Variety in the innovation process of UK research and development service firms

Research and development service firms (RDSFs) are a particular type of technology-based knowledge-intensive business services (KIBS). RDSFs provide clients with R&D services on a contract basis, and operate as knowledge intermediaries linking research and market. They are innovative in their own right, as well as supporting innovation efforts by their clients; they rely on their own innovation efforts to be competitive and to develop new value propositions for their clients. The present paper explores the innovation process in RDSFs, drawing on semi-structured interviews with founders and senior managers of 32 companies in the United Kingdom. Our findings suggest that RDSFs vary considerably in terms of their primary innovation drivers (i.e. whether they are mainly driven by market demands or by technological opportunities) and the outcomes they pursue (i.e. whether their outputs are mainly services to clients or a mixture of services and products and/or intellectual property). Four major orientations of RDSFs were identified: (i) technology-based innovation exploiters; (ii) science-focused innovation explorers; (iii) client-driven innovation integrators; and (iv) open innovation translators. This variety among firms normally belonging to the same, small subsector of KIBS, suggests the need for caution in generalising about behaviour in terms of such statistical groupings.     

The Economic Contributions of Hyman Minsky: varieties of capitalism and institutional reform

The work of Hyman Minsky represents an important link between Post Keynesians and Institutionalists. This essay begins with a brief summary of Minsky's early work, including his well-known financial instability hypothesis and his policy proposals designed to reform the financial system. It then moves on to discuss other proposals that are less well known, and developed after the publication of his Stabilizing an Unstable Economy (1986) book. One of them in all the work of Minsky is his demand that theory be institution-specific. Because there are a variety of possible types of economies, theory must be appropriate to the specific economy under analysis. His analysis concerned an evolving, developed, big-government capitalist economy with complex and long-lived financial arrangements. His policy recommendations were designed to promote a successful, democratic form of capitalism given these financial arrangements. These policies would have to ‘constrain’ instability through creation of institutional ‘ceilings and floors’ while at the same time addressing the behavioral changes induced by reduction of instability. The policies would also have to promote rising living standards, expansion of democratic principles, and enhancement of security for the average household.     

Transaction costs and asset prices: a dynamic equilibrium model

In this article we study the effects of transaction costs onasset prices. We assume an overlapping generations economy witha riskless, liquid bond, and many risky stocks carrying proportionaltransaction costs. We obtain stock prices and turnover in closedform. Surprisingly, a stock's price may increase in transactioncosts, and a more frequently traded stock may be less adverselyaffected by an increase in transaction costs. Calculations basedon the 'marginal' investor overestimate the effects of transactioncosts. For realistic parameter values, transaction costs havevery small effects on stock prices but large effects on turnover.     

Strategic Trading and Welfare in a Dynamic Market

This paper studies a dynamic model of a financial market with N strategic agents. Agents receive random stock endowments at each period and trade to share dividend risk. Endowments are the only private information in the model. We find that agents trade slowly even when the time between trades goes to 0. In fact, welfare loss due to strategic behaviour increases as the time between trades decreases. In the limit when the time between trades goes to 0, welfare loss is of order 1/ N , and not 1/ N ² as in the static models of the double auctions literature. The model is very tractable and closed-form solutions are obtained in a special case.     

The EU-Turkey Customs Union and Greece: Who is the loser?

The purpose of this paper is to first apply the theory of trade in vertically differentiated products in a Customs Union context and second to find out the effects of the Customs Union between the European Union and Turkey. This is done both at a theoretical and at an empirical level. Based on these assumptions, the theoretical analysis indicates that the benefits of admitting Turkey into the Customs Union will be unevenly spread between Germany and Greece. In particular, Germany will definitely benefit, whereas Greece may suffer losses. In the empirical part of the paper, it is examined whether the predictions emanating from the theoretical analysis find any empirical support. For this purpose, the behavior of Greek and Turkish exports to the European Union is examined using desegregated data. The evidence is supportive of the theoretical predictions.     

Tendering procedures and buy-national policies

This paper will examine the possible impact of restricted and negotiated procedures to the industrial structure of sectors operating in public procurement. These two tendering procedures may operate on a given activity with other nontariff barriers or as a means favoring the adjustment process of the sectors dealing with them. In the latter case, their impact is expected to be crucial as to labor productivity, competitiveness, and the like. Despite the approach which defends that the two tendering procedures under examination may represent a deviation from competition, this analysis points out that they have a positive impact on suppliers' industrial performance or that they are at least associated to products that meet an increased labor productivity. (JEL F20)     

Strategic attractiveness and release decisions for cultural goods

We study how producers of cultural goods can strategically invest in raising the attractiveness of their goods in order to secure the most profitable release dates. In a game‐theoretic setting, where two producers choose their investment expenditure before simultaneously setting the release date of their good, we prove that two equilibria are possible: releases are either simultaneous (at the demand peak) or staggered (one producer delays). In the latter equilibrium, the first‐mover secures its position by investing more in attractiveness. We test this prediction on a dataset of more than 1500 American movies released in 10 countries over 12 years. Results are consistent with the theoretical predictions, indicating that higher budget movies are released closer to seasonal demand peaks.     

