26 June 2015

This monthly selection of articles has been carried out by Philippe Gugler and Michael Keller, the Center for Competitiveness, University of Fribourg.

 

The entire selection, carried out since 2013, can now be consulted on the academic articles page of our web.

 

Employment performance in times of crisis: a multilevel analysis of economic resilience in the German biotechnology industry

By : Julian Kahl and Christian Hundt. Competitiveness Review, Volume 25, Issue 4, earlycite, 2015.

Abstract: «While the economic benefits of regional clustering are well-documented, the impact of external shocks on regional clusters has only recently gained attention. This study explores the antecedents of economic resilience, defined as sustained employment growth, prior to and during the global financial crisis within the German biotechnology industry. The purpose of this study is to elucidate the determinants of economic resilience at various levels of analysis. This study combines multilevel linear regression analysis with egocentric network analysis. This allows us to distinguish micro-level and context-level effects in the analysis of economic resilience. The findings of this study indicate that while specialization at the network and context-level is conducive to firm growth prior to the crisis, these configurations seem to be particularly susceptible to external shocks. Conversely, diversity (diversified regional agglomerations and diverse networks) seems to be associated with economic resilience during the crisis. Moreover, we find that economic resilience is connected to adaptive capability at the micro-level, that is, the ability to expand and diversify a firms’ portfolio of network ties in the face of an external shock. Finally, we show that these adaptive processes are facilitated by geographical proximity among collaborating organizations. This study contributes to the existing literature by showing that the antecedents of economic resilience are located at multiple levels of analysis. An important implication of this study is that the examination of the resilience of regional clusters may thus be significantly enhanced by disentangling effects at the firm, network and regional (i.e. context) level.» [ABSTRACT FROM AUTHORS]

 

Chinese M & A in Europe: emerging market multinational in the heavy construction industry

By : Francesca Spigarelli, Ilan Alon and Attilio Mucelli. Competitiveness Review, Volume 25, Issue 4, earlycite, 2015.

Abstract: «This article examines the global competitiveness of an Emerging Market Multinational (EMM) from China through the case of a major European acquisition, in Italy, in the heavy construction industry. Country and firm specific factors are considered. Horizontal integration in this oligopolistic industry changes the industry dynamics, with significant implications for its players. The paper follows case study methodology and triangulates data through a literature review, an examination of available company data and interviews of key personnel. Firm- and country-specific factors, both advantages and disadvantages, including the business environment in the construction industry, globally and regionally, are analyzed. We identified several key success factors at the firm level, including the integration of R&D, marketing and sales; the development of extensive communication and trust among the managers of both companies; the exploitation of the Chinese market as a source of demand; and the shifting of selected production lines to the Chinese market. We augment the traditional model of country-specific advantages/disadvantages (CSA/D) and firm-specific advantages/disadvantages (CSA/D) by examining the host market and industry task environments. Host country-specific factors for successful integration include favorable local conditions, both in terms of endowments and institutions, and an industrial cluster with supporting firms and services. Following the case study, managers can refer to the key success factors to emulate “best practices.” The paper concludes with a heuristic developed by the Chairman of Zoomlinon, Chunxin Zhan, underlining 5 principles for a successful EEM acquisition: Understanding, Sharing, Responsibility, Compliance and Coordination. We develop a deep case study analysis and provide useful theoretical and practical implications with reference to Chinese acquisition in the Western Markets.» [ABSTRACT FROM AUTHORS]

 

National factor effects on firm competitiveness and innovation

By : Michael Louis Troilo and J Markham Collins. Competitiveness Review, Volume 25, Issue 4, earlycite, 2015.

