Knowledge,innovation and firm performance in high- and low-technology regimes

Industries with greater aggregate levels of research and development (R&D) intensity are home to higher rates of firm-level innovation, according to survey data from 845 Canadian manufacturing firms. And, though innovation is more common when industry dynamism is high, innovative firms are likely to enjoy revenue growth, irrespective of the industry in which they operate. The research also shows that firm knowledge, industry dynamism and innovation interact in the way they influence firm performance. A highly skilled workforce is most beneficial to firm performance in dynamic environments, while firms in stable manufacturing industries benefit more from investments in training.     

Innovation and Competition in the Netherlands: Testing the Inverted-U for Industries and Firms

Competition can be good or bad for innovation by firms. On the one hand it stimulates firms to innovate in order to escape competition, on the other hand it hampers firms to reap additional profits from innovation. The recent literature has embraced a model that describes an inverted-U shape relationship between competition and innovation at the industry-level. With the Price Cost Margin and Profit Elasticity as measures of competition, we find evidence supporting this prediction using industry data from the Dutch National Accounts. Moreover, we test the non-linear relation at the micro-level, with special attention for the role of the distribution of technology within industries. We find evidence that there is a threshold for this ‘technology spread’ at which the (marginal) effect of competition on innovation activity by firms turns from positive to negative.     

Corporate Philanthropic Giving,Advertising Intensity,and Industry Competition Level

This article examines whether the likelihood and amount of firm charitable giving in response to catastrophic events are related to firm advertising intensity, and whether industry competition level moderates this relationship. Using data on Chinese firms’ philanthropic response to the 2008 Sichuan earthquake, we find that firm advertising intensity is positively associated with both the probability and the amount of corporate giving. The results also indicate that this positive advertising intensity-philanthropic giving relationship is stronger in competitive industries, and firms in competitive industries are more likely to donate. This study thus provides evidence suggesting that even in the wake of catastrophic events, corporate philanthropic giving is strategic.     

Competitive pressure,innovation and trade protection: Evidence from US patent data

Recent theoretical models have suggested that the relationship between competition and innovation may best be characterised as an inverted‐U shape: firms in industries with low levels of competition are more likely to innovate in the wake of increased competition as they attempt to escape competition, while those in highly competitive industries will decrease innovation in the wake of increased competition as the profit incentive to innovate dissipates. Results from other studies have found positive as well as negative relationships between innovation and competition. In a parallel literature, trade economists have produced conflicting results regarding the impact of trade liberalisation on innovation. One stream of research has shown that increased access to imported intermediate goods increases productivity, suggesting a positive relationship between imports and innovation. Others have hypothesised that firms may use the technology embodied in intermediate inputs as a substitute for domestic innovation. In this paper, we merge these divergent literatures and investigate whether innovation, as measured by the production of patents by US manufacturers, has been impacted by market competition and tariff reductions. Our empirical findings indicate that insulation from imports in the form of higher tariffs on final goods was associated with innovation until the late 1980s, while falling tariffs on intermediate goods appear to have facilitated innovation during the 1990s. We also find evidence of the inverted U‐shaped relationship between market competition and innovation.     

The tradeoff between firm size and diversity in the pursuit of technological progress

