Growth and entrepreneurship

In this paper we suggest that the spillover of knowledge may not occur automatically as typically assumed in models of endogenous growth. Rather, a mechanism is required to serve as a conduit for the spillover and commercialization of knowledge from the source creating it, to the firms actually commercializing the new ideas. In this paper, entrepreneurship is identified as one such mechanism facilitating the spillover of knowledge. Using a panel of entrepreneurship data from 18 countries, we provide empirical evidence that, in addition to measures of Research & Development and human capital, entrepreneurial activity also serves to promote economic growth.     

Industry Clusters in Ohio and Sweden, 1975--1995

The purpose of the present paper is twofold. First, we formulate a general method of identifying clusters of economic activity in a country or region. The methodology is based on generally available industry data and does not start from a priori notions of geographic or technology clusters. Second, the proposed methodology is then used to identify the main clusters of economic activity in Ohio and Sweden and their evolution over the last twenty years.     

Host country characteristics and agglomeration in foreign direct investment

By combining unique data on Swedish multinationals with industry data for 18 countries, the influence of host country characteristics on the location of foreign production is analysed. Particular attention is directed towards agglomeration tendencies in firms' location. The sample selection incorporates countries where firms have no affiliate production, which is an extension of previous research in this area. The results suggest that agglomeration effects are present, predominantly in technologically advanced industries. It is also shown that market size, the supply of skilled labour and earlier exports pattern, affect the location of overseas production.     

The old and the new: the evolution of polymer and biomedical clusters in Ohio and Sweden

This paper examines the rapid growth of the polymer-based and biomedical clusters in Ohio and Sweden – two regions of similar size and with similar traditions undergoing similar industrial restructuring. Two issues are addressed: First, why has growth been so strong in these particular clusters, i.e., can we identify the sources of the growth and dynamics in these sectors? Second, why do these two clusters differ in Ohio and Sweden in terms of size, level and type of activity, number and composition of actors, size structure of firms and growth patterns over the last couple of decades? In particular, what is the role of public policies as well as cultural, historical, and geographic factors? Our main conclusions are (1) that there is strong path dependence in both clusters in both countries, and (2) that the key to rapid development is a high absorptive capacity combined with rapid diffusion to new potential users. Our policy discussion addresses these issues.     

Sunk costs, firm size and internationalization

Sunk Costs, Firm Size, and Internationalization. — One strand of the industrial organization literature argues that outlays on sunk costs are endogenous in market expansion, implying an adaptive adjustment by firms to preserve their market share. A different view is taken in the literature on firms’ internationalization. Here it is argued that sunk costs in firm-specific assets, such as R&;D and marketing, are necessary in order to grow and gain market shares. The empirical analysis supports the internationalization hypothesis. In addition, we also provide evidence that even though larger firms incur higher sunk costs, they do so at a diminishing rate.     

Entrepreneurs learning together: The importance of building trust for learning and exploiting business opportunities

This longitudinal, qualitative case study examines trust-building processes and learning outcomes among entrepreneurs who participated in formal networks designed to develop competence and knowledge. This study is built on rich data collected through observation and video recordings made during network meetings and get-togethers. Additional data was gleaned from personal interviews with participating entrepreneurs. All data sources reveal on how trust develops and how entrepreneurs can use networks to learn and improve their capacity to exploit business opportunities. Studying how trust is built over time among entrepreneurs who demonstrate a low level of trust when they join the network, this study provides insights into micro-processes and important components of building trust. Findings suggest three processes that build commitment, companionship, and competence trust. Moreover, acknowledging the notion of social learning, the findings suggest that when entrepreneurs build trust with one another they can experience cognitive, emotional, and social changes by participating in a network. This may bring potential consequences for their exploiting opportunies. Implications for academics and managers are discussed.     

ASSET‐BASED UNEMPLOYMENT INSURANCE*

This article studies a model of consumption, savings, and job search in which a borrowing constraint limits self‐insurance. The government administers the unemployment insurance program that may condition on an individual’s asset position, but not on her efforts of finding a job. To compensate for the impediments to self‐insurance, benefit payments should optimally be set higher at lower wealth levels and peak for borrowing‐constrained individuals with zero liquid funds. A quantitative exercise reveals that the U.S. unemployment insurance program is surprisingly close to optimal for the asset poor, but far too generous for wealthier individuals.