Bridging the divide: new evidence about firms and digitalisation. Bruegel Policy Contribution Issue #17 December 2019

Using new evidence on the digitalisation activities of firms in the European Union and the United States, we document a trend towards digital polarisation based on firms’ use of the latest digital technologies and their plans for future investment in digitalisation. A substantial share of firms are not implementing any state-of-the-art digital technologies and do not have plans to invest in digitalisation. However, there is also a substantial share of firms that are already partially or even fully implementing state-of-the-art digital technologies in their businesses and that plan to further increase their digitalisation investments. Small Manufacturing firms and old small firms in services are significantly more likely to be and remain non-active in terms of digitalisation. Our results do not provide any evidence that EU firms are more likely than their US counterparts to be stuck on the wrong side of the digitalisation divide. Taking into account firm size and firm age, there are no significant differences between the EU and the US in terms of having more or fewer persistently non-digital firms. As persistently digitally-inactive firms are also less likely to be innovative, to add employees or to command higher mark-ups, it is important for policymaking to remove barriers that trap these firms in persistent digital inactivity. Lack of access to finance is a major barrier for EU firms compared to their US counterparts, particularly for the EU’s persistently non-digital firms, and especially for older, smaller companies in services. Improving their access to finance might therefore go a long way towards addressing the corporate digitalisation divide in the EU

Technology as an economic catalyst in rural and depressed places in Massachusetts

This paper uses case studies, including two cities (Lynn and New Bedford), a sub-city district (Roxbury) and two towns in rural Franklin County (Greenfield and Orange), to examine the role of technology as a potential economic catalyst in rural and depressed places in Massachusetts. Though the five target areas vary in size, density, geographic area, demographic characteristics and economic resources, each exhibits chronic patterns of economic distress related to the decline of manufacturing, construction and other key industries

The Rise of Innovation Districts: A New Geography of Innovation in America

As the United States slowly emerges from the great recession, a remarkable shify is occurring in the spatial geogrpahy of innovation. For the past 50 years, the landscape of innovation has been dominated by places like Silicon Valley - suburban corridors of spatially isolated corporate campuses, accessible only by car, with little emphasis on the quality of life or on integrating work, housing, and recreation. A new complementary urban model is now emerging, giving rise to what we and others are calling "innovation districts." These districts, by our definition, are geographic areas where leading-edge anchor institutions and companies cluster and connect with start-ups, business incubators, and accelerators. They are also physically compact, transit-accessible, and technicall

Market feedback, investment constraints, and managerial behavior

This paper examines the joint role of market feedback and investment constraints on managerial behavior. Using a sample of UK fixed price initial public offerings, we show that underperformance of share returns at the IPO significantly affects managerial investment decisions in the period after the offering. Firms with better investment opportunities and proportionately lower fixed (higher intangible) assets are more sensitive to negative market feedback. Over the longer term, the more responsive firms perform significantly better than their non-responsive counterparts. The findings contribute to the debate on the informational advantage of managers over investors and present strong evidence that the market, on aggregate, can provide a superior assessment of a firm's opportunities. Managers who are able to respond to negative market feedback can significantly improve their firm's future prospects

A Report on the Design Sub-Sector in London

Housed in the School of Creative Enterprise at the London College of Communication (University of the Arts), the Creative Industries Observatory (CIO) is a leading contributor to academic research and analysis within the creative industries, and a source of information for the increasingly influential group of sub-sectors that characterise the modern knowledge economy. The CIO was set up in conjunction with ‘Creative Capital World City’ (CCWC) – a project funded by the Higher Education Innovation Fund (HEIF) aimed at supporting the creative industries in key world markets, including THE UK, India and China. The CIO is an international and multi-disciplinary team with a range of expertise and experience across academic disciplines and industry sub-sectors. We focus on strategic, structural and definitional issues relevant to the creative industries. This report is one in a series designed to give policy makers, business leaders, practitioners and researchers a comprehensive overview and in-depth analysis of the core activities and key characteristics across thirteen creative sub-sectors in developed and emerging global cities. The report is designed to allow you to identify information that is relevant to your needs quickly and effectively, as well as cross-reference between topics and creative sub-sectors. CIO reports are designed to provide a snapshot of each sub-sector in each city. This report focuses on the design sub-sector in London

