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Bounding the Effects of R&D: An Investigation Using Matched Establishment-Firm Data
Abstract
We find that the effects of parent firm R&D on plant-level productivity are diminished by both the geographic and technological distance between the research lab and the plants; that productivity appears to depend on R&D per plant rather than the total amount; and that spillovers from technologically related firms are significant but also depend on R&D intensity rather than total industry R&D. These results suggest that the "dilution" of R&D across multiple target plants reduces its potency sufficiently that spillovers may not be a source of industrywide or economywide increasing returns.
... A rich history of innovation fosters the development of high-quality, technologically advanced products, increasing firms' competitiveness and profitability. Second, innovation enhances expected profitability and productivity by reducing investment costs and enabling firms to realize potential economies of scale in production (Griffith, Harrison, & Van Reenen, 2006;Adams & Jaffe, 1996). Third, innovation allows firms to temporarily establish a monopoly position in the market, leading to higher profits (Schumpeter, 2013). ...
... This parsimonious model indicates a positive and statistically significant association between patent intensity and one-year forward ROA. Column (2) introduces capital expenditure as an additional control, while Column (3) further includes advertising expenditure. The model specification in Column (2) is preferred due to data limitations related to capital expenditure, advertising expenditure, and R&D expenditure. ...
Using a large sample of approximately 2,500 listed firms in China over the past thirty years, I examine the relationship between innovation output and firm performance, as measured by return on assets (ROA). I document a significant increase in the number of patents granted to Chinese listed firms domestically. My findings indicate that patent intensity—measured as the number of patents scaled by total assets—is positively associated with future ROA, even after controlling for various patent-related covariates, as well as year and industry fixed effects. These results contribute to the existing literature on the positive impact of innovation on firm performance, which has been well-documented in Western economies such as the United States and European countries. Furthermore, I identify heterogeneities in this relationship across industries, patent types, and firm sizes. Specifically, the effect of patent intensity on subsequent ROA is more pronounced among firms in the manufacturing sector, those with a higher intensity of invention patents, and those with greater market equity. This study provides new evidence on the real effects of innovation output on firm performance in the context of China’s listed firms.
... See, for example,Kerr and Kominers (2015),Elvery and Sveikauskas (2010),Arzaghi and Henderson (2008),Agrawal et al. (2008),Keller (2002),Rosenthal and Strange (2001),Adams and Jaffe (1996), andAudretsch and Feldman (1996). ...
... See for example,Arzaghi and Henderson, 2008;Agrawal et al., 2008;Conley et al., 2003;Moretti, 2004a and2004b;Audretsch and Feldman, 1996;and Adams and Jaffe, 1996. ...
Buzard et al. (2017) show that American R&D labs are highly spatially concentrated even within a given metropolitan area. We argue that the geography of their clusters is better suited for studying knowledge spillovers than are states, metropolitan areas, or other political or administrative boundaries that have predominantly been used in previous studies. In this paper, we assign patents and citations to these newly defined clusters of R&D labs. Our tests show that the localization of knowledge spillovers, as measured via patent citations, is strongest at small spatial scales and diminishes with distance. On average, patents within a cluster are about two to four times more likely to cite an inventor in the same cluster than one in a control group. Of import, we find that the degree of localization of knowledge spillovers will be understated in samples based on metropolitan area definitions compared to samples based on the R&D clusters. At the same time, the strength of knowledge spillovers varies widely between clusters. The results are robust to the specification of patent technological categories, the method of citation matching, and alternate cluster definitions.
... The investigation led is Descriptive in nature. [21]- [25] B. Test Design: Sample Development is a constructive structure for the acquisition of an instance from a given population. It alludes to the method or process that the scientist will follow in choosing items as an example. ...
: Career planning is the self-evaluation & planning done by a person to have a strong career path. Career planning process in the continuous reiterative process of understanding oneself, setting career goals, revising skills and searching for the right career options. A career plan is an individual's choice of occupation, organization and career path. Career planning encourages individuals to explore and gather information, which enables them to synthesize, gain competencies, make decisions, set goals and take action.
... Knowledge generation is a cumulative and interactive process in which the relations between actors are key for knowledge exchange and diffusion (Ahuja 2000;Dosi 1988). The literature on knowledge spillovers suggest firms can configure R&D portfolios to benefit from external knowledge (Adams and Jaffe 1996;Audretsch and Feldman 1996). The national innovation system literature is of the view that innovative activity does not lead to geographical dispersal easily because innovative capability depends on the quality of relationships between multiple actors and that geographical or cultural proximity augments these relationships (Archibugi and Mitchie 1997). ...
The network approach of value chain analysis examines the role and
centrality of various actors and their interrelationships with other
actors, besides establishing the role of external linkages in this
process. This paper tries to combine the effect of research
networks on the geographic dispersion of innovative activity in the
Indian pharmaceutical industry. We use activity-wise data from
USPTO’s patents to establish the level of integration of Indian
innovative firms in the pharmaceutical global value chain. Using
Tobit analysis, we examine the nature of the collaborative pattern
of firms and establish whether this pattern of the inventor network
level translates to integration into global networks in terms of
geographic dispersion. We analyse the geographic dispersion of
inventor networks as a function of the characteristics of the
innovative actors that coordinate their inventive work. We show
the level of integration of Indian innovative firms in the
pharmaceuticals global value chain and assess the structure of
these research networks. This helped contextualize firms’ roles by
contrasting them with other institutional types. The level of
integration of Indian firms is low in terms of the geographic
dispersal of innovation networks, while the private universities and
public research centres are more geographically dispersed.
... Some studies believe that R&D investment can promote the improvement of the TFP of enterprises. Goto (1989) found that R&D investment contributes significantly TFP improvement in Japanese manufacturing firms [18], and this finding has also been confirmed in the United States, India and China [19][20][21]. Xiao (2022) found that global enterprise R&D investment can significantly improve TFP based on data from 119 countries surveyed by the World Bank between 2007 and 2017 [22]. Another part of the study argues that R&D investment does not contribute to the growth of firms' TFP and even has a dampening effect on it. ...
