Source : NEP (New Economics Papers) | RePEc
Characteristics of Foreign R&D Strategies of Swiss Firms. Implications for Policy
The aim of the paper is, firstly, to identify a number of strategies Swiss firms pursue by performing foreign R&D, expecting that firms, in many instances, are driven by a combination of several motives (”mixed strategies”). Secondly, we ask whether foreign and domestic R&D are substitutes or complements. Thirdly, we draw some policy conclusions based on results for direct and indirect home-country effects of foreign R&D. By applying cluster analysis, we identified four specific patterns of motives of foreign R&D. In a second step, we investigated whether these clusters effectively may be interpreted as specific types of R&D strategies. To this end, the clusters were characterised in terms of a large number of variables, which, according to the OLI paradigm of FDI, determine foreign R&D. We found that the patterns of the four clusters systematically differ with respect to these theory-relate d variables. Some clusters represent, in terms of motives, broad-based mixed strategies, whereas others are strongly focused. It turns out that foreign R&D strategies that primarily aim at exploiting capabilities of the domestic headquarters dominate, whereas cost-reducing strategies are of very minor importance. In case of the other two strategies knowledge sourcing is a constituent element, in the first one, knowledge sourcing is at the core, in the second case it is an important element in the frame of a broad-based strategy. The relative importance of the four strategies implies that, on balance, foreign and domestic R&D are complements. Notwithstanding this positive result, it is sensible to take policy actions supporting the economy to capitalise even more on outward FDI in R&D. Policy basically should aim at securing the attractiveness of Switzerland as a location for R&D-intensive headquarters of firms performing foreign R&D, and at enhancing know ledge spill-overs from headquarter companies to other domestic firms. The five categories of measures we recommend are part of a framework-oriented policy design rather than of a more interventionist concept.
Keywords: Internationalisation of R&D Motives of foreign R&D Foreign R&D strategies Knowledge spillovers Home-country effects of outward FDI in R&D
The Impact of Competition on Macroeconomic Performance
This paper investigates the impact of the toughness of competition on the macroeconomic performance of countries. The relation between competition and innovation has been investigated intensely in industrial economics. It started with Schumpeter’s hypotheses that monopoly profits were necessary for innovation, leading then to U-curve relationships where innovation was the highest for medium-range of competition, but lower for very tough competition as well as for a very lax competitive regime. Empirical studies on the growth differences between countries increasingly stress – apart from the usual suspects like investment, R&D, human capital – the role of institutions. They include indicators on regulation, government size, corruption and rule of law, but usually not the degree of competition. Conventional growth theory did not model the impact of competition, but assumed perfect competition. In New Growth T heory, economic growth depends on purposeful and maximising innovation activities, where market structure plays an important role. But this did not result in the inclusion of competition variables into empirical growth equations. We have attempted to bridge this gap a bit by relating 13 indicators on the toughness of competition to macroeconomic performance. We then added these competition indicators to an equation relating macro performance to the standard explanatory variables for economic growth (like investment and R&D). The results indicate that competition plus innovation is a good recipe at the macro level, too, probably with similar tensions and non-linearity as at the company level.
Keywords: Competition Macroeconomic Performance Innovation
Competition, R&D and the cost of innovation
This paper proposes a model in the spirit of Aghion and al. (2005) that relates the magnitude of the impact of competition on R&D to the cost of innovation. The effect of competition on R&D is an inverted U-shape. However, the shape is flatter and competition policy is therefore less relevant for innovation when innovations are relatively costly. Intuitively, if innovations are costly for a firm, competitive shocks have to be significant to alter its innovation decisions. Empirical investigations using a unique panel dataset from the Banque de France show that an inverted U-shaped relationship can be clearly evidenced for the largest firms, but the curve becomes flatter when the relative cost of R&D increases. For large costs, the relationship even vanishes.
Enabling and Sustaining Collaborative Innovation
This paper extends the principles of open source software development to a non-industry-specific level by introducing the Open Source Innovation (OSI) model. OSI exhibits main differences to other related models and concepts such as the private-collective model, commons-based peer production, R&D networks and is therefore an innovation model in its own right. In order for OSI projects to be successful, numerous factors need to be fulfilled. We make the distinction between four categories of factors: economic, technical, legal, and social. In each category, we differentiate between enabling and sustaining factors. The enabling factors must be met at the beginning of the project, whereas the sustaining factors must be satisfied as the project progresses.
