The Impact of Knowledge Acquisition and Absorptive Capacity on Technological Innovations in Developing Countries: Evidence From Egyptian Small and Medium-Sized Enterprises

The author examines the determinants of technological innovations in Egyptian manufacturing and service small and medium-sized enterprises. Three categories of determinants are explored: (a) firms’ exposure to external knowledge and technologies, (b) firms’ absorptive capacity, and (c) financial and market barriers to innovation. A large dataset derived from the 2009 Egyptian innovation survey is used to estimate two binary logit models of factors explaining firms’ propensity to innovate in the manufacturing and service sectors. Results show that Egyptian manufacturing and service small and medium-sized enterprises follow similar paths to innovate and confirm the assumption that the catching-up reality in most developing countries makes the patterns followed by firms to innovate fundamentally different from those applied in countries at the technology frontier.     

The determinants of foreign giving: An exploratory empirical investigation of US manufacturing firms

To date, there is ample evidence on the determinants of domestic charitable contributions made by US firms. However, to the best of our knowledge, no one has investigated the determinants of foreign charitable contributions made by US firms. Using the Socrates KLD database and the US M&A data for the 2004–2010 period, we find evidence that foreign giving by US manufacturing firms is linked to certain key variables. Specifically, we find evidence that variables found significant in the domestic giving literature (pre entry return on assets, size, debt to asset ratio, market to book ratio, and research and development expense as a function of sales) are also found significant for foreign giving. However, and notably, cultural distance and foreign sales percentage have been found to be important discriminators between manufacturing firms who give abroad and those who do not. It appears that high international business experience (proxied by the foreign sales ratio) and operations in culturally distant countries motivate foreign giving. Finally, subsample analysis involving developed and developing countries suggests that cultural distance matters for developing countries, but does not for the developed country subsample. Firm level profitability matters for developed countries, but not for developing countries. Future research may be expanded to include the dollar amounts of giving and a bigger sample size. Differences in foreign giving patterns between manufacturing and non-manufacturing firms, and by firms in countries other than the US, may also be explored.     

Innovation in services – how different from manufacturing?

Using standardised firm data a comparative analysis of the determinants of product and process innovation in manufacturing and services is performed. Results show that in services there are significant differences in innovation behaviour, in terms of intramural and extramural R&D. It is also found that size matters less in services than in manufacturing. Although youth has a positive effect in both cases, young service firms are more likely than young manufacturing of being pioneer innovators. The results reveal the importance of learning by doing in service process innovations, as young service firms are less likely to introduce process innovations.     

The impact of service innovation on firm-level financial performance

This article empirically investigates if firms focusing on service innovation perform better financially than firms not focusing on service innovation. Analysis of the financial performance of 3575 Norwegian firms in the manufacturing industries supports the proposition that firms focusing on service innovation have significantly higher growth of operating results than firms not focusing on service innovation. However, this proposition is not supported in a corresponding analysis of 1132 Norwegian firms in the service industries. We elaborate on these results by investigating a variety of performance measures and by comparing the effects of service innovation between manufacturing and service industries. The article contributes to the service innovation measurement literature and to a better general understanding of the determinants of service innovation performance effects.     

Growth Development Paths of Firms—A Study of Smaller Businesses

This paper investigates whether firm characteristics that are related to firm growth in the literature are also related to the development path of firms. This means that we test which firm characteristics accompany growth dynamics during a longer period of time, referring to the sequence of growth and decline steps. We examine three variables: firm size, innovation effort, and export share. To this end, we use panel data on 178 German manufacturing firms over the period from 1992 to 2007. We find that the determinants of growth paths are not the same as the determinants of firm growth at one point in time.     

Does Gibrat’s Law Hold? Evidence from Canadian Retail and Manufacturing Firms

This paper investigates the validity of Gibrat’s Law holding for firms in manufacturing and retail trade sectors. The object is to expand our knowledge of Gibrat’s Law to include non-manufacturing firms. A unique longitudinal firm-level database, which contains information on Canadian incorporated establishments, enables the inter-industry comparison. The findings of the analysis are that Gibrat’s Law is violated in both manufacturing and retail sectors. Violations of Gibrat’s Law for both sectors include (i) growth rates that depend on firm size (ii) growth variability that depends on firm size and (iii) a negative persistence of firm growth. Finally, age effects or selection effects are not the causes of these violations.      

How Does Probability of Innovation Change with Firm Age?

This paper looks at the probability of introducing innovations by manufacturing firms at different stages of their lives. Once differences related to activity and size are controlled for, we examine how the probability of innovation varies over entry, post-entry ages, and advanced ages of mature firms. We also measure the association between exit from the market and pre-exit innovation. Results show that the probability of innovating widely varies by activity, and that small size per se broadly reduces the probability of innovation, but also that entrant firms tend to present the highest probability of innovation while the oldest firms tend to show lower innovative probabilities. Some sets of firms with intermediate ages also present a high probability of innovation, and exiting firms are clearly associated to lower levels of introducing process innovations.     