Abstract: «The purpose of this article is to investigate how national-level characteristics such as country wealth, a floating exchange rate, and European Union (EU) membership influence firm-level perceptions of competition and firm-level innovation. Greater understanding of these relationships can promote more effective policymaking as well as add to the existing academic conversation regarding national factors and firm competitiveness. Our data consists of a panel of 27 countries in Central and Eastern Europe and Central Asia from 2002 to 2009 with a total of nearly 27,000 firms from the World Bank Enterprise Survey. We utilize a multinomial logistic regression to estimate firm-level perceptions of both domestic and foreign competition upon decisions to introduce new products and manage new product costs. We then estimate the probability of innovation (introduction of a new product/service, obtaining international quality certification) using a logistic regression. The marginal effects of the key explanatory variables for country wealth, floating exchange rate, and EU membership are calculated. While EU membership heightens perceptions of competition, firms in the EU are less likely to introduce new products or services. On the other hand, a firm in an EU member country is more likely to obtain international quality certification than one that is not. Both country wealth and a floating exchange correlate with enhanced perceptions of competition and innovation as expected. The first finding regarding heightened perceptions of competition yet lower likelihood of introduction of new products/services among EU firms is surprising. Beyond adding to the empirical store of knowledge regarding the relationship of national factors to firm competitiveness, it suggests that more needs to be done with regard to innovation policy. We offer a general recommendation to employ more public-private partnerships for innovation among small and medium enterprises (SMEs), as this has been effective in other parts of the world.» [ABSTRACT FROM AUTHORS]

 

EU member states' ability to attract intellectual capital in times of crisis

By : Anita Pelle and Marcell Zoltán Végh. Competitiveness Review, Volume 25, Issue 4, earlycite, 2015.

Abstract: «One of the key elements of competitiveness today is the ability to attract intellectual capital. The question how the recent financial and economic crisis has changed EU member states’ such abilities can be asked. The question is relevant in relation to the diversity of effects that the crisis had on EU member states, including the different levels of real economy adjustment constraints. We use the concept of competitiveness applied by the World Economic Forum (WEF) in constructing the Global Competitiveness Index (GCI). Based on selected WEF GCI sub-indicators and the WEF’s methodology, we generate a new index that we name ‘Ability to attract intellectual capital’. We compare EU member states’ performance along this indicator for the 2007-2008 (pre-crisis) and the 2013-2014 (post-crisis) periods. This way we are able to rank EU member states before and after the crisis; we can compare their performance in the two periods, relatively to each other, and in relation to their performance along other relevant indices. Our findings show interesting results. Firstly, many peripheral member states of the EU, deeply affected by the crisis, could considerably improve their relative positions between 2007 and 2013. Secondly, the CEE countries show a rather mixed picture, drawing up rather different individual development paths. Thirdly, the advancements in some countries do not imply that overall convergence is proceeding in the EU. Nevertheless, some countries have not wasted the ‘good’ crisis to take those steps of structural reform. For those countries aiming at improving their abilities to attract intellectual capital, or for EU policy design, our research may provide useful results. Moreover, not only our results but also our methodology can be used by others, for other purposes: to compare different years, different sets of countries included in the WEF GCI, or even along different dimensions. The methodology that we use is the adoption of that of the WEF, and the data are from the WEF GCI dataset. However, we do not know of any other research work applying this methodology on this set of WEF GCI sub-indicators, with such purposes as to compare EU member states’ abilities to attract intellectual capital before and after the crisis.» [ABSTRACT FROM AUTHORS]

 

Financial competitiveness analysis in the Hungarian dairy industry

By : Dorisz Tálas , Andrea Rózsa. Competitiveness Review, Volume 25, Issue 4, earlycite, 2015.

Abstract: «To analyse time-series change of the competitiveness of leading companies of the sector based on their financial position regarding the period of financial crisis. Firstly, high level of revenue concentration was proved, consequently, strong competitive situation among few competitors was realised. Corporations having three common features (high amount of equity, high revenue, and diversified product structure) were included in the sample. As the methodological background financial parameters were assigned to the definition of corporate competitiveness, and then comparative and comprehensive financial analysis of competitors was accomplished. Using relevant studies, liquidity based on balance sheets and cash flow statements, working capital processes, conventional and cash-flow based profitability were analysed. It was proved that sample companies continuously improved the efficiency of working capital management indicated by the decrease of the average cash conversion cycle from 45 to 23 days. We realised that there is a Hungarian owned firm having outstanding financial performance, consequently, it has significant position among competitors. This company has further opportunity to increase its market share and competitiveness in the future. Finally, important characteristics of the sector were identified concerning the low level of technological improvements (the average ratio was below 3% of the revenue), and unfavourable profitability processes. In this paper a separate analytic framework is established in view of the application of financial indicators to analyse competitiveness. This kind of analysis was not executed before in this sector.» [ABSTRACT FROM AUTHORS]

 

Political Entrepreneurship, Cluster Policies and Regional Growth

By : Charlie Karlsson. CESIS Electronic Working Paper Series Paper No. 407, 2015.

