Showing papers in "Industrial and Corporate Change in 2019"

Universities and innovation ecosystems: A dynamic capabilities perspective

Abstract: Universities play an important role in innovation ecosystems. In addition to developing human capital and advancing technology, they are increasingly expected to participate as economic development partners with industry and local, state, and national governments. Models such as the “Triple Helix” have been advanced to frame the assessment of interactions among academia, industry, and governments that may foster economic development. Such models highlight the boundary-spanning roles of universities and provide a predetermined list of actions universities could take to strengthen their ecosystem. Unfortunately, the flexible and entrepreneurial management of universities required to make this model work has virtually been ignored in the academic literature. We propose the dynamic capabilities framework to guide how universities might manage their innovation ecosystems. We use this framework to analyze the role of the university throughout the ecosystem lifecycle. These concepts are then illustrated with three case studies of universities that have engaged with partners in local economies to launch new industries, fostering entrepreneurship, and revitalize neighborhoods.

History, Co-Evolution and Economic Growth

Abstract: This paper attempts to present a theory of economic growth. In Section I it discusses the experience of growth modelling over the past 40 years and argues that it fails to capture the most important features of institutional and technical change. Nevertheless as a method for ordering concepts it can be a useful complement to historical research. The problem with history is the almost infinite multitude of events, which have to be classified, described and analysed. A simplifying theoretical framework is essential and inevitable. Section II tentatively presents such a simplifying classificatory framework. It argues that five historical processes or sub-systems of society have been shown by historical research to be relatively autonomous although interacting major influences on the process of economic growth. These five overlapping sub-systems are science, technology, economy, politics and general culture. Each of these is briefly defined. Humans share with other animals the natural environment which can also powerfully and reciprocally influence economic growth. The other five historical processes each have their own partly autonomous "selection environment" and are uniquely human, which is one reason why biological evolutionary analogies have limited value. Although each of the five has its own distinctive features and relative autonomy, it is their interdependence and interaction which provides major insights into the processes of "forging ahead", "catching up" and "falling behind" in economic growth. Positive congruence and interaction between them provides the most fertile soil for growth, while lack of congruence may prevent growth altogether, or slow it down. Although a satisfactory theory of economic growth should help us to understand the evolution of the world economy much better, the limits of forecasting and prediction in the social sciences should be clearly recognised. Popper was surely right in maintaining that the most important historical changes are qualitative and non-repetitive. The fact that we can predict eclipses does not mean that we can predict revolutions. Section III discusses the problem of non-recurrence for the social sciences. Section IV takes a major example to illustrate the theory which has been tentatively advanced -- the archetypal example of forging ahead in the British Industrial Revolution in the late 18th Century. It briefly discusses a dozen or so major features of this revolution as identified by historians and suggests that together they justify the notions of confluence and congruence between science, technology, economy, politics and culture as a plausible explanation of the leap ahead in economic growth then achieved for the first time in world history. Section V then discusses British "falling behind" in the late 19th Century and 20th Century and suggests that this can probably be explained in terms of loss of congruence between the five sub-systems of British society. The rise of new increasingly science-based technologies and of specialised professional management in large corporations fitted ill with some of the older now "traditional" British political and social institutions. After a brief discussion of the more deliberate processes of "catching up" the paper concludes by pointing out that the theory put forward here resembles many earlier explanations of economic growth. Marx's materialist conception of history stressed the tensions between "forces of production", "relations of production" and "superstructure" as a source of social and political change or of stagnation in economic growth. Many other historians and economists (e.g. Veblen, Mokyr, von Tunzelmann, Galbraith, Perez) have stressed in particular the inter-action between technical change and organisational change within firms, as well as political and institutional change at other levels in society. This paper differs from most of them and from Marx's theory in two respects. First, it attaches greater importance to science and to general culture. In this it resembles the theories of Needham and Bernal. Secondly, it does not attempt to assign primacy in causal relationships to any one of the five spheres, whereas most other theories assign primacy to technology or the economy or both. It emphasises rather the relative autonomy of each of the five spheres, based on the division of labour and each with its own selection environment. It is this co-evolution which generates the possibility of mis-match between them and periodically of radical institutional innovations which attempt to restore harmonious development. Such harmony however is not necessarily favourable to economic growth, which is not the only objective pursued by human beings. "Congruence" which is favourable to economic growth must be distinguished from other types of congruence.

