Showing papers in "Industrial and Corporate Change in 2015"
TL;DR: In this paper, the authors investigated whether technological relatedness at the city level was crucial driving force behind technological change in 366 US cities from 1981 to 2010, and they found that the entry probability of a new technology in a city increased by 30% if the level of relatedness with existing technologies in the city increases by 10%, while the exit probability of an existing technology decreased by 8%.
Abstract: This article investigates by means of US Patent and Trademark Office (USPTO) patent data whether technological relatedness at the city level was a crucial driving force behind technological change in 366 US cities from 1981 to 2010. Based on a three-way fixed-effects model, we find that the entry probability of a new technology in a city increases by 30% if the level of relatedness with existing technologies in the city increases by 10%, while the exit probability of an existing technology decreases by 8%.
312 citations
TL;DR: In this paper, the authors investigate the business model configurations associated with high and low firm performance by conducting a qualitative comparative analysis of firms competing in Formula One racing and find that configurations of two business models-one focused on selling technology to competitors, the other one focused on developing and trading human resources with competitors-are associated with a high performance.
Abstract: We investigate the business model configurations associated with high and low firm performance by conducting a qualitative comparative analysis of firms competing in Formula One racing. We find that configurations of two business models-one focused on selling technology to competitors, the other one on developing and trading human resources with competitors-are associated with high performance. We also investigate why these configurations are high-performing and find that they are underpinned by capability-enhancing complementarities, accelerating firms' learning and supporting the development of focused firms' capabilities.
130 citations
TL;DR: In this article, the authors analyzed the comprehensive 35-year patent data set associated with the Detroit auto cluster and confirmed that innovation in clusters can increase in spite of a long-term decline in manufacturing activity.
Abstract: Analyzing the comprehensive 35-year patent data set associated with the Detroit auto cluster we confirm that innovation in clusters can increase in spite of a long-term decline in manufacturing activity. The “stickiness” of local knowledge is sustained by: (i) increasing technological specialization at the local level and (ii) growing connectedness to global centers of excellence. The very forces that bring about the decline in manufacturing in a cluster sustain their position as a global center of innovative excellence
116 citations
TL;DR: The results illustrate how inventive success and particularly breakthroughs require a difficult combination of the reuse of familiar components and recombinant creativity, i.e. the ability to recombine the familiar components in new ways.
Abstract: Interpreting technological invention as a recombinant search process, we study the effect of combining formerly uncombined but familiar technology components on the likelihood of creating more useful inventions. For evidence, we consider 26 years of the US patent record in biotechnology. We find that the creation of new combinations of components not only stimulates average usefulness, but also leads to a significantly higher likelihood of breakthroughs, while reducing the probability of failure. Interaction effects illustrate how reusing more familiar components continues to foster the creation of more useful and breakthrough inventions while lowering failure but only as long as the familiar components are recombined in unprecedented ways. Yet, more familiar components are less likely to be used in new combinations and as such are more likely to be associated with a familiarity trap. Our results therefore illustrate how inventive success and particularly breakthroughs require a difficult combination of the reuse of familiar components and recombinant creativity, i.e. the ability to recombine the familiar components in new ways
107 citations
TL;DR: In this article, the authors investigate the effect of public (PUVC) and private (PRVC) venture capital funds on the sales growth of European New Technology-Based Firms (NTBFs) during the period from 1992 to 2009.
Abstract: We investigate the effect of public (PUVC) and private (PRVC) venture capital funds on the sales growth of 6513 European New Technology-Based Firms (NTBFs) during the period from 1992 to 2009. Our results show that PUVC-backed NTBFs underperform with respect to PRVC-backed ones and do not grow more than non–venture capital-backed companies. The impact of PUVC is still not statistically significant (even though it is positive) when PUVC funds target young NTBFs. The only notable exception suggesting a positive and statistically significant impact for PUVCs is when PUVC funds cofinance with PRVC funds, and both target young firms
100 citations
TL;DR: In this paper, a large sample of R&D-active manufacturing firms over the period 2000-2009 was used to show that knowledge alliances have a positive effect on patenting in terms of both quantity and quality.