Improving the total factor productivity (TFP) of animal husbandry enterprises is the key to promoting the sustainable development of animal husbandry. Technological progress is an important driving force for improving the TFP of animal husbandry enterprises, and research and development (R&D) investment determines the speed of technological progress. Based on the data of Chinese animal husbandry enterprises listed on Shanghai and Shenzhen A-shares in China between 2009 and 2022, this article empirically analyzes the impact of R&D investment on the TFP of animal husbandry enterprises and the moderating role of executive incentives in it and discusses the heterogeneity of this impact, using the fixed-effects model. It is found that R&D investment has a significant positive impact on the TFP of animal husbandry enterprises, and the TFP of animal husbandry enterprises increased by 0.00105 for every 1% increase in R&D investment. Equity incentives for executives positively moderated the relationship between R&D investment and the TFP of animal husbandry enterprises, while executive compensation incentives negatively moderated the relationship. Heterogeneity analysis shows that R&D investment has a significant effect on the TFP of non-state-owned animal husbandry enterprises, but has no significant impact on the TFP of state-owned animal husbandry enterprises. The impact of R&D investment on TFP showed a significant promotion in the livestock and poultry breeding and meat product processing industries, but not in the feed production, dairy product processing and animal health industries. R&D investment has a significant effect on the TFP of animal husbandry enterprises in Eastern China and Central China, but has no significant impact on the TFP of animal husbandry enterprises in Western China.
... Proximity facilitates knowledge spillovers. Evidence for this is found in many studies (e.g., Jaffe, Trajtenberg, and Henderson 1993;Adams and Jaffe 1996;Moskowitz 1999, 2001;Petersen and Rajan 1994;Rosenthal and Strange 2003;Sufi 2007;Giroud 2013). Concerning the audit context, knowledge can be categorized as either explicit or tacit (Tan and Libby 1997;Vera-Muñoz, Ho, and Chow 2006). ...
SYNOPSIS
In large audit firms, interoffice knowledge sharing is embedded in two networks: the branch network, comprising all branch offices, and the client network, formed by similar engagements. Proximity between branch offices may enhance knowledge accessibility, whereas similarity between engagements could impact the relevance of that knowledge. I investigate how the two networks jointly influence the effectiveness of knowledge sharing. I construct client networks based on the similarity of clients’ product offerings and find that clients with greater centrality in the neighboring client network benefit more from knowledge sharing in terms of improved audit quality. I further show that this effect only exists when similar clients in neighboring offices are larger in size and is more salient when there is a gap in expertise between the current auditing office and neighboring offices. By enriching our understanding of interoffice knowledge sharing, these results offer practical insights to auditors, regulators, and audit-report users.
Data Availability: Data are available from the data sources indicated in the paper.
JEL Classifications: M42.
... Despite the general consensus of economists about the relevant and positive role of knowledge spillovers in affecting clustered firms' industrial activity (Adams & Jaffe, 1996;Griffith et al., 2006;Levin & Reiss, 1988;Spence, 1984), to our knowledge, they have not yet been introduced in spatial stochastic frontier models. Specifically, firms' innovative activity can be considered as one of the main determinants of firms' efficiency level and therefore, knowledge spillovers can be identified as spatial effects arising from the factors that determine neighbouring firms' efficiency. ...
This paper develops a spatial Durbin stochastic frontier model for panel data introducing spillover effects in the determinants of technical efficiency (SDF-STE). The model nests several existing spatial and non-spatial stochastic frontier specifications and is estimated using maximum-likelihood techniques. Estimates are shown to be unbiased even for small sample sizes and for alternative specifications of the spatial weight matrix implementing different Monte Carlo simulations. Finally, an application to the Italian accommodation sector is provided. Empirical findings suggest the relevance of the SDF-STE model in capturing labour productivity and knowledge spillover effects.
... 2. Research and development has to be conducted to make a product to meet all the requirements i.e. a Shampoo with antidandruff, conditioning agents who would be even herbal based. 3 [25] 6. In general there is water scarcity; Brands which makes the user use a lesser quantity of water will be welcomed. ...
The study is about buyer behaviour in selecting a
shampoo brand. Through the pilot study it has been found that
Clinic Plus, Head & Shoulder, Pantene, Sun silks, Clinic All
Clear, Himalaya, Velvette, Meera and Shika are the brands
largely used. Hence they were taken up for the study.
... Food World is truly the friendly neighborhood store. [20]- [25] ...
: Buyer behavior is significant to the company because it is usually assumed to be a major determining factor of repeat purchases, positive word of mouth and customer loyalty. Choice is essential for consumers and businesses because it emphasizes the successful outcome of scarce resources and the satisfaction of unmet needs.. Increasing awareness of consumer choices is a critical building block in sales and consumer behavior has generated considerable research area in the process prior to the determination of desires and the implications of those judgements
... (Table 6.4) There is hugeness contrast between instructive capability of individuals as to status and commitment, Gain Availed, observation, Socio Economic Benefits, by and large conclusion on MFS; in rustic zones the training level will be low, because of the microfinance program the general population in the regressive territories picked up advantage as for the above variables [25]. It has additionally been seen that there is critical distinction among Overall variables of small scale fund framework as to Satisfaction on MFS, Self Development of SHG (Table 6.5) ...
: Self improvement gathering (SHG) is a town based money related delegate normally made out of 10-20 nearby ladies. Most self improvement gatherings are situated in India, however SHGs can likewise be found in different nations, particularly in South Asia and Southeast Asia. Microfinance improves the socio-financial status of the Self-help gatherings. The point of microfinance program is to satisfy the monetary needs of low-salary bunches with the assistance of banks and it prompts the advancement of Self Help Groups. Research ponders on SHGs in the state uncovers that these gatherings comprised of for the most part 15-20 individuals for the most part having a place with in reverse territories of the general public. SHGs in India have turned into a potential instrument for the strengthening of ladies, social solidarity and financial advancement of the poor in their own setting. This paper frames some portion of a diagnostic research consider on the job of microfinance factors in the improvement of Self-help bunch in Tamil Nadu state. The examination was directed with an example of 560 individuals from self improvement gatherings having a place with various areas in Tamil Nadu, utilizing multistage inspecting and stratified testing. It has been discovered that the elements impacting self improvement gatherings are financial advantages, observation, gain profited, government disability, social association as for microfinance. It is prescribed that the assets ought to be used in the productive manner to create self improvement gatherings in the state.
... Responses to scheme knowledge, knowledge of rights and privileges, knowledge of growth, knowledge of employability and knowledge of integration and survival by SHG members indicate that members are highly satisfied with the resulting empowerment [24]- [25]. ...