Situating the construct of lean start-up: adjacent conversations and possible future directions

Abstract: The lean startup approach has garnered tremendous amount of interest in recent years and has become mainstream among entrepreneurs. However, this practitioners’ conversation has been largely decoupled from the broader academic literature in management and technology strategy. This paper attempts to fill this gap. We situate the construct of lean startup within its underlying roots in the research traditions of organizational learning, real options, new product development, and technology evolution. We then comment on the economic and technological forces that have caused this organizational form to become prevalent. By juxtaposing these related, but distinct, lines of research we are able to identify a number of novel and interesting avenues for researchers in both entrepreneurship and the broader management literature that lie at the intersection of these domains.

Gimme shelter or fade away: the impact of regional entrepreneurial ecosystem quality on venture survival

Abstract: Our study addresses a popular question in entrepreneurship research—to what extent does the quality of a region’s entrepreneurial ecosystem matter for venture survival? To tackle this question, we created a regional entrepreneurial ecosystem quality index based on five key characteristics: supportive entrepreneurial culture, access to finance, availability of human capital, innovation capacity, and formal support organizations. We analyze 301 United States Metropolitan Statistical Areas for these characteristics and measure the aggregated contextual influence on venture survival within these regions over time. In addition to analyzing the relationship between this index and venture survival, we also consider the moderating role of founders’ experience on survival outcomes. Our findings confirm that, in general, higher quality ecosystems shelter ventures, while ventures in weaker ecosystems are more likely to fade away and fail. However, for serial entrepreneurs, we find that ecosystem quality has a much smaller impact on venture survival.

New developments in innovation and entrepreneurial ecosystems

Abstract: In this article, we provide a rationale for this Special Section on innovation and entrepreneurial ecosystems. We also present a summary of the papers presented in the Special Section, highlighting research questions, theories, data and methods, and principal findings and conclusions. A research agenda is also identified, involving multi-level research on agents, institutions, and regions on the context, process, and impact of innovation and entrepreneurial ecosystems.

R&D, embodied technological change, and employment: evidence from Italian microdata

Abstract: This article explores the employment impact of innovation activity, taking into account both RD however, this positive effect is barely significant when the sole in-house R&D expenditures are considered and fades away when ETC is included as a proxy for innovation activities. Moreover, the positive employment impacts of innovation activities and R&D expenditures are totally due to firms operating in high-tech industries and large companies, while no job creation due to technical change is detectable in traditional sectors and SMEs.

Good times, bad times: innovation and survival over the business cycle

Abstract: High-potential new ventures are a source of economic growth, which policy makers call upon in times of crisis when entrepreneurship is seen as a remedy to economic downturn. Yet at these times new ventures face intensified selection, and survival hinges on heterogeneous capabilities. We examine how the innovative capabilities of new firms created in the Netherlands in 2001-2006, affected their survival likelihood before, during and after the 2007-2008 global financial crisis. We estimate a piecewise exponential model linking survival times, observed in the time period from 2001 to 2015, to longitudinal innovation data from the CIS. Our results show that new ventures innovating within two years from founding benefit of a long-term adaptive survival premium during and after the crisis. This premium and its duration over the stages of the crisis are contingent to the form of innovation: technological innovations entail a more effective and enduring premium, as compared to managerial innovations, which can be even detrimental for survival. Our study has implications for entrepreneurial management, by highlighting how the development of innovative capabilities at founding, lays the foundations for organisational adaptation and resilience in the longer term. Furthermore, our results can inform a policy approach that aims at sheltering from the storm of a financial crisis, those new ventures that do possess the specific and necessary adaptive capabilities, but that are also vulnerable because of the liabilities of newness and smallness. Such an approach could help to maintain alive the process of entrepreneurial experimentation during the crisis, and to boost economic recovery, without dispersing precious resources.

