Showing papers on "Excludability published in 1995"

Collaboration Structure and Information Dilemmas in Biotechnology: Organizational Boundaries as Trust Production

Abstract: Scientists who make breakthrough discoveries can receive above-normal returns to their intellectual capital, with returns depending on the degree of natural excludability, that is whether necessary techniques can be learned through written repons or instead require hands-on experience with the discovering scientists or those trained by them in their laboratory. Privatizing discoveries, then, only requires selecting trusted others as collaborators,most often scientists working in the same organization. Within organizational boundaries, incentives become aligned based on repeat and future exchange, coupled with third-party monitoring and enforcement.We find that high value intellectual capital paradoxically predicts both a larger number of collaborators and more of that network contained within the same organization. Specifically, same-organization collaboration pairs are more likely when the value of the intellectual capital is high: both are highly productive ‘star” scientists, both are located in top quality bioscience university departments, or both are located in a firm (higher ability to capture returns). Collaboration across organization boundaries, in contrast, is negatively related to the value of intellectual capital and positively related to the number of times the star scientist has moved, Organizational boundaries act as information envelopes: The more valuable the information produced, the more its dissemination is limited. In geographic areas where a higher proportion of coauthor pairs come from the same organization, diffusion to new collaborators is retarded.

Collaboration Structure and Information Dilemmas in Biotechnology: Organizational Boundaries as Trust Production

Abstract: Scientists who make breakthrough discoveries can receive above- normal returns to their intellectual capital, with returns depending on the degree of natural excludability - that is, whether necessary techniques can be learned through written reports or instead require hands-on experience with the discovering scientists or those trained by them in their laboratory. Privatizing discoveries, then, only requires selecting trusted others as collaborators, most often scientists working in the same organization. Within organizational boundaries, incentives become aligned based on repeat and future exchange, coupled with third-party monitoring and enforcement. We find that high value intellectual capital paradoxically predicts both a larger number of collaborators and more of that network contained within the same organization. Specifically, same-organization collaboration pairs are more likely when the value of the intellectual capital is high: both are highly productive 'star' scientists, both are located in top quality bioscience university departments, or both are located in a firm (higher ability to capture returns). Collaboration across organization boundaries, in contrast, is negatively related to the value of intellectual capital and positively related to the number of times the star scientist has moved. Organizational boundaries act as information envelopes: The more valuable the information produced, the more its dissemination is limited. In geographic areas where a higher proportion of coauthor pairs come from the same organization, diffusion to new collaborators is retarded.

The missing factor: entrepreneurial networks, enterprises and economic growth in Ghana

Abstract: In an earlier paper (Barr (1994)) I set out a theoretical model describing the role of entrepreneurial networks in both enterprises and the process of economic growth. In this paper I reformulate the model in such a way that it can be estimated using cross-sectional data from Ghana. The results of the analysis suggest that entrepreneurial networks are an input into the production process and possibly source of external economies of scale and economic growth. In the theoretical model entrepreneurial networks facilitate the process of economic growth by helping the entrepreneur capture of knowledge externalities. There is a pool of these externalities, which are productive, non-rival, free and potentially available to all firms. They may be used in conjunction with the rival factors, capital and labour, in the process of production. Where a factor of production is rival, the market determines how it is to be distributed between firms. Where a factor of production is non-rival and non- or only partially excludable, i.e. where the factor is an externality, the market cannot operate as the distributing mechanism. Faced with this market failure, economists interested in growth usually assume that the entire stock of knowledge is available to each firm. Here, as in my earlier paper, I propose that although the entire stock of knowledge is potentially available to each firm, the amount that is actually available is significantly less. In the theoretical model the extent to which an entrepreneur can access or harness the overall stock of knowledge for use in her firm’s production process is determined by the density, size and functionality of the network that connects all the entrepreneurs in the system. In the context of empirical work we must allow for asymmetry in the network, so the position of the agent within that network is also important. On a more general level the paper is one of few formal tests of the hypothesis that the structure of society is important in determining economic outcomes. Several researchers have suggested that the key to understanding the so called ‘East Asian miracle’ is to look at the structure of society and not only dynamic factors such as investment in physical and human capital. Indeed, the World Bank (1993) was able to explain only 36% of the difference in growth performance between Africa and the high performing Asian economies (HPAEs) with reference to these more traditional factors. The literature on this topic includes contributions from several disciplines. Economic sociologists, such as Biggart and Hamilton (1992), argue that the standard neoclassical model is not appropriate for the analysis of ‘Asia’s network capitalism’ (page 472) and that ‘persuasive explanations for the success of Asian business will ultimately come from an institutional analysis of Asian societies and the economies embedded in them.’ (page 488). Coming from a business orientation, Porter (1990) writes that ‘the principal function of the keiretsu (groups of companies affiliated by shareholdings) and the shita-uke structures is to facilitate interchange among related companies (the role of the keiretsu in strategy formulation and financing is greatly overstated in most Western accounts). Companies loosely linked in Japanese groups look to each other for guidance and input on new products, new processes, and new businesses. Japanese trade associations also promote the links between suppliers and buyers, by collecting information and sponsoring studies’ (page 408). Although this paper does not look directly at the HPAEs and the source of their success it does provide an analysis of the interplay between social structure and firm performance. The paper is arranged in five sections. Following the introduction, in Section 2 I develop the empirical formulation of the model. In Section 3 I explain how the entrepreneurial networks in Ghana were measured and provide a description of the structure of the Ghanaian manufacturing community based on the data collected. Section 4 contains the results of the regression analysis and a discussion of their significance for endogenous growth theory. I conclude in Section 5.

