Wal‐Mart innovation and productivity: a viewpoint

Abstract Technology effects, business process development, and productivity growth are considered in the context of a single company: Wal‐Mart. The starting point is the 2001 McKinsey Global Institute report, which finds that over 1995–2000, a quarter of U.S. productivity growth is attributable to the retail industry, and almost a sixth of that is attributable to Wal‐Mart. Wal‐Mart is interesting as well because of its rapid growth in Canada. This is now Canada's largest private sector employer. We also consider other evidence relevant to public policy formation concerning Wal‐Mart and conclude with a discussion of options for partially filling important data gaps.     

Baltic freight futures: Random walk or seasonally predictable?

Ocean freight futures, the only futures contract on a service, began trading on the BIFFEX Exchange in 1985. The Chow and Denning (1993) refinement to the Lo and MacKinlay (1989) variance ratio methodology is used to examine daily BIFFEX price, volume, and index quotes for randomness. Results suggest the possibility of seasonality in the index values between 1985 and 1989. Evidence of seasonality in the index suggests the possibility of the potential for exploitation by some market participants. However, evidence of randomness in the futures contract prices, suggests that index seasonality has not here-to fore been exploited.     

Innovation and productivity in agricultural firms: evidence from a country-wide farm-level innovation survey

ABSTRACT

The literature on the links between innovation and productivity at the firm level in agriculture is almost nonexistent. In this paper, we analyze the factors behind the innovation effort of farms and the impact that innovation effort has on farm’s productivity, exploiting a unique farm-level agricultural innovation survey carried out in Uruguay. The results indicate that farm size, cooperation with other agents to perform R&D, the education of the owner of the farm, the participation of foreign capital and the existence of links with other organizations, in particular scientific, horizontal and vertical ones, are positively correlated with innovation effort. Public and private financial support are not clearly linked with innovation effort. The innovation effort has a positive effect on farm’s productivity. Some heterogeneities across industries in agriculture are found.     

The outsourcing productivity paradox: total outsourcing, organisational innovation, and long run productivity growth

A growing number of empirical studies find a relationship between the outsourcing of activities and a long term loss of firm productivity growth. The paper addresses this outsourcing productivity paradox by examining the connection between total outsourcing and organisational innovation. We present a model of organisational innovation in which managers raise productive efficiency by identifying organisational architectures that more effectively integrate value-adding activities and administrative routines. As part of this process, managers can internally or externally source an activity. Simulations of the model show that large scale outsourcing restricts the scope for future organisational innovation, leading to lower productivity growth. The findings accord with the empirical data and provide a salutary warning for managers and policy-makers about the long term implications of total outsourcing.

Exports,productivity and innovation: new firm level empirical evidence

This article examines the determinants of Portuguese exports, applying data from 277 manufacturing firms for the period 2006–2010. In 2010, these firms accounted for about 47% of total Portugal’s exports. Both the static and dynamic results of the estimated models confirm the positive influence of productivity on variations in exports. The dynamic estimations also suggest that exports in the previous period hold a positive effect on contemporaneous exports, confirming the Roberts and Tybout (1997) sunk cost hypothesis for exports. In the dynamic analysis, the labour costs and the size of the firm do not have a statistically significant effect on Portuguese exports with the findings also pointing to increased expenditure on research and development (R&D) generating no statistically significant effect on exports. The lagged R&D expenditure was also insignificant in explaining the change of Portuguese exports. Thus, these results suggest that applying a product or process innovation measure returns better results than indirect measures such as R&D expenditure.     

Human capital,innovation and productivity in Colombian enterprises: a structural approach using instrumental variables

ABSTRACT

In this paper we explore the R&D–innovation–productivity linkage for the Colombian manufacturing industry, paying special attention to the role of human capital. Using data from two firm-level surveys, the Survey of Development and Technological Innovation (EDIT) and the Annual Manufacturing Survey (EAM), we extend the model of Crépon, Duguet, and Mairesse [1998. ‘Research, Innovation and Productivity: An Econometric Analysis at the Firm Level.’ Economics of Innovation and New Technology 7 (2): 115–158] (hereafter CDM) by including human capital at the investment decision stage. We implement an instrumental variable methodology to correct the potential endogeneity that may arise with the inclusion of human capital. Our results suggest that human capital has a causal effect on research and development (R&D) investment decisions, the innovation behavior of the firm, and increases the labor productivity of the firm. The conclusions highlight the relevance of human capital in the surrounding literature which stands in contrast to prior work that has not included this variable.     