: Women in India have historically been suppressed and even more repressed have been women in particular who belong to the economically and socially weaker sections of society. Throughout post-independence India, all the provisions in the constitution and the length of legislation enacted to empower women were not sufficient to free women from their conventional bondages, liabilities and restrictions. The involvement of women in decision-making processes, particularly in rural areas, has remained very marginal until recent times. This article highlights the satisfaction of members in Tamilnadu for marketing women's self-help groups.
... We conducted queries to our database using Access (www.microsoft.com) in order to compile tables for the number of (1) authors per study and studies per year, (2) studies per journal, and (3) studies per institution. To test for the presence of the 'knowledge dilution' along time (i.e. the contribution of each author to a study is supposed to be minor when there are more authors; Jaffe & Adams 1996;Peretto & Smulders 1998;Seymore 2006) in our dataset, we counted the number of authors for each paper in five periods corresponding to the decades 2010s, 2000s, 1990s, 1980s plus a 'historic' period corresponding to studies previous to 1980. We defined that historic period because those older decades have few references in our database and a preliminary analysis showed that the number of authors varied in a small range (i.e. ...
Despite Arthropoda being a major animal taxon, it is underrepresented in South American scientific publications. Here, we present the results of a bibliometric analysis of published studies on insects and arachnids in Colombia to understand the general patterns of knowledge of both taxa across this megadiverse country. We compiled 3119 studies on insects and 353 on arachnids published between 1918 and 2019 in more than 600 journals. Research on both insects and arachnids reflects the effort done by researchers working in Colombian institutions, but because publications are mainly domestic, their international impact is limited. The studies included 19 taxonomic orders of insects and 72 families of arachnids with a bias toward a few well-studied taxa like Diptera, Lepidoptera, Hymenoptera, Araneidae, and Salticidae, while the majority of taxa are understudied. The geographic coverage of the studies was broad and includes Colombia’s 32 departments, but their distribution was heterogeneous being the Andean region the most studied, while the Caribbean and Orinoquia regions could be considered knowledge gaps. Considering our analysis, we give recommendations to expand and advance the knowledge of Colombian insects and arachnids, a major scientific enterprise in which collaboration among researchers from different institutions is needed.
... Knowledge that is partially, but not wholly, tacit offers opportunities for firms to exploit the versatility of their management processes to permit its replication and transfer, thereby providing firms with an advantage over alternative governance forms that is especially relevant to MNEs (Kogut & Zander, 1993). The result has been sustained scholarly interest into intra-firm knowledge flows and knowledge recombination within MNEs (Buckley & Carter, 2004;Gupta & Govindarajan, 2000;Jensen & Szulanski, 2004), the impact of geographic distance on knowledge flows (Adams & Jaffe, 1996;Hansen & Løvas, 2004;Tallman & Phene, 2007). ...
Research Summary
The centrality of knowledge to the global arena has allowed scholars in this area to play a leading role in developing the knowledge‐based view (KBV) of the firm. We propose that broadening the KBV to take account of the social constructionist approach to knowledge and the multilevel nature of knowledge processes, can build a more serviceable knowledge‐based theory of global strategy. Specifically, we urge research in three directions, the exploration of a KBV of economic organization in a global context, which would encompass macro institutions as well as individuals; focus on the foundational construct of knowledge that would integrate human and machine learning in the global arena; and the creation of a comprehensive framework of knowledge types and knowledge processes across space.
Managerial Summary
Lack of consensus over the nature of knowledge has prevented the KBV from developing into an integrated, stand‐alone theory of the MNE, but has not constrained its ability to provide penetrating insights into global strategy and the management of the MNE. Empirical research shows that the processes through which knowledge is generated and applied in the global arena are complex and contextually differentiated. To extend and synthesize our understanding of these complex processes, we propose the development of a knowledge based theory of global strategy. We advocate extending the KBV in three areas, first, consideration of a KBV of organization in a global context that extends beyond the MNE to consider institutions and individuals, second, a focus on knowledge as a key construct to incorporate recent technological advances in artificial intelligence and machine learning, and third, development of a framework of types and processes of knowledge that have implications for management across locations.
... The main reason for these subsidies is that R&D is expected to have higher social than private returns. As firms mainly consider private returns when deciding on R&D investments, the actual level of R&D investments will be below the socially optimal level in a free market (Arrow, 1962;Adams and Jaffe, 1996). 1 This market failure motivates governments to subsidize R&D investments in the business sector. These subsidies can be granted indirectly through tax incentives or directly through public R&D grants. ...
This study provides new empirical evidence regarding the relevance of evaluation criteria and firm characteristics for public R&D funding decisions. The database used contains both accepted and rejected R&D project proposals, project evaluation scores, and several firm characteristics. The probit estimations show that proposals with high scores on innovative content, spillover, and knowledge gain are significantly more likely to be approved and that most firm-level characteristics are not significant, except for firm size. For example, good or very good assessments of innovative content raise the acceptance probability by between 18 and 37 percentage points, respectively. Small firms are more likely to receive a grant.
... Second, the clustering of R&D employees enhances innovative performance in the area (Breschi & Lissoni, 2009;Simonen & McCann, 2008). As many empirical studies have shown, knowledge spillovers are geographically and technologically bounded (Adams & Jaffe, 1996;Jaffe, Trajtenberg, & Henderson, 1993;Orlando, 2004), with firms and their employees in industrial districts more likely to share technological knowledge, combine ideas and generate more innovative outputs. The localisation of knowledge spillovers is a critical component of firm agglomeration, especially in high-tech industries characterised by rapid technological evolution, presenting the repetitive creation and destruction of innovation (Audretsch & Feldman, 1996). ...
Government‐driven industrial clusters have attracted considerable attention from academic research as well as practical fields, mainly because of their contributions to regional economic growth and sustainable innovation performance. This article investigates the impact of government‐driven industrial districts on the efficiency of new technology‐based firms in information and communications technology industries. Using a meta‐frontier analysis with a unique Korean start‐up dataset, we find that the government's provision of industrial districts increases firm efficiency level compared with that of others outside the districts. Specifically, being located in industrial districts not only improves the efficiency of individual start‐ups but also positively affects the maximum efficiency levels that firms can achieve. Our findings suggest that locational support by public administration, such as utility infrastructure, tax benefits and inter‐firm informal network opportunities, enhances firms' dynamic capability to search for and combine resources to create new markets and innovations, especially for newly established technology firms.
