Innovation, productivity and growth in US business services:a firm-level analysis

This paper examines the impact of innovation on the performance of US business service firms. We distinguish between different levels of innovation (new-to-market and new-to-firm) in our analysis, and allow explicitly for sample selection issues. Reflecting the literature, which highlights the importance of external interaction in service innovation, we pay particular attention to the role of external innovation linkages and their effect on business performance. We find that the presence of service innovation and its extent has a consistently positive effect on growth, but no effect on productivity. There is evidence that the growth effect of innovation can be attributed, at least in part, to the external linkages maintained by innovators in the process of innovation. External linkages have an overwhelmingly positive effect on (innovator) firm performance, regardless of whether innovation is measured as a discrete or continuous variable, and regardless of the level of innovation considered.

Does the motivation for foreign direct investment affect productivity spillovers to the domestic sector?

There is increasing empirical and theoretical evidence that foreign direct investment (FDI) may be motivated not by the desire to exploit some competitive advantage possessed by multinationals, but to access the technology of host economy firms. Using a panel of FDI flows across OECD countries and manufacturing sectors between 1984 and 1995, we test whether these contrasting motivations influence the effects that FDI has on domestic total factor productivity. The distinction between technology-exploiting FDI (TEFDI) and technology-sourcing FDI (TSFDI) is made using R&D intensity differentials between host and source sectors. The hypothesis that the motivation for FDI has an effect on total factor productivity spillovers is supported: TEFDI has a net positive effect, while TSFDI has a net negative effect. These net effects are explained in terms of the offsetting influences of productivity spillovers and market stealing effects induced by incoming multinationals.

Is there a trade-off between quality and productivity? The case of diagnostic technologies in Portugal

The purpose of this paper is twofold: first, we compute quality-adjusted measures of productivity change for the three most important diagnostic technologies (i.e., the Computerised Tomography Scan, Electrocardiogram and Echocardiogram) in the major Portuguese hospitals. We use the Malmquist–Luenberger index, which allows to measure productivity growth while controlling for the quality of the production. Second, using non-parametric tests, we analyse whether the implementation of the Prospective Payment System may have had a positive impact on the movements of productivity over time. The results show that the PPS has helped hospitals to use these tools more efficiently and to improve their effectiveness.

The impact of foreign direct investment on labour productivity in the Chinese electronics industry

Foreign direct investment (FDI) may have a positive impact on labour productivity in recipient industries through direct introduction of capital, technology and management skills and indirectly through spillover effects on domestic firms. This study uses a model intended to examine the overall effects of inward FDI in the Chinese electronics industry. Official data are used for 41 sub-sectors of the industry in 1996 and 1997 having differing levels of FDI. Labour productivity is modelled as dependent on the degree of foreign presence in the industry and other variables, namely capital intensity, human capital and firm size for scale factors. The econometric results suggest that foreign presence in the industry is associated with higher labour productivity. © 2001 Elsevier Science Ltd.

The impact of ICT on productivity of airline industry

Airline industry is at the forefront of many technological developments and is often a pioneer in adopting such innovations in a large scale. It needs to improve its efficiency as the current trends for input prices and competitive pressures show that any airline will face increasingly challenging market conditions. This paper has focused on the relationship between ICT investments and efficiency in the airline industry and employed a two-stage analytical investigation, DEA, SFA and the Tobit regression model. In this study, we first estimate the productivity of the airline industry using a balanced panel of 17 airlines over the period 1999–2004 by the Data Envelop Analysis (DEA) and the Stochastic Frontier Analysis (SFA) methods. We then evaluate the impacts of the determinants of productivity in the industry concentrating on ICT. The results suggest that regardless of all the negative shocks to the airline industry during the sample period, ICT had a positive effect on productivity during 1999-2004.

Do organizational climate and competitive strategy moderate the relationship between human resource management and productivity?

This study examined whether the effectiveness of human resource management (HRM) practices is contingent on organizational climate and competitive strategy. The concepts of internal and external fit suggest that the positive relationship between HRM and subsequent productivity will be stronger for firms with a positive organizational climate and for firms using differentiation strategies. Resource allocation theories of motivation, on the other hand, predict that the relationship between HRM and productivity will be stronger for firms with a poor climate because employees working in these firms should have the greatest amount of spare capacity. The results supported the resource allocation argument. © 2005 Southern Management Association. All rights reserved.