Job Creation Through Building the Field of Impact Sourcing

Provides an overview of the field of impact sourcing - using business process outsourcing to create sustainable jobs for the lowest-income populations. Offers case studies, examines models, outlines challenges, and presents an action agenda

Internet, adjustment of firms and the spatial division of labour

The rise of the Internet has been heralded as the 'death of distance' that may eventually entail a 'decline of the city'. Whether or not these futuristic visions will materialize will depend upon how firms and industries react to the Internet as a general-purpose technology. Besides the locational choice of New Economy firms themselves it is the adoption of E-commerce in industries of the 'old' economy which has the potential for re-shaping the economic geography of regions, and which may, in many instances radically so, change the way to manage the internal organization of firms as well as relationships with business partners (B2B) and with consumers (B2C). The paper aims at discussing elements of a conceptual approach for evaluating these spatial effects of E-commerce activities on locational patterns in the old economy by identifying suitable proxy indicators from existing evidence, such as connectivity to IT-infrastructures, sectoral differences in B2B solutions, market (de-)concentration processes, or changes of functional employment structures of cities. Key words: Internet, E-commerce, Organizational Change, Firm Location, Spatial Division of Labour

Shifting new media: from content to consultancy, from heterarchy to hierarchy

This is a detailed case history of one of London’s iconic new media companies, AMX Studios. Some of the changes in this firm, we assume, are not untypical for other firms in this sector. Particularly we want to draw attention to two transformations. The first change in AMX and in London’s new media industry more generally refers to the field of industrial relations. What can be observed is a shift from a rather heterarchical towards a more hierarchical organized new media industry, a shift from short-term project networks to long-term client dependency. The second change refers to new media products and services. We want to argue for a shift from cool content production towards consultancy and interactive communications solutions

Innovation and the Evolution of Market Structure for Internet Access in the United States

How and why did the U.S. commercial Internet access market structure evolve during its first decade? Commercial Internet access market structure arose from a propitious combination of inherited market structures from communications and computing, where a variety of firms already flourished and entrepreneurial norms prevailed. This setting nurtured innovative behavior across such key features as pricing, operational practices, and geographic coverage. Inherited regulatory decisions in communications markets had a nurturing effect on innovative activity. On-going regulatory decisions also shaped the market’s evolution, sometimes nurturing innovation and sometimes not. This narrative and analysis informs conjectures about several unique features of U.S. market structure and innovative behavior. It also informs policy debates today about the role of regulation in nurturing or discouraging innovation behavior.

Networks in the shadow of markets and hierarchies : calling the shots in the visual effects industry

The nature and organisation of creative industries and creative work has increasingly been at the centre of academic and policy debates in recent years. The differentiation of this field, economically and spatially, has been tied to more general arguments about the trend towards new trust-based, network forms of organization and economic coordination. In the first part of this paper, we set out, unpack and then critique the conceptual and empirical foundations of such claims. In the main section of the paper, we draw on research into a particular creative sector of the economy - the visual effects component of the film industry - a relatively new though increasingly important global production network. By focusing both on firms and their workers, and drawing on concepts derived from global value chain, labour process and institutional analysis, we aim to offer a more realistic and grounded analysis of creative work within creative industries. The analysis begins with an attempt to explain the power dynamics and patterns of competition and collaboration in inter-firm relations within the Hollywood studio-dominated value chain, before moving to a detailed examination of how the organisation of work and reemployment relations are central to the capturing of value. On the basis of that evidence, we conclude that trust-based networks and collaborative communities play some part in accessing and acquiring leverage in the value chain, but do not explain the core mechanisms of resource allocation, coordination and work organisation