Abstract: This study shows for a large sample of R&D-active manufacturing firms over the period 2000-2009 that knowledge alliances have a positive effect on patenting in terms of both quantity and quality. However, when distinguishing between alliances that aim at joint creation of new knowledge and alliances that aim at the exchange of knowledge, results suggest that creation alliances lead to more valuable patents as they receive more forward citations per patent. Knowledge exchange alliances increase patent quantity, but not quality.
99 citations
TL;DR: This paper developed a theoretical model in which the quality of a firm's employees determines its average cost, a firm’s productivity is based on its pre-entry experience and persistent shocks, and over time firms learn about their productivity.
Abstract: Using the matched employer–employee data set for Denmark and information on the founders of new firms, we analyze the hiring choices of all new firms that entered from 2003 to 2010. We develop a theoretical model in which the quality of a firm’s employees determines its average cost, a firm’s productivity is based on its pre-entry experience and persistent shocks, and over time firms learn about their productivity. The model predicts that more productive firms are larger and hire more talented employees, which gives rise to various predictions about how pre-entry experience, firm growth rates, and firm size influence the wages firms pay to their early hires. We find that beginning with the time of entry, larger firms consistently pay higher wages to their new hires. These are firms with greater survival prospects at the time of entry based on the pre-entry backgrounds of their founders and that grow at greater rates over time, both of which are predictive of the wages paid to new hires from the time of entry onward. Our findings suggest workers are allocated to firms according to their abilities, which can give rise to enduring firm capabilities
77 citations
TL;DR: In this paper, the authors examined the relationship between industry sponsorship and restrictions on disclosure using individual-level data on German academic researchers and found that industry sponsorship jeopardizes public disclosure of academic research.
Abstract: The viability of modern open science norms and practices depend on public disclosure of new knowledge, methods, and materials. Aggregate data from the OECD show a broad shift in the institutional financing structure that supports academic research from public to private sponsorship. This article examines the relationship between industry sponsorship and restrictions on disclosure using individual-level data on German academic researchers. Accounting for self-selection into extramural sponsorship, our evidence strongly supports the perspective that industry sponsorship jeopardizes public disclosure of academic research.
69 citations
TL;DR: In this article, an Italian program of subsidies for the applied development of innovations, exploiting a discontinuity in program financing due to an unexpected shortage of public money, is investigated. But the results indicate that the program was not effective in stimulating innovative investment.
Abstract: To evaluate the effect of an R&D subsidy, one needs to know what the subsidized firms would have done without the incentive. This article studies an Italian program of subsidies for the applied development of innovations, exploiting a discontinuity in program financing due to an unexpected shortage of public money. To identify the effect of the program, the study implements a regression discontinuity design and compares firms that applied before and after the shortage occurred. The results indicate that the program was not effective in stimulating innovative investment
62 citations
TL;DR: DC gratefully acknowledges financial supports from the European Commission (FP7-PEOPLE-IEF-2008-235278) and the European Parliament (PEOPLE).
Abstract: DC gratefully acknowledges Financial supports from the European Commission (FP7-PEOPLE-IEF-2008-235278).
61 citations
TL;DR: In this article, the effect of research and development on different innovation outputs is analyzed using firm-level data, and it is shown that research activities are more important for product innovation than for process innovation.
Abstract: R&D is considered to be the main source of innovation. We argue that R&D is too broad a measure, including activities differing in purposes, culture, people, management and other features. However, empirical studies have not analyzed them separately, mainly due to the lack of data. Using firm-level data, the aim of this paper is to estimate the differentiated effect of research and development on different innovation outputs. Results show that both research and development activities are important. However, we find that development activities are more important for product innovation, while the effect of research activities is higher on process innovation. Moreover, we analyze differences by technological intensity of the sector. When analyzing product and process innovations, we find evidence supporting the existence of higher payoffs to development and, especially to research in low-tech sectors when compared with high-tech ones.
TL;DR: In this paper, the authors apply the lens of change and stability to two stages of the innovation lifecycle: (i) knowledge generation; and (ii) the diffusion of innovations.
