Competition, innovation and growth with limited commitment

We study how barriers to business start-up affect the investment in knowledge capital when contracts are not enforceable. Barriers to business start-up lower the competition for knowledge capital and, in absence of commitment, reduce the incentive to accumulate knowledge. As a result, countries with large barriers experience lower income and growth. Our results are consistent with cross-country evidence showing that the cost of business start-up is negatively correlated with the level and growth of income.

The effects of uncertainty avoidance on brand performance: Marketing creativity, product innovation and the brand duration

This paper investigates the link between brand performance and cultural primes in high-risk,innovation-based sectors. In theory section, we propose that the level of cultural uncertaintyavoidance embedded in a firm determine its marketing creativity by increasing the complexityand the broadness of a brand. It determines also the rate of firm product innovations.Marketing creativity and product innovation influence finally the firm marketingperformance. Empirically, we study trademarked promotion in the Software Security Industry(SSI). Our sample consists of 87 firms that are active in SSI from 11 countries in the period1993-2000. We use the data coming from SSI-related trademarks registered by these firms,ending up with 2,911 SSI-related trademarks and a panel of 18,213 observations. We estimatea two stage model in which first we predict the complexity and the broadness of a trademarkas a measure of marketing creativity and the rate of product innovations. Among severalcontrol variables, our variable of theoretical interest is the Hofstede s uncertainty avoidancecultural index. Then, we estimate the trademark duration with a hazard model using thepredicted complexity and broadness as well as the rate of product innovations, along with thesame control variables. Our evidence confirms that the cultural avoidance affects the durationof the trademarks through the firm marketing creativity and product innovation.

Horizontal innovation in the theory of growth and development

We analyze recent contributions to growth theory based on the model of expanding variety of Romer (1990). In the first part, we present different versions of the benchmark linear model with imperfect competition. These include the labequipment model, labor-for-intermediates and directed technical change . We review applications of the expanding variety framework to the analysis of international technology diffusion, trade, cross-country productivity differences, financial development and fluctuations. In many such applications, a key role is played by complementarities in the process of innovation.

Importance of international linkages for local know-how flows. Some econometric evidence from Belgium

External knowledge is an important input for the innovation process of firms. Increasingly, this knowledge is likely to originate fromoutside of their national borders. This explains the preoccupationof policymakers with stimulating local technology transfers coming from international firms. We find that firms that have access to the international technology market are more likely to transfer technology to the local economy. In doing so, we qualify the traditional assertion that multinational firms are more likelyto transfer technology to the local economy. Once controlled for the superior access to the international technology market that multinationals enjoy, we find that these firms are not more likelyto transfer technology to the local economy compared to exportingor local firms that have access to the international technology market. In summary, the main result of this paper is that it isnot so much the international character of the firms, but rathertheir access to the international technology market that is important for generating external knowledge transfers to the local economy.

Health care management autonomy: Evidence from the Catalonian hospital sector in a decentralised Spain

The organisation of inpatient care provision has undergone significant reform in many southern European countries. Overall across Europe, public management is moving towards the introduction of more flexibility and autonomy . In this setting, the promotion of the further decentralisation of health care provision stands out as a key salient policy option in all countries that have hitherto had a traditionally centralised structure. Yet, the success of the underlying incentives that decentralised structures create relies on the institutional design at the organisational level, especially in respect of achieving efficiency and promoting policy innovation without harming the essential principle of equal access for equal need that grounds National Health Systems (NHS). This paper explores some of the specific organisational developments of decentralisation structures drawing from the Spanish experience, and particularly those in the Catalonia. This experience provides some evidence of the extent to which organisation decentralisation structures that expand levels of autonomy and flexibility lead to organisational innovation while promoting activity and efficiency. In addition to this pure managerial decentralisation process, Spain is of particular interest as a result of the specific regional NHS decentralisation that started in the early 1980 s and was completed in 2002 when all seventeen autonomous communities that make up the country had responsibility for health care services.Already there is some evidence to suggest that this process of decentralisation has been accompanied by a degree of policy innovation and informal regional cooperation. Indeed, the Spanish experience is relevant because both institutional changes took place, namely managerial decentralisation leading to higher flexibility and autonomy- alongside an increasing political decentralisation at the regional level. The coincidence of both processes could potentially explain why some organisation and policy innovation resulting from policy experimentation at the regional level might be an additional featureto take into account when examining the benefits of decentralisation.