Keywords: OSI; open source innovation; R&D
JEL: O32 L17 O3 O31
Culture, Creativity and Innovation in the Internet Age
bstract This unpublished paper was submitted to the May 22-23 conference on IPR at Birkbeck College, London. It analyses the distinct economic roles of culture, creation, and innovation in the Creative Industries by assessing the fitness for purpose of their statistical definitions. On this basis it proposes a method for studying the relation between creative labour and innovation. Lax usage has made the term ‘Creative Industries’ a synonym for three distinct things: creativity, culture and intellectual alienability. I use the term Cultural and Creative Sector (CCS). My aim is to distinguish Creative Labour, of which the sector is a specialist user, from Cultural Outputs, which the sector produces. These are found combined in the CCS in an advanced form, but they also exist separately outside it. In order to understand their wider economic impact – in particular, their relation to innovation and Intellectual Property – it is necessary to distinguish them. I begin from the empirical reality of the Creative Industries as currently defined which, I argue, establishes it as an ‘industrial sector’, in the economically meaningful sense that it is a specialised branch of the division of labour. Its definition, however, has yet to be aligned with this reality. This sector’s specialism is that it employs creative labour to produce cultural products. Its emergence is the outcome of two processes: a separation of mechanical from creative labour, which we inherit from the age of machines, and a revolution in service sector productivity, arising from the age of the internet. Creative labour is a general economic resource, employed both inside and outside the CCS. The CCS is the starting point of an adequate definition, because in it, creative labour is found in its most advanced and specialised form, and because in it, this kind of labour has applied to maximum effect the new service technologies which have emerged with the internet age. However, in o rder properly to assess its wider impact, creative labour has to be defined independent of the assumption that it only produces cultural products. This paper proposes such a definition. It outlines, on the basis of this definition, how the economic contribution of creative labour to service sector growth might be assessed.
Keywords: cultural economics; creative industries; innovation; internet
JEL: Z1 O3 J2
Radical versus Non-Radical Inventions
This paper looks at the special characteristics of radical inventions. It tries to identify those variables that differentiate radical inventions from non-radical inventions. Since radical inventions are very important for the economy as a whole and for the individual firm performances, understanding what makes radical inventions differ from non-radical inventions is very important. For our research we made use of the EPO (European Patent Office) database on patents. We used the number of forward patent citations per patent to identify radical from non-radical inventions. For our analysis we used the backward patent citations per patent. In order to test if the two groups we are considering are truly different and to see on what factors they differ we made use of discriminant function analysis. Some of our main conclusions are that radical inventions are to a higher degree based on existing knowledge than non-radic al inventions. Also the combination of emergent and mature knowledge is more important for radical inventions. A further result that follows from our analysis is that radical inventions are induced by the recombination over more knowledge domains as compared to non-radical inventions. Our research hints also on the importance of alliances and an open innovation system for the development of radical inventions.
Keywords: radical inventions, patents, organizational learning, alliances
JEL: O30 O31 O32 O33 O34 D83
Competition, Human Capital and Income Inequality with Limited Commitment
We develop a dynamic general equilibrium model with two-sided limited commitment to study how barriers to competition, such as restrictions to business start-up, affect the incentive to accumulate human capital. We show that a lack of contract enforceability amplifies the effect of barriers to competition on human capital accumulation. High barriers reduce the incentive to accumulate human capital by lowering the outside value of ‘skilled workers’, while low barriers can result in over-accumulation of human capital. This over-accumulation can be socially optimal if there are positive knowledge spillovers. A calibration exercise shows that this mechanism can account for significant cross-country income inequality.
Keywords: Limited commitment, limited enforcement, human capital accumulation, income inequality, innovation, barriers to competition.
JEL: D99 E20 J24 O15 O34 O43
Localized Innovation, Localized Diffusion and the Environment: An Analysis of CO2 Emission Reductions by Passenger Cars, 2000-2007
We investigate technological change with regard to CO2 emissions by passenger cars, using a Free Disposal Hull methodology to estimate technological frontiers. We have a sample of cars available in the UK market in the period 2000 – 2007. Our results show that the rates of technological change (frontier movement) and diffusion (distance to frontier at the car brand level) differ substantial between segments of the car market. We conclude that successful policies should be aimed at diffusion of best-practice technology, and take account of the different potential for further progress between different segments of the market (e.g., diesel and gasoline engines, and small vs. large engines).
