Barriers to innovation and public policy in Catalonia

The present paper analyses the link between firms’ decisions to innovate and the barriers that prevent them from being innovative. The aim is twofold. First, it analyses three groups of barriers to innovation: the cost of innovation projects, lack of knowledge and market conditions. Second, it presents the main steps taken by Catalan Government to promote the creation of new firms and to reduce barriers to innovation. The data set used is based on the 2004 official innovation survey of Catalonia which was taken from the Spanish CIS4 sample. This sample includes individual information on 2,954 Catalan firms in manufacturing industries and knowledge-intensive services (KIS). The empirical analysis reveals pronounced differences regarding a firm’s propensity to innovate and its perception of barriers. Moreover, the results show that cost and knowledge barriers seem to be the most important and that there are substantial sectoral differences in the way that firms react to barriers. The results of this paper have important implications for the design of future public policy to promote entrepreneurship and innovation together.

Stochastic productivity measurement

Stochastic productivity indicators are defined, and superlative measures of these indicators are derived. It is shown that, in the presence of complete markets or a common-expectations equilibrium, differences in the market values of firms are superlative indicators of cross-sectional productivity differences. Exactness results are used to decompose nonstochastic productivity indicators into a measure of true productivity change and a measure of ‘luck’. The decomposition is illustrated empirically.

Marketing in medium-sized manufacturing firms: The state-of-the-art in France and in Quebec

An examination of the relationship between marketing and SMEs raises two kinds of questions: the first relates to the categories of SMEs studied, and it goes without saying that their responses will depend on their size (very small, small, and medium); the second depends on the elements likely or not to bring out a marketing approach. In fact, we can infer a large part of this approach from the answers having to do with segmentation practices, positioning, and information research. These three practices constitute the foundation of this approach. For all that, to ask questions directly (especially with regard to segmentation) would lead to biased responses. Taking these premises into account and with understanding of marketing behaviour in the medium-sized firms as an objective, we conducted two surveys in two locations, France and Québec (Canada), in which only enterprises with 50 to 250 employees were retained. The results show that if the marketing approach of the medium-sized firms is always focused on client distinction (more than on the market as such), competition leading to positioning is very much a part of their preoccupations; finally, these enterprises commonly practice commercial intelligence. This implies structuring commercial activity in general and marketing in particular, the two not always well delimited. These last two traits differentiate them from the other categories of SMEs, the very small enterprises (VSEs) and the small enterprises (SEs).

How different are the regional factors of high-tech and low-tech start-ups? Evidence from Japanese manufacturing industries

This paper analyzes regional determinants of the start-up ratio in the Japanese manufacturing sector. A major contribution of this study is the comparison between high-tech and low-tech industries. The empirical results using a sample of 253 industrial districts suggest that business density, weight of the manufacturing sector, and the average business size significantly influence the start-up ratio in both high-tech and low-tech industries. Distinct differences between these industries were found with regard to the effects of human capital, research institutes, and the weight of high-tech industries.

Firm entry and exit in Italian provinces and the relationship with unemployment

This study investigates the influence of the unemployment rate on firm entry, exit and net entry in Italian provinces. We attempt to explain these market dynamics in six different sectors, including manufacturing, construction, commerce, hotels and restaurants, transport and financial services. We control for other regional factors, such as patenting activity, economic growth, economic welfare, tourism, industrial districts and whether being a major city. Findings indicate that the effects of unemployment on entry and exit are dependent upon the sector under study, but are mainly negative. This suggests a lack of dynamics in the Italian regional labor markets.

Output and productivity growth in the education sector: comparisons for the US and UK

This paper considers the measurement of performance in public service provision in an international context by examining outcome-based measures for the education sector. It first sets out the measurement issues in general terms. The paper then applies these methods to comparing the UK experience with that in the US over the period 1979–2002. The results show higher labour productivity growth in the UK education sector than in the US over this time period, so that the UK eliminated the productivity gap with the US by the end of the Century.