... 6 For details, see Appendix A.2. 7 The parameter h in Equation (5) can be interpreted as technological proximity and geographical proximity. This formulation is consistent with empirical studies showing that technological and geographical proximities enhance R&D spillover (see Adams & Jaffe, 1996;Aldieri & Cincera, 2009;Belenzon & Schankerman, 2013;Goto & Suzuki, 1989;Jaffe, Trajtenberg, & Henderson, 1993, and others). Since the 1990s, semiconductor firms in South Korea have begun headhunting Japanese engineers in the neighboring country, Japan. ...
We combine a model of product research and development (R&D) and technological spillover with the concept of technological distance and examine horizontal mergers in a duopolistic market with R&D. The results are fourfold. First, a merger can better encourage R&D investment than the competition case. Second, with a small degree of product differentiation (PD), the merger criterion under the Cournot duopoly is stricter than that of the Bertrand case. By contrast, with a moderate or large degree of PD, the opposite is true. Third, with a small technological distance, a merger should be allowable. Finally, with a small degree of PD and moderate technological distance, a merger should be allowable.
... Our choice of empirical model follows others in the literature, which also measure firm-level productivity (Kafouros, Buckley & Clegg, 2012). These authors cite several papers in the area of estimating production functions to justify their choice (Adams & Jaffe, 1996;Kafouros & Buckley, 2008;Scherer, 1982). One of the attractive features of such an approach is that it allows for an accounting of the basics in production, namely capital, labor, and intermediate inputs. ...
The superior productivity performance of outward foreign direct investment (FDI) firms is attributable to both ex ante advantages gained within the home market and ex post learning, which emanates from MNE experiences in host markets. Learning is modeled as a function of firm-level R&D efforts, absorptive capacity, and host-country characteristics. Using a firm-level panel database on all firms in Canada, a large-scale econometric analysis is undertaken to show that the host-country environment is central to MNE learning. We also quantify results in the extant literature on the share of the superior productivity exhibited by FDI firms into that which emanates from the home market, and that which is linked to ex post learning, finding 79% attributable to the selection effect, and 21% to the learning effect. The implications of these results are that, since productivity is endogenous to FDI, firms which are below a threshold level required to be successful internationally ex ante can nevertheless succeed if learning can move these MNEs above the required threshold for success ex post. As such, this research provides insights into strategies and host-country environments which lead to ex post productivity improvements for firms undertaking outward FDI, and hence informs the FDI decision at the firm level.
... Two boundaries defining the territorial remoteness from the core of the territorial scientific system are taken into account: a) 0-50 km -the immediate proximity zone and b) 50-100 km -the outer-belt. According to the studies on innovation diffusion and knowledge spillovers, [24][25][26][27][28] locating within a 50km limit or one-hour drive provides higher potential for the emergence of research ties due to frequent communication and even daily commute (incl. labor mobility). ...
... Specifically, despite some studies recognize that geographical proximity between R&D and manufacturing is key to preserving the innovative capabilities of firms (Gray, Siemsen, & Vasudeva, 2015;Ketokivi & Ali-Yrkkö, 2009;Mariani, 2002;Tecu, 2013) and that, conversely, the positive effects of R&D on the productivity of manufacturing decrease as the geographical distance between the two activities increases (Adams & Jaffe, 1996), our result seem to confirm the need of better investigating the mutual interdependence between innovation and manufacturing activities, possibly at a finer level of analysis. In fact, innovation and manufacturing comprise a wide variety of activities and the debate on co-location and geographical proximity can be advanced by analysing the interplay between innovation and manufacturing subactivities, as well as specific firm and industry characteristics (Buciuni & Finotto, 2016;Castellani & Lavoratori, 2020;Ketokivi & Ali-Yrkkö, 2009). ...
This paper investigates the role of geographical and temporary proximity in the location and co-location decisions of manufacturing activities by foreign multinational enterprises (MNEs). Empirical analysis shows that foreign MNEs co-locate their new manufacturing plants with their plants already operating in the same manufacturing activity, while geographical proximity exerts a much weaker role when the latter operates in services activities. This is especially true in the case of knowledge-intensive business services, where the travelling and meeting of professionals allows temporary proximity. Moreover, a spatial econometric extension of the analysis confirms a geographical decay effect for intra-firm co-location with activities located in contiguous provinces.
... Policymakers, practitioners, and business leaders are concerned about how the geographical separation of innovation and production might limit a location's subsequent capacity to innovate, and make some regions more vulnerable to economic crises and import competition. This is related to the debate on whether the co-location of R&D and production is important for the performance of nations (Rosenberg 1963;Dertouzos, Lester, and Solow 1989;Porter 1990;Pisano and Shih 2009;Berger 2013), regions (Porter 1998;Delgado, Porter, and Stern 2014), and firms (Adams and Jaffe 1996;Ketokivi and Ali-Yrkkö 2009;Alcacer and Delgado 2016). ...
This paper quantifies the extent of co-location of innovation and production for industry clusters with varying knowledge intensity. If input-output, knowledge, and skill linkages are interdependent and geographically bounded, then we would expect innovation and production to be co-located in regional clusters. However, theory predicts that the degree of agglomeration benefits associated with co-location may vary across economic activities with different knowledge intensity. Using data from the U.S. Cluster Mapping Project, I develop measures of the co-location of innovation and production for 27 industry clusters, examining patterns across regions and over time (1998–2015) in the United States. I find that there is a significant co-location of innovation and production for many clusters, especially for those with higher knowledge intensity. This paper focuses on the Information Technology and Analytical Instruments cluster and the Automotive cluster to illustrate the co-location measures and the micro-geography of innovation and production.
... Policymakers, practitioners, and business leaders are concerned about how the geographical separation of innovation and production might limit a location's subsequent capacity to innovate, and make some regions more vulnerable to economic crises and import competition. This is related to the debate on whether the co-location of R&D and production is 5 important for the performance of nations (Rosenberg, 1963;Dertouzos et al., 1989;Porter 1990;Pisano and Shih, 2009;Porter and Rivkin, 2012;Berger, 2013), regions (Porter, 1998;Delgado, Porter, Stern, 2014;Delgado and Porter, 2018), and firms (Adams and Jaffe, 1996;Ketokivi and Ali-Yrkkö, 2009;Alcacer and Delgado, 2016). ...