Fostering the growth of student start-ups from university accelerators: an entrepreneurial ecosystem perspective

Abstract: Despite their significance, firms created by students have been the subject of little research. Adopting the entrepreneurial ecosystem framework, this paper examines the growth of student start-ups, especially those that participate in university accelerators. Focused on the University of Toronto, this paper contributes to an understanding of how university accelerators can better support the entrepreneurial efforts of students. It is clear that firms that participate in accelerators with a screening process have a stronger performance in both employment and product growth. Moreover, a habitual entrepreneur director or a more intensive accelerator program is found to have more positive effects on product growth at firms than on employment growth.

Innovation and employment: an introduction

Abstract: The eight papers of this icc special section address the relationships between innovation of different kinds—related to products, processes, or organizational arrangements—in their effects on job creation and job destruction at the level of both firm and whole sectors, in a wide range of countries from all continents except north america and oceania. The evidence suggests that product innovation as such does not lead to job destruction but possibly to a polarization of jobs. The effects of process innovation are more controversial. At a purely firm level, a significant negative effect on employment is often absent. However, this does not rule out the possibility of industry-wide labor shedding outcomes. Finally, the evidence so far suggests that a driver of employment dynamics in western advanced economies much more powerful than the patterns of innovation has been exerted by globalization and offshoring to competition from emerging economies like china.

Effects of innovation on employment in Latin America

Abstract: This study examines the impact of process and product innovation on employment growth across four Latin American countries (Argentina, Chile, Costa Rica, and Uruguay) using micro data from innovation surveys. Specifically, we relate employment growth to process innovations and to the growth of sales separately due to innovative and unchanged products. Results show that that compensation effects are prevalent, and the introduction of new products is associated with employment growth at the firm level. Specifically, we find that for the manufacturing firms as a whole, the introduction of process innovations only affects the employment growth in the countries case of Chile. At the same time, we observe no evidence of displacement effects due to the introduction of product innovations. In fact, the observed compensation effects resulting from the introduction of new products imply, in turn, employment growth even when the replacement of old products is taken into account.

To be (routine) or not to be (routine), that is the question: a cross-country task-based answer†

Abstract: This work proposes a new measure of the routine content of occupations and sectors for 20 OECD countries, based on information about the sequence and flexibility of the tasks performed on the job. A negative but weak association emerges between routineness and skill intensity, which suggests the importance of both technological and organizational considerations in the measure of routine intensity. Between 2000 and 2010, employment mainly grew in non-routine occupations, especially in market services, while manufacturing shed routine and non-routine jobs. Changes in shares of employment by routine quartile are dominated by within-effects.

When Linder meets Hirschman: inter-industry linkages and global value chains in business services

Abstract: This article looks at the determinants of a country’s participation in business services (BS) global value chains (GVCs). BS GVCs are comparatively less explored than traditional manufacturing ones, and there is a gap in the literature on the relative positions of countries in BS GVCs and the opportunities they might open for development. This article puts forward and finds empirical support to the conjecture that the domestic structure of backward and forward linkages a la Hirschman, alongside the domestic representative demand for BS a la Linder, are of high importance. The results, based on the World Input-Output Database, suggest that the presence of strong domestic backward-linked industries to BS makes an emerging country more likely to create domestic value within BS GVC. Our findings contribute to the debate on a “premature de-industrialization” in emerging countries and on the relationship between levels of development and engagement in BS GVCs.

Sources of innovation and innovation type: firm-level evidence from the United States

Abstract: Only a handful of studies on innovation empirically analyze the links between firm innovation and the sources of that innovative activity of sources of innovation on types of innovation. To fill this gap in the literature, this study provides one of the first tests to identify how important sources of new information (suppliers, customers, other business people in the industry, workers, and university) are associated with types of innovations (product, process, and marketing). Data come from the 2014 National Survey of Business Competitiveness sponsored by the Economic Research Service at the United States Department of Agriculture (n = 10,952). The results show that innovation ideas emanating from customers, workers, and universities are positively associated with all types of innovations, suggesting that these sources are critical for developing different types of innovation. In particular, universities as a source of innovation activity are especially important. In contrast, other sources, such as suppliers and people in industry do not seem to be as important as a source of innovation.