Drug innovation, prices and health

This article tries to reconcile economic-industrial policy with health policy when dealing with biomedical innovation and welfare state sustainability. Better health accounts for an increasingly large proportion of welfare improvements. Explanation is given to the welfare losses coming from the fact than industrial and health policy tend to ignore each other. Drug s prices reflecting their relative relative effectiveness send the right signal to the industry rewarding innovation with impact on quantity and quality of life- and to the buyers of health care services.The level of drug s public reimbursement indicates the social willingness to pay of the different national health systems, not only by means of inclusion, or rejection, in the basket of services covered, but especially establishing the proportion of the price that is going to be financed publicly.Reference pricing for therapeutic equivalents as the upper limit of the social willingness to pay- and two-tiered co-payments for users (avoidable and inversely related with the incremental effectiveness of de drug) are deemed appropriate for those countries concerned at the same time with increasing their productivity and maintaining its welfare state. Profits drive R&D but not its location. There is no intrinsic contradiction between high productivity and a consolidated National Health Service (welfare state) as the European Nordic Countries are telling us every day.

Lobbying, innovation and protectionist cycles

This paper explains why trade liberalizations occur in developing countries,and why they are often reversed. It does so by focusing on the use oflobbying for protection by import competing firms as a means to postponecostly product quality upgrades to keep up with foreign competitors. Giventhe availability of a political market for import tariffs, domestic firmswill lobby for a sequence of tariffs that insulate domestic profits from awidening quality gap, thereby allowing adjustment to be postponed. But asthe contributions required by the government grow with the size of thequality gap, it will be optimal to adjust quality and to decrease thelobbying effort at some time, leading to liberalization and technologicalcatch-up. But then the equilibrium tariff will again be small and "cheap",and it will pay to start lobbying anew, until the next quality adjustment.Therefore, cycles in protection will occur as a result of the use oflobbying as a substitute for innovation. The model thus sheds new light onthe impact of the costs of protection on the effectiveness of the lobbyingeffort over time, and on their implications for the timing and the timehorizon of trade reforms in developing countries.

Entrepreneurial risk, investment and innovation

In this paper I develop a general equilibrium model with risk averse entrepreneurialfirms and with public firms. The model predicts that an increase in uncertainty reducesthe propensity of entrepreneurial firms to innovate, while it does not affect thepropensity of public firms to innovate. Furthermore, it predicts that the negativeeffect of uncertainty on innovation is stronger for the less diversified entrepreneurialfirms, and is stronger in the absence of financing frictions in the economy. In thesecond part of the paper I test these predictions on a dataset of small and mediumItalian manufacturing firms.

Neglected risks, financial innovation and financial fragility

We present a standard model of financial innovation, in which intermediaries engineer securities with cash flows that investors seek, but modify two assumptions. First, investors (and possibly intermediaries) neglect certain unlikely risks. Second, investors demand securities with safe cash flows. Financial intermediaries cater to these preferences and beliefs by engineering securities perceived to be safe but exposed to neglected risks. Because the risks are neglected, security issuance is excessive. As investors eventually recognize these risks, they fly back to safety of traditional securities and markets become fragile, even without leverage, precisely because the volume of new claims is excessive.

Emergence of Cooperation on Static and Dynamic Networks

Game theory is a branch of applied mathematics used to analyze situation where two or more agents are interacting. Originally it was developed as a model for conflicts and collaborations between rational and intelligent individuals. Now it finds applications in social sciences, eco- nomics, biology (particularly evolutionary biology and ecology), engineering, political science, international relations, computer science, and philosophy. Networks are an abstract representation of interactions, dependencies or relationships. Net- works are extensively used in all the fields mentioned above and in many more. Many useful informations about a system can be discovered by analyzing the current state of a network representation of such system. In this work we will apply some of the methods of game theory to populations of agents that are interconnected. A population is in fact represented by a network of players where one can only interact with another if there is a connection between them. In the first part of this work we will show that the structure of the underlying network has a strong influence on the strategies that the players will decide to adopt to maximize their utility. We will then introduce a supplementary degree of freedom by allowing the structure of the population to be modified along the simulations. This modification allows the players to modify the structure of their environment to optimize the utility that they can obtain.

