Open technology innovation activity and firm value: evidence from Korean firms

Despite the importance of Open Technology Innovation Activity (OTIA) for firm value, the literature investigating effects of OTIA announcements of developing country firms is not known in international academic circles. Our study using an event study approach examines the effects of OTIA (technology import and joint R&D) announcements of firms in Korea, one of the leading developing and highly innovative countries. We find that the announcements of OTIA produce positive average abnormal returns. Interestingly, unlike the prior studies on developed country firms, OTIA with firms in the homogenous industry leads to greater firm value than that involving firms in heterogenic industries. This implies an importance of a technological fusion with external firms in different industries for value of developing country firms. In addition, this article finds no home bias that a nationality of partner firms is not essential for the relation between OTIA and value of firms.     

Properties of knowledge base and firm survival: Evidence from a sample of French manufacturing firms

The paper analyzes the effects of the properties of firms' knowledge base on the survival likelihood of firms. Drawing upon the analysis of the patterns of co-occurrence of technological classes in patent applications, we derive the coherence, variety and cognitive distance indexes, accounting respectively for technological complementarity, differentiation and dissimilarity in the firms' patent portfolios. The results of our analysis are in line with the previous literature, showing that innovation enhances the survival likelihood of firms. In addition, we show that the search strategies at work in the development of firms' knowledge base matter in reducing the likelihood of a failure event. Knowledge coherence and variety appear to be positively related to firms' survival, while cognitive distance exerts a negative effect. We conclude that firms able to exploit the accumulated technological competences have more chances to be successful in competing durably in the market arena, and derive some policy implications concerning the role of public intervention in the orientation of search efforts in local contexts.     

Political connections, financing and firm performance: Evidence from Chinese private firms

This paper examines the role of affiliation with the ruling Communist Party in the operation of private enterprises in China. Using a nationwide survey of private firms, we find that the Party membership of private entrepreneurs has a positive effect on the performance of their firms when human capital and other relevant variables are controlled. We further find that Party membership helps private entrepreneurs to obtain loans from banks or other state institutions, and affords them more confidence in the legal system. Finally, we find Party membership to be more important to firm performance in regions with weaker market institutions and weaker legal protection.     

The sale of small firms: a multidimensional analysis

Summary. This paper endogeneizes the security voting structure in an auction mechanism used to sell a small firm. The design of security voting structure allows the seller to choose between two objectives which are not mutually consistent. If the seller wants to maximize his revenue, he should retain some shares to benefit from the future dividends generated by the acquirer. At the opposite, if he wants to sell his firm to the most efficient candidate, he should sell all the shares. Received: July 4, 2001; revised version: October 31, 2002 RID="*" ID="*" The paper has benefited from a number of comments from the anonymous referees. Correspondence to: C. At     

The occurrence and spatial distribution of collaboration: biotech firms in Gothenburg, Sweden

This paper deals with the occurrence and spatial distribution of collaborations within biotechnology. By starting from a total population of 45 firms involved in biotech R&D, we shed light on how many collaborate with (1) other firms, (2) venture capitalists, and (3) actors in science and technology and whether these partners can be found in the region, nation or in the rest of the world. Possible explanations for the different patterns are drawn out.     

Economic strategies of firms facing asymptotic demand: a case study

This paper is an attempt to determine the relationship between the pattern of growth of demand for consumer goods and the market behaviour of the firms selling them, particularly their advertising expenditures. The demand for many consumer goods may not witness a steady growth over time. Firms selling such products will have a market behaviour that differs in character and path from that of those selling in expending markets. In this article, I intend to analyse the market behaviour of firms producing toilet soap in the Australian economy.     

The firm as an interactor: firms as vehicles for habits and routines

This paper pursues a research agenda inspired by Richard Nelson and Sidney Winters Evolutionary Theory of Economic Change (1982). This seminal work applied the Darwinian concepts of variation, replication and selection to the evolution of firms. It proposed a level of evolution, replication and selection at a level higher than individuals or genes, involving the replication and selection of routines and institutions. Significantly, the applicability or otherwise of these Darwinian concepts depends on precise definitions of terms such as replication and selection. The present essay builds on previous work where the concepts of replication (Godfrey-Smith, 2000; Aunger, 2002; Hodgson, 2003b) and selection (Price, 1995; Frank, 1998; Knudsen, 2002b, 2003) have been refined. We deploy the key concepts of replicator and interactor from the modern philosophy of biology (Hull, 1981, 1988). It is shown that while habits and routines can be regarded as replicators, there is a case for regarding firms and similarly cohesive organizations as interactors. We explore some of the implications of this result and provide an important component in the construction of a multiple-level evolutionary theory, involving replicating units at several socio-economic levels.JEL Classification: B25, B52, D20, D83, L20Correspondence to: Geoffrey M. Hodgson, Malting House, 1 Burton End, West Wickham, Cambridgeshire CB1 6SD, UK     