Keywords: CO2 emissions by cars, technological change, diffusion of innovations
JEL: Q55 O31 O33
Futures of automobile industry and challenges on sustainable development and mobility
Portugal had only very few foresight exercises on the automobile sector, and the most recent one was a survey held in a project on work organisation systems in the automobile industry, its recent historical paths and the special strategies of location of companies (the WorTiS project). This involved several teams with different disciplinary backgrounds and from two Portuguese universities. The provisional main results of the first round of a Delphi survey held in Portugal on the automotive sector were already published, but a further analysis was not yet done. This foresight survey was done under the WorTiS project, developed in 2004 by IET – Research Centre on Enterprise and Work Innovation (at FCT-UNL), and financed by the Portuguese Ministry of Science and Technology. Some of this experience on foresight analysis is also been transferred to other projects, namely the WORKS project on work organisation restruct uring in the knowledge society that received the support from EC and still is running. The majority of experts considered having an average of less knowledge in almost all the scenario topics presented. This means that information on the automotive industry is not spread enough among academics or experts in related fields (regional scientists, innovation economists, engineers, sociologists). Some have a good knowledge but in very specialised fields. Others have expertise on foresight, or macroeconomics, or management sciences, but feel insecure on issues related with futures of automobile sector. Nevertheless, we considered specially the topics where the experts considered themselves to have some knowledge. There were no “irrelevant” topics considered as such by the expert panel. There are also no topics that are not considered a need for co-operation. The lack of technological infrastructures was not considered as a hindered factor for the accomplishment of any scenario . The experts’ panel considered no other international competence b esides US, Japan or Germany in these topics. Special focus will be made in this paper on the topic 2. Public policy and automobile industries, and more specifically on the technological and/or research policies issues, where one can specify the automobile’s role in transport policies with further implications like environment, safety, energy, mobility.
Keywords: automotive industry; scenario; economical co-operation; technology; Delphi survey
JEL: L62 C42 A14 J11 O14
A Multilevel Analysis of Innovation in Developing Countries
Innovation is a multilevel phenomenon. Not only characteristics of firms but also environment within which firms operate matter. Although this has been for long recognized in the literature, a quantitative test that explicitly concerns the hypothesis that framework conditions affect innovativeness of firms remains lacking. Using a large sample of firms from many developing countries, we estimate a multilevel model of innovation that integrates explanatory factors at different levels of the analysis. Apart from various firm’s characteristics, national economic, technological and institutional conditions directly predict the likelihood of firms to innovate.
Keywords: Innovation, Technological Capability, Multilevel Modeling, Institutions, Developing Countries
JEL: C30 E11 O30
Corporate Financial Reporting on Internet: Global Developments and an Appraisal of Practices in Bangladesh
The use of internet technology for corporate reporting is currently a well-established practice in many countries that have developed securities market. Investors find corporate web sites as a convenient way of collecting financial information of companies. Corporations also find the internet to be the most prompt and economical means of information dissemination. The practice of corporate reporting on the internet is relatively new in Bangladesh. However, the fast development of securities market in Bangladesh has caused expansion of this practice day by day. The paper investigates the emerging issues of online corporate financial reporting in the global context. It then makes an attempt to provide an appraisal of the current practice of corporate financial reporting on the internet by Bangladeshi companies and tries to provide recommendations in the light of global developments. The research reveals that although many of the issues relating to online financial reporting have been addressed by different standard setters worldwide, they have been overlooked in Bangladesh and some of these issues need particular attention for continued development and further guidance in this area.
The inhibited (exhibited) spread of innovations
This note makes general statements about standard models of the diffusion of innovations. Its premise is a familiar idea that innovations are socially-learned changes that spread like wildfires across diverse populations. However, the rate at which innovations spread is subject to the forces of exhibition and inhibition. Exhibitors promote the spread of innovations; inhibitors subjugate them. Hence, where the forces of subjugation are stronger than the forces of promotion, it is the slow spread, rather than the lack, of innovations which undermines the competitiveness of nations, and consequently frustrates economic performance. This suggests a need for a simple and more realistic model. Since the analytical components (basic equations and statistical inference) of the needed model are readily available, this note attempts a synthesis. Unfortunately in its current version the note is incomplete, and therefore makes only a tentative concluding remark. Even so, there is enough insight to warrant comment.
