Financial constraints and the failure of innovation projects

Theoretical and empirical approaches have stressed the existence of financial constraints in innovative activities of firms. This paper analyses the role of financial obstacles on the likelihood of abandoning an innovation project. Although a large number of innovation projects are abandoned before their completion, the empirical evidence has focused on the determinants of innovation while failed projects have received little attention. Our analysis differentiates between internal and external barriers on the probability of abandoning a project and we examine whether the effects are different depending on the stage of the innovation process. In the empirical analysis carried out for a panel data of potential innovative Spanish firms for the period 2004-2010, we use a bivariate probit model to take into account the simultaneity of financial constraints and the decision to abandon an innovation project. Our results show that financial constraints most affect the probability of abandoning an innovation project during the concept stage and that low-technological manufacturing and non-KIS service sectors are more sensitive to financial constraints. Keywords: barriers to innovation, failure of innovation projects, financial constraints JEL Classifications: O31, D21

Finding a suitable job: the effect of the institutional context on self-perceived over-education

The current research compares the perception of over-education in four different European countries, resorting to European Household Panel Data. The results confirm that the type of educational system accounts for some of the cross-national differences in self-perceived over-education. In qualificational spaces, like Denmark, where vocational training receives more importance, self-perceived over-education is not associated as much with educational attainment as in the so-called’ organisational spaces’, like Spain, France and Italy. Yet, the results confirm that, controlling for the system of education, the traits and regulation of the labour market also have an effect on over-education. Thus, in Spain, where temporary employment has soared in recent decades, this type of contract is clearly associated with the perception of over-education, to a much higher extent than in Italy or France. Temporary contracts in Spain may not work as a steppig stone for attaining a job suitable to the training received by the individual, as they may in the case of France or Italy. In sum, not only institutions offering skills and human capital, but labour market regulation as well, have a clear impact on the incidence of over-education.

The interaction of ownership structure and customer satisfaction as determinants of brand equity

In this paper we study the interaction between ownership structure and customer satisfaction, and their impact on a firm's brand equity. We find that customer satisfaction has a positive direct effect on brand equity but an indirect negative one, through reductions in ownership concentration. This latter effect emerges when managers are focused mainly on satisfying customers. It gives out a warning signal that highlights the perverse effect of implementing policies focused excessively on satisfying customers at the expense of shareholders, on a firm's brand equity. We demonstrate our theoretical contention, empirically, making use of an incomplete panel data comprising 69 firms from 11 different nations for the period 2002-2005.

Generating Brand Equity through Corporate Social Responsibility to Key Stakeholders

In this paper we argue that socially responsible policies have a positive impact on a firm's brand equity in the short-term as well as in the long-term. Moreover, once we distinguish between different stakeholders, we posit that secondary stakeholders such as community are even more important than primary stakeholders (customers, shareholders, workers and suppliers) in generating brand equity. Policies aimed at satisfied community interests act as a mechanism to reinforce trust that gives further credibility to social responsible polices with other stakeholders. The result is a decrease in conflicts among stakeholders and greater stakeholder willingness to provide intangible resources that enhance brand equity. We provide support of our theoretical contentions making use of a panel data composed of 57 firms from 10 countries (the US, Japan, South Korea, France, the UK, Italy, Germany, Finland, Switzerland and the Netherlands) for the period 2002 to 2007. We use detailed information on brand equity obtained from Interbrand and on corporate social responsibility (CSR) provided by the SiRi Global Profile database, as compiled by the Sustainable Investment Research International Company (SiRi).

The distribution of talent across contests

Do the contests with the largest prizes attract the most able contestants? Towhat extent do contestants avoid competition? In this paper, we show, theoreticallyand empirically, that the distribution of abilities plays a crucial role in determiningcontest choice. Sorting exists only when the proportion of high-ability contestantsis sufficiently small. As this proportion increases, contestants shy away from competitionand sorting decreases, such that, reverse sorting becomes a possibility. Wetest our theoretical predictions using a large panel data set containing contest choiceover three decades. We use exogenous variation in the participation of highly-ablecompetitors to provide empirical evidence for the relationship among prizes, competition,and sorting.

The dynamics of research networks in Brite-Euram

Network formation within the BRITE--EURAM program is investigated.Wedescribe the role of the hub of the network, which is defined as the setofmain contractors that account for most of the participations. We studytheeffects that the conflict of objectives within European research fundingbetween pre-competitive research vs. European cohesion has on theformationof networks and on the relationship between different partnersof the network. \\A panel data set is constructed including the second and third frameworkof theBrite--Euram program. A model of joint production of research results isusedto test for changes in the behavior of partners within the twoframeworks. \\The main findings are that participations are very concentrated, that isasmall group of institutions account for most of the participations, butgoingfrom the second to the third framework the presence of subcontractorsand singleparticipants increases substantially. This result is reinforced by the factthat main contractors receive smaller spill-ins within networks, butspill-insincrease from the second to the third framework.

Diversity and regional inequalities: Assessing the outcomes of the Spanish 'System of Health Care Services'

The consolidation of a universal health system coupled with a process of regionaldevolution characterise the institutional reforms of the National Health System(NHS) in Spain in the last two decades. However, scarce empirical evidence hasbeen reported on the effects of both changes in health inputs, outputs andoutcomes, both at the country and at the regional level. This paper examinesthe empirical evidence on regional diversity, efficiency and inequality ofthese changes in the Spanish NHS using cross-correlation, panel data andexpenditure decomposition analysis. Results suggest that besides significantheterogeneity, once we take into account region-specific needs there is evidenceof efficiency improvements whilst inequalities in inputs and outcomes, althoughmore visible , do not appear to have increased in the last decade. Therefore,the devolution process in the Spanish Health System offers an interesting casefor the experimentation of health reforms related to regional diversity butcompatible with the nature of a public NHS, with no sizeable regionalinequalitiest.

