Productivity and costs for firms in presence of technology renewal processes

Wide empirical analyses investigated size and growth rate distribution of business firms, providing a relevant empirical support to economic theory. We rely on such analyses and on studies on technology renewal costs and productivity, in order to draw sufficient conditions for the optimality of firms’ profit with respect to the time. The relationships that hold among productivity, costs of renewal and growth rates of the companies at the optimal profit time are shown and suggestions for firms’ policies are proposed

Economic growth and corporate renewal

To address competition from Emerging and Industrialized Countries it is necessary for Italian companies to face structural and financial reforms. Structural reforms will affect and improve processes, products. They will upgrade knowledge transfer. At the same time, financial reforms are necessary to adjust firms’ dimensions with what markets and international competition require. A movement in the right direction is the rise of innovative medium firms. These corporations are spreading through affiliation networks which improve the systemic efficiency and that are responsible for the progressive deep changes in the industry. Italy’s growth strategy will call for appropriate industrial policies and supported by a widespread socioeconomic consensus.internationalization, technological change, international trade, emerging countries.

Differences in forecasting approaches between product firms and product-service systems (PSS)

This paper examines the forecasting implications for Product-Service Systems (PSS) applications in manufacturing firms. The approach taken is to identify the scope of operations for PSS applications by identifying all the activities associated with the total cost of ownership (TCO). The paper then develops a revenue model for manufacturing firms providing PSS applications. The revenue model identifies three generic revenue streams that provide the basis for discussion on the differences in forecasting approaches between product firms and Product-Service Systems (PSS) in manufacturing firms. The forecasting approaches are different due to the nature of customer involvement in the service aspect of PSS applications. This necessitates an understanding of the customer service experience and the factors affecting this such as the service profit chain which links profitability, customer loyalty and service value to employee satisfaction, capability and productivity. The forecasting approaches identified raises forecasting challenges for each of the three generic revenue sources. These challenges vary from the difficulty in obtaining the service user’s viewpoint through to difficulties in determining market acceptance of PSS applications

Product innovation and renewal: Foreign firms and clusters in Belgium.

Using the cluster definitions of the European Cluster Observatory, this paper investigates the link between cluster membership and firm-level product innovation and renewal; using data from the Community Innovation Survey for Belgium. Clustered firms account for 71 percent of total product renewal generated in 2004 and for 53 percent of product innovators; compared to 29 and 47 percent for non-clustered firms, respectively. Furthermore, cluster membership is shown to be conducive to firm-level product innovation and renewal once firm size, export intensity and research inputs are taken into account. Foreign firms are not more prone to carry out product innovation, except for subsidiaries in clusters.

The relationship between knowledge management, innovation and firm performance: evidence from Dutch SMEs

This article investigates the relationship between knowledge management (KM), innovation and firm performance of smaller firms (less than 100 employees), based on a panel of more than 400 Dutch firms. Regression analyses explain the variations in sales turnover growth from various measures of KM strategies. We distinguish between KM input, throughput and output (or innovation) strategies. We find that KM input strategies related to knowledge acquisition are positively related to sales turnover growth. In contrast, we do not find a relation between KM throughput and KM output (innovation) measures and firm performance. The results emphasize the importance of both knowledge absorption and knowledge creation to the success of innovative efforts in small firms. This is an updated version of Scales-paper N200322.

Why aredeveloping countries so slow in adopting new technologies ? the aggregate and complementary impact of micro distortions

This paper explores how developmental and regulatory impediments to resource reallocation limit the ability of developing countries to adopt new technologies. An efficient economy innovates quickly; but when the economy is unable to redeploy resources away from inefficient uses, technological adoption becomes sluggish and growth is reduced. The authors build a model of heterogeneous firms and idiosyncratic shocks, where aggregate long-run growth occurs through the adoption of new technologies, which in turn requires firm destruction and rebirth. After calibrating the model to leading and developing economies, the authors analyze its dynamics in order to clarify the mechanism based on firm renewal. The analysis uses the steady-state characteristics of the model to provide an explanation for long-run output gaps between the United States and a large sample of developing countries. For the median less-developed country in the sample, the model accounts for more than 50 percent of the income gap with respect to the United States, with 60 percent of the simulated gap being explained by developmental and regulatory barriers taken individually, and 40 percent by their interaction. Thus, the benefits from market reforms are largely diminished if developmental and regulatory distortions to firm dynamics are not jointly addressed.Economic Theory&Research,Emerging Markets,E-Business,Technology Industry,Political Economy

Common Frameworks for Regional Competitiveness - Insights from a Number of Local Knowledge Economies