JEL: M3 Z00 D8 O31
Leadership in online knowledge networks : challenges and coping strategies in a network of practice
In this paper we explore the challenges and coping strategies for leading online intraorganizational Networks of Practice (NOPs). The research indicates that coordinating distributed knowledge in NOPs poses a leadership challenge that is not yet addressed in the literature on knowledge management in general and is unique when comparing intraorganizational NOPs to research on leadership in other types of online knowledge networks. This challenge entails creating and maintaining a balance between the interests of the formal organization and the interests of the informal network, and shows that coordinating informal knowledge sharing in a formal context involves a management dilemma thereby contributing to theory on coordinating distributed knowledge
Keywords: distributed knowledge; knowledge coordination; leadership, management dilemma; networks of practice
Open and closed industry clusters: The social structure of innovation
In this paper we discuss knowledge and innovation in clusters and the benefits of clustering from a knowledge-based perspective. Knowledge-based resources and innovations are important sources of competitive advantage for firms. Aware of the importance of continuously seeking new knowledge firms increasingly seek knowledge-rich locations such as specific industry clusters across the world. These are locations characterized by the concentration of firms operating in related and supporting activities, a specialized work force and a specialized institutional environment that nurtures the industry. However, it is not likely that these clusters are always locations from which the firms will be able to draw the intended knowledge benefits. The social structure of the relationships between individuals and firms determines the extent to which knowledge will be created, will flow between co-located firms and bounds the know ledge benefits the firms may capture. We finish with a discussion of the need of further examination of the network dynamics involved in an industry cluster to obtain a clearer identification of the actual positive externalities that may accrue to co-locating firms.
Keywords: Strategy; Industry clusters; Innovation
JEL: M0 M1
Knowledge, understanding and the dynamics of medical innovation
This paper investigates the processes by which scientific knowledge is created and legitimized. It focuses on scientific developments in a branch of medicine and explores the pathways through which the growth of knowledge enables advances in medical science and in clinical practice. This work draws conceptually on evolutionary approaches to technological change. The empirical part presents a longitudinal analysis of a database of scientific publications in the field of ophthalmology over a period of 50 years. Such an exercise allows us to identify pathways of shared understanding on a disease area, and to map out distinctive trajectories followed by the ophthalmology research community. The paper also contributes to general understanding of the innovation process by supporting the notion that knowledge coordination is a distributed process that cuts across and connects complementary areas of expertise.
JEL: O33 D83 O31
Innovation driven sectoral shocks and aggregate city cycles
This paper formalizes one mechanism through which diversification in the production of research & development across firms located in a city dampens volatility in the local labor market, improves the incentives to perform research & development and smooths the aggregate business cycle fluctuations of a city. This is done by adapting the standard multi-sector quality ladder model (Grossman and Helpman 1991) in order to allow for heterogeneity across firms, thus taking into account knowledge spillovers across heterogenous sectors, knowledge accumulation, pecuniary externalities and segmented labor markets. As a result, according to the local degree of diversification in research & development, sectoral technological shocks have an influence on the current choice of research & development and the location of production, and in turn on local business cycles and the life cycle of the city: diversificatio n in research & development allows innovations in different sectors of the city to arrive at different points in time, thus avoiding to put pressure on the local labor markets and keeping wage discipline. This permits firms located in the city to perform enough research & development and possibly beat outside competition in discovering and manufacturing new products, thus growing -at the aggregate city level-through less volatile cycles.
Keywords: quality ladder with heterogeneity across firms, labor pooling economies, knowledge spillovers, diversification, schumpeterian growth in the city
JEL: I31 I32 D63 D31
JEL: E32 O31 R23
Keeping the wheels turning : multi-level dynamics in organizing networks of practice
This paper addresses organizing dynamics of intra-firm ‘networks of practice’ (NOPs). It unravels different dimensions that play a role in knowledge sharing within NOPs: (1) practice dimension; (2) social dimension; and (3) organizational dimension. Based on a unique interpretive case study, we ‘unpack’ each dimension and consider them as dynamic based on either positive or negative forces that influence knowledge sharing in NOPs. By introducing the metaphor of a cogwheel, we argue that maintaining continuation of a NOP involves the dynamics of three levels of embeddedness (1) embeddedness of the NOP in local practices; (2) social embeddedness of the network; and (3) organizational embeddedness of the network. This integrative framework of multi-level dynamics helps to further our understanding regarding the success and failures of organizing NOPs.