Regional entrepreneurial ecosystems in China

Abstract: This study focuses on regional entrepreneurial ecosystems in the largest emerging economy in the world. We use a two-stage structural model distinguishing between two sets of factors, those that have direct impact on entrepreneurial activities and those that have indirect impact. Based on an empirical analysis of 263 Chinese prefecture-level municipalities from 2008 to 2015, we find that human capital, knowledge creation, and access to finance are the main factors that drive local entrepreneurial activity. New technology-based startups are significant predictors of the regional stock of human capital and the presence of risk finance suggesting the unique role of technology-based firms in promoting sustainable growth in regional entrepreneurial ecosystems. The presence of research-intensive universities also has a strong positive impact on regional entrepreneurial ecosystems.

Automation and Productivity - a Cross-country, Cross-industry Comparison

Abstract: We investigate the effects of automation on total factor productivity (TFP). Using industry-level panel data for nine countries, we find that more intensive use of industrial robots has a significantly positive effect on TFP. Specifically, an increase of one standard deviation in the robot intensity is associated with more than 6% higher TFP. Moreover, we find that the robot intensity increases with Chinese import competition and that automation is associated with higher wages and unchanged or higher employment.

The demand-pull effect of public procurement on innovation and industrial renewal

Abstract: This article analyzes, empirically, the link between public procurement and innovation activities by taking into account the moderating effect played by import penetration on public procurement. Using industry-level information on patent applications for 24 countries over the period 1995-2012, we test the impact of public procurement on innovation activities and whether and in which direction import penetration on public procurement impacts on patenting. The econometric analysis relies on Poisson regression techniques aiming to investigate the correlation between patent counts, supply as well as demand-side determinants, controlling for country and sector heterogeneity. The obtained results confirm our main hypotheses. The dynamics of patenting is positively affected by the public procurement while a high degree of import penetration reduces the innovation enhancing effect exerted by public demand. Our results suggest that public demand may represent an effective tool for industrial policy to stimulate innovative activities, to shape the transformation of production systems and to foster industrial renewal. Moreover, the empirical evidence shows that the strategy regarding the degree of openness in public procurement towards non-domestic firms is a crucial policy choice capable of affecting the innovative potential of public demand.

Replicator dynamics in value chains: Explaining some puzzles of market selection

Abstract: The pure model of replicator dynamics provides important insights in the evolution of markets but has not met with much empirical support. This article extends the model to the case of firms vertically integrated into value chains (VCs). Through an extended analytical model and numerical simulations, we show that (i) by taking VCs into account, the replicator dynamics may reverse its effect. In these ”regressive developments” of market selection, firms with low fitness expand because of being integrated with highly fit partners, and the other way around; (ii) allowing a partner’s switching re-introduces selection forces into the upper layers of VCs; and (iii) periods of instability in the early stage of the industry life cycle may be the result of an optimization’ of partners within a value chain, thus providing a novel and simple explanation of the evidence discussed earlier in the literature.

Technological innovation and the distribution of employment growth: a firm-level analysis

Abstract: This work studies the firm-level relationship between different types of innovative activities and employment growth rates. Improving on previous investigations on the topic, it combines a dynamic panel analysis of the effects of different types of product and process innovation on employment growth with an outlook on the whole conditional employment growth distribution. Results show that product innovation -- especially in terms of good new to the entire market -- has a positive effect on employment growth. This role is likely to be particularly relevant for both fast-growing and shrinking firms. Process innovation appears instead to have less clear-cut dynamics, consistently with existing evidence. Among different types of process innovation, the introduction of novel auxiliary processes appears to be more positively linked with employment growth.