Conclusion Our analysis lends support to both sides of the debate concerning the optimal firm size for achieving technical advance. It provides a basis for why industries composed of many small firms will tend to exhibit greater diversity in the approaches to innovation pursued, and why greater diversity will contribute to more rapid technological change. It also provides a basis for why industries populated by larger firms will achieve a more rapid rate of technical advance on the approaches to innovation that are pursued. These arguments together suggest that a tradeoff exists between the appropriability advantage of large size and the advantages of diversity that accrue from numerous small firms. Our analysis has been more appreciative than rigorous and, indeed, often explicity speculative. While we attempted to raise important questions, our framework requires more structuring before we can be confident about any of our conclusions. Even in its inchoate form, however, our analysis demonstrates that much needs to be done before the current debate about firm size can seriously inform policy. If we accept the plausibility of our basic framework, it focuses attention on a range of issues and questions. The fundamental premise of our analysis is that firm capabilities and perceptions differ within industries. This premise is not, however, widely reflected in analyses of industry behavior and performance, which typically take some representative firm as their starting point. Indeed, the analytic utility of our particular premise deserves scrutiny. Are differences in firm capabilities and perceptions as critical to explaining the industry patterns in innovative activity and performance as we suggest? Do these differences persist? Is our abstract characterization of these differences and their effects on innovative activity up to the task of providing a basis for policy?These intraindustry differences in capabilities and perceptions underpin the hypothesized relationship in our framework between the number of firms within an industry and the number of distinct technological activities pursued by the industry as a whole. Surely this hypothesis should be tested. To establish the relationship between numbers of firms and technological diversity, we also made two important assumptions, which themselves should be examined. First, we assumed that firms independently decide upon which approaches to innovation to pursue.This assumption precludes the clustering of firms around innovative activities due to imitation, a phenomenon highlighted by Nelson (1981) and Scott (1991). To the degree that innovative activities yield relatively fast, public results, the assumption may be suspect. While our evidence indirectly suggests that such clustering may not be critical for explaining innovative activity in a wide range of industries, more research would be helpful. Second, we assumed that the number of approaches to innovation pursued by firms is independent of their size, implying large and small firms will tend to pursue the same number of approaches. This assumption probably does not apply to the smallest firms within an industry, particularly to the extent that such firms are often not full line manufacturing firms. Does it apply, however, to the medium to large firms that account for the preponderance of R&D and economic activity inthe manufacturing sector? While our evidence again provides indirect support for this claim, more empirical and theoretical research is indicated.We also made other claims and assumptions that deserve further attention. For example, we argued that greater technological diversity stimulates technical advance and provides gross increments to social welfare. Assuming it exists, the mechanism linking diversity and technical advance has never been examined empirically and is not obvious. Our assumption that expected firm growth due to innovation is increamental played an important role in permitting usto hypothesize an appropriability advantage of large size. Again, both the assumption and its alleged effect on innovative activity are worth examining. Finally, we also need to test whether the relationship between R&D and firm size within industries depends upon appropriability conditions, particularly upon the extent to which firms can sell their innovations or grow rapidly due to innovation. In conclusion, this litany of reasonable but unsubstantiated assumptions and arguments should make clear that this paper is only a modest beginning of a daunting research agenda.

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Industry changes in technology and complementary assets and the creation of high-growth firms

This study uses employment data to examine why some industries host more new high-growth firms than others. Using a unique data base of 201 industries over a 15-year period, we find that increases in the proportion of employment of scientists and engineers in industries are positively associated with counts of fast-growing new firms; however, we do not detect a relationship between fluctuations in the proportion of employment in sales and production occupations and counts of fast-growing new firms. The findings suggest that technological innovation is an important determinant of entrepreneurial opportunity. Further, they suggest that private new firms are an important means of organizing commercial innovation and that new firms may be less constrained by complementary assets than has been previously understood.     

Banking competition and firm-level financial constraints in Latin America

Prior literature argues that, given the existence of information asymmetries and agency costs, higher competition may increase financial constraints by reducing banks' incentives to build lending relationships. Using a sample of listed firms for six Latin American countries, we analyze the relation between banking competition and financial constraints. We find evidence in line with prior research that banking competition increases financial constraints. This result is robust and heterogeneous. We include other country-specific variables and check the robustness of our findings; the main results hold. Our results show that the effect of competition differs across firms and industries. Specifically, consistent with the information hypothesis, the negative impact of competition is higher for small quoted firms and for low-assets tangibility industries. Also, as expected, we find evidence that firms are more affected by financial constraints during the last crisis. This negative effect is larger for firms in more competitive banking industries.     

Institutional ownership and technological relatedness: A test of endogeneity

Building on the previous literature on corporate diversification, institutional ownership and firm innovation, this study proposes an endogenous relationship between institutional ownership and corporate technological relatedness. Technological relatedness is the degree to which a set of industries in which a firm operates its businesses demand similar technological knowledge. A Vector Autoregressive analysis of data from U.S. manufacturing firms shows that firms enhancing technological relatedness attract more institutional investors and as predicted, this pattern is particularly strong for pension fund ownership. In contrast, the analysis fails to show that institutional investors cause a firm's business portfolio to increase in technological relatedness.     

Services vs. Manufacturing – How Does Foreign and Domestic Sales Impact on Their R&D?

While the distinction between manufacturing and services becomes increasingly blurred to some observers, we find, using a panel of Swedish firms, clear evidence that foreign sales (exports) are more important than domestic sales for stimulating R&D. This is particularly clear for manufacturing and this importance of foreign sales has increased over time, simultaneous to an opening up of the Swedish economy. Even though service industries have seen an increase in both R&D and trade over time, it is thus mainly manufacturing that has benefited from increased possibilities for absorptive capacity. This result suggests a clear dichotomy between manufacturing and services in terms of how they react to trade and how they turn towards the foreign market vs. the domestic market to find stimuli for innovation.     

