of different sources and agents, ICT in particular, in enabling various impacts of innovation. The peculiarities of service innovation require a wider approach than that observed for goods innovation, which is less focused on non-technological aspects. An ad hoc survey was carried out in the region of Madrid to test a microeconometric and multidimensional approach at the firm level. Specific impacts of innovation are examined by carrying out an ordered probit model with sample selection. Results indicate a certain correspondence between the multidimensional nature of service innovation and a preliminary impact assessment. The paper notes that ICT and clients–providers interactions are both important, acting to facilitate different types of service innovation.

Modes of innovation in knowledge-intensive business services evidence from Lombardy

The present paper investigates the sectoral variety and common patterns across different typologies of knowledge-intensive business services (KIBS). We examine this issue by considering the case of Lombardy, a highly developed manufacturing area the industrial activities of which are experiencing a pervasive transformation towards higher knowledge content, demanding stronger and more pervasive support by advanced services. Drawing on an original survey-based firm-level dataset, we analyze innovation patterns across KIBS, evaluating the explanatory power of traditional classifications of the service sector, as well as the heterogeneity driven by firm and market specific characteristics. Our findings highlight four profiles of KIBS: interactive innovation mode, product innovation mode, conservative innovation mode and techno-organizational innovation mode. When examining in more depth the variables that are associated with cluster membership, we find that firm strategy is the most significant determinant, with size, customer location, and training also playing a role in defining cluster specificities.

Determinants of firm survival: a duration analysis using the generalized gamma distribution

We use parametric duration analysis to study the survival of Austrian firms. We find that hazard rates in both manufacturing and services initially increase, reach a peak after the first year of operation and then decrease with age. The maximum hazard rate is higher in services. We also find differences in hazard rates among different types of manufacturing industries distinguished by the nature of their sunk costs, their reliance on human resources and inputs from external services. Finally, we find that larger initial size and higher market growth, and at the same time lower net entry and declining market concentration prolong the life of an entrant.

The curious destiny of a heterodoxy: The Austrian economic tradition

The Austrian School has had a curious destiny: while contributing many concepts to contemporary economic theory, it is either ignored or criticised by much of modern economic literature. This article discusses possible reasons for this institutional sidelining and the main futures of a renewal of Austrian thought.

Transaction tax and stock market behavior: evidence from an emerging market

This study examines the impact of a stamp tax rate increase on market behavior, using data from two stock exchanges in China. We find that when the tax rate increases from 0.3 to 0.5% (which implies that the transaction cost increases by about 1/3) trading volume decreases by 1/3. This implies an elasticity of turnover with respect to a stamp tax of −50% and an elasticity of turnover with respect to transaction cost of −100%. The markets’ volatility significantly increases after the increase in the tax rate. Furthermore, the change in the volatility structure indicates that the markets become less efficient in the sense that shocks are less quickly assimilated in the markets.

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Optimal patent length and height

Patent breadth and length have been discussed extensively in innovation literature. In this article, I analyze the optimal degree of novelty of patent protection and its tradeoff with patent length. In the context of subsequent innovations each innovation builds on the previous one. The degree of novelty necessary for a non-infringing patent is crucial for the firms’ incentive to innovate. One of the findings is that a monopolist’s optimal degree of novelty is lesser than would be socially desirable. Furthermore, there exists a finite optimal patent length. Competitors introducing an improved technology cause uncertainty which may be compensated by extending patent length.

Firm survival: methods and evidence

This paper surveys the Industrial Organization literature on firm survival. We find that, in retrospect, the econometric specifications used in this area have progressively become more sophisticated, addressing issues such as discrete time, unobserved heterogeneity and competing risks. We also identify a number of firm- and industry-specific covariates that provide largely consistent results across samples, countries and periods. On the other hand, the evidence is less clear-cut with regard to ownership and spatial factors.

How large is liquidity risk in an automated auction market?

We introduce a new empirical methodology that models liquidity risk over short time periods for impatient traders who submit market orders. Using Value-at-Risk type measures, we quantify the liquidity risk premia for portfolios and individual stocks traded on the automated auction market Xetra. The specificity of our approach relies on the adequate econometric modelling of the potential price impact incurred by the liquidation of a portfolio. We study the sensitivity of liquidity risk towards portfolio size and traders' time horizon, and interpret its diurnal variation in the light of market microstructure theory.

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The outsourcing productivity paradox: total outsourcing, organisational innovation, and long run productivity growth

A growing number of empirical studies find a relationship between the outsourcing of activities and a long term loss of firm productivity growth. The paper addresses this outsourcing productivity paradox by examining the connection between total outsourcing and organisational innovation. We present a model of organisational innovation in which managers raise productive efficiency by identifying organisational architectures that more effectively integrate value-adding activities and administrative routines. As part of this process, managers can internally or externally source an activity. Simulations of the model show that large scale outsourcing restricts the scope for future organisational innovation, leading to lower productivity growth. The findings accord with the empirical data and provide a salutary warning for managers and policy-makers about the long term implications of total outsourcing.

Reemployment wages and UI liquidity effect: a regression discontinuity approach

This paper puts together the non-distortionary liquidity effect of unemployment insurance and job match quality. We identify a big impact on subsidized unemployment duration and a small impact on wages on the job that follows the unemployment spell. Wage gains are heterogeneous and concentrated on individuals at the bottom of the pre-unemployment income distribution. The non-distortionary nature of the liquidity effect reduces the pressure on low-income workers to accept lower productivity jobs.

