The Growth Opportunities for SMEs?

The extensive empirical literature on the validity of Gibrat’s law does not in general verify the law as it finds that firms’ growth rates are negatively correlated with both firm size and age. However, some studies find that Gibrat’s law holds for sub-samples of firms such as large firms or firms belonging to special industries. It has been pointed out that these results are due to the fact that the likelihood of firm survival for natural reasons is positively related to firm size and age. This study uses a relatively large and representative sample of Danish firms to evaluate the validity of Gibrat’s law for different kinds of firms over the period 1990 - 2003. In contrast to the majority of earlier studies our analysis corrects for the bias in the estimations by using variables related to the survival of small firms.Market Structure; Firm Strategy; Market Performance;

Investment in R&D and Corporate Governance

The paper investigates the impact of ownership concentration on the likelihood that firms are involved in innovative activities or invest in research and development. We find that more dispersed ownership significantly increases the probability that a firm is engaged in innovation or invests in research and development. Moreover, the effect from ownership concentration is far more important for the incentive to innovate than the effect from product market concentration

Scale in Technology and Learning-by-Doing in the Windmill Industry

This paper examines the remarkable development of technology and the fast learning-by-doing in the windmill industry since it emerged in the beginning of the 1980s. Based on time series of prices of windmills a dynamic cost function for producing windmills is tested. The estimations verified that learning-by-doing in the Danish windmill industry has contributed significantly to improve the cost efficiency of the producers. The technological development has been stimulated both by process and product innovations as the capacity of the individual mills has increased. The learning effect created by early subsidies from the government has consolidated the competitive advantages of the windmill cluster in Denmark and preserved the first mover advantages at the world market. The article concludes that the industry probably will enter into a matured phase in the future with more modest technological growth.Learning-by-doing; scale in technology; process and product innovations

Industrial clusters, firm location and productivity – Some empirical evidence for Danish firms

According to the economic literature, industrial clusters are groups of firms on the same location composing a production system with spillovers that can be vertical and/or horizontal. This paper focuses on horizontal clusters by exploring the spatial distribution of industrial clusters in Denmark. The key issue in the theoretical part of the paper is whether firms located in industrial clusters are more productive than their counterparts located separately outside industrial agglomerations. Firms located in clusters are potentially more productive than other firms because of the agglomeration advantages of e.g. networks, knowledge spillovers, human capital mobility etc. In the empirical part of the paper, industrial clusters are identified using municipalities as the spatial dimension. In the first part of the analysis, clusters are identified at the NACE-2 digit industrial level. Next, using firm-level data for the 1990s the relative ‘cluster-firm’ productivity is estimated. The study finds evidence of a significantly higher productivity in clusters. However, the magnitude of the cluster advantages varies a lot across industries and is highest in textile.Industrial clusters; productivity

Overskud og vækst i den nye økonomi

Begrebet den nye økonomi opstod 1990erne i takt med en række ændringer i den økonomiske udvikling. Blandt økonomer udviklede der sig nærmest det syn, at den til tider eksplosive udvikling i informationsteknologien så godt som havde fjernet normale konjunktursvingninger - endog uden tidligere tiders inflationære pres. Medens begrebet ‘ny økonomi’ således er relativt klart på makroniveau, er begrebet mindre entydigt på virksomhedsniveau. Dertil kommer, at det ikke på forhånd er entydigt om virksomhederne i den nye økonomi oplever bedre indtjening, øget vækst og/eller jævnere konjunkturudvikling end andre virksomheder. Det er disse spørgsmål denne artikel søger at afklare. På baggrund af en database, der rummer regnskabsoplysninger for danske virksomheder over en syvårig periode samt information om deres patent aktivitet, argumenteres der for, at virksomhederne i den nye økonomi kan afgrænses til de, der er patentaktive. Artiklen påviser, at virksomhederne i den nye økonomi er udsat for de samme konjunkturmæssige svingninger, ligesom vækst og indtjening er af samme størrelse. Det konkluderes derfor, at fordelene ved den nye teknologi især kommer forbrugerne til gode i form af bedre og billigere produkter

Persistence in Corporate Performance? - Empirical Evidence from Panel Unit Root Tests

Persistence in corporate performance is analyzed in the framework of empirical tests of unit root behavior concerning firm profits. Data for firm-specific rates of return is applied in a set of panel unit root tests to address the question of persistence in profits both at firm level and for the aggregate level of industry-specific profits. The firm data all reject a null hypothesis of random walk behavior of profits but when smoothing profit rates at a two-digit NACE-code level for industries, the empirical evidence is more mixed as most industries show up with a unit root in aggregate rates of return, i.e. indicating persistence in corporate performance.Corporate performance; Persistence in profits; Panel unit root tests

Green Subsidies and Learning-by-doing in the Windmill Industry.

This paper examines the remarkable learning-by-doing in the windmill industry since it emerged in the beginning of the 1980's. Green subsidies for producing electricity by wind power has been a precondition for the rapid growth in the production of windmills. Based on time series of prices of windmills a dynamic cost function for producing windmills is tested. The cost disadvantage of producing electricity by windmills relative to traditional power stations has narrowed considerably because of a strong learning-by-doing effect. The deliberate policy to subsidize production of electricity by windpower has placed Denmark in a first-mover position in this market and the future has to show whether this is a successful story of an infant industrial policy.Learning-by-doing; infant industry; green subsidies

Does the New Economy Create Higher Productivity?

The rapid and continuous growth in the US in the 1990s and the simultaneous boom in the IT industry created the concept "The New Economy". What connects the two phenomena is that the IT industry alone is considered productive, and increased productivity in other industries, as a result of increased IT use, has brought focus on the IT industry as a catalyst for growth.The Danish Ministry of Finance (2001) points out general increased productivity in Denmark at macro level and this increase is said to be a result of increased IT use. The question is, however, if the influence of IT investments really can be verified. The strongest evidence would be to show that this relationship exists at micro level. The purpose of this article is to investigate whether it is possible to detect increased productivity in the late 1990s, using data from Danish industries for the first time.The result of this analysis shows increased productivity in the IT industry starting in 1993. IT in production counts for increased but stagnated growth, whereas IT in the service industries has seen rapidly increasing productivity.Productivity; New Economy

Are Ownership Structures Risk- & Wealth-Constrained?

The paper considers the owners of the firms as normal investors who want to optimise the return from their investments in accordance with their wealth constraint and the risk of their investment in the firm. The paper tests this theory on a representative sample of Danish companies including small firms. Concerning the wealth constraint for owners, the study finds evidence of more dispersed ownership in larger and more capital-demanding firms. According to the investors risk aspect, firms operating on foreign markets are more likely to have more than one owner. Concerning the domestic markets the owner structure is more dispersed in industries with a volatile business cycle.corporate governance; ownership structures

Do R&D Investments Affect Export Performance?

This paper analyses the role of R&D in the export behaviour of Danish firms. Export behaviour is defined as the likelihood of a firm being an exporter. In the theoretical part of the paper it is argued that export and being R&D active are endogenous with respect to each other, and an empirical model is formulated in order to estimate which factors affect the firm's export. It is argued that besides R&D, firm size, wages and a number of other firm-specific factors controlling for risks are highly important for the export performance. In the empirical part of the paper the model is tested on a sample of 3,500 Danish firms. Using a FIML estimation form in order to deal with endogeneity problems between the R&D and export decisions of the firms, the computation clearly verifies the theoretical model put forward. Moreover, R&D is an important factor for being an exporting firm.firm behaviour; export; R&D