Appropriability mechanisms,innovation, and productivity: evidence from the UK

ABSTRACT

We use an extended version of the well-established Crepon, Duguet, and Mairesse model [1998. “Research, Innovation and Productivity: An Econometric Analysis at the Firm Level.” Economics of Innovation and New Technology 7 (2): 115–158] to model the relationship between appropriability mechanisms, innovation, and firm-level productivity. We enrich this model in three ways: (1) We compare estimates obtained using a broader definition of innovation spending to those that use R&D spending. (2) We assume that a firm simultaneously innovates and chooses among different appropriability methods to protect the innovation. (3) We estimate the impact of innovation output on firm productivity conditional on the choice of appropriability mechanism. We find that firms that innovate and rate formal methods for the protection of intellectual property highly are more productive than other firms, but that the same does not hold in the case of informal methods of protection, except possibly for large firms as opposed to SMEs. We also find that this result is strongest for firms in the services, trade, and utility sectors, and negative in the manufacturing sector.     

Decomposing the contribution of firm innovation to aggregate productivity growth: the case of Chinese manufacturing industry

This article proposes a generalized productivity decomposition approach to evaluate the contribution of firm innovation to aggregate productivity growth (APG) of China’s manufacturing industry. Results indicate that APG is mainly driven by firm-level productivity improvements, while across-firm resource misallocations lead to sizable productivity losses. The weak contribution of firm innovation to APG is found to be mainly caused by resource misallocations within innovating firms. The results suggest that firm innovation has not yet taken a dominant driving force for APG.     

Mapping research on R&D,innovation and productivity: a study of an academic endeavour

ABSTRACT

This paper accounts for the development of the academic endeavour to determine the firm-level relationship between investments in R&D and productivity. The impact of 28 highly cited publications within this line of study is investigated using a combination of bibliometric techniques and citation function analysis. We show how the attention paid to this line of research broadens and deepens in parallel to the diffusion of innovation as a research theme during 2000s. Our findings also suggest that the attraction of scholarly attention is driven by combination of broadening interest in the central research question under study and boundary-pushing methodological contributions made in the key contributions.     

Firm innovation and productivity in Europe: evidence from innovation-driven and transition-driven economies

This article examines the links between firm innovation and firm productivity performance across a range of European economies, and in particular, we explore the differences between countries which are in transition from efficiency-driven to innovation-driven with those which are primarily innovation-driven economies. We employ an endogenous-switching technique to explore micro-economic survey-based data from both innovating and noninnovating firms. The model allows us to construct counterfactual scenarios which overcome problems of self-selection in the data. Some of the findings provide support for the traditional patterns previously found in the innovation literature, in which innovation efforts and investments in physical and human capital are found to be important for product and process innovations in manufacturing and service firms and across economy types. Our counterfactual analysis also allows us to outline a rationale for policy intervention towards noninnovating firms as well as innovating firms depending on where the transitional heterogeneity effects are greatest.     

Intersections in system innovation: a nested-case methodology to study co-evolving innovation journeys

Current persistent sustainability challenges are widely understood to require transitions and system innovations. As these systemic changes typically emerge from multiple co-evolving innovations, Schot and Geels [2008. Strategic niche management and sustainable innovation journeys; theory, findings, research agenda, and policy. Technology Analysis and Strategic Management 20, no. 5: 537–54] urge to study the interactions between innovation journeys. Their call for multiplicity has been met through several studies. Yet considering that these analyses still leave the attendant navigational challenges underexposed, this article demonstrates the usefulness of nested-case methodologies. Focusing on the ‘intersections’ between interpenetrating case histories, in-depth investigation is combined with broader attention to next-order changes. The relevance and implications of these intersections are illustrated through four innovation journeys in the Dutch traffic management field: unfolding largely in parallel, but sometimes intersecting, they yield a mixed picture of trajectory formation and fragmentation. The phenomenon of emergent incoherence is identified as a key strategic challenge in system innovation processes.     

How enterprise strategies are related to innovation and productivity change: an empirical study of Japanese manufacturing firms

This study analyzes the total factor productivity of 1067 Japanese manufacturing firms. In production estimation, we employ the directional distance function and Luenberger productivity indicator. Research and development strategy survey data are used to analyze the determinant factors related to improvements in innovation and productivity. Our results indicate that increasing technology and knowledge through a ‘black box’ process is related to an increase in productivity. Furthermore, the protection and management of production knowledge and expertise is a valid method of increasing global technical change.     

Drivers of productivity in Vietnamese SMEs: the role of management standards and innovation

Using a rich panel dataset of small and medium scale manufacturing enterprises (SMEs) active in the manufacturing sector in Viet Nam, this paper investigates the drivers of firm productivity, focusing on the role played by international management standards certification. We test the hypothesis that, accounting for technological innovation (product and process) and other variables related to technological capabilities, international standards are conducive to higher productivity, through improved management practices and business organization. In line with the requirement of continuous improvement implied by most international standards, the main findings show that the possession of an internationally recognized standard certificate leads to significant productivity premium. We further find that the effect of certification on productivity is particularly strong for firms with technological innovation, located in southern provinces, and operating in more scale-intensive industries.     