Abstract: This introduction to this special section establishes the context within which automotive firms cope with turbulence caused by globalization, new governmental regulations, and advances in electronics, communication, and drive train technologies. While exploring change, the papers in the special section also report on stability, e.g. in the central role of Original Equipment Manufacturers in system integration and their resulting dominance over product architecture and supply chain dynamics. We apply the lens of change and stability to two stages of the innovation lifecycle: (i) knowledge generation; and (ii) the diffusion of innovations. The papers, organized along these dimensions, help us understand how and why automotive firms are changing their ways of innovating, but also why past patterns of innovative behavior persist. We close with an outlook on future research topics to complement this special section
TL;DR: In this paper, the authors investigated the microeconomics underlying the spectacular growth of productivity in China's manufacturing sector over the period 1998-2007 and highlighted the importance of the transformation of domestic firms as drivers of technical learning.
Abstract: This article investigates the microeconomics underlying the spectacular growth of productivity in China’s manufacturing sector over the period 1998–2007. Underlying the aggregate evidence of such dramatic growth, one observes a large, albeit shrinking, intra-sectoral heterogeneity coupled with an even more important process of learning and knowledge accumulation. A major process of both catching-up and dying out among the least efficient ones occurs. Furthermore, we explore the effect of the characteristics of firms according to the ownership and governance structure upon the productivity distributions, highlighting the importance of the transformation of domestic firms as drivers of technical learning. In essence, China’s fast catching-up process entails more of learning and “creative restructuring” of domestic firms rather than sheer “creative destruction” and even less so a multinational corporation-led drive.
TL;DR: This paper explored changes in the organization of work in European nations over 2000-2010 and found that during economic expansion periods tend to be discretionary learning enhancing, while periods of economic stagnation tend to reinforce the use of more hierarchical forms of work organization.
Abstract: This article explores changes in the organization of work in European nations over 2000–2010. Results show a decline in the Discretionary Learning (DL). Periods of economic expansion tend to be DL enhancing, while periods of economic stagnation tend to reinforce the use of more hierarchical forms of work organization. More generally, the results show that cross-country comparisons do not provide a sound basis for drawing conclusions about how the evolution of national labor market policies impact on changes in work organization over time within nations
TL;DR: In this article, the authors analyzed the impact of patent bibliographic indicators and patent characteristics on the economic value of patents put on sale in an auction, considering different typologies of sellers and buyers.
Abstract: This article analyzes the impact of patent bibliographic indicators and patent characteristics on the economic value of patents put on sale in an auction, considering different typologies of sellers and buyers. A unique data set covering all patent auctions held until the end of 2008 by Ocean Tomo is used. We employ two measures of patent value drawn from the auction process: the offer price (ex ante value set by the seller) and the closing price (the market value determined by the buyers) of patent lots. We find a positive correlation between forward citations and the economic value of patents (in terms of both the lot offer price and the lot closing price), while backward citations have a positive and significant impact only on the lot offer price. The number of claims is positively related to the lot closing price and the effect is significant only for the fraction of buyers who are nonpracticing entities. The degree of technological congruence of the patents included in a lot turns out to be positively associated with the probability that the lot is sold and has a positive effect on both the lot offer price and the lot closing price. We also find a significant impact of the extent of the residual life of patents on the lot closing price. The effect is driven by the subsample of nonpracticing entities as buyers. Finally, the extension of patent protection to other jurisdictions, as captured by the size of the patent family, is positively associated with both the lot offer price and the lot closing price.
TL;DR: In this article, the authors examine how productivity eects of human capital and innovation vary at different points of the conditional productivity distribution, and find that the returns to human capital increase with proximity to the technological frontier in industries with a low level of technological intensity.