Keywords: Distributed Organizations; Knowledge Management; Networks of Practice, Distributed Organizations; Knowledge Management; Networks of Practice;Organization; Practice-based learning; Social embeddedness
The Role of Information in the Take-up of Student Loans
Policies need not only to be well designed to effectively address market failures, but their parameters also need to be part of agents’ information sets. This is illustrated by government student loans in the Netherlands which are intended to alleviate liquidity constraints. Despite generous loan conditions, take-up rates on these loans are low. Some have argued that this is due to limited knowledge about these conditions. We examine the importance of information constraints through a randomized experiment. Half of the students who responded to an Internet questionnaire were given factual information on loan conditions, whereas the other half did not receive such information. Six months later, students who received information have better knowledge about the loan conditions. While OLS regressions reveal a large and significantly positive association between knowledge about loan conditions and borrowing, our instr umental variable estimates suggest that this is not a causal effect which would rule out that the low take-up rate is caused by information constraints.
Keywords: Field experiment; Student debt; Student loans; Loan conditions
JEL: I22 I28 D83
How does University Collaboration Contribute to Successful R&D Management?
The issue of through what processes R&D collaboration with universities affects a firms’ innovation performance remains under-researched. In particular, university relationships have not been fully integrated in the open innovation framework. This study explores the relationship between firms’ collaboration with universities and their capabilities for innovation, as perceived by R&D managers. Drawing on a series of interviews with R&D managers at 45 randomly selected firms collaborating with two research universities in Sweden, we explicitly recognise mechanisms through which university relationships contribute to successful R&D management.
Keywords: University-Industry Link; Innovation; Technology transfer; R&D; Research collaboration
JEL: I23 O31 O32
Building institutions for growth and human development: an economic perspective applied to the transitional countries of Europe and CIS
The aim of this paper is to analyse in a more qualitative way the role of institutions in transitional countries in the CEECs and CIS. The main question we address is: what kind of institutional arrangement leads to Human development? We propose an analytical pattern where global performance (i.e. Human development) is the final outcome of a new institutional arrangement.
Keywords: Institution; Transition; Human Development; Growth
JEL: P30 O17 P27
When Does a Developing Country Use New Technologies?
We develop a model of optimal pattern of economic development that is first rooted in physical capital accumulation and then in technical progress. We study an economy where capital accumulation and innovative activity take place within a two sector model. The first sector produces a consumption good using physical capital and non skilled labor. Technological progress in the consumption sector is driven by the research activity that takes place in the second sector. Research activity which produces new technologies requires technological capital and skilled labor. New technologies induce an endogenous increase of the Total Factor Productivity of the consumption sector. Physical and technological capital are not substitutable while skilled and non skilled labor may be substitutable. We show that under conditions of the adoption process of new technologies, the optimal strategy for a developing country consists in accumulating physical capital first; postponing the importation of technological capital to the second stage of development. This result is due to a threshold effect from which new technologies begin to have an impact on the productivity of the consumption sector. However, we show that once a certain level of wealth is reached, it becomes optimal for the economy to import technological capital toproduce new technologies.
Keywords: economic development, technical progress, skilled labor, non skilled labor, total factor productivity , new technology, developing countries
Cumulative Innovation, Experimentation and the Hold-Up Problem
Extending the basic model of two-stage cumulative innovation with asymmetric information to include `experimentation’ by second-stage rms, we nd that the costs of a strong (versus weak) intellectual property (IP) regime may be substantially increased. In addition, these costs increase as experimentation becomes cheaper and as the differential between high and low value second-stage innovations grows, with the result that a weak IP regime is more likely to be optimal. Thus, technological change which reduces the cost of encountering and trialling new `ideas’ implies a reduction in the socially optimal level of IP rights such as patent and copyright.
Keywords: Cumulative Innovation, Hold-Up, Experimentation, Intellectual Property.
JEL: K3 L5 O3
Transaction Costs, Information Technology and Development
This paper examines the impact of transaction costs on economic welfare and development. We extend the static model of Romer (1994), in which transaction costs reduce welfare by the reducing the equilibrium number of intermediate goods, and estimate the welfare losses in the case of domestic transaction costs. The main analysis of the paper extends a dynamic model of Ciccone and Matsuyama (1996) to incorporate transaction costs. We show that high transaction costs reduce the long-run level of development, and may arrest development completely in the extreme case. We also discuss the role of information technology in reducing transaction costs, and offer some preliminary evidence from rural India to illustrate how these reductions may occur through the use of such technologies.
Keywords: transaction costs; information technology; Internet; development; India
JEL: P2 L31 O3 O12
International R&D Spillovers and Institutions
The empirical analysis in “International R&D Spillovers” (Coe and Helpman, 1995) is first revisited by applying modern panel cointegration estimation techniques to an expanded data set that we have constructed for the purpose of this study. The new estimates confirm the key results reported in Coe and Helpman about the impact of domestic and foreign R&D capital stocks on TFP. In addition, we show that domestic and foreign R&D capital stocks have measurable impacts on TFP even after controlling for the impact of human capital. Furthermore, we extend the analysis to include institutional variables, such as legal origin and patent protection, in order to allow for parameter heterogeneity based on a country’s institutional characteristics. The results suggest that institutional differences are important determinants of total factor productivity and that they impact the degree of R&D spillovers.