The impact of product innovation on firm-level markup and productivity: evidence from China

This article empirically evaluates the impact of product innovation on firms’ markup and productivity. Based on a large sample of Chinese manufacturing firms, we estimate firm-level markup using the wedge between output elasticities of intermediate input and its cost share in total revenue. Firm productivity is measured as revenue productivity and adjusted with the estimated markup. The results suggest that product innovation increases firm-level markup and revenue productivity. However, the effect of product innovation on the adjusted productivity is mostly negative or insignificant. The observed relationships also vary in response to market structures. Our results indicate that the positive impact of product innovation on revenue productivity is mainly driven by price-cost markup changes rather than physical productivity improvements. Our study suggests the widely observed positive relationship between product innovation and revenue productivity should be interpreted with caution.     

Why exporting countries agree to voluntary export restraints: the oligopolistic power of the foreign supplier

This paper studies the impact of VER on an exporting country. It shows that a VER at the free‐trade level favours the concentration of industry, allows firms with an export licence to expand, causes the contraction of the size of the firms producing for the domestic market only, and raises the price mark‐up in the domestic market. The impact on welfare is indeterminate depending upon the effect on global efficiency. If a VER is binding, also the price mark‐up in the foreign market rises and this effect on terms of trade, ceteris paribus, is welfare improving. An applied general equilibrium model for Turkey supports the conjecture that with a VER the increased oligopolistic power of incumbent firms with an export licence, the higher price mark‐up in the domestic market and a possible social welfare gain, are the key elements in understanding the rationale behind VERs. However, if authorities induce firms to engage in unproductive profit‐seeking activities, rent dissipation occurs and the impact on social welfare becomes negative.     

A Luenberger-Hicks-Moorsteen productivity indicator: its relation to the Hicks-Moorsteen productivity index and the Luenberger productivity indicator

Summary. Introducing a new difference-based Luenberger-Hicks-Moorsteen productivity indicator, this contribution establishes theoretically its relations with some existing ratio- and difference-based productivity indexes and indicators. The first main result is an approximation proposition stating that the logarithm of the Hicks-Moorsteen productivity index is about equal to the Luenberger-Hicks-Moorsteen productivity indicator. Secondly, we also establish the specific conditions under which the Luenberger-Hicks-Moorsteen indicator equals the recently introduced Luenberger indicator and compare these to the conditions governing the relations between ratio-based Hicks-Moorsteen and Malmquist indices.Received: 2 May 2002, Revised: 19 May 2003, JEL Classification Numbers: C43, D21, D24.We are grateful for the most constructive remarks of a referee. Obviously, the authors remain solely responsible for any residual shortcomings. Correspondence to: W. Briec     

R&D,public innovation policy,and productivity: The case of danish manufacturing

The purpose of this paper is to investigate the relationship between private R&D, public innovation support transferred to the private sector, and productivity in Danish manufacturing. Two main conclusions are established. First, public innovation support has a positive and significant effect on private R&D expenditures with an estimated elasticity of 0.062. Second, the indirect effect on productivity from public innovation support is reflected in a positive point estimate which is found to be robust to different specifications of R&D capital.     

Customary law as a social contract: International commercial law

Merchants broke the bonds of localized political constraints during the tenth and eleventh centuries to establish the constitutional foundations of international commercial law as we see it today. The medieval “Law Merchant” was an international legal system that governed without the centralized coercive power of the state. In order to see how this was possible, the incentives which led to the merchants community's social contract, as well as the rules and institutional arrangements that the resulting contract produced are examined and explained. A process of legal change evolved, participatory institutions were established to adjudicate disputes and effective incentives were implemented to induce compliance with the resulting judgements. The unwritten social contract established by the medieval business community remains in force to this day. International commercial law is still largely independent of nationalized legal systems, retaining many of the basic (though) modernized institutional characteristics of the medieval Law Merchant. James Buchanan suggested that “Free relations among free men—this precept of ordered anarchy can emerge as principle,” under an appropriately structured social contract. The international Law Merchant provides a historical and modern demonstration that Buchanan is indeed correct. This paper was originally prepared for presentation to the Liberty Fund Conference on “Liberty and the Constitutional Foundations of International Order,” Washington, D.C., July 1991. I wish to thank Randall Holcombe, Kevin Refitt, and the participants in the Liberty Fund Conference for helpful comments and suggestions that led to several revisions.     

Random dynamical systems: a review

Summary. This paper provides a review of some results on the stability of random dynamical systems and indicates a number of applications to stochastic growth models, linear and non-linear time series models, statistical estimation of invariant distributions, and random iterations of quadratic maps.Received: 16 August 2002, Revised: 9 January, 2003, JEL Classification Numbers: C1, C6, D8, D9. Correspondence to: Mukul MajumdarThanks are due to A. Goswami and B.V. Rao for their detailed comments on an earlier version.