Abstract: This paper examines how productivity eects of human capital and innovation vary at dierent points of the conditional productivity distribution. Our analysis draws upon two large unbalanced panels of 6,634 enterprises in Germany and 14,586 enterprises in the Netherlands over the period 2000-2008, considering 5 manufacturing and services industries that dier in the level of technological intensity. Industries in the Netherlands are characterized by a larger average proportion of high-skilled employees and indus- tries in Germany by a more unequal distribution of human capital intensity. Except for low-technology manufacturing, average innovation performance is higher in all industries in Germany and the innova- tion performance distributions are more dispersed in the Netherlands. In both countries, we observe non-linearities in the productivity eects of investing in product innovation in the majority of indus- tries. Frontier …rms enjoy the highest returns to product innovation whereas the most negative returns to process innovation are observed in the best-performing enterprises of most industries. In both countries, we …nd that the returns to human capital increase with proximity to the technological frontier in industries with a low level of technological intensity. Strikingly, a negative complementarity eect between human capital and proximity to the technological frontier is observed in knowledge-intensive services, which is most pronounced for the Netherlands. Suggestive evidence for the latter points to a winner-takes-all interpretation of this …nding.
TL;DR: In this article, the authors provide an assessment of Klepper's theoretical and empirical work on industry clustering and discuss what questions on industry location are still left open or in need of more evidence in the context of Kleppers' theory.
Abstract: Steven Klepper's theory of industry clustering based on organizational reproduction and inheritance through spinoffs challenged the Marshallian view on industry clustering. This article provides an assessment of Klepper's theoretical and empirical work on industry clustering. We explore how "new" his spinoff theory on industry clustering was, and we investigate the impact of Klepper's theory on the economic geography community. Klepper's work has inspired especially recent literature on regional branching that argues that new industries grow out of and recombine capabilities from local related industries. Finally, the article discusses what questions on industry location are still left open or in need of more evidence in the context of Klepper's theory. (Less)
TL;DR: In this paper, the authors examined information and communication technologies (ICT) adoption among 3759 Colombian manufacturing firms to identify factors that are pertinent to the adoption and usage of ICT at the firm level.
Abstract: This study examines information and communication technologies (ICT) adoption among 3759 Colombian manufacturing firms to identify factors that are pertinent to the adoption and usage of ICT at the firm level. This article also attempts to ascertain if the determinants of a firm's ICT adoption vary across the firm size. Our major findings show that three main factors are complementary to a firm's ICT adoption: human capital, organizational changes, and innovation results. Also, firms facing competition in markets abroad are more likely to adopt ICT. Information spillover within the industry is also identified as a determinant of ICT adoptions by firms.
TL;DR: In this article, the authors examined how the innovation performance of European firms changes when they begin to internationalize their R&D activities and found that firms with a greater number of previous innovations are more likely to begin international R&DI activities and that a weaker increase in the technological diversity of innovation activities.
Abstract: The internationalization of corporate research and development (R&D) activities is a growing phenomenon, but previous empirical studies provide inconclusive evidence of its effects on the innovation performance of firms. This article examines how the innovation performance of European firms changes when they begin to internationalize their R&D activities. Propensity score matching and difference-in-differences methods are applied to control for self-selection and to estimate the causal effect of R&D internationalization. Patent inventor data are used to track the locations of corporate R&D activities. Information on patent applications, patent citations, and technological fields is used to measure innovation output, quality, and diversity, respectively. The results indicate that firms with a greater number of previous innovations are more likely to begin international R&D activities. Moreover, beginning R&D internationalization further increases the innovative output of firms. The results also indicate a weaker increase in the technological diversity of innovation activities. In contrast, the difference in the average quality of innovations in favor of international firms is shown to be due to self-selection.
TL;DR: In this paper, the authors suggest that the evolution of vertical firm structure depends on contextual factors that differ in their impact across industries and produce different patterns of vertical firms' structure, and that these contextual factors make it possible to account for specific features of the evolution in vertical firm structures using a systematic approach that evaluates the same contextual factors in every industry.
Abstract: The analysis presented here suggests that the evolution of vertical firm structure depends on contextual factors that differ in their impact across industries and produce different patterns of vertical firm structure. These contextual factors make it possible to account for specific features of the evolution of vertical firm structure using a systematic approach that evaluates the same contextual factors in every industry. The automobile and aluminum industries illustrate how these contextual factors can explain the evolution of vertical firm structure
TL;DR: In this paper, the diffusion and integration of external knowledge by distinguishing between the depth and breadth of technological knowledge in combination with the type of partner and channel of exchange was analyzed using a latent variable structural equation model with a sample of 202 US biotechnology firms.