Patent management by universities: evidence from Italian academic inventions

Abstract: Over the past 20 years, European universities have increased their propensity to retain title of their faculty's inventions, but evidence on the value of such patents is at best mixed. Based on a longitudinal sample of Italian academic patents (patents over faculty's inventions), assigned either to universities or firms, we find that the lower value of university-owned patents, versus firm-owned ones, is owing to lower Technological Importance of the inventions and less effective Exploitation of the related patents. Lack of experience in managing patented inventions explains our results for Technological Importance, but not for Exploitation. Both are unrelated to the presence of a technology transfer office. Our study suggests caution in pushing universities to expand their patent portfolios and in using university-owned patents as indicators of technology-transfer activities.

Accelerators and intra-ecosystem variety: how entrepreneurial agency influences venture development in a time-compressed support program

Abstract: Accelerator programs constitute an important new element in entrepreneurial ecosystems, comprising focused support to advance the development of entrepreneurial ventures. Yet, we lack understanding of the processes through which accelerators contribute to enhancing entrepreneurial activity and especially the role of entrepreneurship agency in this process. By systematically tracking a cohort of ventures in a leading accelerator, our study draws out intra ecosystem heterogeneity and reveals that the accelerator program elements can impose a distinctive direct effect on participating ventures but the effect varies as entrepreneurs adopt different approaches to engage other players in the ecosystem. We find that in order to fit in the temporal structure of the accelerator program, entrepreneurs adopt two different strategies to achieve accelerated venture development—acceleration with focus and acceleration with foresight. The effectiveness of these two acceleration strategies are moderated by the approaches to engaging the accelerator offerings for resource acquisition. By developing a theoretical framework of entrepreneurial acceleration in the accelerator setting, we contribute to the specific literatures on entrepreneurial process and accelerators and more generally to the emerging literature on the functioning of entrepreneurial ecosystems.

Manager remuneration, share buybacks, and firm performance

Abstract: Using a dynamic heterogeneous agent industry model we examine the impact of manager remuneration schemes on firms investment decisions and on the evolution of their competitiveness and share values. Whereas an increase in the share-based manager remuneration component is always bene cial to the manager, it is bene cial for shareholders only if such a change in the remuneration scheme is adopted by all firms in the industry. In that case productivity growth is slowed down and workers real wages are reduced.

Innovations in emerging markets: the case of mobile money

Abstract: Mobile money is a financial innovation that provides transfers, payments, and other financial services at a low or zero cost to individuals in developing countries where banking and capital markets are deficient and financial inclusion is low. We use transaction costs and institutional theories to explain the growth and impact of mobile money. Having developed a new archival dataset that tracks mobile money deployment across 90 emerging economies during 16 years between 2000 and 2015, we address the question of relative economic impact of the banking and telecoms sectors in the provision of mobile money. We show that telecom groups and not banks are more likely to launch mobile money in countries where legal rights are weaker and credit information less prevalent. However, it is when mobile money is offered via a banking channel that the spillover effects on the economy are greater. Findings have significant implications for policy and strategy.

Exploiting the control revolution by means of digitalization: value creation, value capture, and downstream movements

Abstract: © 2019 The Author(s). This article explains why firms move downstream to profit from the value they create for customers through improved control. Under certain circumstances, product innovations and services are dynamically interdependent in the sense of improved control creating value for the customer. Since value capture is distinct from value creation, firms may need to change their means of appropriation to profit. Empirically, the article analyses how firms can renew their product offerings by incorporating control technologies into their traditional mechanical engineering products. In contrast to a strand in the recent strategy literature that argues that manufacturing firms should move downstream to deliver complementary services, this article explains these shifts as related to increased control, economies of throughput, value creation, and value capture. The article contributes to the throughput and control technology literature by showing the importance of differentiating value creation from value capture. The increased control by means of digitalization and the discrepancy between value creation and value capture explains why many manufacturing firms will become service firms.

