Standard-Setting and Knowledge Dynamics in Innovation Clusters

Extensive research has been conducted on how firms and regions take advantage of spatially concentrated assets, and also why history matters to regional specialisation patterns. In brief, it seems that innovation clusters as a distinctive regional entity in international business and the geography of innovation are of increasing importance in STI policy, innovation systems and competitiveness studies. Recently, more and more research has contributed to an evolutionary perspective on collaboration in clusters. Nonetheless, the field of cluster or regional innovation systems remains a multidisciplinary field where the state of the art is determined by the individual perspective (key concepts could, for example, be industrial districts, innovative clusters with reference to OECD, regional knowledge production, milieus & sticky knowledge, regional lock-ins & path dependencies, learning regions or sectoral innovation systems). According to our analysis, the research gap lies in both quantitative, comparative surveys and in-depth concepts of knowledge dynamics and cluster evolution. Therefore this paper emphasises the unchallenged in-depth characteristics of knowledge utilisation within a cluster's collaborative innovation activities. More precisely, it deals with knowledge dynamics in terms of matching different agents´ knowledge stocks via knowledge flows, common technology specification (standard-setting), and knowledge spillovers. The means of open innovation and system boundaries for spatially concentrated agents in terms of knowledge opportunities and the capabilities of each agent await clarification. Therefore, our study conceptualises the interplay between firm- and cluster-level activities and externalities for knowledge accumulation but also for the specification of technology. It remains particularly unclear how, why and by whom knowledge is aligned and ascribed to a specific sectoral innovation system. Empirically, this study contributes with several descriptive calculations of indices, e.g. knowledge stocks, GINI coefficients, Herfindahl indices, and Revealed Patent Advantage (RPA), which clearly underline a high spatial concentration of both mechanical engineering and biotechnology within a European NUTS2 sample for the last two decades. Conceptually, our paper matches the geography of innovation literature, innovation system theory, and new ideas related to the economics of standards. Therefore, it sheds light on the interplay between knowledge flows and externalities of cluster-specific populations and the agents' use of such knowledge, which is concentrated in space. We find that knowledge creation and standard-setting are cross-fertilising each other: although the spatial concentration of assets and high-skilled labour provides new opportunities to the firm, each firm's knowledge stocks need to be contextualised. The context in terms of 'use case' and 'knowledge biography' makes technologies (as represented in knowledge stocks) available for collaboration, but also clarifies relevance and ownership, in particular intellectual property concerns. Owing to this approach we propose a conceptualisation which contains both areas with inter- and intra-cluster focus. This proposal additionally concludes that spatial and technological proximity benefits standard-setting in high-tech and low-tech industries in very different ways. More precisely, the versatile tension between knowledge stocks, their evolution, and technical specification & implementation requires the conceptualisation and analysis of a non-linear process of standard-setting. Particularly, the use case of technologies is essential. Related to this approach, clusters strongly support the establishment of technology use cases in embryonic high-tech industries. Low-tech industries in contrast rather depend on approved knowledge stocks, whose dynamics provide better and fast accessible knowledge inputs within low-tech clusters.innovation clusters, standard-setting, knowledge externalities and flows, knowledge alignment, mechanical engineering, biotechnology

Economic growth in the post-socialist Russian Federation after 1991: The role of Institutions

The paper emphasizes the transition in Russia and the role institutions played before and during the process. In Russia, a big bang approach was applied. That is to say, transition was conducted all of a sudden, omitting important underlying reforms. This practice should function as a shock therapy. Hence, the approach should leave no other chance than an abrupt adaption to the new free-market rules. These rules would then lead to fast economic growth and development, as they did in other places. However, since Russian GDP per capita and thereby living standards deteriorated dramatically in the years after the collapse of the Soviet Union, the plan did not work. At any rate, since then Russian economic indicators recovered and partly achieved their pre-1991 levels at the end of the last decade. The paper depicts Russia's reform efforts and the subsequent developments. The close ties among the political elite, the banking sector and the old nomenklatura are demonstrated. The patrimonial system that persisted for centuries is still observable at the state level. At any rate, Russia can neither evade its historical and institutional development path nor its societal structures that are based on networks and nepotism. Russia's systemic lack of the rule of law and therewith of secure property, the character of the Russian political system with the patriarch as the head of state and the resulting necessity of corruption and bribes inhibit the realization of its full growth potential. --country studies,economic systems,formerly centrally planned economies,growth,institutions,transition economies

Guns and butter - but no margarine: The impact of Nazi economic policies on German food consumtion, 1933-38

The German population's material standard of living during the 'peace years' of the Nazi regime (1933-38) is much debated. We use hitherto disregarded consumption data and the axiom of revealed preferences to test whether the material standard of living improved. We find that the food consumption bundle realized in 1935-36 must have been inferior to that of 1927-28 although GDP per capita was much higher. Even in 1937-38 consumers were probably worse off compared to 1927-28. We conclude that increasing consumption constraints forced German consumers to a diet and thus to a material standard of living that were much more frugal than national income figures suggest. --

Why blu-ray vs. HD-DVD ist not VHS vs. Betamax: the co-evolution of standard-setting consortia

