The "Great Moderation" and the US External Imbalance

The early 1980s marked the onset of two striking features of the current world macro-economy: the fall in US business cycle volatility (the "great moderation") and the large and persistent US external imbalance. In this paper we argue that an external imbalance is a natural consequence of the great moderation. If a country experiences a fall in volatility greater than that of its partners, its relative incentives to accumulate precautionary savings fall and this results in an equilibrium permanent deterioration of its external balance. To assess how much of the current US imbalance can be explained by this channel, we consider a standard two country business cycle model in which households are subject to country specific shocks they cannot perfectly insure against. The model suggests that a fall in business cycle volatility like the one observed for the US relatively to other major economies can account for about 20% of the current total US external imbalance.

International Knowledge Transfer: an integrated analysis of antecedents, consequences and time patterns of the FDI knowledge spillover effect

This thesis is concerned with the process of international knowledge transfer mediated by multinational corporations\u2019 Foreign Direct Investment. Answering to International Business scholars\u2019 recent call for a deeper analysis of the multinational firms\u2019 strategic behaviour at the level of the subsidiary, it explores the theoretical drivers behind the active role foreign subsidiaries can play in influencing the process of knowledge dissemination within the host-location. Using two different datasets on foreign subsidiaries\u2019 local innovative activity and business linkages with domestic suppliers and distributors, the empirical analysis lends support for established theorizing about multinational firms\u2019 trade-off between the opportunity to learn from the host-environment and the risk to lose control over their proprietary knowledge assets, due to the local spillover effect. Moreover, shifting the focus of the analysis from the head-quarter to the foreign subunits, the results reveal that subsidiaries actively manage these knowledge flows within their host-locations, to the aim of fostering incoming information (in terms of both technology and knowledge of the local business network and market), while at the same time restricting outward spillovers. It is also shown that, in order to manage these knowledge flows, foreign subsidiaries adapt their investment in local interaction with domestic firms to both internal and external factors. More specifically, the results suggest that increasing competitive pressure fosters the importance of sourcing resources for innovation from the local context. However, when competition becomes too high, subsidiaries tend to lower the extent of close interaction with local counterparts, in order to protect their competitive assets from the increased risk of knowledge spillover in the external environment. Furthermore, this relationship is moderated by the extent to which the subsidiaries possess relevant competitive assets. In other words, especially capable subsidiaries in very competitive environments tend to shy away from strong interaction with local firms, since under such circumstances the risk of spillovers is larger than the potential benefits of learning. This thesis also makes a theoretical contribution by combining International Business literature with Open Innovation perspectives to develop a framework for the analysis of the time patterns of the knowledge flows between foreign and domestic firms. Specifically, it motivates the importance \u2013 for firms\u2019 competitiveness - of evaluating the speed at which this phenomenon takes place

The Great Moderation and the U.S. External Imbalance

The early 1980s marked the onset of two striking features of the current world macroeconomy: the fall in U.S. business cycle volatility (the ggreat moderationh) and the large and persistent U.S. external imbalance. In this paper, we argue that an external imbalance is a natural consequence of the great moderation. If a country experiences a fall in volatility greater than that of its partners, its incentives to accumulate precautionary savings fall and this results in a permanent deterioration of its external balance. To assess how much of the current U.S. imbalance can be explained by this channel, we consider a standard two-country business cycle model in which households are subject to business cycle shocks they cannot perfectly insure against. The model suggests that a fall in business cycle volatility like that observed in the United States can account for about 20 percent of the actual U.S. external imbalance.Business cycle volatility; Precautionary saving; Current account; Net foreign asset position

Does co-location accelerate knowledge outflows from FDI? The role of MNC subsidiaries' technology sourcing strategies

