A corporation’s culture as an impetus for spinoffs and a driving force of industry evolution

We offer a theory of spinoffs that explains some salient aspects of these important market entrants. In infant industries, a great share of new market opportunities is depleted by firms that spinoff from incumbents. A model emphasizing the relation between incumbents’ evolving corporate cultures and the generation of spinoffs explains this regularity in industry evolution. By doing so, we capture different patterns in firm development that finally will help explain the evolutionary paths that industries may follow. We show that organizations reach a critical size that entails the collapse of a cooperative culture and triggers the exodus of personnel founding own firms. Thereby, organizations with a cooperative culture active in a dynamic business environment provide ideal training grounds for potential founders. Moreover, we argue that cooperative firm cultures and processes of “entrepreneurial imprinting” are important sources of spinoffs’ superior capabilities concerning their later market performance. We relate our findings to empirical evidence on developmental patterns in industries, such as genealogies and performance of spinoffs.     

The biological hypothesis in cliometrics of growth: a methodological critique of Fogel (post 1982) and Ashraf & Galor (2013)

The resort to biological “analogies”, “metaphors” and “concepts” is an important aspect of the history of the relationships between economics and biology and has long been greatly controversial. This controversy continues today in the most recent work of three cliometricians, i.e. Fogel (post 1982) and Ashraf and Galor (2013). We focus on the theories of historical growth relying on biological explanations which have been formulated by these economists, from the specific angle of biological reductionism. We propose a methodological critique of their use of biological variables as determinants of the historical dynamics of economic growth. Based upon the transposition to the field of economics of Ernst Mayr’s distinction between functional and evolutionary biology and his definitions of reductionism, we argue that despite some similarities, the questions raised by Fogel’s and Ashraf & Galor’s theories are of distinct nature. Nonetheless, we stress the need for a careful examination of the biological mechanisms supporting these researches.     

产业政策中的资金配置:市场力量与政府扶持

产业政策具有重要的国家战略意义,如何有效引导经济资源流向政策支持产业,是产业政策发挥成效的关键.现有相关研究未深入考察经济资源在扶持行业之间及行业内部配置的规律,而且没有综合探讨不同资金配置的关联.文章考察了市场力量与政府扶持两种机制如何引导产业政策下的资金配置.研究发现,产业政策支持的企业获得了更多的债务融资和政府补助.其中,债务融资更多地流向了成长行业中规模较大的企业,政府补助使成长行业中的小规模企业和成熟行业中的大规模企业受益更多.研究结果表明,市场看重企业的增长机会,政府补助则会顾及当前成长性较弱而相对不受市场青睐的企业,对产业政策下的市场化资金配置起到了补充作用.文章的研究为如何协调市场机制和政府扶持两种力量提供了一定的借鉴.     

The microfoundations of business cycles: an evolutionary, multi-agent model

This work presents an evolutionary model of output and investment dynamics yielding endogenous business cycles. The model describes an economy composed of firms and consumers/workers. Firms belong to two industries. The first one performs R&D and produces heterogeneous machine tools. Firms in the second industry invest in new machines and produce a homogenous consumption good. Consumers sell their labor and fully consume their income. In line with the empirical literature on investment patterns, we assume that firms’ investment decisions are lumpy and constrained by their financial structure. Simulation results show that the model is able to deliver self-sustaining patterns of growth characterized by the presence of endogenous business cycles. The model can also replicate the most important stylized facts concerning micro- and macro-economic dynamics.     

A fire sale without fire: An explanation of labor-intensive FDI in China

China's labor-intensive industries are characterized by low technology and high competition. The massive inflow of FDI in China's labor intensive industries is inconsistent with the conventional wisdom that FDI should be more prevalent in technology-intensive and low competition industries. To explain this puzzle, we offer a “fire sale” hypothesis: facing severe financial constraints, Chinese private firms give up their equity to form joint ventures with foreign firms in order to obtain financing. Using the garment industry as an example, we find that among domestic firms, the financial constraint index is highest for private firms and lowest for state-owned firms. We further estimate a probit model of joint-venture decisions by private firms. Our results suggest that those private firms with greater financial constraints are more likely to seek foreign joint ownership. The effect of financial constraints on joint venture decision is both statistically and economically significant.     

Cognition,Social Impulse,and the Principle of Adaptation: Insights into the Peirce-Veblen Connection

This article seeks to offer insights into the connections between Charles S. Peirce and Thorstein B. Veblen regarding their understanding of the logic of scientific thought and cognition. In this sense, this work explores how both Veblen and Peirce dismissed the Cartesian notion of unmediated cognition and how they sought to depict cognition as a process. Furthermore, this article presents Peirce’s concept of “social impulse” and Veblen’s “principle of adaptation” as complementary perspectives on science and cognition that have strong evolutionary content.     