Has DRG payment influenced the technical efficiency and productivity of diagnostic technologies in Portuguese public hospitals? An empirical analysis using parametric and non‐parametric methods

The use of Diagnosis Related Groups (DRG) as a mechanism for hospital financing is a currently debated topic in Portugal. The DRG system was scheduled to be initiated by the Health Ministry of Portugal on January 1, 1990 as an instrument for the allocation of public hospital budgets funded by the National Health Service (NHS), and as a method of payment for other third party payers (e.g., Public Employees (ADSE), private insurers, etc.). Based on experience from other countries such as the United States, it was expected that implementation of this system would result in more efficient hospital resource utilisation and a more equitable distribution of hospital budgets. However, in order to minimise the potentially adverse financial impact on hospitals, the Portuguese Health Ministry decided to gradually phase in the use of the DRG system for budget allocation by using blended hospitalspecific and national DRG casemix rates. Since implementation in 1990, the percentage of each hospitals budget based on hospital specific costs was to decrease, while the percentage based on DRG casemix was to increase. This was scheduled to continue until 1995 when the plan called for allocating yearly budgets on a 50% national and 50% hospitalspecific cost basis. While all other nonNHS third party payers are currently paying based on DRGs, the adoption of DRG casemix as a National Health Service budget setting tool has been slower than anticipated. There is now some argument in both the political and academic communities as to the appropriateness of DRGs as a budget setting criterion as well as to their impact on hospital efficiency in Portugal. This paper uses a twostage procedure to assess the impact of actual DRG payment on the productivity (through its components, i.e., technological change and technical efficiency change) of diagnostic technology in Portuguese hospitals during the years 1992–1994, using both parametric and nonparametric frontier models. We find evidence that the DRG payment system does appear to have had a positive impact on productivity and technical efficiency of some commonly employed diagnostic technologies in Portugal during this time span.

Moving from HRM to knowledge productivity:a study of whether and how organizations become learning organizations

Practitioners and academics are in broad agreement that, above all, organizations need to be able to learn, to innovate and to question existing ways of working. This thesis develops a model to take into account, firstly, what determines whether or not organizations endorse practices designed to facilitate learning. Secondly, the model evaluates the impact of such practices upon organizational outcomes, measured in terms of products and technological innovation. Researchers have noted that organizations that are committed to producing innovation show great resilience in dealing with adverse business conditions (e.g. Pavitt, 1991; Leonard Barton, 1998). In effect, such organizations bear many of the characteristics associated with the achievement of ‘learning organization’ status (Garvin, 1993; Pedler, Burgoyne & Boydell, 1999; Senge, 1990). Seven studies are presented to support this theoretical framework. The first empirical study explores the antecedents to effective learning. The three following studies present data to suggest that people management practices are highly significant in determining whether or not organizations are able to produce sustained innovation. The thesis goes on to explore the relationship between organizational-level job satisfaction, learning and innovation, and provides evidence to suggest that there is a strong, positive relationship between these variables. The final two chapters analyze learning and innovation within two similar manufacturing organizations. One manifests relatively low levels of innovation whilst the other is generally considered to be outstandingly innovative. I present the comparative framework for exploring the different approaches to learning manifested by the two organizations. The thesis concludes by assessing the extent to which the theoretical model presented in the second chapter is borne out by the findings of the study. Whilst this is a relatively new field of inquiry, findings reveal that organizations have a much stronger chance of producing sustained innovation where they manage people proactively where people process themselves to be satisfied at work. Few studies to date have presented empirical evidence to substantiate theoretical endorsements to engage in higher order learning, so this research makes an important contribution to existing literature in this field.

Trade unions and productivity:the impact of union presence on labour productivity in Korean manufacturing

This thesis examines the theoretical and empirical relationship between trade unions and productivity in the Korean auto and cement manufacturing industries, during the 1980s. It challenges the tenets of the existing debate by stressing the contingent nature of this relationship. In particular this thesis pinpoints inadequacies of econometric analysis as the only method of judging this association between union presence and productivity, because this ignores national and historical industrial relations contexts. Moreover, the polarity between positive and negative views of trade union influences on productivity is seen as needlessly limited, failing as it does to consider the full context of labour-management dynamics within the employment relationship. Empirically, this thesis focuses on the unionism and productivity during two contrasting political periods: the first a time of constraint on union action and the second a period of relative freedom. It examines these periods using a full range of quantitative and qualitative analysis. Of particular significant is the inclusion of attitude surveys of the relationship between the presence of unions and productivity conducted amongst workers, managers and trade union officials. The broad conclusion of the thesis is a rejection of the validity of continuing to examine the relationship between trade unions and productivity without locating this within national and historical industrial relations contexts.