Keywords: Working Paper , Productivity , Investment , Foreign investment , Capital , Economic models ,
Estimating the Productivity Selection and Technology Spillover Effects of Imports
In the wake of falling trade costs, two central consequences in the importing economy are, first, that stronger competition through increased imports can lead to market share reallocations among domestic firms with different productivity levels (selection). Second, the increase in imports might improve domestic technologies through learning externalities (spillovers). Each of these channels may have a major impact on aggregate productivity. This paper presents comparative evidence from a sample of OECD countries. We find that the average long run effect of an increase in imports on domestic productivity is close to zero. If the scope for technological learning is limited, the selection effect dominates and imports lead to lower productivity. If, however, imports are relatively technology-intensive, imports also generate learning that can on net raise domestic productivity. Moreover, there is somewhat less selection when the typical domestic firm is large. The results support models in which trade triggers both substantial selection and technological learning.
Keywords: market shares; R&D; Technology investments
JEL: F1 O3 O33
No ‘Third Way’ for Economic Organizations? Networks and Quasi-Markets in Broadcasting
We present two linked, longitudinal case studies of the use of quasi markets in UK broadcasting over the past decade: one looks at the regulated outsourcing of programme making to independent producers, the other at the development of an internal market system within the BBC. New network forms are shown to have arisen from the interaction of legal regulation, contracts, and property rights. However, these organizational forms are also seen to be associated with increased transaction costs and with signs of deterioration in programme quality and innovation. We suggest that for such networks to be a viable ‘third way’ between markets and hierarchy, closer attention needs to be given to the issue of institutional design.
Keywords: networks, quasi markets, television production
JEL: K23 L14 L24 L82
Networks for change: How networks influence organizational change
This paper contributes to the literature on organizational change by examining organizations as social entities embedded in inter-organizational networks. In contrast to extant research that focuses on macro environment and internal factors to explain organizational change we put forth the social network surrounding the firm as a major driver of any change process. In specific we examine organization change as driven by the organizations? positions and relations in an interorganizational network. Our conceptual framework demonstrates that inter-organizational networks are important mid-level environmental factors that complement the macro-environment and internal organizational factors for the study of organizational changes. We conclude with a discussion on normative implications for organizations and avenues for future research.
Keywords: organizational change, social networks
JEL: M0 M1
IT Outsourcing in Finnish Business
This paper reviews the characteristics and magnitude of information technology (IT) outsourcing as well as studies its labor productivity effects with a representative sample of Finnish businesses. Depending on the IT task in question, on average from one-third to two-thirds of IT has been outsourced; of the ten categories considered, the development of non-Internet business-to-business applications (e.g., EDI) is the leading activity in this respect. The various dimensions of IT outsourcing are all highly positively correlated. After controlling for industry and regional effects as well as characteristics of firms and their employees, it is found that an externally-supported computer user is about 20% more productive than an otherwise similar worker without a computer, which corresponds to about 5% output elasticity of outsourced IT; the effect of internally-supported computer use is not statistically s ignificantly different for zero, and it is also several times smaller in magnitude. While the issues of causality, timing, self-selection, and unobserved firm heterogeneity are not fully addressed, the findings nevertheless suggest that IT outsourcing may have significant economic consequences.
Keywords: labor productivity, information technology, computers, outsourcing Finnish business
JEL: D23 D24 L14 L24
Assessing the assignation of public subsidies: Do the experts choose the most efficient R&D projects?
The implementation of public programs to support business R&D projects requires the establishment of a selection process. This selection process faces various difficulties, which include the measurement of the impact of the R&D projects as well as selection process optimization among projects with multiple, and sometimes incomparable, performance indicators. To this end, public agencies generally use the peer review method, which, while presenting some advantages, also demonstrates significant drawbacks. Private firms, on the other hand, tend toward more quantitative methods, such as Data Envelopment Analysis (DEA), in their pursuit of R&D investment optimization. In this paper, the performance of a public agency peer review method of project selection is compared with an alternative DEA method.
Keywords: Subsidies, R&D, DEA, Multi Criteria Decision Analysis, “peer review”.
JEL: O32 C61 H25