Efficiency vectors, efficiency and performance measures: new methods for ranking efficient organizational units

We present and discuss measures for analyzing productivity in deterministic frontier models. A new efficiency measure is introduced allowing for discrimination among efficient organizational units. In addition, a new performance measure for analyzing productivity of organizational units is presented. This measure fulfills various properties of efficiency measures but relaxes the indicator property. Both new approaches are based on the development of efficiency vectors which is a new vector measure for measuring efficiency. The vector components are efficiency measures related to subsets of a production possibility set. The new approaches are applied in the context of data envelopment analysis.

The cost of strikes in the Spanish mining sector: modelling an undesirable input with a distance function

In some contexts, firms have to deal with certain elements or factors that affect the production outcome but which are non-market in nature and therefore do not have a price. In this paper we propose a new use of a production economics tool, the input distance function, to empirically measure the effects of these factors. Although we suggest a general use of this methodology, it has been developed in the context of measuring the effects of labor disputes in a particular declining industry, that of Spanish coal mining. We have estimated an equation system comprising an input distance function and cost share equations to calculate the cost generated by strikes.

Smoking prevalence in the United States: Differences across socioeconomic groups

This paper uses recent US state-level data to examine smoking behavior across four population groups divided by age, literacy, income and ethnicity. Another contribution lies in the consideration of various smoking control policies and the full costs of smoking. Overall, the results show that non-price smoking policies are relatively more effective than price or tax policies in reducing smoking prevalence and that these policies gain effectiveness as the population begins to age.

The productivity performance of Irish dairy farms 1984–2000: a multiple output distance function approach

This study measures productivity growth on Irish dairy farms over the period 1984–2000. A total factor productivity index is constructed for the dairy system and is decomposed into technical change, efficiency change, and changes in scale efficiency. This is achieved by estimating a stochastic output distance function model of the production technology in use on Irish dairy farms. Overall, productivity on Irish dairy farms grew by 1.2% per annum over the sample period.

Application of a double bootstrap to investigation of determinants of technical efficiency of farms in Central Europe

The paper provides one of the first applications of the double bootstrap procedure (Simar and Wilson 2007) in a two-stage estimation of the effect of environmental variables on non-parametric estimates of technical efficiency. This procedure enables consistent inference within models explaining efficiency scores, while simultaneously producing standard errors and confidence intervals for these efficiency scores. The application is to 88 livestock and 256 crop farms in the Czech Republic, split into individual and corporate.

The temporal variation of cost-efficiency in Switzerland’s hospitals: an application of mixed models

This paper uses a mixed effects model to examine the temporal variation of cost efficiency in Switzerland’s general hospitals. The variations in total costs, the number of empty beds and the length of hospital stays are analyzed using financial data from a sample of 168 hospitals operating from 1998 to 2003, as well as hospitalization records disaggregated to Diagnosis Related Groups. Individual intercepts and random coefficients are used to account for the unobserved time-invariant heterogeneity and the differences in temporal patterns across hospitals and DRG categories. The analysis illustrates the usefulness of mixed models to account for unobserved factors such as quality, with a relatively weak assumption that their temporal variations, rather than their initial levels, be uncorrelated with efficiency changes. The results indicate that hospitals have adopted measures to curtail hospitalizations and reduce empty beds. The extent and effectiveness of these measures vary significantly across individual hospitals. However, there is no evidence in favor of a particular ownership type or subsidization regime. While the link between reduction rates of empty beds and gains in cost-efficiency is statistically significant, the expected association between shortening hospital stays and cost-efficiency cannot be clearly established in the data.

How clusters can encourage entrepreneurship and venture creation. Reasons and advantages

The aim of this article is to define what is meant by clusters, their characteristics or determinants and the advantages they generate, focusing on the role they play in boosting entrepreneurship and new venture creation. In clusters, a balance is reached between cooperation and competition which becomes evident in the higher productivity of the companies because of their increased access to inputs, information, technology and institutions; or in greater innovation and venture creation. The cluster incentivizes the entry of new companies or start-ups. The hope is, then, that the new companies will revitalize specific regions where competitiveness has fallen and that entrepreneurship will contribute to economic development and improved country-wide competitiveness.

