Explaining the decisions to carry out product and process innovations: the Spanish case.

We investigate the determinants of innovation activity making a distinction between product and process innovations. We analyse a pseudo production function of innovations where among the explanatory variables, special attention is paid to firm and market characteristics. The study is applied to a large sample of Spanish manufacturing firms during the period 1990–1993. There are important implications arising from the empirical results: 1) Product and process innovations are intimately related independently of the model used in the estimation. 2) The control by unobserved firm effects as the ability and experience of manager is so important as to affect the conclusions on the managerial decisions about which type of innovation develop. 3) Given the feedback effects amongst innovation decisions and other factors determining them, it is also very important to consider a version of the model that allows correlation among those unobserved effects and explanatory variables. 4) The probability to innovate is higher in capital intensive firms and in firms with export activities. 5) Market competition encourages the decision to innovate up to a threshold. vi) The past firm experience and the managerial quality play a significant role in the probability to innovate. vii) Product and process innovation decisions are complementary

The Effects of Fiscal Incentives for R & D in Spain

This paper explores the effect of fiscal incentives for R&D on innovation. Spain is considered one of the most generous countries in the OECD in fiscal treatment of R&D, yet our data reveal that tax incentives are little known and, especially, seldom used by firms. Restricting our empirical analysis to those firms that do report knowing about such incentives, we investigate the average effect of tax incentives on innovation, using both nonparametric methods (matching estimators) and parametric methods (Heckman’s two-step selection model with instrumental variables). First, we find that large firms, especially those that implement innovations, are more likely to use the tax incentives, while small and medium enterprises (SMEs) encounter some obstacles to using them. Secondly, the average effect of the policy is positive, but significant only in large firms. Our main conclusion is that tax incentives increase innovative activities by large and high-tech sector firms, but may be used only randomly by SME

The effect of innovation activity on innovating quasi-rents: an empirical application

This paper investigates whether innovations generate quasi-rents and whether the size of those quasi-rents are affected by market conditions. Using a panel data of Spanish manufacturing firms during the period 1990-93 we answer affinnatevely to both questions. Product, process and both innovations generate quasi rents and such quasirents appears to be higher for process innovations. The size of innovation quasi-rents seems to be affected positively by demand growth, by product standarisation, and by low product market concentration. The three empirical results are in agreement with the theoretical predictions such as the Schmoockler' s theory of demandpool innovation, the price-elasticity of demand effects of Kamien and Schwartz and the replacement effect of Arrow. Process innovations are more affected by market conditions than the rest of innovations, at the tine of generating quasi-rents

Persistence and ability in the innovation decisions

The main concern of this paper is to analyse the complementarities between the decisions to carry out both product and process innovations. We also try to identify the main determinants of the innovation activity as well as to separate the experience effect of the firm (capacities, routines as organization) from the experience effect of the manager (skills, abilities). It has been common when facing the study of technological change, to consider innovation as a homogeneous activity. The main analyses have focused on the determinants of such activity trying to explain decisions, counts or R and D expenses in the context of a unique activity. Several recent works, however, are worried about the possibility of analysing innovation distinguishing among different types according to the final purpose of this activity. We focus on two different decisions, product and process innovations, using typical discrete choice specifications (univariate and bivariate models) and also binary choice models with heterogeneity. Among the results, we find complementary but asymmetric effects concerning both decisions in static models even controlling heterogeneity. We also test whether the persistence in conducting innovation activities matter. We do so in an extensive database that provides information about manufacturing firms. Our results point towards the importance of both ability of the manager (unobserved heterogeneity) and experience of the firm (dynamics in the equation indicator)

Explaining export regional involvement through marketing strategy : the case of Spanish companies exporting to Latin America

The equivalence between the absence of arbitrage and the existence of an equivalent martingale measure fails when an infinite number of trading dates is considered. By enlarging the set of states of nature and the probability measure through a projective system of topological spaces and Radon measures, we characterize the absence of arbitrage when the time set is countable