What is specific about evolutionary economics?

Ever since an “evolutionary” perspective on the economy has been suggested, there have been differing, and partly incommensurable, views on what specifically this means. By working out where the differences lie and what motivates them, this paper identifies four major approaches to evolutionary economics. The differences between them can be traced back to opposite positions regarding the basic assumptions about reality and the proper conceptualization of evolution. The same differences can also be found in evolutionary game theory. Achievements of the major approaches to evolutionary economics and their prospects for future research are assessed by means of a peer survey.

The persistence of regional new business formation-activity over time – assessing the potential of policy promotion programs

We investigate regional differences in the level and the development of regional new business formation activity. There is a pronounced variance of start-up rates across the regions. The level of regional new business formation is rather path-dependent so that changes are relatively small. The main factors determining the level of regional start-ups are innovation and an entrepreneurial climate. These factors also seem to be responsible for changes in the level of regional new business formation. In addition, unemployment plays a role. Steering innovation and creating an entrepreneurial atmosphere could be an appropriate starting point for policy measures that try to promote start-ups. Our empirical evidence strongly suggests that such measures may have significant effect only in the long run.

Rigidities,Living Conditions,and Institutions in the Far North

The remoteness and geography of Alaska create service access rigidities that are difficult to overcome. The delivery of basic services like healthcare, police protection, and justice are often inadequate in rural places. The continued employment of neoclassical assumptions in policy making is a primary reason policies fail to overcome the barriers. A broader scope of analysis can inform the issues faced by rural residents and provide insight into alternate solutions.

On Laidler regarding the Austrian business cycle theory

The authors welcome criticisms emanating from neoclassical critics of Austrian economics. We congratulate Laidler for transcending the usual modes of macroeconomic analysis to take on praxeological considerations. This paper should be interpreted as a welcome for his efforts in the hope that they will be widely emulated within the profession.

Fiscal-monetary policy coordination and debt management: a two-stage analysis

We study interactions between two policymakers, central bank and government, in managing public debt as the result of a two-stage game. In the first stage, the institutional regime is established. This determines the equilibrium solution for the second stage, in which a differential game is played between the two policymakers. It is shown that, if the policymakers can communicate before the game is played (multiple-equilibrium), coordination problems can be solved by using the concept of correlated equilibrium.

Are some taxes different than others? An empirical investigation of the effects of tax policy in Canada

This paper investigates the response of major macroeconomic variables to four different types of tax policy innovations in Canada within a VAR framework. The positive tax multipliers documented in the previous literature are found only for corporate tax innovations. Our results indicate that different taxes affect output differently, and imply that the composition of total taxes may be a major factor behind cross-country variation in the sign and magnitude of total tax multipliers.

Vertical Innovation and Catching-Up: Implications of EU Integration for CEECs-5

We analyze the role of vertical innovation in trade patterns for developing economies trading with technologically advanced countries. A model is presented where the international diffusion of knowledge, promoted by economic integration, is the source of a technological catching up and leads to a convergence in the quality of traded goods, with a positive effect on exports. We then turn our attention on the evolution of trade between the Central and Eastern European countries (CEECs-5) and their European Union partner countries, assessing whether economic integration has increase the quality of the goods produced. For the period 1995–2005, we find evidence of the increasing role of intra-industry trade and vertical differentiation and a process of specialization in higher quality products, especially in the medium- and high-skill sectors.

An evolutionary perspective on health innovation systems

This paper elaborates on the general properties of medical innovation processes. It begins with a critical review of different perspectives and methods of investigation used in various streams of research that have previously analysed technical change in the health sector. After profiling and discussing their characteristics, the paper proposes an evolutionary approach to change in medicine constructed around the notion of a ‘Health Innovation System’. Health innovation, it is argued, consists of complex bundles of new medical technologies and clinical services emerging from a highly distributed competence base. Health Innovation Systems are driven by the combination of (1) institutionally-bound interactions among agents (‘gateways’ of innovation) and (2) history-dependent trajectories of change (‘pathways’ of innovation) whose developments emerge from and feed back into the structure of the system through organised transfers of knowledge between research and clinical practice. After drawing examples from recent empirical work on clinical research in specific disease areas, the paper concludes by identifying implications for further research.

Extending the Learning-By-Exporting Hypothesis: Introducing a Credit Constraint

This paper develops a theoretical framework which can be used to examine policy implications from the learning-by-exporting hypothesis. This work builds on previous theoretical literature by introducing a credit constraint. When credit is available, the analysis suggests that supporting a learning sector via an export subsidy is not necessarily advised to improve social welfare. The learning sector’s goods may be over-produced (relative to another non-tradable sector goods) when consumers can borrow freely for their consumption. If the learning sector’s goods are over-produced, social welfare will be improved via a tax on production.

On local indeterminacy and endogenous cycles in Ramsey models with heterogeneous households

It is well-known that endogenous cycles can occur in Ramsey models with heterogeneous households and borrowing constraints. In this note, we address the issue of robustness in the more general case of endogenous labor supply and we explain the occurrence of local indeterminacy under progressive taxation.