This paper quantifies the extent of co-location of innovation and production for industry clusters with varying knowledge intensity. If input-output, knowledge, and skill linkages are interdependent and geographically bounded, then we would expect innovation and production to be co-located in regional clusters. However, theory predicts that the degree of agglomeration benefits associated with co-location may vary across economic activities with different knowledge intensity. Using data from the U.S. Cluster Mapping Project, I develop measures of the co-location of innovation (patenting) and production (employment) for 27 industry clusters, examining patterns across regions and over time (1998-2015) in the United States. I find that there is a significant co-location of innovation and production for many clusters, especially for those with higher knowledge intensity. This paper focuses on the Information Technology and Analytical Instruments cluster and the Automotive cluster to illustrate the co-location measures and the micro-geography of innovation and production.
... Such findings are further supported by Jaffe et al. (2000) and Thompson (2006). Along with the results that spillovers dissipate rapidly with distance (Conley et al., 2003;Moretti, 2004;Adams and Jaffe, 1996), we expect the impact of imitation to be more significant in agglomerated industries. As a byproduct, our results also contribute to the discussion on the policy implications of agglomeration. ...
How do research and development (R&D) investments stimulate the local economy? Our paper complements and extends the voluminous literature on the externalities of R&D investments by looking at internal firm growth across regions and the “spillovers” from R&D workers on other workers within the same firm. More specifically, we examine how R&D investments affect the change in employment and productivity in the same firm over time. We also investigate the differences that come with domestic or foreign ownership. Combining data from the Swedish biennial survey series on R&D with firm and establishment registers, we find that R&D-stimulated growth is a localized phenomenon: firms tend to grow in the same regions where they invest in R&D activities. This link is particularly strong for employment effects. While we find that the positive association between R&D and labor productivity holds for all firms, growth effects on local employment are limited to domestically owned firms, especially in manufacturing. The results strengthen our understanding of the correlation between R&D and firm growth on a local level, and contribute to both the academic and policy debate on the effects of globalization on local economic growth.
Geographic proximity between parties increases personal interactions and enhances the exchange of tacit information vital to success in collaborative innovation. In a sample of 582 joint R&D ventures, we observe that the distance between partners varies widely. Controlling for the self-selection among partners, we find that more geographically proximate parties tend to establish longer contract duration ex ante to address contracting risks associated with the increased sharing of tacit information. We argue that partner proximity in joint R&D leads to the creation of relationship-specific capital. Thus, the operative governance mode when partners are geographically proximate is organizational in nature.
JEL Classification: D23; L24
We model the spatial characteristics of technological knowledge flows in the UK. Using a novel and highly accurate dataset of inventor locations, we test for localisation of knowledge spillovers in citations between UK patent applications from 1982 to 2015. We apply continuous distance localisation tests separately to patent citations in 313 technologies and find that spillovers are localised in far fewer technologies and at shorter distances than previous studies have suggested. Only 30% of technologies in the UK display localisation, knowledge spillovers decay rapidly at distances between 30 and 80 km, and spillovers within technologies are twice as frequently localised as spillovers between technologies. Our results suggest that technological and geographical proximity are important determinants of knowledge spillovers in the UK and that close physical proximity is particularly relevant for industrial sectors that are more reliant on tacit knowledge.
Training is one of the human resource management department's main functions. Education refers to a formal setup where workers are trained and taught work-related technical knowledge issues. This focuses on teaching staff how to use different equipment or how to execute certain tasks in order to increase efficiency. This article is mainly based on secondary data and it reveals the concept of human resource training.
This study focuses on the role of geography in foreign subsidiary survival in host countries afflicted by political conflict. We argue that survival is a function of exposure to conflicts, and depends on the characteristics of place (the conflict zone) and space (geographic concentration and dispersion of other home-country firms). The roles of place and space are explored using street-level analysis of geographic information systems data for 670 Japanese multinational enterprises (MNE) subsidiaries in 25 conflict-afflicted host countries over 1987–2006. Through dynamic modeling of conflict zones as stretchable and shrinkable places relative to subsidiary locations, we develop a means of characterizing a foreign subsidiary’s exposure to multiple threats in its geographic domain. Our results show that greater exposure to geographically defined threats, in both a static and a dynamic sense, reduces the likelihood of MNE survival. The findings indicate, moreover, that both concentration and dispersion with other firms affect survival; however, the effects depend on where the firm is spatially located (whether the firm is in a conflict zone) and with whom (home-country peers or sister subsidiaries).
Fiscal efficiency is determined not only by the municipality’s local characteristics but also by externalities from the neighborhood. In this paper, we study municipalities’ fiscal efficiency and assess the importance of such externalities in shaping local fiscal efficiency. The quantification of externalities is challenging because municipalities interact in complex ways. We build a municipality-specific indicator of externalities that considers the effect of the geographic and social neighborhoods. Externalities tend to increase when municipalities are close and have more significant differences in social development. To analyze the role of externalities in public spending efficiency, we propose a novel way to compare efficiency models by ensuring similarity in their structural properties (inputs, outputs, and orientation). In this situation, when one does not consider the network effect that a specific municipality receives, one could be misevaluating the municipality’s actual efficiency level. We apply our model to Brazilian municipalities and find that socio-economic externalities play an essential role in local public spending efficiency. Many municipalities are deemed efficient when they are not if we do not explicitly consider the effect of externalities on the municipality’s local performance. Our findings highlight the importance of socio-economic cooperation and integration among municipalities as a tool to achieve better fiscal performance.
We introduce and test a firm-level innovation-efficiency measure new to the finance literature. The measure, termed the research quotient (RQ), defined as the firm-specific output elasticity of research and development (R&D), was first developed in the management literature. RQ has a low correlation with existing innovation input, output, and efficiency measures. We test RQ in a number of innovation tests common to the finance literature and find that RQ is robust in all tests of firm value, even after controlling for previous innovation measures. The results suggest that RQ may serve as a relevant complementary measure of a company’s innovation.