Evolutionary chimeras: a Woesian perspective of radical innovation

Abstract: This article proposes a novel perspective of technological change based on the ‘Woesian’ model of cell evolution to study technological change and, in particular, the origins of radical innovation. The model identifies horizontal gene transfer (HGT) as a critical force that drives evolution and complements the Darwinian theory of vertical inheritance. Building on this model, we highlight the key role of the horizontal transfer of functional modules in generating radical innovation as well as strengthening the analogy between biological and technological evolution. We use the turbojet revolution to illustrate the main features of the model and elucidate the conditions under which horizontal transfer is a crucial evolutionary force leading to radical innovation. We then elaborate on the implications of the model for how firms should search for radical innovation, as well as emphasize the importance of a firm’s replicative-integrative capability—that is, the ability to ‘replicate with modifications’ existing functional modules and integrate them into a novel architecture—in shaping the generation of radical innovation.

Does innovation stimulate employment? Evidence from China, France, Germany, and The Netherlands

Abstract: This article tests whether product and process innovations increase employment in three European countries—France, Germany, and The Netherlands—and in the People’s Republic of China on the basis of the same underlying theoretical framework and comparable harmonized micro data. The data pertain to the period 2002–2004 and cover the manufacturing and services industries in the three European countries, and to the period 1999–2006 and only the manufacturing industries in China. Process innovation does not play a significant role, whereas non-innovation-related efficiency improvements in the production of unchanged products tend to reduce employment. In contrast, product innovation stimulates employment, the compensation effect via increased demand dominating the displacement effect. The net effect of product innovation and the net growth in total employment are comparable in the two regions.

Is There a Role for Patents in the Financing of New Innovative Firms

Abstract: It is argued by many that one of the benefits of the patent system is that it creates a property right to invention that enables firms to obtain financing for the development of that invention. In this paper, I review the reasons why ownership of knowledge assets might be useful in attracting finance and then survey the empirical evidence on patent ownership and its impact on the ability of firms to obtain further financing at different stages of their development, both starting up and after becoming established. Studies that attempt to separately identify the role of patent rights and the underlying quality of the associated innovation(s) will be emphasized, although these are rather rare.

Long-term firm growth: an empirical analysis of US manufacturers 1959–2015

Abstract: Firm growth is an essential feature of market economies, shaping together macroeconomic performance and the evolution of industry structures. As a potential indicator of organizational 'fitness' within a competitive environment, firm growth is also a central concern to both the practice and theory of business strategy. Despite both its theoretical and practical importance, though, growth remains a poorly understood property of firms. While previous studies have documented the highly skewed nature of firm growth rates, we know far less about the persistence of growth rates over long-periods of time. For instance, do 'fast growers' tend to maintain their relative growth rates advantages over long-periods or is superior growth a transitory phenomenon? Is, as predicted by evolutionary and capability based theories of the firm, the process of firm growth path-dependent or is it more akin to a random walk? The answers to these questions are central to building a robust theory of firm growth. This paper attempts to address this gap in our empirical knowledge of firm growth using a dataset that spans 50 years, which allows the abandonment of the assumption, common to all incumbent studies, that the stochastic paths of all firms stem from the same generating process. These exploratory results indicate that growth rate persistence is there and my be even substantial for some firms, but it is rare. We also study the links between the micro- properties of firm growth within sectors and the patterns of aggregate growth of these same sectors. Indeed, we find circumstantial but widespread evidence that heterogeneity across firms correlates with industry dynamism.

The export additionality of innovation policy

Abstract: The empirical evidence that innovation policies often lead to innovation additionality is long-standing. However, innovation is an intermediate outcome. Innovations are important to the extent that they contribute to some broader goal, such as the competitiveness of firms and economies. To this end, we take exporting as an important indicator of competitiveness and investigate whether innovation interventions lead to exporting outcomes. Using the Mannheim Innovation Panel, the current study explores whether innovation interventions at various administrative levels associate with changing export behaviors among German Small- and Medium-sized Enterprise (SMEs). Our results provide evidence of the scope for policymakers to employ innovation interventions as export policy.