Export,R&D and new products. a model and a test on European industries

In this article we extend the model developed by Bogliacino and Pianta (Industrial and Corporate Change 22 649, 2013, b) on the link between R&D, innovation and economic performance, considering the impact of innovation on export success. We develop a simultaneous three equation model in order to investigate the existence of a ‘virtuous circle’ between industries’ R&D, share of product innovators and export market shares. We investigate empirically – at the industry level – three key relationships affecting the dynamics of innovation and export performance: first, the capacity of firms to translate their R&D efforts in new products; second, the role of innovation as a determinant of export market shares; third, the export success as a driver of new R&D efforts. The model is tested for 38 manufacturing and service sectors of six European countries over three time periods, from 1995 to 2010. The model effectively accounts for the dynamics of R&D efforts, innovation and international performance of European industries. Moreover, important differences across countries emerge when we split our sample into a Northern group – Germany, the Netherlands and the United Kingdom – and a Southern group – France, Italy and Spain. We find that the ‘virtuous circle’ between innovation and competitiveness holds for Northern economies only, while Southern industries fail to translate innovation efforts into export success.     

Radical innovations as drivers of breakthroughs: characteristics and properties of the management of technology leading to superior organisational performance in the discovery process of R&D labs

An interesting problem in management of technology and economics of innovation is how to explain the sources of some breakthroughs in research organisations. The present study confronts this problem by analysing the main determinant of the discovery of quasi-periodic materials that has generated a scientific paradigm shift in crystallography. The inductive study shows that radical innovations adopted in research labs, used by high-skilled adopters (called lab-oriented radical innovations; e.g. the Transmission Electron Microscopy), support breakthroughs and enhance discovery processes. This evidence substantiates a theoretical framework, which explains the main relations, characteristics, and properties of lab-oriented radical innovations that improve discovery processes and induce the superior organisational performance in advanced scientific fields. R&D management implications are discussed.     

Reciprocity: theory and facts

The importance of reciprocity is not new in economics. Contractual market exchanges and long-run interactions are both situations based on self-interested reciprocal behaviour. However, reciprocity is not only a behaviour but also a motive that sometimes appears to be inconsistent with self-interest. This fact produces a tension between those who try to explain reciprocal behaviour within the standard framework and those who aim at enlarging it with the introduction of additional behavioural principles. This special issue collects a selection of papers presented at the International Conference “Reciprocity. Theory and facts” were the two perspectives were compared and discussed. In this Introduction note we provide first a broad view of the role of reciprocity in economics and then a quick introduction to each of the contributions enclosed in this special issue.     

Environmental policy and long-term welfare in a tourism economy

A dynamic general equilibrium model of a small open economy specialized in producing tourism services is presented. The tourism package is a bundle of attributes provided by firms, the government and the natural environment. Investment in accommodation increases the number of visitors but also congests public goods and reduces environmental quality. The model is used to determine the conditions for the existence of a long-term double dividend. These conditions depend on both the initial level of environmental quality and the responsiveness of the tourism price to marginal changes in environmental and accommodation quality and congestion of public goods. Support from the Balearic Islands Government (PRIB-2004-10142) and helpful comments from anonymous referees are gratefully thanked.     

Individual incentives by adjusting work hours: Bellamy's egalitarian economy

Edward Bellamy proposed an ideal egalitarian economy in which production is carried out as a nonprofit government service, income is shared equally by all individuals independently of work exertion, and relative work hours are used as incentives to allocate labor to different jobs. This economy is shown to possess an equilibrium consistent with full freedom of individual choice of occupation and consumption, to be achieved through a fully decentralized titonnement process. However, individuals have an obligation to work which deprives them of their freedom to choose between income and leisure, so that the scale of output is indeterminate and may be nonoptimal unless a social-welfare function is introduced.     

Aggregate convergence and sectoral specialization in innovation

Over the last 20 years OECD countries have converged in terms of their innovations, in parallel to the process of economic convergence and catching up in technology. However, this has not led to a similarity in the sectoral strengths of the majority of countries. Applying a measure of technological distance between pairs of countries based on patents, it is shown that nations have increased their technological specialization (i.e. their sectoral differences) over the 1980s. An apparent paradox is pointed out, as countries converge by becoming more different and grow by becoming more specialized.     

Fiscal devaluations: evidence using bilateral trade balance data

We study the effects of fiscal devaluations on the trade balances of European Union countries over the 2000–2014 period using bilateral trade balance data. This enables us to control for the coincidence of tax policy measures in different countries, which is an aspect left unconsidered in previous econometric studies. A fiscal devaluation consisting of a budget-neutral tax shift in the amount of 1% of gross domestic product (GDP) from employers’ social security contributions to value added tax leads to a short-term improvement of bilateral trade balance ranging between 0.3 and 0.6% of GDP. An extrapolation of our baseline estimate to the overall trade balance yields an impact of 4.3% of GDP for the whole sample, which is slightly higher than presented in previous empirical research. Applying extrapolation to the trade deficit countries in the euro area shows that these countries’ balance of trade with the rest of the euro area improves by only 0.75% of GDP. Thus, the magnitude of the fiscal devaluation impact on the trade balance varies significantly across countries, depending on their trade openness, among other potentially relevant factors.     

Experience, instruction and knowledge acquisition: a study in taxation

This study examines the effects of direct work experience, gained through internships and cooperative educational experiences, on subsequent knowledge acquisition. In particular, theoretical and empirical research in education, cognitive psychology and accounting suggests that experienced individuals develop organizational knowledge structures which allow them to better assimilate new information into memory than inexperienced individuals. Consistent with this notion, the research investigates whether the benefits of prior direct work experience on knowledge acquisition is a function of the nature of the learning tasks (structured versus unstructured) used in subsequent educational experiences.As hypothesized, the results indicate that inexperienced subjects were assisted to a greater extent in the knowledge acquisition process by structure oriented tax return preparation tasks than by relatively unstructured tax research assignments. Also consistent with expectations, the opposite was true for experienced subjects. When experienced subjects were provided with instruction supplemented by unstructured tax research assignments, they demonstrated a greater level of tax knowledge than when assigned structured tax return problems. Further, the knowledge level of experienced subjects was found to be greater than that of inexperienced subjects only when unstructured tax research assignments were provided. These findings suggest that all benefits of direct work experience on the knowledge acquisition process cannot be realized without the specific consideration of such experiences on the design of educational and firm training materials. Finally, the study also indicates that the benefits of direct work experience on subsequent knowledge acquisition are generally greater for individuals with low versus high learning aptitudes.     

Economic returns to industrial research

This paper investigates the relationship between R&D and corporate performance. The study extends previous research by examining the conditions under which firms benefit from R&D; by incorporating in the analysis the varying costs of R&D inputs; and by employing an opportunity-cost approach that estimates the monetary returns to R&D. The findings indicate that industrial research generates revenues that are significantly higher than the returns that other investments yield. The study also resolves previously conflicting results concerning firm size, and offers new insights on the role of technological opportunities that contradict past studies. Although the potential for innovation is greater in high-tech industries, intense R&D competition prevents technologically dynamic firms from enjoying high returns to R&D. By contrast, the results demonstrate that low-tech firms use R&D successfully as part of their strategies, implying that prior research underestimates the importance of R&D for these firms.