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.

Trade,wages, and the specific factors model: empirical evidence from manufacturing industries in Ghana

This study analyzes the impact of trade on wages in the context of the specific factors model by focusing on the link between trade and the average real wage. A recent paper by Jones and Ruffin (Rev Int Econ, 16:234–249, 2008) shows how one can use the specific factors model to predict how labor should fare from an improvement in the terms of trade. For this purpose, I use annual firm-level data on the manufacturing sector in Ghana during the period 1991–1997. I find that a ceteris paribus increase in the price of exportables in the wood industry would help labor but labor would be hurt by price increases in the food-baker, furniture, textile-garment, and metal-machinery industries.

How useful are signals? A micro-structure analysis

We analyze how the market processes a signaling event by studying a sample of self-tender offers, events often viewed as signals of firm value. By examining changes in the degree of informed trading, we find asymmetric information costs fall at announcement, remain low throughout the event, and increase at offer expiration. By 1 month following expiration, informed trading returns to a level not significantly different from that prior to the offer. Higher risk firms have significantly larger declines in information asymmetry during the offer. Increases in information asymmetry persist 1 month following expiration for firms with lower pre-offer informed trading.

The impact of patents and standards on macroeconomic growth: a panel approach covering four countries and 12 sectors

Based on the assumption that codified technological know-how contributes to economic growth, this paper presents the estimation of a Cobb–Douglas production function, pooling data from four European countries and 12 sectors. The empirical results confirm that both the stock of patents and the stock of technical standards contribute significantly to economic growth in the 1990s. Whereas the results of the country models are rather similar, we observe significant differences between the sector models, which indicate that standards are more important for growth in less R&D-intensive industries and patents in R&D-intensive industries.

Accounting for growth in retail trade: an international productivity comparison

In this paper we argue that the standard approach for measuring output and productivity in the trade sector has become obsolete. The key problem is that changes in prices of goods purchased for resale are not accounted for. We outline a consistent accounting framework for measuring trade productivity and provide new estimates, taking into account purchase prices of goods sold in a double deflation procedure. We find strong productivity improvements in the UK and US compared to France, Germany and The Netherlands since the mid-1990s. This finding is robust for various productivity measurement models.

Noise trading and autocorrelation interactions in the foreign exchange market: Evidence from developed and emerging economies

This paper seeks to empirically determine whether feedback trading strategies result in stabilization or destabilization in the foreign exchange market and if such strategies are a distinctive characteristic of an emerging economy or they are a common element to both developed and emerging economies. These hypotheses are tested via the use of a feedback model augmented with a generalized autoregressive conditional heteroskedasticity (GARCH) process for modeling the errors. The results suggest presence of both positive and negative feedback trading and asymmetric behavior in both types of economies. Irrespective of the nature of feedback trading, presence of asymmetric behavior implies that market traders rely on central banks to intervene so they can realize short-term profits. Finally, in cases of a positive first-order autoregressive parameter presence of the bandwagon effect is implied, whereby past currency movements are followed by expectations of currency movements in the same direction.

A longitudinal study of the characteristics, business creation process and outcome differences of Canadian female vs. male nascent entrepreneurs

This paper concerns a longitudinal study, of a random sample of nascent entrepreneurs in Canada (based on an initial screening sample of 49,763 households). We study gender differences, including number and type of gestational activities, the characteristics of the business created, and the status of the start-up effort after the 4th year of data collection. Logistic regression is used to predict the creation of an operating business from gender and other variables. Four of nine gender difference hypotheses were supported. Findings show that women who are members of a start-up team are six times more likely to achieve an operating business.

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.

Efficiency measurements and the gains from trade under transaction costs

The paper investigates the measurement of economic efficiency under transaction costs in a second best world. New measurements of technical efficiency, allocative efficiency, and price efficiency are proposed. They have three desirable properties. First, they measure efficiency loss in monetary units. Second, they are additive and can be conveniently summed into an overall efficiency measure. Third, they allow for transaction costs and their effects on prices and trade incentives. The paper investigates the welfare effects of technology choice, government pricing and trade policy, and market imperfections on efficiency. It provides new insights on the measurement of benefits from trade liberalization when trade affects not only price efficiency, but also technical and allocative efficiency.

The aggregation of capital over vintages in a model of embodied technical progress

The paper considers how to measure capital in a model where technical progress is embodied in new units of capital. This embodiment model also assumes that once new units of capital are installed, it cannot be “unbolted” and sold on the second hand market. A significant difference between this Solow–Harper model and the traditional capital services model due to Jorgenson and his coworkers is that rising real wage rates will generally induce early retirement of assets; i.e., this model can provide an explanation for obsolescence. The paper studies how to aggregate over vintages and how to measure depreciation in the context of this embodiment model. These problems are more complicated than the corresponding problems in the traditional capital services model because the age of retirement of an asset is endogenous in the embodiment model. The paper uses duality theory to simplify the exposition.