Abstract: « In recent years and not least after the latest financial and economic crisis, we have seen a strongly renewed interest for industrial policy to get the developed economies growing again. The political entrepreneurs, i.e. the politicians and their experts and advisers have been hunting desperately for new approaches to industrial policy. With political entrepreneurs, we here understand politicians/bureaucrats/civil servants/authorities within publically financed activities that with different methods try to stimulate entrepreneurship and self-employment with the overall goal to increase employment and economic growth. The renewed interest for industrial policy and the increased importance of political entrepreneurs motivate that we once again ask the fundamental question about what shall be the proper focus, measures and extent of industrial policy. Shall the industrial policy be vertical and focus at specific industries and even specific companies or shall it be horizontal and focus at improving the general conditions for all industries and firms? However, there is a related and partly more controversial question, namely, what is the proper spatial scale for the policy interventions by the political entrepreneurs? Shall the industrial policy focus at certain places and possibly focus at existing and/or emerging industrial clusters or shall it be spatially neutral and not try to discriminate between different regions and places? The purpose of this paper is to throw some light over all above questions but with some extra focus at the questions concerning the spatial aspects. The above questions are by no means new but there are today very good reasons to throw new light at them not least against the back¬ground of EU´s new industrial and regional policy that aims at achieving ‘smart specialization’, what that now may be.» [ABSTRACT FROM AUTHOR]

 

Research clusters: How public subsidies matter?

By : Marie-Laure Cabon-Dhersin and Emmanuelle Taugourdeau. Documents de travail du Centre d’Economie de la Sorbonne 2015.13, 2015.

Abstract: « This paper investigates the factors underlying the emergence of Research Cluster (RC), i.e. cooperation (or coordination of research efforts) through spatial proximity between public and private research teams. A ‘public lab’ and a ‘private lab’ interact in a two-stage game to decide on ‘location’ and ‘research effort’. A high level of public subsidies associated to a low asymmetry in the ‘valorisation capability’ between both labs is necessary for the formation of a cluster. We find that RC performs better than non-cooperation in terms of research efforts in a ‘public lab’ (but not in a ‘private lab’) and output gains that can be appropriated by each lab.» [ABSTRACT FROM AUTHORS]

 

Identifying Geographic Clusters: A Network Analytic Approach

By : Roberto Catini, Dmytro Karamashuk, Orion Penner and Massimo Riccaboni. MPRA Paper No. 64454, 2015.

Abstract: « In recent years there has been a growing interest in the role of networks and clusters in the global economy. Despite being a popular research topic in economics, sociology and urban studies, geographical clustering of human activity has often studied been by means of predetermined geographical units such as administrative divisions and metropolitan areas. This approach is intrinsically time invariant and it does not allow one to differentiate between different activities. Our goal in this paper is to present a new methodology for identifying clusters, that can be applied to different empirical settings. We use a graph approach based on k-shell decomposition to analyze world biomedical research clusters based on PubMed scientific publications. We identify research institutions and locate their activities in geographical clusters. Leading areas of scientific production and their top performing research institutions are consistently identified at different geographic scales.» [ABSTRACT FROM AUTHORS]

 

Determinants of the Internationalization of Regions: The Role and Effectiveness of Public Policy Measures

By : Mariasole Bannò, Lucia Piscitello and Celeste Varum. Regional Studies, Volume 49, Issue 7, Pages 1208-1222, 2015.