The Innovation Potential and Thematic Leadership of Austrian Industries: An Interpretation of the Technology Delphi with Regard to the Old Structures/High-performance Paradox

The Austrian Technology Delphi searched for problem-oriented fieldsof potential leadership of Austrian scientists and firms. This study classifies the Delphi results according to standard industry classifications in order to facilitate their use by industrial economists and to propose an explanation of the old structures/high performance paradox. It reveals that expertsawarded the top marks for innovativeness to low- and high-qualification as well as to mainstream and research intensive industries, not to medium qualification and to marketing and labour-intensive ones. This implies that innovation is by no means restricted to high-tech industries and that the standard industry classifications are not well suited to deal with aspects of technology policy. Old structures need not hinder high performance.     

Regulating away competition: the effect of regulation on entrepreneurship and employment

Many scholars have worried that regulation deters entrepreneurship because it increases the cost of entry, reduces innovation in the regulated industry, and benefits large firms because they can overcome the costs of complying with regulations more easily than smaller firms. Using novel data on the extent of US federal regulations by industry and data on firm births and employment from the Statistics of US Businesses, we run fixed effects regressions to show that more-regulated industries experienced fewer new firm births and slower employment growth in the period 1998–2011. Large firms may even successfully lobby government officials to increase regulations to raise their smaller rivals’ costs. We also find that regulations inhibit employment growth in all firms and that large firms are less likely to exit a heavily regulated industry than small firms.     

Interrelationship among foreign presence,domestic sales and export intensity in Chinese manufacturing industries

Using panel data on six Chinese manufacturing industries over the period 2005–2007, this article explores the interrelationship among foreign presence, domestic sales and export intensity of local firms. We find that the domestic sales and exports are complementary for local firms in China’s pharmaceutical industry, whereas in the case of the textile, transportation equipment, beverage, communication equipment and general equipment manufacturing industries, domestic sales and exports are substitutes. An increase in the average domestic sales increases foreign presence in all industries. The same applies to an increase in the average export intensity. An increase in the level of competition in China’s textile industry increases the export intensity as well as domestic sales of local textile firms. However, an increase in the level of competition in the pharmaceutical industry leads to a very large decrease in export intensity of local pharmaceutical firms. In the case of China’s transportation equipment manufacturing industry, an increase in the level of competition decreases domestic sales of local firms. Furthermore, an increase in the firm size increases domestic sales of Chinese firms in all six manufacturing industries.     

Market failure vs. system failure as a rationale for economic policy? A critique from an evolutionary perspective

This paper reconsiders the explanation of economic policy from an evolutionary economics perspective. It contrasts the neoclassical equilibrium notions of market and government failure with the dominant evolutionary neo-Schumpeterian and Austrian-Hayekian perceptions. Based on this comparison, the paper criticizes the fact that neoclassical reasoning still prevails in non-equilibrium evolutionary economics when economic policy issues are examined. This is more than surprising, since proponents of evolutionary economics usually view their approach as incompatible with its neoclassical counterpart. In addition, it is shown that this “fallacy of failure thinking” even finds its continuation in the alternative concept of “system failure” with which some evolutionary economists try to explain and legitimate policy interventions in local, regional or national innovation systems. The paper argues that in order to prevent the otherwise fruitful and more realistic evolutionary approach from undermining its own criticism of neoclassical economics and to create a consistent as well as objective evolutionary policy framework, it is necessary to eliminate the equilibrium spirit. Finally, the paper delivers an alternative evolutionary explanation of economic policy which is able to overcome the theory-immanent contradiction of the hitherto evolutionary view on this subject.     

铜文化创意产业园区可持续发展的路径选择

铜文化创意产业园是铜文化与铜产业结合的一种全新的经济运行模式和载体,它同时带动了多种产业的升级,形成了具有地方特色的经济形态。以安徽“铜都”铜陵为例,借鉴一些经济学者关于产业组织结构、产业集群选择如何推动新型工业化与文化产业园区融合的相关理论,尝试构建一个有关铜文化产业的全球性的需求与供给曲线,解释铜文化产业园区的可持续发展路径选择,以及与现实情况如何结合。提出发展循环经济、走国内竞争、世界拓展路线、建立健全的产业园区交流平台以及混合商业模式等方面的对策建议,为现实的实际操作提供理论参考。     

Transaction costs,industry experience and make-or-buy decisions in the population of early U.S. auto firms

We study the determinants of make-or-buy decisions for engines made by every recorded U.S. auto firm during 1917–1933. Most make-or-buy studies testing predictions of transaction cost economics exclude smaller firms, even though their make-or-buy behavior might be different from large firms’ due to capital constraints or other factors. We find that transaction cost effects on make-or-buy choices were nevertheless important at the population level. We also find that firm experience in the industry, as well as pre-entry experience, significantly affected make-buy choices. These experience effects may reflect the interaction of mechanisms emphasized in evolutionary and transaction cost theories.     