The motives of off-the-books entrepreneurs: necessity- or opportunity-driven?

In recent years, it has become common to represent entrepreneurs as either necessity- or opportunity-driven. Drawing upon face-to-face interviews in England with 70 entrepreneurs trading wholly or partially off-the-books, this paper evaluates critically this dichotomous representation. The finding is that squeezing the motives of off-the-books entrepreneurs into one side or the other of this dichotomy not only over-simplifies their rationales since both necessity and opportunity motives are often involved but also obfuscates how their motives change over time. The outcome is a call to replace this either/or depiction with a richer and more nuanced both/and understanding of off-the-books entrepreneurs that recognises their diverse and dynamic motives.

Optimal geographic diversification and firm performance: evidence from the U.K.

This paper examines the relationship between multinationality and firm performance. The analysis is based on a sample of over 400 UK multinationals, and encompasses both service sector and manufacturing sector multinationals. This paper confirms the non-linear relationship between performance and multinationality that is reported elsewhere in the literature, but offers further analysis of this relationship. Specifically, by correcting for endogeneity in the investment decision, and for shocks in productivity across countries, the paper demonstrates that the returns to multinationality are greater than those that have been reported elsewhere, and persist to higher degrees of international diversification.

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.

Low-Tech, innovation and state aid: the Austrian case

This paper analyses innovation patterns of Austrian Low- and Medium Tech (LMT-) SMEs and how these companies are supported by public policy. It adds evidence to the claim that Low-Tech SMEs are actually more innovative than commonly thought and that supporting these industries might yield positive effects. The Austrian innovation system is diversified, yet programmes that aim at LMT innovations are scarce. LMT SMEs are surprisingly innovative, but rarely use available support measures, indicating that these measures may be too High-Tech-oriented. Relatively high additionality effects and impacts can be achieved, if innovative LMT projects are fostered.

The public economics of self control

This paper analyzes self-control problems in intertemporal consumption of a sin good where current consumption imposes a negative externality on one’s future selves due to the existence of present-biased preferences. We introduce the negative externality dubbed ‘internality’, which is augmented by the cumulative distribution function of the sum of previous consumption. We show that the shot-run self with self-control problem over consumes the sin good compared to that of the long-run self without present-biased preferences. Further, we investigate the effectiveness of self-bargaining with the presence of an external control devise as possible punishment. The short-run self faces three possible options: do nothing, accept the long-run self’s offer, or reject the offer. In the latter case an external control devices is implemented. It is shown that successful self-bargaining depends on the efficiency of the control device.

Interest rate and bank stock returns asymmetry: Evidence from U.S. banks

We use the multivariate extension of Exponential Generalized Autoregressive Conditionally Heteroscedastic (EGARCH) of Nelson, Econometrica, 59: 347–370, 1991 to test for spillover effects and examine the extent of asymmetries between short- and long-term interest rates and portfolios of money center, large, and medium-size banks in the U.S. Our results indicate the existence of price and volatility spillovers from short- and long-term interest rates to the three bank portfolios. We also provide evidence of response asymmetries for the portfolios of money center and large banks, suggesting that money center and large banks are more sensitive to negative than positive short- and long-term interest rate changes.

A closer look at Black–Scholes option thetas

This paper investigates Black–Scholes call and put option thetas, and derives upper and lower bounds for thetas as a function of underlying asset value. It is well known that the maximum time premium of an option occurs when the underlying asset value equals the exercise price. However, we show that the maximum option theta does not occur at that point, but instead occurs when the asset value is somewhat above the exercise price. We also show that option theta is not monotonic in any of the parameters in the Black–Scholes option-pricing model, including time to maturity. We further explain why the implications of these findings are important for trading and hedging strategies that are affected by the decay in an option’s time premium.

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.

Investment and dynamic DEA

A dynamic version of data envelopment analysis (DEA) is developed in the present paper. Our model introduces investment in traditional DEA and imposes intertemporal cost minimization. Adding an intertemporal adjustment constraint into the cost minimization problem, we derive the relation between the DEA variables of the variable cost function and those of the primary production frontiers’ coefficients. The augmented DEA model can be solved using standard linear programming. This dynamic framework enables computing the production frontiers, measuring the productive efficiencies and evaluating the potential economies all in the presence of adjustment costs.

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.