Patents, firm size and financial constraints: an empirical analysis for a panel of Italian manufacturing firms

The paper empirically investigates the issue of financial constraintsto investment, focusing on its relationship with innovationactivities. The study is based on the analysis of a cross-industriespanel of 804 Italian companies, observed through the years 1995–2000.The main objective of the study is to highlight whether thereare financial determinants underlying the strong bias of patentingactivity towards larger companies in the Italian economy. Byapplying a dynamic panel analysis, we found that only the firmsshowing lower financial constraints are able to keep a sustainedpatenting profile through time. Our evidence suggests the existenceof an imperfect capital market in the Italian economy, particularlyin the case of medium-sized companies, which tend to delay inefficientlythe start of in-house R&D activities.     

How and where to offshore: a productivity comparison at the firm level

Using recent survey data on South Korean firms’ strategies for sourcing intermediate goods from abroad, we investigate whether there exists a productivity premium of offshoring by considering organizational forms (insourcing versus outsourcing) and the income level of offshored countries (North versus South) altogether. Thus, we consider the following four offshoring types: outsourcing from South, insourcing from South, outsourcing from North and insourcing from North. Unlike previous studies, we give particular attention to the comparison between outsourcing from North and insourcing from South and find that firms outsourcing from North are more productive than firms sourcing from their own affiliates in South. We offer three critical conditions to incorporate our empirical findings into the standard firm heterogeneity model: the fixed cost is higher for insourcing than for outsourcing and is higher in North than in South, the headquarters receive a larger share of the final revenue through insourcing than through outsourcing, and sourcing from North guarantees better profitability (or a bigger share) in the market for the headquarters than sourcing from South. Thus, this article contributes to the literature by identifying a new productivity order.     

Towards a kernel theory of external knowledge integration for high-tech firms: Exploring a failed theory test

Designing information systems (ISs) requires a thorough understanding of the organizational knowledge processes in which these systems are used. Although much is known about internal organizational knowledge processes, the understanding of external knowledge processes is less developed. Hence, this paper reflects an attempt to operationalize and test a model of the process of external knowledge integration (EKI), consisting of an identification, acquisition, and utilization stage. We utilize high-technology based firms from a variety of high-tech categories including nanotechnology based firms since these firms have critical knowledge integration needs. The results of an international survey, with responses of 317 high-tech companies, suggest that not these three EKI-stages, but four organizational effectiveness functions (goal attainment, pattern maintenance, adaptation, and integration) account for most variation in responses. These findings seem to imply that ISs that are to support the EKI-process should be designed according to organizational effectiveness functions rather than to EKI-stages. It is proposed that each organizational effectiveness function imposes different requirements on ISs because users interact differently with IS in each function.     

Patterns and strategies of Foreign Direct Investment: the case of Japanese firms

This paper is to study globalization motives and strategies of Japanese manufacturing industries by analyzing the causes and patterns of foreign direct investment (FDI) of Japanese manufacturing firms. We use regression analysis to determine internally driving-out factors and externally-inducing factors. Japanese FDI strategy has gone through three different stages; from natural resource-seeking investment in the 1950s and 1960s to market-expansion investment in the 1970s and 1980s and to a combination of cost-reducing (low-cost labor-seeking) investment and market-penetrating investment in the 1990s. Our findings show that Japanese FDI in Asia and other developing countries tends to be in labor-intensive sectors where Japanese firms are losing their comparative advantages at home. The main motive for FDI into these regions is low-cost resource seeking. On the other hand, Japanese FDI in the US and Europe tends to be knowledge-intensive sectors where Japanese firms attempt to internalize transaction and information costs by globalizing its production. The main motive for FDI into these regions is market-seeking.     