Entrepreneurship as a non-profit-seeking activity

It is typically assumed that people engage in entrepreneurship because there are profits to be made. In contrast to this view, this paper argues that entrepreneurship is more adequately characterized as a non-profit-seeking activity. Evidence from a broad range of authors and academic fields is discussed showing that entrepreneurship does quite generally not pay in monetary terms. Being an entrepreneur seems to be rather rewarding because it entails substantial non-monetary benefits, like greater autonomy, broader skill utilization, and the possibility to pursue one’s own ideas. It is shown how incorporating these non-monetary benefits into economic models of entrepreneurship can lead to a better understanding of the phenomenon.

A Historian’s Perspective on the PATCO Strike, Its Legacy, and Lessons

This article argues that the unsuccessful 1981 strike of federal air traffic controllers was the most significant single event in accelerating the decline of organized labor in the United States in the late 20th century. Like the failed Homestead steel strike of 1892, the PATCO strike cast a long shadow over US labor relations for many years after the event itself. Among the effects of the strike was the role it played in legitimizing the use of permanent replacement workers during strikes. This article draws lessons from the PATCO debacle that are worth considering 25 years later.

Economic freedom: a comparative study

This paper presents a comparative study of economic freedom in five groups of countries: Free, Mostly Free, Islamic, Latin American, and a subset of EU member countries. The study includes 103 countries, and uses data from the 2007 Index of Economic Freedom. The paper tests for the statistical significance of the difference between group means for each of ten measures of economic freedom and for the overall freedom score. The empirical evidence shows that the Islamic countries have significantly less economic freedom than the other groups, and that they are the only group with declining economic freedom in the last 13 years.

The geography of new firm formation: Evidence from independent start-ups and new subsidiaries in the Netherlands

This paper investigates to what extent determinants of the rate of independent start-ups and the rate of new subsidiaries are different. Using a regional database for the Netherlands over the period 1988–2002, we investigate the impact of two types of agglomeration effects, localization and urbanization, while controlling for a range of economic variables. We find urbanization economies to be particularly important for the creation of new subsidiaries while localization economies are more important for the creation of independent new ventures. Finally, the effect of agglomeration variables is found to be stronger for manufacturing industries compared to services industries.

A generalized procedure to recover the first derivatives of a production function when the firm is a profit maximizer

Partial derivatives of production functions are necessary in many instances to characterize the technology of firms. We present here a general method to recover the first derivatives of the production function of a profit maximizing firm. The method is systematic and applies even when the optimization problem of the firm is subject to additional constraints. It allows researcher to recover returns to scale and technological progress in complex situations.

Assessing multi-dimensional performance: environmental and economic outcomes

This study examines economic performance, environmental performance, and regulatory activity for plants in three industries: pulp and paper, oil, and steel. Stochastic frontier production function models show significant deviations from production efficiency. Older plants are less efficient in production, but perform no worse on emissions. Plants spending more on pollution abatement tend to do worse on both production efficiency and emissions. Stricter local regulatory pressure is associated with somewhat lower emissions, but has mixed effects on production efficiency. Positive correlations between SUR residuals for emissions and production efficiency suggest unmeasured plant-level characteristics that drive both economic and environmental performance.

The contributions of productivity, price changes and firm size to profitability

Sources of profit change for Telstra, Australia’s largest telecommunications firm, are examined. A new method allows for changes, in a firm’s profits to be broken down into separate effects due to productivity change, price changes, and growth in the firm’s size. This in turn allows us to calculate the distribution of the benefits of productivity improvements between consumers, labor, and shareholders. The results show that around half the benefits from Telstra’s productivity improvements from 1984 to 1994 were passed on to consumers in the form of real price reductions.