Despite the strategic importance of the knowledge outflows from FDI for local firms’ competitiveness, no study has focused on the speed at which this phenomenon takes place. However, this issue is crucial since the speed at which firms absorb external knowledge influences the time they need to carry out subsequent innovations, their ability to adapt to external changes and enter new markets, thus ultimately affecting their chances to achieve a competitive advantage. This paper tries to fill this gap, by investigating the temporal patterns of knowledge outflows between foreign subsidiaries and firms located in host-regions. Combining International Business literature with insights on Innovation Strategy, we provide evidence on the timing of this phenomenon, and discuss the role played by multinational firms’ technology sourcing strategies

Information Asymmetries, Family Ownership and Divestiture Financial Performance: Evidence from Western European Countries

Abstract: Combining agency theory and information asymmetry literature this paper examines the controversial relationship between family ownership and the stock market reaction to a divestiture event. We employ a unique dataset of 265 divestiture transactions in West European countries. We reveal that in presence of high information asymmetries the stock market’s positive reaction will be lowered by a higher perception of the risk of opportunistic behaviours that controlling owners may carry out to the detriment of minority shareholders

Change and stability in the automotive industry: a patent analysis

3noopenThis study explores the evolution of the knowledge base of the dominant Original Equipment Manufacturers (OEMs) in the global automotive industry. Using data on patent families, we reconstruct and analyze their innovative portfolio in the period 1990-2014. The analysis documents experimentation in new technical fields as well as stability in industry- specific technical areas, allowing to draw implications on the underlying industry dynamics. Specifically, our results show that despite the emergence of technological opportunities in new and once-unrelated technical domains, the importance of core automotive technologies has increased over the period of analysis. At the same time, the relative position of carmakers along different performance dimensions has remained quite stable, suggesting that the technological capabilities that have traditionally driven success in this industry continue to play a key role in explaining firms’ competitive strength.openAlessandra Perri; Daniela Silvestri; Francesco ZirpoliPerri, Alessandra; Silvestri, Daniela; Zirpoli, Francesc

The Knowledge Base of (Multi-technology) Industries

Understanding the knowledge base of industries is of paramount importance for analyzing the dynamics of industries’ evolution and competition. This is particularly relevant for multitechnology industries that encompass an evolving variety of technical fields. Focusing on the automotive industry, we propose a methodological approach that identifies, as a starting point, the key actors that engage in the industries’ knowledge generation and then reconstructs their patent portfolio over time. We argue that this approach enables to map the process of accumulation of the competences that correspond to the industry’s technological core while uncovering the emerging technological trends that animate the industry’s development

Change and stability in the automotive industry: a patent analysis

This study explores the evolution of the knowledge base of the dominant Original Equipment Manufacturers (OEMs) in the global automotive industry. Using data on patent families, we reconstruct and analyze their innovative portfolio in the period 1990-2014. The analysis documents experimentation in new technical fields as well as stability in industry- specific technical areas, allowing to draw implications on the underlying industry dynamics. Specifically, our results show that despite the emergence of technological opportunities in new and once-unrelated technical domains, the importance of core automotive technologies has increased over the period of analysis. At the same time, the relative position of carmakers along different performance dimensions has remained quite stable, suggesting that the technological capabilities that have traditionally driven success in this industry continue to play a key role in explaining firms’ competitive strength

International Knowledge Transfer: an integrated analysis of antecedents, consequences and time patterns of the FDI knowledge spillover effect