Charity without Altruism

Abstract: I. INTRODUCTION Evidence suggests that many charitable contributions are channeled to organizations (or groups of people) that produce excludable goods (or services) that are sold on the market. Some of the frequently noted examples are in the field of performing arts, where the philanthropic contributions of individuals and institutions constitute a traditional source of financing for the performers' "regular" activities. Organizations like orchestras, theaters, dance, and opera companies treat these donations as a stable stream of revenue and not as temporary funding or as a form of emergency relief resulting from an unexpected event.(1) For many of these nonprofit organizations, it is common practice to show in their financial statements a gap between the cost of producing their output and the revenue generated from its sale. This "income gap" is traditionally bridged by the flow of philanthropic contributions.(2) In the market setting, a philanthropic contribution is defined as a voluntary payment made by a consumer to the organization that produces the good. This payment is additional to the market price paid by the consumer to purchase the good or service. Two questions motivated this paper. 1. On the contributor side: Why would a selfish utility-maximizing contributor pay the producer of a good an amount (as contribution) exceeding the minimum price he has to pay to buy the product?(3) 2. On the recipient side: Why would a producer (the group of recipients) prefer to use the philanthropic contribution mechanism rather than the simple market mechanism of adjusting prices and quantities in order to break even and avoid the dependency on voluntary contributions? In the literature, the answer to the first question is founded on the altruistic motive of donors. Two general forms of altruistic donations are widely discussed. The first form is contributions made for the production of a nonexcludable pure public good, as discussed by Andreoni [1988] Bergstrom et al. [1986] and Roberts [1987]. In general, this literature suggests that, due to free ridership problems, voluntary contributions cannot by themselves support Pareto-efficient provision of the public good.(4) The second form of altruistic donation is represented by Hansmann [1981], James and Rose-Ackerman [1986], Ben-Ner [1986], and others. They consider contributions made to producers of excludable public goods. In Hansmann [1981] and Ben-Ner [1986], the contributing activity is described as self-imposed price discrimination. Implicitly they argue that club goods have a special feature such that consumers, in particular charitable contributors, are willing to give away parts of their consumer surplus of that product. In this setting, again, contributions are motivated by altruism, as the contributors do not bargain for benefits in return for their loss of consumer surplus. This explanation implies that donors have a special utility function and that they derive utility from the action of contributing, whereas other people, the recipients in particular, do not share this characteristic. The second question regarding producers' motives has received much less attention in the literature. The Coase theorem suggests the basic answer to both the above questions. The Coase theorem claims that when there are inefficiencies, the transition to an efficient allocation could generate economic rents.(5) Thus, utility-maximizing economic agents would negotiate their way towards the efficient allocation and share the rents created in the process. It is the contention of this paper that giving and receiving charitable contributions in a market setting is an example of that phenomenon. Charitable giving facilitates the move from an otherwise inefficient allocation to an efficient one. In the process, the participating agents (the contributors and the recipients) try to divert the rents created to their private benefit. This paper differs from the aforementioned literature in considering a non-altruistic motive for contributing. …