1. Aims of the paper: in this paper we analysed a number of European regions that in the last ten to fifteen years experienced a process of industrial reconversion moving from traditional sectors-based economies to knowledge economies. With the aim of shaping the transformation paths driving their competitiveness recovery, the analysis was conducted on two levels. First, we tried to identify the most relevant factors of competitiveness behind each region’s renewal process and combined them to shape a number of common trajectories of regional competitiveness. Secondly, we outlined a taxonomy of transformation paths followed by each of the territories under investigation in their development process towards a knowledge economy. Interestingly, all regional ‘success histories’ are strongly dependent on the presence of a tri-polar regional innovation system (RIS) ‘gluing’ firms, institutions and academia. 2. Factors and trajectories of regional competitiveness: Some of the factors of regional competitiveness identified in the analysis (exhaustively listed and described in the full paper) are entrepreneurial motivation, managerial skills, access to private and public financing, the presence of a local technical university. By combining the competitiveness factors specific to each regional ‘success history’, we were able to spot a number of trajectories of regional competitiveness : (i) the Nokia economies trajectory, (ii) the knowledge creation upon invitation trajectory and (iii) the Cambridge way trajectory. The first trajectory includes the Nordic regions of Tampere and Goteborg. The leading factors of development of these regions can be brought back to the successful development strategies of Ericsson and Nokia, in turn based on excellent managerial and organisational skills and a strong international orientation. The second trajectory of regional competitiveness refers to Ireland, Scotland and Wales, characterized by an ‘industrialisation upon invitation’ type of growth based on foreign direct investments. The policy of FDI attraction is largely supported by public incentives and owes its success to the leading role taken up by regional development agencies. The last trajectory of regional competitiveness relates to the high tech cluster of Cambridge (UK), emerged and developed essentially thanks to the active role of Cambridge University in nurturing the cluster with human capital of excellence and in allowing the faculty members to commercially exploit their skills and technical know how. The most interesting result of this part of the analysis is that the regions under scrutiny owe their virtuous process of competitiveness recovery to three sets of factors, each originating from one of the three territorial actors making up a regional innovation system – firms, institutions, university – so that behind each regional renewal history it is possible to recognize the presence and the ‘functioning’ of a RIS. 3. A taxonomy of regional transformation paths: Next, we classified the development dynamics of the regions investigated above along three paths of economic restructuring. The first path, here defined as the RIS into process, is typical of industrial clusters in engineering-based sectors such as plant engineering, specialised advanced machinery and shipbuilding. Here the relationship with the RIS is developed at a later stage of the cluster life, as the RIS originates in response to the presence of the cluster. This is the case of a number of regions under scrutiny (Baden-Württemberg and Brabant, for instance) where the regional innovation system was specifically designed to support and strengthen local existing industrial specializations. The second regional development path, typical of industrial clustering in science-based sectors such as genetics, IT and biotechnology, follows the opposite ‘direction’. Here the RIS is the main source of the cluster creation and the cluster develops from the regional innovation system by exploiting all the local resources in terms of cooperation and interaction with universities and local institutions. This is the case of regions such as Shannon and Cambridge (UK), which have followed a transformation process here defined as RIS from process, where the pre-existence of the RIS represents a key factor for the organization of a science-based industrial system. The third path may be viewed as the result of a combination between the two different base ‘entities’ described above. In fact, in regions such as Wales, Tampere, Göteborg and North Rhine – Westphalia, science-based clusters have developed from declining engineering-based sectors, passing through the formation of a RIS. In this respect, the transformation process can be defined as RIS through process. In this group of regions, the regional innovation system acted as catalyst for the local system transformation process, driving the regional competitive repositioning through the development of clusters of innovative and high tech firms. In this respect, the process of territorial transformation has taken place thanks to a ‘systemic effort’ and as a result of social interdependencies among territorial actors.

Boosting Innovation and Productivity in Enterprises: What Works?

A return to economic growth and higher employment requires growth in the number and sustainability of Irish enterprises. Innovation at enterprise level is essential for sustainability and competitiveness and plays a major role in increasing overall productivity. Understanding the determinants of enterprise innovation and how it affects productivity is important for designing effective innovation policies. The tight fiscal constraints and the urgency of achieving successful outcomes require that government policies aimed at enhancing enterprise innovation and raising productivity need to be very effective. This paper draws on recent international theoretical and empirical literature based on enterprise level data to explore four questions: Does innovation contribute to higher productivity? Which types of enterprises invest in innovation? Which enterprises have higher innovation expenditure per employee? Which types of enterprises are more likely to innovate successfully? We then look at what these findings imply for policy in relation to indigenous enterprises, whether the current policy mix is appropriate and how it might become more effective.Productivity

Organizational Renewal: The Management of Large-Scale Organizational Change in Norwegian Firms

A study of large organizational change projects was done in 228 private and public sector firms across Norway to examine the causes and consequences of renewal efforts and the strategies used by firm level management and union leaders to involve the workforce in the planning, design and execution of change. The research focus was on management\u27s choice of different forms of worker participation and their effects on the project outcomes. Data came from structured interviews with the top manager and an elected employee representative in each firm. The results showed that most major changes occurred in organizational structures and administration, undertaken primarily to increase efficiency and as a response to financial difficulties. In the private sector, the planning and design phases of change projects were dominated by top management, with very little involvement by non-managerial employees. Public sector employees played a larger role in the early phases of the projects, mostly through their elected representatives in legally prescribed forums. In both the private and public sector, there was more worker participation in the execution of change, both through elected representatives and more direct worker involvement of an ad hoc, firm-specific, nature. Neither the extent nor form of participation contributed to the success of the change projects. Instead, the project outcomes were primarily a function of external pressures experienced by the organization, the importance of renewal for organizational survival, and the flexibility of management and labor to accommodate to change. Resistance to change did not decrease as a function of worker participation, but it was influenced by the degree of labor-management agreement in the firm