R&D cooperation and spillovers: Some empirical evidence

This paper provides some first empirical evidence on the relationshipbetween R&D spillovers and R&D cooperation. The results suggest disentangling different aspects of know-how flows. Firms which rate incoming spillovers more importantly and who can limit outgoing spillovers by a more effective protection of know-how, are more likely to cooperate in R&D. Our analysis also finds that cooperating firms have higher incoming spillovers and higher protection of know-how, indicating that cooperation may serve as a vehicle to manage information flows. Our results thus suggest that on the one hand the information sharing and coordination aspects of incoming spillovers are crucial in understanding cooperation, while on the other hand, protection against outgoing spillovers is important for firms to engage in stable cooperative agreements by reducing free-rider problems. Distinguishing different types of cooperative partners reveals that while managing outgoing spillovers is less critical in alliances with non-commercial research partners than between vertically related partners, the incoming spillovers seem to be more critical in understanding the former type of R&D cooperation.

Complementarity between technology make and buy in innovation strategies: Evidence from Belgiam manufacturing firms

This paper characterizes the innovation strategy of manufacturing firms andexamines the relation between the innovation strategy and importantindustry-, firm- and innovation-specific characteristics using Belgiandata from the Eurostat Community Innovation Survey. In addition to importantsize effects explaining innovation, we find that high perceived risks andcosts and low appropriability of innovations do not discourage innovation,but rather determine how the innovation sourcing strategy is chosen. Withrespect to the determinants of the decision of the innovative firm toproduce technology itself (Make) or to source technology externally (Buy),we find that small firms are more likely restrict their innovation strategyto an exclusive make or buy strategy, while large firms are more likely tocombine both internal and external knowledge acquisition in their innovationstrategy. An interesting result that highlights the complementary nature ofthe Make and Buy decisions, is that, controlled for firm size, companies forwhich internal information is an important source for innovation are morelikely to combine internal and external sources of technology. We find thisto be evidence of the fact that in-house R&D generates the necessaryabsorptive capacity to profit from external knowledge acquisition. Also theeffectiveness of different mechanisms to appropriate the benefits ofinnovations and the internal organizational resistance against change areimportant determinants of the firm's technology sourcing strategy.

Employment protection, international specialization and innovation

We develop a model to analyse the implications of firing costs on incentivesfor R&D and international specialization. The Key idea is paying the firingcost, the country with a rigid labor market will tend to produce relativelysecure goods, at a late stage of their product life cycle.Under international trade, an international product cycle emerges where,roughly, new goods are first produced in the low firing cost country willspecialize in 'secondary innovations', that is, improvements in existinggoods, while the low firing cost country will more specialize in 'primaryinnovation', that is, invention of new goods.

Translation to success of surgical innovation.

Contemporary thoracic and cardiovascular surgery uses extensive equipment and devices to enable its performance. As the specialties develop and new frontiers are crossed, the technology needs to advance in a parallel fashion. Strokes of genius or problem-solving brain-storming may generate great ideas, but the metamorphosis of an idea into a physical functioning tool requires a lot more than just a thinking process. A modern surgical device is the end-point of a sophisticated, complicated and potentially treacherous route, which incorporates new skills and knowledge acquisition. Processes including technology transfer, commercialisation, corporate and product development, intellectual property and regulatory routes all play pivotal roles in this voyage. Many good ideas may fall by the wayside for a multitude of reasons as they may not be marketable or may be badly marketed. In this article, we attempt to illuminate the components required in the process of surgical innovation, which we believe must remain in the remit of the modern-day thoracic and cardiovascular surgeon.