Business Dynamics and Efficiency in Industries and Regions: The Case of Spain

High rates of firm births and deaths are a pervasive phenomenon across industries and territories. Most studies have related the great turbulence at the fringe of practically all manufacturing industries to positive effects on the long-run performance of industries. According to these views business turbulence, although it has a relatively small incidence on net entry, leads to allocative improvement and stimulates innovation. The existing set of empirical studies does not reach clear conclusions, however, and many questions are still open. Our contribution analyses the relationship between business dynamics in manufacturing and the growth of total factor productivity in industries and regions. After a review of current literature on entry and exit it is argued that most models are tailored to suit the processes observed in industries and regions that are near the technological frontier, and we propose an approach that could be more representative of middle range economies such as Spain. According to this approach new firms are seen more as users of innovations than producers of innovations. We adopt a model based on a vintage capital framework in which new entrants embody the edge technologies available and exiting businesses are supposed to represent the most marginal obsolete plants. Both industries and regions are represented by a Hall's type production function which controls for imperfect competition and economies of scale. The results show that both entry and exit rates contribute positively to the growth of total factor productivity in industries and in regions.     

供应链集中度与企业创新——基于中国制造业上市公司的实证研究

信息技术革命和国际垂直分工深刻地改变了全球制造业的生产格局和竞争基础，传统的企业间竞争正逐渐演化为供应链间的竞争。对2011-2018年A股制造业上市公司的实证分析发现：供应商集中度负向影响企业创新，但这一效应在市场地位较高的企业中得到弱化；客户集中度与企业创新则呈显著正相关，且在市场地位较高的企业中得到强化。研究还发现，融资约束缓解是供应链集中度影响企业创新活动的作用渠道。研究对于供应链与创新活动之间的关系做出了文献贡献，并对创新驱动发展战略下企业根据自身市场地位权变性地从事创新活动提供了实践指导。     

Are there demonstration-related spillovers from FDI?: Evidence from Switzerland

This paper examines whether there are signs of demonstration-related spillovers from foreign direct investment (FDI). It hypothesizes that the size and the extent of such benefits vary according to the level of the absorptive capacity of local firms. Using detailed firm data from Swiss manufacturing and services/construction, we find strong evidence for demonstration-related spillovers when (a) local firms are not far behind the technological frontier of the industry with a technological gap slightly greater than one, and (b) local firms demonstrate high investment in the absorptive capacity. The results are found to be more consistent in manufacturing than services/construction.     

Foreign Direct Investment and mark-up dynamics: Evidence from Spanish firms

A review of the literature indicates that Foreign Direct Investment has the potential to increase the intensity of competition and to act as a channel for technology transfers. Using a Spanish firm level data set, we disentangle these effects by estimating a dynamic model of firm level performance, which we proxy by mark-ups. We find that FDI has a positive long-run effect on the mark-ups of targets, but this is limited to firms in R&D intensive sectors. In addition, we find weak evidence that foreign presence dampens margins. However, this effect appears to be more than compensated by positive spillovers in the case of knowledge intensive industries.     

Examining Determinants of Foreign Wage Premiums in China

We estimate foreign wage premiums for every 3‐digit manufacturing industry in China and discover a wide range of premiums both for ‘foreign’ ownership and for overseas Chinese ownership. Foreign ownership generates larger and more prevalent wage premiums than overseas Chinese ownership, but both produce premiums that respond similarly in estimates of determinants. Using the number of computers per worker to measure firms' technology levels, we find evidence consistent with the hypothesis that foreign firms pay higher wages to reduce the risk of worker turnover and the accompanying technology leakage in 76 to 78 per cent of industries. However, this determinant explains only 5 to 6 per cent of the foreign wage premium. We find the most intensive support for the ‘fair wage’ hypothesis that foreign firms pay higher wages because they are more profitable than domestic firms and workers in more profitable firms expect to be paid more, otherwise they will shirk. This hypothesis explains an average of 8 to 9 per cent of the foreign wage premiums, with support found in 72 to 75 per cent of the industries. When we consider the best combination of explanatory variables to include in each industry's wage regression, we find evidence consistent with our combined hypotheses in most industries, but we still find large residual foreign wage premiums.     