Arrested development: the experience of European hard disk drive firms in comparison with US and Japanese firms

This paper analyses how US, Japanese, and European HDD firms responded to technological shifts in the hard disk industry from 1973 through 1996. Leading incumbent US HDD firms were frequently forced out of the market. Leading Japanese incumbent firms in the same industry, however, were not displaced by these changes. US startup firms thrived under these technological shifts, displacing US incumbent firms. Japanese startups did poorly. European firms encountered the worst of both worlds: its incumbent firms were frequently displaced by technological changes, as were US firms; while startup firms (with one exception) performed as poorly as those in Japan.     

Impact of firm size and industry type on R&D efficiency throughout innovation and commercialisation stages: evidence from Korean manufacturing firms

Technological innovation through R&D is a critical element in enhancing and fostering firm performance. In particular, measurement of R&D efficiency throughout the innovation and commercialisation stages is important. However, almost of R&D efficiency-related studies assumed that R&D is a single stage. This study aims at analysing relative efficiency scores throughout the stages of the R&D process using a two-stage data envelopment analysis (DEA) model with a sample of 1039 Korean manufacturing firms. Based on our preliminary results, this study was extended by comparing subsample groups categorised by firm size and industry type. The key findings include: (1) firms show imbalanced R&D efficiency throughout the two stages and (2) R&D efficiency is different by firm size and industry type. The empirical results and findings may assist policy- and decision-makers to enhance R&D efficiency at the firm level. Moreover, introduction of the two-stage DEA model and comparative analysis methods to firm-level data contributes to scholars.     

Competitive strategies,innovation, and firm performance: an empirical study in a developing economy environment

This paper studies the relationships between competitive strategies, innovation, and firm performance within the context of Turkish manufacturing companies. The data were collected from top management of the firms via Computer Assistant Telephone Interviewing method. One hundred and forty manufacturing firms operating in various sectors including textile, automotive supply, computer and electronics provide the basis for this empirical research. In order to test our model, we employ structural equation modelling using partial least squares. The results show that competitive strategies such as cost-leadership and differentiation can lead to innovation, which, in turn, increase firm performance. Managers implement cost-leadership and differentiation strategies to take part in competitive market conditions; however, they should put additional importance on innovation that plays a significant role as a bridge between competitive strategies and firm performance.     

Competition and the relative productivity of large and small firms

Using a comprehensive dataset on the incidence of price-fixing across British manufacturing industries in the 1950s, I compare collusive and competitive industries and find evidence of a negative relationship between collusion and the labour productivity of larger firms relative to smaller firms. In particular, collusion is associated with a reduction or even a reversal of the productivity gap between larger and smaller firms. This result is robust to controlling for the potential endogeneity of collusion.     

Product differentiation, firm heterogeneity and international trade: Exploring the Alchian–Allen effect

In a model of international trade with horizontally differentiated goods, increasing returns and monopolistically competitive markets, this paper proposes that the degree of differentiation in a product mix–defined as the ratio of the number of varieties to the total value of imports–can be regarded as another aspect of quality. Furthermore, this paper draws a parallel to the Alchian–Allen effect and shows that, when firms are heterogeneous in either fixed or variable costs, the degree of differentiation is increasing in per unit transportation costs.     

Corporate tax policy and heterogeneous firm innovation: Evidence from a developing country

This paper adds to the literature by identifying the causality of corporate tax policy on firm innovation in a developing country. We exploit the China’s 2006 corporate income tax base reform to integrate the tax system between foreign-invested and state/collective-controlled firms as a natural experiment. The difference-in-differences strategy documents a positive effect of corporate tax deduction on firm patenting. The effect is particularly significant if a firm is of larger size or locates in eastern provinces. We also examine possible channels behind the findings, including changes in R&D and capital investment, intangible assets, financial constraints, and new product sales.     

Uncertainty and investment evidence from a panel of Chinese firms

Using data from various Chinese companies for the period 1994–2005 and applying GMM (System) technique, we report some stylized facts regarding the link between uncertainty and investment, where uncertainty is measured as the volatility of daily stock market returns. Controlling for the short- and long-run investment dynamics, we discover important effects of measured uncertainty on firm-level investment. Our study consistently indicates a positive and statistically significant effect of uncertainty on the company investment. Further more the macroeconomic and firm-specific components of uncertainty also have a significant positive effect on their own. Higher risk perception leading to higher investment, and in turn stronger aspirations of reinvestment.