R&D investment and financial contracting in spanish manufacturig firms

This paper presents a model in which a firm with a degree of R and D specialization raises external funds to develop a two-period project that involves some non-verifiable returns (R and D-type of project). Taking into account a possible opportunistic behavior by the manager, we find out that the optimal firm's debt equity ratio is negatively related to the firm's degree of R and D specialization, its internal funds, and the output generated by the R and D project. Moreover, the expected R and D output of the firm is related negatively to the firm's leverage and positively to the firm's degree of R and D specialization as well as the amount of internal funds. The novelty of this work is to derive these results from strategic default consideration of the managers of firms specialized in R and D investments, as opposed to the standard collateral arguments concerning debt financing. This has a consequence of a lower growth of the firm's debt-equity ratio once we compare firms specialized on R and D investments with others non specialized in these activities. We confirm our main theoretical findings making use of a Spanish data set of manufacturing firms during the period 1990-94

R&D INVESTMENT AND FINANCIAL CONTRACTING IN SPANISH MANUFACTURIG FIRMS

This paper presents a model in which a firm with a degree of R&D specialization raises external funds to develop a two-period project that involves some non-verifiable returns (R&D-type of project). Taking into account a possible opportunistic behavior by the manager, we find out that the optimal firm's debt equity ratio is negatively related to the firm's degree of R&D specialization, its internal funds, and the output generated by the R&D project. Moreover, the expected R&D output of the firm is related negatively to the firm’s leverage and positively to the firm’s degree of R&D specialization as well as the amount of internal funds. The novelty of this work is to derive these results from strategic default consideration of the managers of firms specialized in R&D investments, as opposed to the standard collateral arguments concerning debt financing. This has a consequence of a lower growth of the firm’s debt-equity ratio once we compare firms specialized on R&D investments with others non specialized in these activities. We confirm our main theoretical findings making use of a Spanish data set of manufacturing firms during the period 1990-94.

The innovative behavior of Spanish enterprises and its impact on salaries.

Our aim was to analyze the effects of firms'' innovative behavior on their employees'' salaries in the Spanish manufacturing industry. We found a premium in the wage paid by innovative firms, regardless of size. However, when taking company size into account, we found that the effect of innovations was greater in small-medium enterprises (SME), contrary to what was expected. The inferences of the models estimated suggest that the higher the market concentration the weaker the appropriability regime, especially for SMEs. However, at the same time, a firm''s innovations reduce the impact of market concentration on wages, making innovating firms more autonomous than non-innovating ones. Even more, to be able to innovate, firms have to isolate their employees'' salaries from the product market. These results hold regardless of firm''s size, but have a greater impact on the small-medium group of firms. Finally, our analysis backs the assumption that salaries in both large and small-medium firms are generated by two distinct economic regimes, supporting the proposition that an SME is not simply a scaled-down large firm.

PERSISTENCE AND ABILITY IN THE INNOVATION DECISIONS

The main concern of this paper is to analyse the complementarities between the decisions to carry out both product and process innovations. We also try to identify the main determinants of the innovation activity as well as to separate the experience effect of the firm (capacities, routines as organization) from the experience effect of the manager (skills, abilities). It has been common when facing the study of technological change, to consider innovation as a homogeneous activity. The main analyses have focused on the determinants of such activity trying to explain decisions, counts or R&D expenses in the context of a unique activity. Several recent works, however, are worried about the possibility of analysing innovation distinguishing among different types according to the final purpose of this activity. We focus on two different decisions, product and process innovations, using typical discrete choice specifications (univariate and bivariate models) and also binary choice models with heterogeneity. Among the results, we find complementary but asymmetric effects concerning both decisions in static models even controlling heterogeneity. We also test whether the persistence in conducting innovation activities matter. We do so in an extensive database that provides information about manufacturing firms. Our results point towards the importance of both ability of the manager (unobserved heterogeneity) and experience of the firm (dynamics in the equation indicator).

Training plans, manager’s characteristics and innovation in the accommodation industry.

This paper explores the effect of training plans and managerial characteristics on innovation activity in the hospitality sector. This sector is featured by being labor-intensive so the examination of employment and managers skills deserves attention in order to determine the level of quality and competitive advantage in the provision of services. The data in the paper comes from a questionnaire administered to hotel managers in a representative sample of hotels in the Balearic Islands, a leading tourist destination. Results suggest that training plans positively affect innovation-related decisions and the extent of their implementation; however, managers should have more than experience to manage the innovation change, specifically skills and capabilitiesInnovación; Hoteles; Formación;