Abstract: We analyze the diffusion and integration of external knowledge by distinguishing between the depth and breadth of technological knowledge in combination with the type of partner and channel of exchange. Using a latent variable structural equation model with a sample of 202 US biotechnology firms between 1990 and 2009, we investigate the extent to which the mergers and acquisitions with different partners contribute to the depth and breadth of the focal firm’s knowledge base. Our analysis also addresses potential endogeneity issues and shows that acquisitions of related firms mainly increase the depth of knowledge, while acquisitions of unrelated firms develop the breadth of knowledge.
TL;DR: The authors found that internally promoted top managers are associated with significant higher innovative activity compared with their externally hired colleagues, consistent with the notion that firm-specific knowledge of inside top managers is relatively more important to facilitate innovative firm activities than experiences from outside the firm.
Abstract: The decision whether to hire a new CEO from outside the firm or to promote an internal candidate is considered among scholars and practitioners as highly influential for subsequent strategy setting and a firm’s innovativeness. Our empirical investigation shows that internally promoted top managers are associated with significant higher innovative activity compared with their externally hired colleagues. Our findings are consistent with the notion that firm-specific knowledge of inside top managers is relatively more important to facilitate innovative firm activities than experiences from outside the firm. However, we also note that outsiders are often hired for reasons that may not coincide with the objective to promote innovations in first place
TL;DR: In this paper, the authors propose three management levers for SDI scale-up: autonomous spanning units, a portfolio of viable local systems, and concurrent platform management, based on a 7-year participating observation of an ambitious Renault program, targeting the development and scaling-up of four electric vehicles.
Abstract: Some innovations are challenging to deploy because they destabilize existing technologies and value chains (systemic) as well as traditional customer preferences (disruptive). The existing literature does not provide clear guidance as to effective management methods for systemic and disruptive innovations (SDIs). We build on a unique set of in-depth data, based on a 7-year participating observation of an ambitious Renault program, targeting the development and scale-up of four electric vehicles. We propose three management levers for SDI scale-up: autonomous spanning units, a portfolio of viable local systems, and concurrent platform management
TL;DR: In this paper, the short-term effects of downsizing on operational and financial performance of large German firms were studied and it was shown that productivity and profitability after downsizing are comparable to their pre-downsizing levels.
Abstract: This article uses a unique data set to study the short-term effects of downsizing on operational and financial performance of large German firms. In general, productivity and profitability after downsizing are—at the best—comparable to their pre-downsizing levels. During the downsizing event, the performance even drops. Moreover, we make a distinction between firms downsizing because of a business downturn and firms downsizing to increase efficiency. Especially downsizing for the latter firms appears to be unsuccessful
TL;DR: This article found that institutionalized socialization practices are associated with the not-invented-here (NIH) syndrome in highly technologically specialized companies and that such practices might also contribute to a biased perception of internally generated knowledge and therefore to a greater reluctance to adopt external knowledge.
Abstract: Management literature highlights several potential benefits of institutionalized socialization practices that attempt to increase cohesiveness among employees. This article posits that such practices might also contribute to a biased perception of internally generated knowledge and therefore to a greater reluctance to adopt external knowledge, enhancing the so-called not-invented-here (NIH) syndrome. Drawing on multi-informant survey data, the authors find that institutionalized socialization practices are associated with the NIH syndrome. This association is, however, muted in highly technologically specialized companies.
TL;DR: In this paper, the authors investigate the impact of universities' regulation of knowledge transfer activities on the institutional capability to raise funding from research contracts and consultancies, based on extensive department-level data on university funding.
Abstract: In a context characterized by public spending reviews and research funding shortages, governments in several countries are putting pressure on universities to increase their applied research activity, intensify their interaction with industry, and attract funding from the nonacademic domain. The economic literature provides rich evidence on the convergence between institutional factors and individual-level characteristics that are influencing university involvement in knowledge transfer activities. The aim of this article is to investigate the impact of universities’ regulation of knowledge transfer activities on the institutional capability to raise funding from research contracts and consultancies. Based on extensive department-level data on university funding, we address the characteristics of institutional knowledge transfer practices and investigate how these activities influence the intensity of funding to Italian universities
TL;DR: In this article, the authors analyze the pattern of mutual causation of technological and organizational innovations and contribute to the understanding of their interdependencies by means of a test of necessary and sufficient conditions for the presence of sequential versus simultaneous complementarity.