When it comes to evaluating the causal effect of public policies on corporate performance, most studies tend to focus exclusively on targeted firms, as if these firms have no relationship to the rest of the economy. Yet, public policies are highly likely to influence non-targeted firms indirectly due to the relationships they have with targeted firms. This paper aims to fill this gap by evaluating the indirect causal effect of a new French cluster-innovation policy on the financial and employment outcomes of non-targeted companies. To do so, it focuses on French Technological Research Institutes, which are science-industry collaborations based on technology platforms that bring together SMEs, large companies, universities, and public research bodies with the goal of accelerating the transfer of knowledge towards firms and generating spillovers (indirect effects) inside and outside the scheme. Based on the literature on spillover effects and agglomeration economies, it can be assumed that industry-specific spillovers tend to be spatially concentrated. By comparing a non-targeted firm located in the NUTS-3 regions within which the policy was implemented (referred to as "treated regions"), to a non-targeted firm outside of these "treated regions", using a difference-in-differences method with fixed effects applied to panel data (2008–2016) combined with a double matching at the NUTS-3 region and firm level, we find that non-targeted firms located in the "treated regions" significantly improve their financial performance (turnover, financial autonomy) compared to control firms located in the NUTS-3 control regions. The dynamics of employment outcomes are ambiguous. A negative significant effect is observed on the proportion of managers at the beginning of the policy and a positive significant effect is noted later, at the end of the period of observation. An analysis of the dynamics of the effects indicates that performance does not improve immediately after the policy, but later in time.
Business R&D spending has been shown to exert both direct and indirect positive effects on value added. Nevertheless, the heterogeneity of the returns to R&D has seldom been examined. Using detailed sectoral data from Czechia over the period 1995–2015, this study finds that privately funded business R&D has both direct and spillover effects, but that the publicly funded part of business R&D only leads to spillovers. The results further suggest that both upstream and downstream spillovers matter, regardless of the source of funding, and that during the period studied, R&D returns were heavily affected by the economic crisis. Lastly, private R&D offers significant returns only after reaching a critical mass, while the effects of public R&D spending do not display such non-linearity. This heterogeneity in the returns to business R&D should be reflected in innovation policy design.
Purpose
The purpose of this paper is to examine firms’ knowledge-sourcing behavior in green technology development with respect to the home country’s market- vs nonmarket environmental policy stringency.
Design/methodology/approach
This paper empirically analyzes the effects of market and nonmarket environmental policy stringency on firms’ knowledge sourcing activity with patent data from OECD countries during 1991–2010, across five categories of green technologies.
Findings
When a nation establishes more stringent market environmental policies, firms likely source more international knowledge rather than domestic knowledge about green technology, up to a point. After that level, this balance shifts (inverted U-shaped curve) due to the risks associated with greater investment costs and commerciality. Nonmarket environmental policies instead should exhibit a positive, linear relationship with international relative to domestic knowledge sourcing. This study also reveals the dynamic roles of a firm’s green technological capability with market-based environmental policy stringency and a substitutive role of the capability with nonmarket-based environmental policy stringency.
Research limitations/implications
This study shows the effect of market and nonmarket environmental policy stringency on firms’ knowledge sourcing. The findings provide meaningful implications for policymakers regarding the optimal levels of market and nonmarket environmental policy stringency that will enhance their countries’ green technology development.
Originality/value
This paper enriches the literature of environmental policy and knowledge sourcing and offers the direction of future research of how environmental policy stringency influences a firm’s knowledge sourcing for green technology development.
This chapter analyses the role of traditional factors associated with Marshallian and Jacobsian economies (i.e. external agglomeration) and the role of factors associated to the intra-firm co-location of activities (i.e. internal agglomeration) in influencing location decisions of multinational enterprises (MNEs) within a foreign country. Our empirical analysis considers the location decision of 447 new greenfield investments in manufacturing activities by 384 foreign MNEs in Italy, throughout the period 1998–2012, at a sub-national NUTS-3 level. Findings from a conditional logit model confirm that (1) both external and internal agglomeration economies have a strong effect on MNEs’ location decisions and (2) once allowing for intra-firm co-location, the influence of external forces decreases. Additionally, results obtained through spatial econometrics techniques show a strong spatial decay effect both for the effects associated with intra-firm co-location in contiguous provinces and for the traditional Marshallian forces. Conversely, the benefits of diversity (Jacobsian economies) cross province geographical boundaries.
Internationalization of R&D and innovation by multinational enterprises (MNEs) has undergone a gradual and comprehensive change in perspective over the past 50 years. From sporadic works in the late 1950s and in the 1960s, it became a systematically analyzed topic in the 1970s, starting with pioneering reports and “foundation texts”. Our review unfolds the theoretical and empirical evolution of the literature from dyadic interpretations of centralization versus decentralization of R&D by MNEs to more comprehensive frameworks, wherein established MNEs from advanced economies still play a pivotal role, but new players and places also emerge in the global generation and diffusion of knowledge. Hence, views of R&D internationalization increasingly rely on concepts, ideas, and methods from IB and other related disciplines such as industrial organization, international economics, and economic geography. Two main findings are highlighted. First, scholarly research pays increasing attention to the network-like characteristics of international R&D activities. Second, different streams of literature have emphasized the role of location-specific factors in R&D internationalization. The increasing emphasis on these aspects has created new research opportunities in some key areas, including inter alia: cross-border knowledge-sourcing strategies, changes in the geography of R&D and innovation, and the international fragmentation of production and R&D activities.
Although many studies on FDI spillovers either implicitly or explicitly consider the firm as a single-location entity, most countries are dominated by multi-location business groups that consist of several affiliates. Business groups and their affiliates operate in different subnational regions and vary in their responsibilities (i.e., research and development, manufacturing, and marketing & sales) as well as in their ability to coordinate internally and minimize spatial transaction costs. We argue that such variations in turn affect the ability of business groups to benefit from intra- and inter-regional FDI spillovers. We advance prior research by examining how the effects of FDI spillovers on the performance of indigenous business groups in China are influenced by 1) the location and the geographic dispersion of their portfolios of affiliates and 2) the responsibility of each affiliate. Our analysis shows that the geographic dispersion of business groups has a profound effect on how much they benefit from FDI spillovers. It also shows that business groups are particularly effective in exploiting FDI spillovers through affiliates with marketing & sales responsibilities, while affiliates with other responsibilities are not effective in doing so.
