Alliances and the innovation performance of corporate and public research spin-off firms

We explore the innovation performance benefits of alliances for spin-off firms, in particular spin-offs either from other firms or from public research organizations. During the early years of the emerging combinatorial chemistry industry, the industry on which our empirical analysis focuses, spin-offs engaged in alliances with large and established partners, partners of similar type and size, and with public research organizations, often for different reasons. We seek to understand to what extent alliances of spin-offs with other firms (either large- or small- and medium-sized firms) affected their innovation performance and also how this performance may have been affected by their corporate or public research background. We find evidence that in general alliances of spin-offs with other firms, in particular alliances with large firms, increased their innovation performance. Corporate spin-offs that formed alliances with other firms outperformed public research spin-offs with such alliances. This suggests that, in terms of their innovation performance, corporate spin-offs that engaged in alliances with other firms seemed to have benefitted from their prior corporate background. Interestingly, it turns out that the negative impact of alliances on the innovation performance of public research spin-offs was largely affected by their alliances with small- and medium-sized firms.     

Returns to alliance portfolio diversity: The relative effects of partner diversity on firm's innovative performance and productivity

This study considers the impact of diversification in types of technological alliances, resulting in alliance portfolio diversity, on various dimensions of a firm's performance, as they relate to exploration and exploitation. Using a large panel of innovative firms in the Netherlands, this study shows that partner type diversity in a firm's alliance portfolio has an inverted U-shaped relationship with productivity and radical innovative performance and a positive relationship with incremental innovative performance. Moreover, the results suggest that a lower level of diversity is needed to achieve an optimal level of productivity compared to radical innovative performance, whereas for incremental innovative performance a higher level of portfolio diversity appears to give the best performance.     

TESTING POVERTY LINES

In theory, a poverty line can be defined as the cost of a common (inter‐personally comparable) utility level across a population. But how can one know if this holds in practice? For groups sharing common consumption needs but facing different prices, the theory of revealed preference can be used to derive testable implications of utility consistency knowing only the “poverty bundles” and their prices. Heterogeneity in needs calls for extra information. We argue that subjective welfare data offer a credible means of testing utility consistency across different needs groups. A case study of Russia's official poverty lines shows how revealed preference tests can be used in conjunction with qualitative information on needs heterogeneity. The results lead us to question the utility consistency of Russia's official poverty lines.     

How effective are level-based R&D tax credits? Evidence from the Netherlands

This article examines the impact of the R&D fiscal incentive programme on R&D by Dutch firms. Taking a factor demand approach, we measure the elasticity of firm R&D capital accumulation to its user cost. Econometric models are estimated using a rich unbalanced panel of firm data covering the period 1996 to 2004 with firm specific R&D user costs varying with tax incentives. Using the estimated user cost elasticity, we perform a cost–benefit analysis of the R&D incentive programme. We find some evidence of additionality suggesting that the level based programme of R&D incentives in the Netherlands is effective in stimulating firms’ investment in R&D. However, the hypothesis of crowding out can be rejected only for small firms. The analysis also indicates that the level based nature of the fiscal incentive scheme leads to a substantial social deadweight loss.     

Changes in household composition as a shock-mitigating strategy

This paper uses data from the Russian Longitudinal Survey that span the two recent economic recessions of 1998 and 2008 to study the effect of declining incomes on household composition. We hypothesize that individuals face a trade-off between taking advantage of economies of scale and specialization when living with others, and individual privacy. Consumption smoothing is achieved by forgoing privacy during the crisis and results in increases in household size. Our empirical results suggest that members of households that experienced negative income shocks are more likely to move in with others compared to individuals residing in households whose income remained the same or increased.     

A note on testing for complementarity and substitutability in the case of multiple practices

Recent empirical studies of firm-level performance have tested complementarity in the case of multiple practices. These papers have drawn conclusions using potentially biased estimates of pair-wise interaction effects. We develop a consistent and simple testing framework and test it against alternatives.