The Network Embeddedness of New,Technology-Based Firms: Developing A Systemic Evolution Model

The present paper focuses on the interactive relationship between new, technology-based firms and their network environment. The paper analyzes the mechanisms through which new, technology-based firms become immersed in innovation and manufacturing networks. The concept of embeddedness is developed and used to depict such mechanisms.A systemic evolution model of new, technology-based firms is proposed. The model depicts the evolution of new, technology-based firms in manufacturing and innovation networks. The model emphasizes the catalyzing role of new, technology-based firms in national systems of innovation.Network embeddedness is empirically explored in five case studies of Finnish new, technology-based firms. The systemic evolution model serves as an interpretative scheme for the case studies. The analysis of the organic relationship between new, technology-based firms and their systemic environment also serves to reveal the implications of embeddedness for new, technology-based firms.     

Innovation and export performance of emerging market enterprises: The roles of state and foreign ownership in China

This article examines the role of ownership for the relationship between innovation and exports. Analyzing a large firm-level data set on Chinese manufacturing firms during 2000–2007, we find that state ownership has a positive moderating effect on the innovation–export relationship. We ascribe this effect to state-owned firms’ privileged access to complementary resources and networks that strengthen their ability to use innovation to generate exports. In contrast to many earlier studies, we also find that foreign ownership has a negative moderating effect. One likely reason is that indicators of local innovation do not reflect the flows of knowledge between foreign-owned firms and their parent companies. This finding highlights the fact that innovation and production may be geographically separated within multinational enterprises. A policy implication of the analysis is that public support to innovation is likely to have stronger effects on exports when it targets firms that carry out most of their activities in domestic market.     

Metropolitan innovation,firm size,and business survival in a high-tech industry

This paper contributes to the growing body of business survival literature that focuses on regional determinants of the hazard faced by firms. Using parametric survival analysis, we test the effects of regional innovation on exit likelihood in the US computer and electronic product manufacturing during the 1992–2008 period. The novelty of our approach is in conditioning the effects of metropolitan innovation on firm size. Estimation results suggest a negative relationship between metropolitan patenting activity and survival of firms that started with 1–3 employees. This effect decreases if companies grow. Establishments with more than 4 employees at start-up are insensitive to metropolitan innovation, although size of firms that started with 4–9 employees improves their survival chances. These findings indicate that local knowledge spillovers do not translate into lower hazard. The negative relationship indicates either a creative destruction regime or decisions of entrepreneurs to shut down existing ventures in order to pursue other opportunities.     

A comparative study of innovation behaviour in Singapore's KIBS and manufacturing firms

While most services innovation studies are concentrated on the OECD or EU countries, research on services innovation in the non-OECD context is still rare. This study investigates innovation behaviour of a certain group of services – knowledge-intensive business services (KIBS), compared with the manufacturing sector in Singapore. The main findings of this study are: (1) KIBS firms have higher innovating ratio than manufacturing firms, but innovating manufacturing firms are more likely to do R&D than innovating KIBS firms; (2) KIBS firms have higher human capital intensity, training spending intensity, innovation spending intensity, and R&D spending intensity than manufacturing firms; (3) KIBS firms and manufacturing firms have similar innovation objectives, although some delicate nuances do exist; (4) KIBS firms are less likely to have overseas partners for innovation collaboration than manufacturing firms; (5) there is a U pattern of innovation collaboration with geographic distance for both KIBS and manufacturing firms; (6) social capitals are important for KIBS firms' successful provision of innovation support to manufacturing clients; (7) the importance of spatial proximity varies over different phases of innovation support.     

Innovation and the Quality of Labour Factor: An empirical investigation in the French food industry

The aim of our paper is to analyse the determinants of the innovation propensity of the firm. Among the numerous works devoted to this subject, the interest of our research is, firstly, to use a direct measurement of innovation, instead of the usual proxies, as R&D expenditures and patents statistics, secondly, to emphasise the role of labour factor quality as a major determinant of innovation. We first build a definition of labour factor quality, based on a double dimension: individual skill level and functional distribution of jobs inside the firm. At the end we consider that each job category can be involved in the innovation process, at the different steps of it: conception, decision, implementation. To explain the innovation propensity at the firm level, our logit model takes into account four explanatory dimensions: the quality of labour factor employed inside the firm, the firm structural characteristics (as size, for instance), the sectoral market structures and, finally, the quality of labour factor employed inside the firm sector, as a proxy for the R&D spillover effect. We use some individual firms data, including a direct measurement of innovation, that distinguished between several types: radical vs. incremental and product vs. process vs. organisational innovation. The French food industries with its 500.000 employees and 42 sectors, mostly composed of small firms, are our empirical field. The results emphasise the influence of the usual firm structure variables. Firm size, particularly, is very clearly positively related to the innovation propensity. At the same time, some more original facts appears, such as the influence of firm status: after controlling the sectoral influence, co-operative firms seem to innovate less than private ones. Labour factor quality appears to play a very significant role by itself, but mostly, helps us to analyse and specify the influence of other variables on innovation. At the end, it shows that innovation is a multiphase process, and that the relative importance of each phase greatly depends on the kind of innovation that is considered. Conception is the most important phase in the radical innovation case, which greatly involves formally high-skilled job categories as R&D employees or engineers. At the same time, the implementation phase, which seems to be particularly important in the incremental innovation case, emphasises the role of the intermediate categories know-how.At the end we can say that small industrial firms appear to be less innovative for two reasons: the usual scale effect argument is correct only in the process innovation case in relation to the capital intensity level. In some other cases as radical innovation, small firms are less innovative because of their job structure and particularly because of the lack of formal scientific capabilities (as the R&D personnel's one).     