At present, China's PV industry is experiencing a policy-driven to market-driven transition. Whether the endogenous driving force for China's PV industry output growth has been changed is a question of substantial concern? To scientifically answer the question of the endogenous driving force of the output growth of China's PV industry, we empirically analyse the driving force of China's PV industry output growth by constructing an expanded Cobb-Douglas technology production function. The results demonstrate that the output elasticity of research and development (R&D) is between 0.13 and 0.18, which is higher than the level of 0.1 in traditional Chinese manufacturing. Compared with traditional industries, PV industries are more capable of translating their R&D inputs into output revenue; The contribution rate of R&D input to output growth exceeds physical capital and labour factors, indicating that the endogenous driving force of China's PV industry output growth has changed from factor-driven to technological innovation-driven.
This paper examines Korean universities’ responses to coercive pressures from the government towards neoliberal reforms. Unlike the general perception that coercive pressures from the government have a sweeping effect for all the organizations of the field, this paper shows variations among organizations in the adoption of a new practice promoted by the government. To explain this unexpected variation, we propose a theoretical framework of multi-level and multi-faceted institutional dynamics. Our empirical analysis shows that Korean universities’ adoption of admission officer system as a representative neoliberal global-standard practice varies depending on societal-level normative neoliberal discourses, field-level mimetic isomorphism among adjacent universities, and organization-level functional necessity.
Green innovation is the main force to drive China’s intensive pollution industries (IPIs) into sustainable development. Improving green innovation efficiency (GIE) is an effective way to reach this goal. The correct approach to measuring IPIs’ GIE and its influencing factors is a hot issue. Based on the panel data of China’s 21 subdivided industries of IPIs over the period from 2011 to 2015, this paper applies the Super-Slack-Based Measurement (Super-SBM) and Tobit model to analyse IPIs’ GIE and its influencing factors, respectively. The results show that IPIs’ overall efficiency fluctuates around 0.67 in the first 4 years and increases to 0.776 in 2015, failing to be DEA-efficient; there are obvious gaps in GIE between the 21 industries, and the ferrous metal smelting and calendering industry has the weakest GIE. The regression results show that, government R&D support and environmental regulation have inverted U-shaped and U-shaped relationship with IPIs’ GIE, respectively. Foreign market demand and market competition have significant positive and negative impacts on GIE, respectively, but the impact of market openness is not significant. The results suggest that (1) Chinese government should increase R&D support for IPIs, especially for those with low GIE, and strengthen supervision of the use of government R&D funds to avoid the crowding-out effect, (2) strengthen the intensity of environmental supervision and enforcement of environmental regulation policies, (3) improve environmental protection standards and preferential policies for exportation at the same time, (4) promote industrial restructuring and improve the mechanism of resource and benefit sharing to promote the flow of innovative resources and diffusion of innovative achievements.
As Mohnen (1996: 40) has indicated, research and development (R&D) externalities is a two-sided theoretical issue. Its ‘dark’ side concerns the under-investment problem caused by non-appropriability of R&D benefits. On the ‘bright’ side, R&D spillovers are a source of productivity gains. Both aspects have been invoked to justify public support for R&D investment directly and indirectly. To establish whether public support can be justified due to productivity gains from spillovers, we meta-analyse 983 productivity estimates for spillovers and 501 estimates for own-R&D from 60 empirical studies. Our findings indicate that the average spillover effect is: (i) positive but heterogenous and smaller than what is reported in most narrative reviews; (ii) usually smaller than that of own-R&D capital; (iii) too small to be practically significant when evidence with adequate statistical power is considered. Controlling for observable sources of heterogeneity and best-practice research, the meta-effect is insignificant in the full sample but significant and large among OECD firms/industries/countries. We discuss the implications of these findings for future research and public support for R&D investment.
The so‐called “new growth theory” is characterized by the now Nobel Prize winning insight that ideas are a nonrival input to and output from endogenous investment in innovation. Nonrivalry implies increasing returns to scale, but this also unintentionally creates an empirically disputed scale effect that a growing population implies an ever‐increasing growth rate. Empirical evidence supports fully‐endogenous growth without scale effects, but theoretical issues sustain the decades‐long dispute over exactly how to negate the scale effect. This article surveys theoretical approaches to resolving the scale effect and shows how four generations of endogenous growth theory are defined by the maturing of modeling techniques for constraining increasing returns. The synthesis suggests that the dispute over scale effects is really a narrative about how the powerful application of increasing returns has followed a standard theoretical development pattern. This implies that a fourth generation is now emerging that negates the scale effect while retaining fully‐endogenous growth without relying on assumptions of linearity. Instead, the market response to excessive increasing returns to innovation constrains explosive growth by expanding the market, rather than by a linear assumption. This latest class of endogenous growth models may be the final chapter to resolving the long‐running dispute.
En France, comme dans de nombreux pays, les dernières décennies ont été fortement marquées par le dynamisme et l’étalement des métropoles, qui concentrent à la fois des fonctions décisionnelles, des fonctions productives à haute valeur ajoutée, ainsi que des populations qualifiées, et bénéficient, dès lors, d’économies d’agglomération. Si la contribution de ces métropoles à la richesse nationale est majeure, le phénomène de métropolisation tend à accentuer les inégalités territoriales. Encouragés par les récentes réformes territoriales, et notamment les lois NOTRe et MAPTAM, le renforcement du rôle des régions, leur élargissement, et l’affirmation des métropoles, posent avec encore plus d’acuité les questions du développement territorial, des territoires d’action pertinents et de la répartition des richesses au sein de l’espace régional.La région Midi-Pyrénées ne fait pas exception à ce phénomène de métropolisation tant le dynamisme, le rayonnement et la croissance urbaine de Toulouse sont notables. De plus, son hétérogénéité infrarégionale en fait un terrain d’étude favorable pour saisir les nouveaux enjeux territoriaux qu’impose ce phénomène de métropolisation : une polarisation croissante des activités, une démographie différenciée, une croissance économique freinée par la « tyrannie de la distance », une répartition spatiale inégale des qualifications et des productivités, ou encore une structure urbaine polycentrique.Aussi, aujourd’hui, réussir à combiner un dynamisme métropolitain entraînant, avec des dynamismes territoriaux différenciés, ainsi qu’une politique territoriale pertinente et coopérative, semble être le défi à relever pour tendre vers davantage d’équité territoriale.
