The Provision of Finance to Innovation: A Survey Conducted among Italian Technology-based Small Firms

Financial constraints to the development of innovation are often considered one of the main impediments to high-technology firms seeking to expand and grow. In particular this is the case of small and medium size high-tech firms. In the U.S. and the U.K. a variety of sources of finance are available to the start-ups of innovative firms; in the other European countries, and particularly in Italy, these means are still uncommon so that the development of technology is often prevented. This paper, based on an empirical analysis on a survey of 46 small high-tech Italian firms, aims at exploring the problems experienced by small businesses in gaining access to debt and equity finance. The results highlight that traditional financial sources are inadequate to finance innovative projects. The questioned firms rely mainly on personal finance, and secondly on short term bank debt; they are truly involved in maintaining control over the firm activities and are willing to issue outside equity only if the new investors also provide non financial competencies. Among the 46 interviewed firms, only 10 are willing to be listed in the future on small firms' stock markets.     

The evolution of the world trade web: a weighted-network analysis

This paper employs a weighted network approach to study the empirical properties of the web of trade relationships among world countries, and its evolution over time. We show that most countries are characterized by weak trade links; yet, there exists a group of countries featuring a large number of strong relationships, thus hinting to a core-periphery structure. Also, better-connected countries tend to trade with poorly-connected ones, but are also involved in highly-interconnected trade clusters. Furthermore, rich countries display more intense trade links and are more clustered. Finally, all network properties are remarkably stable across the years and do not depend on the weighting procedure.     

New combinations in old industries

The literature on long waves gives great emphasis to the process of the diffusion of new pervasive technologies that raise productivity and growth, first in the sectors that generate them, then in those sectors that progressively adopt them. This paper explores this process of diffusion, relying on an ongoing analysis of the diffusion of robotized, modular production process in the international tire industry. The analysis captures three key features of the diffusion process of the long wave. First, we look at the emergence of radical innovations in mature sectors through the adoption of pervasive technologies, i.e. robotics. Second, we see that the adoption of the new process goes hand in hand with the adoption of new organizational routines at the level of both design and manufacturing processes, modularity. Third, this study highlights the role played by key individuals—entrepreneurs—who develop new ways of doing business.     

Sunspot Fluctuations in Two-sector Economies with Heterogeneous Agents

We study a two-sector model with heterogeneous agents and borrowing constraint on labor income. We show that the relative capital intensity difference across sectors is crucial for the conditions required to get indeterminacy and endogenous fluctuations. The main result shows that when the consumption good is sufficiently capital intensive, local indeterminacy arises while the elasticities of capital–labor substitution in both sectors are slightly greater than unity and the elasticity of the offer curve is low enough. Locally indeterminate equilibria are thus compatible with a low elasticity of intertemporal substitution in consumption and a low elasticity of the labor supply. As recently shown in empirical analysis, these conditions appear to be in accordance with macroeconomic evidences. We would like to thank R. Becker, J.P. Drugeon and an anonymous referee for useful comments and suggestions. The current version also benefited from a presentation at the conference “Public Economic Theory 04”, Beijing, August 2004.     

Designing payments for environmental services in theory and practice: An overview of the issues

Payments for environmental services (PES) have attracted increasing interest as a mechanism to translate external, non-market values of the environment into real financial incentives for local actors to provide environmental services (ES). In this introductory paper, we set the stage for the rest of this Special Issue of Ecological Economics by reviewing the main issues arising in PES design and implementation and discussing these in the light of environmental economics. We start with a discussion of PES definition and scope. We proceed to review some of the principal dimensions and design characteristics of PES programs and then analyze how PES compares to alternative policy instruments. Finally, we examine in detail two important aspects of PES programs: their effectiveness and their distributional implications.PES is not a silver bullet that can be used to address any environmental problem, but a tool tailored to address a specific set of problems: those in which ecosystems are mismanaged because many of their benefits are externalities from the perspective of ecosystem managers. PES is based on the beneficiary-pays rather than the polluter-pays principle, and as such is attractive in settings where ES providers are poor, marginalized landholders or powerful groups of actors. An important distinction within PES is between user-financed PES in which the buyers are the users of the ES, and government-financed PES in which the buyers are others (typically the government) acting on behalf of ES users. In practice, PES programs differ in the type and scale of ES demand, the payment source, the type of activity paid for, the performance measure used, as well as the payment mode and amount. The effectiveness and efficiency of PES depends crucially on program design.     

Kitchen confidential? Norms for the use of transferred knowledge in gourmet cuisine

When will knowledge holders share their knowledge with peers? Several studies suggest that norms of knowledge disclosure encourage knowledge transfer. More recently, scholars have hypothesized that norms of knowledge use may indirectly promote it. In this article, we synthesize a theoretical framework of the effect of norms of knowledge use and test its predictions by means of a field experiment involving more than 500 Italian chefs. For the literature on knowledge transfer, we confirm the importance of norms, but we also show that they are not complete substitutes for other means of protecting private knowledge. For the literature on social norms, we provide evidence of how actors assess others' propensity to conform and how this influences the intention to participate in the norm‐regulated exchange. Copyright © 2013 John Wiley & Sons, Ltd.     

Group efforts when performance is determined by the “best shot”

We investigate the private provision of a public good whose level is determined by the maximum effort made by a group member. Costs of effort are either commonly known or privately known. For symmetric perfect-information games, any number of players may be active and we characterize the unique (mixed-strategy) equilibrium in which active contributors use the same strategy. Increasing the number of active players leads to stochastically lower individual efforts and level of the public good. When information is private, the symmetric equilibrium is in pure strategies. Increasing the number of players yields a pointwise reduction in the equilibrium contribution strategy but an increase in equilibrium payoffs. Comparative statics with respect to costs and levels of risk aversion are derived. Finally, whether information is public or private, equilibria are inefficient—we provide mechanisms that improve efficiency.     

Corporate Groups and Minority Shareholder Wealth: A Role for Private Benefits?

This paper aims at developing a theoretical framework to address the issue of internal resource allocation within corporate groups, representing an extension of the internal capital market approach developed for Anglo-Saxon type multidivisional enterprises. In particular, the paper investigates how private benefits from control affect investment decision processes in a capital constrained business group. We consider a group of n listed companies controlled by one main shareholder (i.e., a hierarchical group), and suppose that the group as a whole is endowed with an exogenous and limited amount of capital for investment. We analyze the effects of private benefits on the investment allocative efficiency and on the wealth of the group';s various claimants. Under reasonable assumptions, we show that the controlling shareholder always finds preferable to secure private benefits. Moreover, and surprisingly enough, we find that the appropriation of control benefits may give rise to an increase in the market value of the group as well as in the portfolio wealth of the set of minority shareholders. In particular, the positive effect of control benefits on minority interests increases with the capital rationing of the group. Therefore, the effects of private benefits can be different in different markets, depending on the degree of development and the credit capacity of the single market. The findings of this paper challenge the largely accepted view that private benefits from control are always harmful to minority shareholders.