Abstract: « This paper assesses the role of public policy measures on outward internationalization of regions. By including financial and non-financial incentives among the determinants of the international competitiveness of regions, it is found that the former are important to enhance their active internationalization, but that variables related to the knowledge and competence base of regions are even more so. Financial incentives related to equity participation as well as non-financial incentives related to the provision of information come out highly significant in stimulating outward internationalization. The empirical analysis is conducted for the twenty Italian NUTS-2 regions over the period 2003–2008.» [ABSTRACT FROM AUTHORS]

 

On the Link between Urban Location and the Involvement of Knowledge-Intensive Business Services Firms in Collaboration Networks

By : Sverre J. Herstad and Bernd Ebersberger. Regional Studies, Volume 49, Issue 7, Pages 1160-1175, 2015.

Abstract: « Knowledge-intensive business services firms can play a key role in modern economies by linking localized collaboration networks to global knowledge flows, and by actively serving in support of knowledge diffusion across institutional and sectoral divides. The extent to which they do is dependent on the resources available locally. This paper uses the unique establishment-level innovation data available in Norway to investigate whether location in urban labour market regions influences the geographical scope of collaborative linkages maintained within and outside the realm of clients. It proceeds to consider whether the diversity of partner types used locally, domestically and abroad differ between locations.» [ABSTRACT FROM AUTHORS]

 

Location Advantages and Repeat Investment in Australia: A Two-State Comparison

By : Paul Kalfadellis. Regional Studies, Volume 49, Issue 7, Pages 1140-1159, 2015.

Abstract: « Repeat investment is increasingly important for governments seeking to retain and embed existing foreign subsidiaries within their domains. Identifying the location advantages that predict the repeat investment behaviour of foreign subsidiaries although important has not been studied in any systematic manner. Using a sample of 356 foreign subsidiaries operating in Australia, a multiple regression model is used to test the relationship between the location advantages and repeat investment across both national (Australia) and regional (New South Wales and Victoria) spatial domains. The different location advantages found to be predictive of repeat investment suggest that reliance in the literature on location being synonymous with the national domain is inadequate. The findings highlight the need for domain-specific policy responses if governments are to encourage repeat investment at the regional level.» [ABSTRACT FROM AUTHOR]

 

Strategic nodes in investment fund global production networks: The example of the financial centre Luxembourg

By : Sabine Dörry. Journal of Economic Geography, Volume 15, Issue 4, Pages 797-814, 2015.

Abstract: « The patterns and dynamics of contemporary financial capitalism are mirrored in micro-production structures of finance in international financial centres (IFCs). Applying the global production network framework allows for analyses of these structures in greater detail, better illuminating the industry’s organization, its locally anchored professional practices, and the far-reaching power relationships between IFCs. The example of the IFC Luxembourg, the world’s largest cross-border investment fund centre, shows that, in particular, advanced business services firms facilitate the global reach of investment funds (i) in their close collaboration with both local and global financial corporations, and (ii) in their exploitation of localized arbitrage assets.» [ABSTRACT FROM AUTHOR]

 

Another cluster premium: Innovation subsidies and R&D collaboration networks

By Tom Broekel, Dirk Fornahl and Andrea Morrison. Research Policy, Volume 44, Issue 8, Pages 1431-1444, 2015.

Abstract: « This paper investigates the allocation of R&D subsidies with a focus on the granting success of firms located in clusters. On this basis it is evaluated whether firms in these clusters are differently embedded into networks of subsidized R&D collaboration than firms located elsewhere. The theoretical arguments are empirically tested using the example of the German biotechnology firms’ participation in the 6th EU-Framework Programmes and national R&D subsidization schemes in the early 2000s. We show that clusters grant firms another premium to their location, as they are more likely to receive funds from the EU-Framework Programmes and hold more favorable positions in national knowledge networks based on subsidies for joint R&D.» [ABSTRACT FROM AUTHORS]

 

National innovation systems and the intermediary role of industry associations in building institutional capacities for innovation in developing countries: A critical review of the literature

By Andrew Watkins, Theo Papaioannou, Julius Mugwagwa and Dinar Kale. Research Policy, Volume 44, Issue 8, Pages 1407-1418, 2015.