We compare the geographic location of patent citations with that of the cited patents, as evidence of the extent to which
knowledge spillovers are geographically localized. We find that citations to domestic patents are more likely to be domestic,
and more likely to come from the same state and SMSA as the cited patents, compared with a “control frequency” reflecting
the pre-existing concentration of related research activity. These effects are particularly significant at the local (SMSA)
level. Localization fades over time, but only very slowly. There is no evidence that more “basic” inventions diffuse more
rapidly than others.
The authors assume that firms invest in R&D not only to generate innovations, but also to learn from competitors and extraindustry knowledge sources (e.g., university and government labs). This argument suggests that the ease of learning within an industry will both affect R&D spending, and condition the influence of appropriability and technological opportunity conditions on R&D. For example, they show that, contrary to the traditional result, intraindustry spillovers may encourage equilibrium industry R&D investment. Regression results confirm that the impact of appropriability and technological opportunity conditions on R&D is influenced by the ease and character of learning. Copyright 1989 by Royal Economic Society.
Panel data based studies in econometrics use the analysis of covariance approach to control for various ‘individual effects’ by estimating coefficients from the ‘within’ dimension of the data. Often, however, the results are unsatisfactory, with ‘too low’ and insignificant coefficients. Errors of measurement in the independent variables whose relative importance gets magnified in the within dimension are then blamed for this outcome.Errors-in-variables models have not been used widely, in part because they seem to require extraneous information to be identified. We show how a variety of errors-in-variables models may be identifiable and estimable in panel data without the use of external instruments and apply it to a relatively simple but not uninteresting case: the estimation of ‘labor demand’ relationships, also known as the ‘short-run increasing returns to scale’ puzzle.
This paper considers the prospects for constructing a neoclassical theory of growth and international trade that is consistent with some of the main features of economic development. Three models are considered and compared to evidence: a model emphasizing physical capital accumulation and technological change, a model emphasizing human capital accumulation through schooling, and a model emphasizing specialized human capital accumulation through learning-by-doing.
Growth in this model is driven by technological change that arises from intentional investment decisions made by profit-maximizing agents. The distinguishing feature of the technology as an input is that it is not a conventional good or a public good; it is a nonrival, partially excludable good. Because of the noconvexity introduced by a nonrival good, price-taking competition cannot be supported. Instead, the equilibrium is one with monopolistic competition. The main conclusions are that the stock of human capital determines the rate of growth, that too little human capital is devoted to research in equilibrium, that integration into world markets will increase growth rates, and that a large population is not sufficient to generate growth. Copyright 1990 by University of Chicago Press.
We show that limitation of firm size caused by loss of control across hierarchic levels depends crucially on the nature of the supervision process. If the employees cannot identify the times at which their performance is monitored, there is no limit imposed on the firm size by the heights of the hierarchical structure. "Loss of control" may impose such a limit if the employees are aware of the times at which they are being monitored. The analysis also shows the rationale for hierarchical wage differentials for essentially identical employees.
There is a great deal of evidence that almost all organizational structures tend to produce false images in the decision-maker, and that the larger and more authoritarian the organization, the better the chance that its top decision-makers will be operating in purely imaginary worlds. This perhaps is the most fundamental reason for supposing that there are ultimately diminishing returns to scale.
In this article I present an alternative specification of knowledge production and derive a structural econometric model with some desirable properties. I provide a simple and less data-intensive framework for empirical studies of the relationship between firm performance and R&D. The main empirical findings are as follows: (i) R&D has a positive effect on performance, (ii) the appropriable part of knowledge capital depreciates at a rate of .2, (iii) there are significant spillover effects of R&D across lines of business within a firm, and (iv) there are significant spillovers in R&D across firms that belong to the same interlocking group of firms.
In this article I derive a structural econometric model of learning by doing from a dynamic oligopoly game. Unlike previous empirical models, this model is capable of testing hypotheses concerning both the technological nature and strategic implications of learning. I estimate the model with firm-level data from the early U.S. rayon industry. The empirical results show that there were considerable differences across firms in both proprietary and spillover learning. The results also indicate that the two leading firms took their rival's reactions into account when choosing their strategies.
This article analyzes R&D policies when the returns to cost-reducing and demand-creating R&D are imperfectly appropriable and market structure is endogenous. We generalize previous characterizations of appropriability to permit the possibility that own and rival R&D are imperfect substitutes. We also describe how equilibrium expenditures on process and product R&D, as well as equilibrium market structure, depend on technological opportunities and spillovers. In contrast to previous work, diminished appropriability does not necessarily reduce R&D expenditures. For example, under some conditions, an increase in the extent of process (product) spillovers will lead to an increase in product (process) R&D. We estimate several variants of the model by using manufacturing line-of-business data and data from a survey of R&D executives.
This article outlines the production function approach to the estimation of the returns to R&D and then proceeds to discuss in turn two very difficult problems: the measurement of output in R&D intensive industries and the definition and measurement of the stock R&D "capital." The latter concept leads to a discussion of modeling of the spillover effects of R&D and to suggestions for possible measurement of such effects via the concept of technological distance between firms and industries. Somewhat more familiar econometric problems (multicollinearity and simultaneity) are taken up in the next section and another section is devoted to estimation and inference problems arising more specifically in the R&D context. Several recent studies of returns to R&D are then surveyed, and the paper concludes with a plea for a lowering of expectations as to what the available data can tell us and with suggestions for ways of expanding the current data base in this field.
This paper models strategic behavior within firms. The principal (e.g., the firm's owner) is handicapped by not knowing as much about the firm's capabilities as the agent(s) (e.g., the manager). The agent can extract some rents from his private information. The principal can retrieve some of these rents at the expense of introducing a distortion, paying the agent less than the full value of his marginal product. As a result the firm operates inefficiently. The degree of this inefficiency varies with demand elasticity and with the length of the firm's managerial hierarchy. The costs of operating the hierarchy create a limit to the size of the firm.
Our purpose in this paper is to investigate the economics of managerial organizations by focusing on the decision problem of management. Ours is a "team theory" analysis, that is, it ignores the problem of conflicting objectives among managers and focuses instead on the problem of coordinating the decisions of several imperfectly informed actors. However, unlike classical team theory, we concentrate on the choice by managers of what to know, as well as what to do, and we allow the possibility that bounded rationality limits the managers' ability to understand subtle messages.