A comparative study of innovation behaviour in Singapore's KIBS and manufacturing firms

While most services innovation studies are concentrated on the OECD or EU countries, research on services innovation in the non-OECD context is still rare. This study investigates innovation behaviour of a certain group of services – knowledge-intensive business services (KIBS), compared with the manufacturing sector in Singapore. The main findings of this study are: (1) KIBS firms have higher innovating ratio than manufacturing firms, but innovating manufacturing firms are more likely to do R&D than innovating KIBS firms; (2) KIBS firms have higher human capital intensity, training spending intensity, innovation spending intensity, and R&D spending intensity than manufacturing firms; (3) KIBS firms and manufacturing firms have similar innovation objectives, although some delicate nuances do exist; (4) KIBS firms are less likely to have overseas partners for innovation collaboration than manufacturing firms; (5) there is a U pattern of innovation collaboration with geographic distance for both KIBS and manufacturing firms; (6) social capitals are important for KIBS firms' successful provision of innovation support to manufacturing clients; (7) the importance of spatial proximity varies over different phases of innovation support.     

Analysing the link between export intensity,innovation and firm size in a science-based industry

The aim of this paper is to contribute to a better understanding of the relationship between export intensity, innovation and size in a particular technological setting: a science-based industry. Using a sample of 121 firms in the French biotechnology industry, we have found that firm size is not a determinant for innovation or for export intensity. However, the results show a positive and significant link between innovation and export intensity. Our findings open a new agenda for policy-makers when interpreting how they should promote innovation and exports in science-based firms.     

Performance feedback and export intensity of Chinese private firms: Moderating roles of institution-related factors

Building on the behavioral theory of the firm and institutional view, we examine how performance feedback (i.e., a focal firm’s performance relative to its industry peers) affects export intensity and how institution-related factors moderate this relationship. Using a sample of Chinese private manufacturing firms, we find that positive performance feedback lowers export intensity while the relationship between negative performance feedback and export intensity is insignificant. Moreover, outperforming firms are likely to decrease their export intensity even more when they are located in regions of better institutional development or have political connections. Underperforming firms with political connections tend to increase their export intensity. These findings enrich our understanding of the export behavior of emerging market firms.     

Learning about foreign markets: A study of Czech SMEs

Drawing on the organizational learning literature, our study examines the role of foreign market knowledge and firm emphasis on technological innovation in the internationalization of small, entrepreneurial firms in the Czech Republic. It is based on a sample of 168 SMEs representing a broad range of manufacturing industries that were founded after the fall of communism and as the Czech economy was transitioning to a more market-based economy. Findings indicate that emphasis on technological innovation is associated with greater acquisition of foreign market knowledge. In addition, our results indicate that emphasis on technological innovation directly and indirectly influences the performance of such SMEs in international markets. Our findings also suggest that foreign market knowledge partially mediates the relationship between firm emphasis on technological innovation and international performance. Implications of our findings from the perspective of theory and practice are discussed.     

Profiting from product innovation: The impact of legal, marketing, and technological capabilities in different environmental conditions

Although product innovation is a key tool for firms competing in the marketplace, innovating firms often fail to obtain economic returns from their product innovations. This study examines the moderating effects of legal, marketing, and technological capabilities on the relationship between product innovation and firm performance in different environmental conditions in order to identify how a firm can leverage these capabilities to profit from product innovation. Based on the data of 223 Chinese firms, this study finds that legal capability positively moderates the relationship between product innovation and firm performance, especially when competitive intensity is high; the moderating effect of marketing capability is positive, although it is weakened by market turbulence; and technological capability has a negative moderating effect, which becomes more significant as technological turbulence increases.     

The determinants of successful R&D consortia: government strategy for the servitization of manufacturing

The Taiwanese government has started to promote the concept of the ??servitization of manufacturing?? with a view to accelerating the servitization of the country??s manufacturing industries. The objective is to enable Taiwan??s industries to progress from manufacturing toward innovation, R&D, and services. The main purpose of this study is to explore the factors determining the formation of R&D consortia among Taiwanese firms. In a literature review and analysis, we distinguish the factors underlying the formation of these R&D consortia into internal and external factors. The findings show that four external factors are positively significant: the degree of industry competition, the appropriability conditions of innovations, government subsidies, and cooperation between firms in different industries. Firm size and firm age are among the internal factors that are significantly positive in the formation of R&D consortia.