Abstract: « Developed over the past three decades, the national innovation system concept (NIS) has been widely used by both scholars and policy makers to explain how interactions between a set of distinct, nationally bounded institutions supports and facilitates technological change and the emergence and diffusion of new innovations. This concept provides a framework by which developing countries can adopt for purposes of catching up. Initially conceived on structures and interactions identified in economically advanced countries, the application of the NIS concept to developing countries has been gradual and has coincided – in the NIS literature – with a move away from overly macro-interpretations to an emphasis on micro-level interactions and processes, with much of this work questioning the nation state as the most appropriate level of analysis, as well as the emergence of certain intermediary actors thought to facilitate knowledge exchange between actors and institutions. This paper reviews the NIS literature chronologically, showing how this shift in emphasis has diminished somewhat the importance of both institutions, particularly governments, and the political processes of institutional capacity building. In doing so, the paper suggests that more recent literature on intermediaries such as industry associations may offer valuable insights to how institutional capacity building occurs and how it might be directed, particularly in the context of developing countries where governance capacities are often lacking, contributing to less effective innovation systems, stagnant economies, and unequal development.» [ABSTRACT FROM AUTHORS]

 

Creative Clusters and District Economies: Towards a Taxonomy to Interpret the Phenomenon

By : Caterina Branzanti. European Planning Studies, Volume 23, Issue 7, pp. 1401-1418, 2015.

Abstract: « This paper deals with the occurrence of district economies in creative clusters, through the systematization of the extensive literature on the spatial concentration of creative activities. The research contributes to a larger understanding of creative clusters according to a revised taxonomy, formerly applied to traditional industrial districts, based on the four main advantages that district economies seem to trigger: reduction of production and transaction costs, increased efficiency of factors of production and enhancement of dynamic efficiency. Addressing the extent to which the same factors can be found in creative clusters, the paper, firstly, seeks to review some of the most important contributions that deal with such externalities, in the context of creative industries. Secondly, it provides some related reflections on strengths and weaknesses and possible future research developments. The net result is an effective analytical framework that can be used to interpret this peculiar geographic agglomeration, combining the notion of district economies and the exceptional features of creative industries.» [ABSTRACT FROM AUTHOR]

 

Territorial Capital: Theory, Empirics and Critical Remarks

By : Balázs István Tóth. European Planning Studies, Volume 23, Issue 7, pp. 1327-1344, 2015.

Abstract: « Territorial capital has gained considerable attention in the past few years. The aim with this work is to throw light on some underlying aspects of territorial capital research. The study focuses on the theoretical and empirical issues of territorial capital and highlights some critical remarks related to the topic. On the one hand, the focus of the study is on the comparison of concepts and approaches in connection with territorial capital; then an in-depth look is taken at “capital frameworks” related to the research field. On the other hand, a comprehensive overview is presented of empirical investigations by comparing the applied methods, dimensions and variables of territorial capital. An argument is also made for a critical assessment concerning the topic with regard to the sense and function of territorial capital in regional economics and local economic development and highlights some further dilemmas concerning the “properties of capital” and “territorial capital paradigm”. Finally, some suggestions are provided for the future of territorial capital analysis. The main result of the study is an own belief in the concept of territorial capital.» [ABSTRACT FROM AUTHOR]

 

The Evolution of Innovation Networks and Spin-off Entrepreneurship: The Case of RAD

By : Amnon Frenkel, Emil Israel and Shlomo Maital. European Planning Studies, Volume 23, Issue 8, pp. 1646-1670, 2015.

Abstract: « We conducted an in-depth analysis of an Israeli startup, RAD Bynet, founded in 1981, that has intentionally, through the vision of its founder, given rise to 129 other startups employing some 15,000 workers, and created a unique “cloud”. Through a survey of the existing firms, we sought to explore the nature of this ecosystem and to quantify the relationships that exist between the mother company and the enterprises that emerge from it. Our main findings were: (a) social and technological proximity encourages the tendency of the companies to maintain business relationships that probably contribute to knowledge exchange, while technological diversity drives innovation and startup formation; and (b) firms will choose to cooperate on the basis of a shared past and personal proximity relations, as well as technological proximity at a certain level; “viral clouds” of startups like the one we studied can thus intentionally be designed and developed.» [ABSTRACT FROM AUTHORS]