Eco‐labelling by a for‐profit certifier: Countervailing power and its consequences

For‐profit certifier's eco‐labelling is common in industries where firms have some “countervailing power” on sharing gains from labelling. We show that the certification standard for an environmental quality is lowered when firms have strong “power.” A certifier with too low bargaining power will prefer to sell to the best offer rather than bargain. This switch in the selling mechanism also thwarts his incentives in setting the standard. This is consequential for evaluating policies. The dimensions and even signs of welfare changes induced by taxes and subsidies depend upon the mechanism used, and ultimately upon firms’ countervailing power.     

GROWTH,INTER‐INDUSTRY AND INTRA‐INDUSTRY COMPETITION AND WELFARE*

In this paper we introduce strategic interaction between firms in an R&D growth model which captures both the intra‐industry competition between firms operating within an industry and the inter‐industry competition between firms in different industries. We show that the more substitutable the goods produced within each industry (across industries) are, that is, the more intense the intra‐industry (inter‐industry) competition, the higher is the growth rate. In the comparison between social optimum and a decentralized economy, it is shown that the market outcome is characterized by inefficiently high entry of firms within each industry and insufficient productivity growth.     

Corruption,product complexity and African exporters

Several studies have shown that African manufacturers perform poorly, especially in comparison to their counterparts from other developing countries. We build on these studies by (a) examining the decision to stop exporting among African manufacturers and (b) investigating whether these decisions can be linked to institutional dimensions (such as corruption). Consistent with previous studies, we observe that a significant fraction of African firms stop exporting every year. Using product complexity as a measure of an industry’s ‘sensitivity’ to corruption, we find that firms in more ‘corruption-sensitive’ industries are more likely to stop exporting if there is an increase in overall corruption in the exporting country. Firm characteristics (such as size and productivity) also seem to influence the decision to stop exporting. Our finding about the relationship between corruption and the decision to stop exporting supports the conventional wisdom that corruption is detrimental to economic performance.     

The Case,if Any,for Economic Literacy

To be essential “for the literate man,” knowledge must be a requisite to important communication and economically acquired. Therefore, argues Stigler, “… economics belongs in everyone's education once we have learned how to teach it.” He then goes on to illustrate the difficulty of conveying essential economic understanding, including the important difficulty economists have had in grasping their own subject.     

Tax cuts and enterprises’ R&D intensity: Evidence from a natural experiment in China

This paper studies the impact of tax cuts on enterprises’ R&D intensity. We use a natural experiment involving China’s business tax changing to value-added tax (“BT to VAT”) to identify any causality. The results reveal that this tax reform has prompted enterprises to increase their research and development (R&D) investment. Specifically, a stronger ability to transfer tax, results in this change having a more significant promotional effect on enterprises’ R&D intensity. Further analysis demonstrates that firms with different ownership types and in different industries respond differently to the “BT to VAT” policy. Our findings are only significant for non-state-owned and other modern service enterprises. This paper provides a theoretical and empirical basis for detailed analyses of the effects of “BT to VAT” policy, particularly the government’s subsequent improvement to the tax reform policy, to further stimulate enterprise investments in R&D as well as industrial upgrading.     

The Washington Consensus revisited: a new structural economics perspective

The Washington Consensus reform resulted in economic collapse and stagnation in many transition economies and “lost decades” in other developing countries in 1980s and 1990s. The paper provides a new structural economics perspective of such failures. The Washington Consensus reform failed to recognize that many firms in a transition economy were not viable in an open, competitive market because those industries went against the comparative advantages determined by the economy’s endowment structure. Their survival relied on the government’s protections and subsidies through various interventions and distortions. The Washington Consensus advised the government to focus their reforms on issues related to property rights, corporate governance, government interventions, and other issues that may obstruct a firm’s normal management. Without resolving the firms’ viability problem, such reforms led to the firms’ collapse and an unintended decline and stagnation of the economy in the transition process. This paper suggests that the viability assumption in neoclassical economics be relaxed when analyzing development and transition issues in socialist, transition, and developing economies.     

OCEAN SHIPPING ECONOMICS: FREE TRADE AND ANTITRUST IMPLICATIONS

Many economists and antitrust experts claim that ocean shipping conferences are essentially legalized cartels. They often advocate eliminating ocean shipping conferences' antitrust immunity. This paper argues that conferences also help to coordinate their members' joint investments and thereby allow the historically small firms in this industry to exploit vast network economies (akin to those in other transportation industries) that small firms could not capture on their own. The paper proposes reducing rather than eliminating immunity and calls for an end to many of the regulations currently stifling the industry.     

The exceptional performance of Chinese outward direct investment firms

This paper finds that Chinese manufacturing firms that engage in outward foreign direct investment (ODI) have better economic performance than non-ODI manufacturing firms. Overall, ODI firms are more productive and have higher profitability than non-ODI firms. The sector analysis shows that the exceptional performance is significant for labor-intensive industries. Finally, the ODI activity can raise the productivity of other firms in an industry. The larger the ODI within an industry, the higher the productivity of all firms in that industry. The paper suggests that domestic firms set up their firm’s global strategy and reallocate the firm’s resources according to the changing investment environment, taking advantages of profit opportunities outside of domestic markets and invest abroad to get new markets and new technology.