Multinational firms, productivity and employment

Over the last three decades foreign direct investment (FDI) has become the most visible driver of globalisation. It has grown faster than world output and international trade and now reports world annual flows exceeding 1,000 billion US dollars. In this period, Germany has undergone significant changes in order to play an important role in the globalisation process. Apart from being a member state of the European Union (EU) whose key feature is the free flow of trade, investment and labour, the re-unification of East and West Germany in 1990 has been a significant development. This in effect has meant that East Germany as well as other Eastern European nations opened up to foreign investment for the first time. In this period, Germany has attracted in excess of 10 per cent of inward FDI into the EU and invested around 15 per cent of all FDI in the EU. This thesis explores empirically the potential impact of FDI on firms operating in and investing from Germany over a ten year period. Using panel data at the firm-level it concentrates on three areas relating to FDI. Firstly, it considers whether foreign-owned firms are more productive than German multinational firms and German non-multinational firms. Secondly, the thesis considers the impact of German investments abroad on domestic productivity. Finally, employment effects emanating from outward high-tech FDI are estimated for the leading OECD (Organisation of Economic Co-operation and Development) countries, namely Germany, Belgium, France, the Netherlands, Sweden, the United Kingdom and Japan. The findings of the first analysis indicate that while foreign-owned firms are generally more productive than German non-multinationals, there is no clear cut difference between foreign-owned firms and German multinationals. These differences would not have been uncovered, had the analysis compared foreign firms with all domestic firms. Equally, location within Germany is also important, as this productivity gap is more pronounced for firms which are located in the Eastern states. The findings of the second analysis suggest that engaging in outward FDI has an overall positive effect on the parent firm's productivity at home. Finally, results of the third analysis show that an expansion of high-tech offshoring activities by OECD multinationals (MNEs) is not associated with any reduction in employment at home.

Firm-level productivity growth in Northern Ireland:the impact of exporting, innovation and public financial assistance

Motivated by the historically poor productivity performance of Northern Ireland firms and the longstanding productivity gap with the UK, the aim of this thesis is to examine, through the use of firm-level data, how exporting, innovation and public financial assistance impact on firm productivity growth. These particular activities are investigated due to the continued policy focus on their link to productivity growth and the theoretical claims of a direct positive relationship. In order to undertake these analyses a newly constructed dataset is used which links together cross-sectional and longitudinal data over the 1998-2008 period from the Annual Business Survey, the Manufacturing Sales and Export Survey; the Community Innovation Survey and Invest NI Selective Financial Assistance (SFA) payment data. Econometric methodologies are employed to estimate each of the relationships with regards to productivity growth, making use in particular of Heckman selection techniques and propensity score matching to take account of critical issues of endogeneity and selection bias. The results show that more productive firms self-select into exporting but there is no resulting productivity effect from starting to export; contesting the argument for learning-by-exporting. Product innovation is also found to have no impact on productivity growth over a four year period but there is evidence of a negative process innovation impact, likely to reflect temporary learning effects. Finally SFA assistance, including the amount of the payment, is found to have no short term impact on productivity growth suggesting substantial deadweight effects and/or targeting of inefficient firms. The results provide partial evidence as to why Northern Ireland has failed to narrow the productivity gap with the rest of the UK. The analyses further highlight the need for access to comprehensive firm-level data for research purposes, not least to underpin robust evidence-based policymaking.

Public capital, productivity and trade balances:some evidence for the Italian regions

This paper analyses the extent to which intensive investments in public capital may have had an unfavourable impact on the regional trade balances across the 20 Italian regions. Our working hypothesis is that investments in public capital, while stimulating the demand for tradables across the regions, may have a limited positive impact on the supply of tradables in regions characterised by relatively low productivity like the South of Italy (or Mezzogiorno). The empirical results are consistent with our expectations and suggest that programs of investments in public capital should be accompanied by additional policy measures that can remove the structural factors that hamper the total factor productivity growth in specific areas. © Springer-Verlag 2008.