Extensive research has been conducted on the economics of standards in the last three decades. To date, standard-setting studies emphasize a superior role of demand-side-driven technology diffusion; these contributions assume the evolution of a user-driven momentum and network externalities. We find that consumers wait for a dominant standard if they are unable to evaluate technological supremacy. Thus, supply-side-driven activities necessarily need to address an absence of demand-side technology adoption. Our paper focuses on Blu-ray vs. HD-DVD as an illustrative case of consortia standard wars. One central role of consortia is to coordinate strategic behavior between heterogeneous agents, e.g. incumbents, complementors (content providers) and others, but also to form a coalition against other standard candidates. More precisely, we argue that agents signal standard-setting war outcomes through consortia events. We depict the essential role of consortia structures for the recently determined standard war between the High-Definition disc specifications Blu-ray and HD-DVD. Therefore, the paper suggests that unique supply-side dynamics from consortia structures, consortia announcements and exclusive backing decisions of firms determined the standard-setting process in the Blu-ray vs. HD-DVD standard war. This study is based on the following data: movie releases and sales numbers, membership affiliation for structural consortia analysis, and an in-depth event study. A detailed comparison of the technological specifications of both standard specifications supports our argument that there was no technological supremacy of one standard candidate from a consumer-oriented usecase perspective. We furthermore clarify that content providers (complementors) such as movie studios and movie rental services feature a gate-keeping position in the Blu-ray vs. HD-DVD standard war. In the case of Blu-ray, film studios decided the standard war because the availability of movie releases, but not technological supremacy, made the standard attractive to consumers. Finally, we find that there is a co-evolution of the consortia in terms of membership dynamics. Particularly, firm allegiance of heterogeneous agents plays a crucial role. --Blu-ray,HD-DVD,standard wars,co-evolution,consortia,event study

Business taxes and the electoral cycle

The purpose of this paper is to assess whether politicians manipulate the timing of tax rate changes in a strategic way to maximize reelection prospects. To do so, we exploit the German local business tax as a testing ground which is set autonomously by German municipalities. As election dates vary across local councils, the data allows us to disentangle effects related to the timing of elections from common trends. Using a rich panel data-set for German municipalities, we assess the impact of elections on local business tax choices. The findings support the notion of a political cycle in tax setting behavior as the growth rate of the local business tax is significantly reduced in the election year and the year prior to the election, while it jumps up in the year after the election. This pattern turns out to be robust against a number of sensitivity checks. --local business tax choice,political economy,election cycle

Avoiding evolutionary inefficiencies in innovation networks

Innovation policy is in need for a rational which allows the design and evaluation of policy instruments. In economic policy traditionally the focus is on market failures and efficiency measures are used to decide whether policy should intervene and which instrument should be applied. In innovation policy this rational cannot meaningfully be applied because of the uncertain and open character of innovation processes. Uncertainty is not a market failure and cannot be repaired. Inevitably policy makers are subject to failure and their goals are to be considered as much more modest compared to the achievement of a social optimum. Instead of optimal innovation, the avoidance of evolutionary inefficiencies becomes the centrepiece of innovation policy making. Superimposed to the several sources of evolutionary inefficiencies are socalled network inefficiencies. Because of the widespread organisation of innovation in innovation networks, the network structures and dynamics give useful hints for innovation policy, where and when to intervene. --innovation policy,innovation networks,uncertainty,exploration and exploitation,evolutionary inefficiencies,policy rational

Real wage cyclicality of newly hired workers

Several recent marcoeconomic models rely on rigid wages. Especially wage rigidity of newly hired workers seems to play a crucial role, since the decision of opening a vacancy or not is mainly influenced by their real wages. However, so far little empirical evidence exists on how real wages of newly hired workers react to business cycle conditions. This paper aims at filling this gap for a large economy, namely Germany, by analyzing the cyclical behavior or real wages of newly hired workers while controlling for "cyclical up- and downgrading" in employer/employee matches. For the analysis two endogenous variables are used: either the "typical" (e.g. modal) real wages paid to entrants into particular jobs of particular firms or entrants' individual real wages. The results show that entry-wages are not rigid, but considerably respond to business cycle conditions. This finding strengthens Pissarides' (2009) dismissal of theories based on cyclically rigid hiring wages. Furthermore, I show that the procyclicality of the employment / population ratio is (nearly) identical to the procyclicality of real entry-wages

A taxonomy of innovation networks

In this discussion paper we develop a theory-based typology of innovation networks with a special focus on public-private collaboration. This taxonomy is theoretically based on the concept of life cycles which is transferred to the context of innovation networks as well as on the mode of network formation which can occur either spontaneous or planned. The taxonomy distinguishes six different types of networks and incorporates two plausible alternative developments that eventually lead to a similar network structure of the two types of networks. From this, important conclusions and recommendations for network actors and policy makers are drawn. --

Windows of technological opportunity: do technological booms influence the relationship between firm size and innovativeness?

Many papers have been written about the effect of firm size on innovativeness, revealing a positive, a negative or a mixed impact. To this day, the so-called Schumpeterian hypothesis of the above-average innovativeness of large firms has been neither confirmed nor rejected, often because of insufficient data or a too-short observation period. Many studies concentrate only on a specific region or a specific sector, or they analyze a very short time period. Windows of technological opportunities, providing technological booms for both firms and sectors, have not yet been investigated. An analysis of Germany’s chemical, metal and electronic-engineering sectors between 1877 and 1932 reveals that the sector-specific long-term relationship between firm size and innovativeness is negative, except during times of specific technological booms. In combination with firm-specific characteristics, this new aspect can contribute to a better understanding of the long-term relationship between firm size and innovativeness. --Effect of firm size on innovativeness,technological boom,Schumpeterian hypothesis