Abstract: It is generally suggested that technological and organizational innovations, being complementary, need to be adopted simultaneously. Nevertheless, sequential rather than simultaneous adoption of these two types of innovation may be optimal. In this paper, we analyze the pattern of mutual causation of technological and organizational innovations and contribute to the understanding of their interdependencies. By the means of a test of necessary and sufficient conditions for the presence of sequential versus simultaneous complementarity, we explore the adoption of two allegedly complementary innovations in the sphere of design, namely, computer-aided design/manufacture equipment (CAD) and inter-organizational design teams with customers and suppliers (JOD). The evidence is drowned upon a longitudinal sample of Italian manufacturing plants observed over 27 years (1970–1996). We find that simultaneous adoption of the two innovations under consideration is unlikely while the likelihood of JOD adoption increases having adopted CAD. The results highlight the driving role of technological innovations, and notably of the decline in the price of IT equipment, upon the diffusion of complementary organizational innovations.
TL;DR: In this article, the impact of patent litigation on the firms involved in patent litigation suits is analyzed and it is shown that small and unexperienced firms are at a disadvantage when dealing with litigation.
Abstract: This paper analyzes the impact of the German patent litigation system on the firms involved in patent litigation suits. The German system of separation of infringement and invalidity decisions provides patent holders with a window of opportunity to enforce patents that may later be invalidated. This shifts a major share of the risk to the defendant, allocating bargaining power to the plaintiff. This study empirically provides support for this incongruity by analyzing how patent litigation outcome in Germany affects the financial performance of the disputing firms. I show that plaintiffs on average profit from litigation while defendants agreeing upon a settlement deal lose as much as defendants losing in trial. I further show that small and unexperienced firms, particularly defendants, are at a disadvantage when dealing with litigation. The results stress that, as long as patent validity cannot entirely be established prior to the infringement proceedings, defendants, and particularly small defendants, will be disadvantaged by a separation of infringement and nullity proceedings.
TL;DR: In this article, the authors analyze whether a gender wage gap exists in the boards of directors of companies listed on the Madrid Stock Exchange from 2004 to 2011, and find that women's presence on the Nomination and Compensation Committee increases the gender gap in pay, and it is reduced when there are independent female directors who have gained a degree on the board, and when the company operates in the finance and real estate services sector.
Abstract: The aim of this study is to analyze whether a gender wage gap exists in the boards of directors (BD) of companies listed on the Madrid Stock Exchange from 2004 to 2011. We hypothesize that the percentage of female directors on a BD, the presence of female directors on the Nomination and Compensation Committee, the presence of well-qualified independent women directors on BD, the sector, and the geographical region, have an effect on the gender wage gap. The results show that the percentage of female directors on a BD and the geographical region have no effect on the gender wage gap. On the other hand, the finding reports that women’s presence on the Nomination and Compensation Committee increases the gender gap in pay, and it is reduced when there are independent female directors who have gained a degree on the BD, and when the company operates in the finance and real estate services sector. In addition, the results also demonstrate that the seniority of the female directors decreases the gender gap in pay, while there is a rise when the companies are bigger and the size of the BD and the return on assets increase. These conclusions should encourage regulatory bodies to adopt forceful rules to mitigate the gender gap in pay.
TL;DR: In this article, an inductive study of a leading vehicle design community was conducted to understand motivations to participate in a firm-hosted design community and how the nature of the design task influenced sustained participation.
Abstract: Firms increasingly seek to use online communities as sources of ideas, innovations, and designs. However, many such open innovation efforts lack sustained participation and ultimately fail. This research sought to understand motivations to participate in a firm-hosted design community and how the nature of the design task influences sustained participation. From an inductive study of a leading vehicle design community, we found project variety—across two dimensions of project autonomy and project complexity—supported a range of motivations to participate and the social practice of vehicle design. We discuss implications of our study for research on online communities and for firms within the global vehicle industry.