This thesis is concerned with the process of international knowledge transfer mediated by multinational corporations’ Foreign Direct Investment. Answering to International Business scholars’ recent call for a deeper analysis of the multinational firms’ strategic behaviour at the level of the subsidiary, it explores the theoretical drivers behind the active role foreign subsidiaries can play in influencing the process of knowledge dissemination within the host-location. Using two different datasets on foreign subsidiaries’ local innovative activity and business linkages with domestic suppliers and distributors, the empirical analysis lends support for established theorizing about multinational firms’ trade-off between the opportunity to learn from the host-environment and the risk to lose control over their proprietary knowledge assets, due to the local spillover effect. Moreover, shifting the focus of the analysis from the head-quarter to the foreign subunits, the results reveal that subsidiaries actively manage these knowledge flows within their host-locations, to the aim of fostering incoming information (in terms of both technology and knowledge of the local business network and market), while at the same time restricting outward spillovers. It is also shown that, in order to manage these knowledge flows, foreign subsidiaries adapt their investment in local interaction with domestic firms to both internal and external factors. More specifically, the results suggest that increasing competitive pressure fosters the importance of sourcing resources for innovation from the local context. However, when competition becomes too high, subsidiaries tend to lower the extent of close interaction with local counterparts, in order to protect their competitive assets from the increased risk of knowledge spillover in the external environment. Furthermore, this relationship is moderated by the extent to which the subsidiaries possess relevant competitive assets. In other words, especially capable subsidiaries in very competitive environments tend to shy away from strong interaction with local firms, since under such circumstances the risk of spillovers is larger than the potential benefits of learning. This thesis also makes a theoretical contribution by combining International Business literature with Open Innovation perspectives to develop a framework for the analysis of the time patterns of the knowledge flows between foreign and domestic firms. Specifically, it motivates the importance – for firms’ competitiveness - of evaluating the speed at which this phenomenon takes place.This thesis is concerned with the process of international knowledge transfer mediated by multinational corporations’ Foreign Direct Investment. Answering to International Business scholars’ recent call for a deeper analysis of the multinational firms’ strategic behaviour at the level of the subsidiary, it explores the theoretical drivers behind the active role foreign subsidiaries can play in influencing the process of knowledge dissemination within the host-location. Using two different datasets on foreign subsidiaries’ local innovative activity and business linkages with domestic suppliers and distributors, the empirical analysis lends support for established theorizing about multinational firms’ trade-off between the opportunity to learn from the host-environment and the risk to lose control over their proprietary knowledge assets, due to the local spillover effect. Moreover, shifting the focus of the analysis from the head-quarter to the foreign subunits, the results reveal that subsidiaries actively manage these knowledge flows within their host-locations, to the aim of fostering incoming information (in terms of both technology and knowledge of the local business network and market), while at the same time restricting outward spillovers. It is also shown that, in order to manage these knowledge flows, foreign subsidiaries adapt their investment in local interaction with domestic firms to both internal and external factors. More specifically, the results suggest that increasing competitive pressure fosters the importance of sourcing resources for innovation from the local context. However, when competition becomes too high, subsidiaries tend to lower the extent of close interaction with local counterparts, in order to protect their competitive assets from the increased risk of knowledge spillover in the external environment. Furthermore, this relationship is moderated by the extent to which the subsidiaries possess relevant competitive assets. In other words, especially capable subsidiaries in very competitive environments tend to shy away from strong interaction with local firms, since under such circumstances the risk of spillovers is larger than the potential benefits of learning. This thesis also makes a theoretical contribution by combining International Business literature with Open Innovation perspectives to develop a framework for the analysis of the time patterns of the knowledge flows between foreign and domestic firms. Specifically, it motivates the importance – for firms’ competitiveness - of evaluating the speed at which this phenomenon takes place.LUISS PhD Thesi

What are the most promising conduits for foreign knowledge inflows? Innovation networks in the Chinese pharmaceutical industry

We study innovation networks in emerging markets, where foreign actors have been identified as key sources of knowledge spillovers as well as progenitors of industry clusters. Focusing on connectivity as a channel for international knowledge sourcing, we widen our lens beyond multinational enter- prises (MNEs) to include critical innovative actors such as research institutions (i.e. universities and research centers). We examine the geographic dispersion of co-inventor networks generated by US patents associated with the Chinese pharmaceutical industry. Previous research has highlighted the role of organizationally driven MNE networks as enablers of foreign knowledge inflows to less de- veloped countries. However, our results emphasize the critical role of individually motivated networks arising from advanced economy research institutions in connecting China to global knowledge networks