The importance of relative performance feedback information: Evidence from a natural experiment using high school students

We study the effect of providing relative performance feedback information onperformance, when individuals are rewarded according to their absolute performance. Anatural experiment that took place in a high school offers an unusual opportunity to testthis effect in a real-effort setting. For one year only, students received information thatallowed them to know whether they were performing above (below) the class average aswell as the distance from this average. We exploit a rich panel data set and find that theprovision of this information led to an increase of 5% in students grades. Moreover, theeffect was significant for the whole distribution. However, once the information wasremoved, the effect disappeared. To rule out the concern that the effect may beartificially driven by teachers within the school, we verify our results using nationallevel exams (externally graded) for the same students, and the effect remains.

Testing for convergence clubs in income per-capita: A predictive density approach

The paper proposes a technique to jointly test for groupings of unknown size in the cross sectional dimension of a panel and estimates the parameters of each group, and applies it to identifying convergence clubs in income per-capita. The approach uses the predictive density of the data, conditional on the parameters of the model. The steady state distribution of European regional data clusters around four poles of attraction with different economic features. The distribution of incomeper-capita of OECD countries has two poles of attraction and each grouphas clearly identifiable economic characteristics.

Similarities and convergence in G-7 cycles

This paper examines the properties of G-7 cycles using a multicountry Bayesian panelVAR model with time variations, unit specific dynamics and cross country interdependences.We demonstrate the presence of a significant world cycle and show that country specificindicators play a much smaller role. We detect differences across business cycle phasesbut, apart from an increase in synchronicity in the late 1990s, find little evidence of major structural changes. We also find no evidence of the existence of an Euro area specific cycle or of its emergence in the 1990s.

Disability, capacity for work and the business cycle: An international perspective

An important policy issue in recent years concerns the number of people claimingdisability benefits for reasons of incapacity for work. We distinguish between workdisability , which may have its roots in economic and social circumstances, and healthdisability which arises from clear diagnosed medical conditions. Although there is a linkbetween work and health disability, economic conditions, and in particular the businesscycle and variations in the risk of unemployment over time and across localities, mayplay an important part in explaining both the stock of disability benefit claimants andinflows to and outflow from that stock. We employ a variety of cross?country andcountry?specific household panel data sets, as well as administrative data, to testwhether disability benefit claims rise when unemployment is higher, and also toinvestigate the impact of unemployment rates on flows on and off the benefit rolls. Wefind strong evidence that local variations in unemployment have an importantexplanatory role for disability benefit receipt, with higher total enrolments, loweroutflows from rolls and, often, higher inflows into disability rolls in regions and periodsof above?average unemployment. Although general subjective measures of selfreporteddisability and longstanding illness are also positively associated withunemployment rates, inclusion of self?reported health measures does not eliminate thestatistical relationship between unemployment rates and disability benefit receipt;indeed including general measures of health often strengthens that underlyingrelationship. Intriguingly, we also find some evidence from the United Kingdom and theUnited States that the prevalence of self?reported objective specific indicators ofdisability are often pro?cyclical that is, the incidence of specific forms of disability arepro?cyclical whereas claims for disability benefits given specific health conditions arecounter?cyclical. Overall, the analysis suggests that, for a range of countries and datasets, levels of claims for disability benefits are not simply related to changes in theincidence of health disability in the population and are strongly influenced by prevailingeconomic conditions. We discuss the policy implications of these various findings.

Análisis empírico del comportamiento de los costes en las explotaciones agrícolas mediante datos de la red contable agraria nacional

In this article an empirical analyse of farming costs is performed withinthe frame of the activity based costing, employing a panel data set ofCatalan farms. One the main conclusions of the study is that there islimited association for transaction and farm costs, especially in indirectcosts. Direct and indirect costs are mainly driven by volume production.

Allowing for heterogeneity in the decomposition of measures of inequality in health

This paper shows how recently developed regression-based methods for the decomposition ofhealth inequality can be extended to incorporate heterogeneity in the responses of health to the explanatory variables. We illustrate our method with an application to the GHQ measure of psychological well-being taken from the British Household Panel Survey. The results suggest that there is an important degree of heterogeneity in the association of health to explanatory variables across birth cohorts and genders which, in turn, accounts for a substantial percentage of the inequality in observed health.

Education, growth and income inequality

Estimates of the e¤ect of education on GDP (the social return to education)have been hard to reconcile with micro evidence on the private return. We present a simple explanation that combines two ideas: imperfect substitution between worker types and endogenous skill biased technological progress. When types of workers are imperfect substitutes, the supply of human capital is negatively related to its return, and a higher education level compresses wage di¤erentials. We use cross-country panel data on income inequality to estimate the private return and GDP data to estimate the social return. The results show that the private return falls by 2 percentage points when the average education level increases by a year, which is consistent with Katz and Murphy's [1992] estimate of the elasticity of substitution between worker types. We find no evidence for dynamics in the private return, and certainly not for a reversal of the negative e¤ect as described in Acemoglu [2002]. The short run social return equals the private return.

Economic integration and corruption: The corrupt soul of the European Union

We study the link between corruption and economic integration. We show that if an economic union establishes a common regulation for public procurement, the country more prone to corruption benefits more from integration. However, if the propensities to corruption are too distinct, the less corrupt country will not be willing to join the union. This difference in corruption propensities can be offset by a difference in efficiency. We also show that corruption is lower if integration occurs. A panel data analysis for the European Union confirms that more corrupt countries are more favorable towards integration but less acceptable as potential new members.