Public procurement policy and the Czech industry

The aim of this paper is to specify the extent of buy-national policies of the Czech Republic and the impact of opening its public procurement market to domestic production and employment due to the Europe Agreements of 1995. Two series of indicators are proposed for measuring the impact of Czech buy-national policies. The first series outlines the behavior of the public sector vis-à-vis domestic production and imports. The second series sketches the industrial structure of the sectors which, following the above analysis, seem to be protected by preferential public procurement. The interaction of both series of indicators can provide information about the level of protection in terms of public procurement on a sectoral level. This paper is part of the Phare Program of Action for Cooperation in Economics, a research project launched by the Commission of the European Union. The authors gratefully acknowledge contributions by Andrew Cox and anonymous project referees. The authors are responsible for any remaining errors.     

Imoannatori and business angels: two models of informal capital provision

This article compares the role and objectives of informal capital provision in a trust‐based context (such as in industrial districts) and in a market‐based context. An example of the former is given by the activities of impannatori in the Prato (Florence, Tuscany) textile district, while the latter is associated with the activities of business angels. Impannatori are ‘pure entrepreneurs’ acting as final firms; they have two main functions: liaising with the final market and coordinating subcontracting activities. Another typical function of impannatori is to provide informal finance to subcontractors. Pure entrepreneurs, like impannatori in Prato, are typical of industrial districts in general. The article compares impannatori with business angels as both act as informal capital providers to small firms and start‐ups, often replacing and offering finance in parallel to the banking system. Despite the large number of studies on Italian industrial districts, informal capital provision within them has often been neglected. The novelty of the article is therefore to explore the role of impannatori as providers of informal credit to subcontractors for the functioning and the success of the textile district in Prato. It will be argued that a trust‐based context enables credit providers to reduce transaction costs and information asymmetry, therefore reducing the risk associated with informal lending. To do this we compare the impannatori model with business angels, highlighting differences and similarities. In order to assess the importance of impannatori within Prato we draw on ecological theories of organizations and investigate the co‐evolution of impannatori and subcontractors' populations. The empirical evidence we provide is consistent with the hypothesis that the two populations have evolved in symbiosis and that the informal credit provided by impannatori has been crucial for the economic development of Prato. Cet article compare le rôle et les objectifs d'une mise à disposition informelle de capitaux basée sur la confiance (comme dans les districts industriels) et sur le marché. Le premier cas est illustré par les activités des impannatori dans le secteur textile de Prato (près de Florence, Toscane), et le second est associé aux activités des business angels, investisseurs individuels fortunés. Les impannatori sont de véritables chefs d'entreprises du marché; leurs deux fonctions principales sont le lien avec le marché final et la coordination des activités de sous‐traitance. Un autre de leur rôle consiste à financer les sous‐traitants de manière informelle. Les vrais chefs d'entreprise, tels les impannatori de Prato, sont caractéristiques des districts industriels en général. L'article les compare aux business angels, car tous sont des fournisseurs de capitaux non‐institutionnels auprès de petites entreprises et start‐ups, remplaçant souvent le système bancaire ou offrant un financement parallèle. Malgré les multiples études sur les districts industriels italiens, la mise à disposition informelle de capitaux qui y existe a souvent été négligée. L'originalité de l'article est donc d'explorer le rôle des impannatori en tant que fournisseurs de crédit non‐institutionnels auprès des sous‐traitants en vue du fonctionnement et du succès du secteur textile de Prato. Un contexte de confiance permet aux fournisseurs de crédit de réduire le coût des transactions et l'asymétrie de l'information, limitant ainsi le risque associé au prêt informel. C'est pourquoi l'article compare le modèle des impannatori aux business angels, soulignant différences et similitudes. Afin d'évaluer la place des premiers à Prato, il s'inspire des théories écologiques des organisations et examine l'évolution conjointe des impannatori et des sous‐traitants. L'indice empirique ainsi obtenu corrobore l'hypothèse que les deux populations ont évolué en symbiose et que le crédit informel procuré par les impannatori a été essentiel à l'essor économique de Prato.