The Effect of R&;D Intensity on Corporate Social Responsibility

This study examines the impact that research and development (R&D) intensity has on corporate social responsibility (CSR). We base our research on the resource-based view (RBV) theory, which contributes to our analysis of R&D intensity and CSR because this perspective explicitly recognizes the importance of intangible resources. Both R&D and CSR activities can create assets that provide firms with competitive advantage. Furthermore, the employment of such activities can improve the welfare of the community and satisfy stakeholder expectations, which might vary according to their prevailing environment. As expressions of CSR and R&D vary throughout industries, we extend our research by analysing the impact that R&D intensity has on CSR across both manufacturing and non-manufacturing industries. Our results show that R&D intensity positively affects CSR and that this relationship is significant in manufacturing industries, while a non-significant result was obtained in non-manufacturing industries.     

Determinants of R&D collaboration of service firms

This article examines the determinants of R&D collaboration of service firms. Different from manufacturing firms, we expect that types of innovation, public financing, innovation protection, purchase of external R&D, firm’s absorptive capacity, spillovers, and certain innovation barriers determine the firm’s decision to collaborate in R&D. Results indicate that firms that undertake R&D collaboration tend to undertake process innovation, receive public funding, can protect their innovations, and typically subcontract the development of their technologies. The article provides implications for theory and practice.     

High-growth firms and innovation: an empirical analysis for Spanish firms

This paper analyses the effect of R&D investment on firm growth. We use an extensive sample of Spanish manufacturing and service firms. The database comprises diverse waves of Spanish Community Innovation Survey and covers the period 2004–2008. First, a probit model corrected for sample selection analyses the role of innovation on the probability of being a high-growth firm (HGF). Second, a quantile regression technique is applied to explore the determinants of firm growth. Our database shows that a small number of firms experience fast growth rates in terms of sales or employees. Our results reveal that R&D investments positively affect the probability of becoming a HGF. However, differences appear between manufacturing and service firms. Finally, when we study the impact of R&D investment on firm growth, quantile estimations show that internal R&D presents a significant positive impact for the upper quantiles, while external R&D shows a significant positive impact up to the median.     

Corporate Social Performance and Innovation with High Social Benefits: A Quantitative Analysis

This article analyses the link between innovation with high social benefits and corporate social performance (CSP) and the role that family firms play in this. This theme is particularly relevant given the large number of firms that are family-owned. Also the implicit potential of innovation to reconcile corporate sustainability aspects with profitability justifies an extended analysis of this link. Governments often support socially beneficial innovation with various policy instruments, with the intention of increasing international competitiveness and simultaneously supporting sustainable development. In parallel, firms pursue corporate social responsibility (CSR) and environmental management activities partly in the hope that this will foster such innovation in their organisation (alongside their main aim of improving CSP). Hence, the main research question of this article is about the association of CSP with innovation with high social benefits and the determinants of the potential moderation of this association. Based on panel data, the article analyses the link between CSP and innovation, and the effect of being a family firm using panel estimation techniques. The results point to a moderating role of family firms on the link between innovation with high social benefits and CSP. The article concludes by assessing the policy implications of this insight.     

Product Differentiation and Process R&D: The Trade-off Between Quality and Productivity in the Spanish Firm

This paper proposes a theoretical model in which the incentives that product differentiation exercises on process innovation are established. The resulting quadratic relationship determines a point beyond which a trade-off between these two variables exists. The estimations based on a panel data of Spanish manufacturing firms confirm this result. Moreover, firm size seems to play a important role on process innovation only for those firms with a certain degree of product differentiation. For the rest, the degree of differentiation of rival firms is the relevant variable.     

Exchange Rate Exposure and its Determinants: Evidence from Indian Firms

This article examines the determinants of the exchange rate exposure by comparing both manufacturing and service sector firms in India over the period of 2000 to 2013. First, the study finds that service sector firms are more exposed to exchange rate changes than manufacturing firms in India. Second, the results indicate that the market-to-book ratio and export are significant and positively related; however, size is negatively related to the exchange rate exposure of both the manufacturing and service sector firms. These results are robust with the estimation using a trade-weighted exchange rate.