measuring the unmeasurable a country s non r d expenditure on product and service innovation knowledge about non r d innovation expenditure such as patenting and licensing design trial production tooling up manpower training market research and investment in fixed assets is extremely sparse and questions about the latter were very poorly answered in the recent community innovation survey cis using information regarding the quality of replies we reach a tentative national estimate of 1992 innovation expenditure for all manufacturing and service industries in the netherlands expenditure on product related r d represents about one quarter of total product and service innovation expenditure roughly half of the latter consists of investment in fixed assets the latter being more important in services than in manufacturing

the looks of a winner beauty and electoral success abstract we study the role of beauty in politics using candidate photos that figured prominently in electoral campaigns our investigation is based on visual assessments of 1929 finnish political candidates from 10 011 respondents of which 3708 were finnish as finland has a proportional electoral system we are able to compare the electoral success of non incumbent candidates representing the same party an increase in our measure of beauty by one standard deviation is associated with an increase of 20 in the number of votes for the average non incumbent parliamentary candidate the relationship is unaffected by including education and occupation as control variables and withstands several other robustness checks

beauty and the labor market the authors examine the impact of looks on earnings using interviewers ratings of respondents physical appearance plain people earn less than average looking people who earn less than the good looking the plainness penalty is 5 to 10 percent slightly larger than the beauty premium effects for men are at least as great as for women unattractive women have lower labor force participation rates and marry men with less human capital better looking people sort into occupations where beauty may be more productive but the impact of individuals looks is mostly independent of occupation suggesting the existence of pure employer discrimination copyright 1994 by american economic association

innovation and diffusion in small firms theory and evidence the article provides an inventory of the strengths and weaknesses of small firms in a dynamic context to do this it considers verbal accounts of the processes of innovation and diffusion as well as quantitative studies testing cause effect relations it consider both economic and noneconomic factors concerning issues of motivation perception and knowledge first an overall summary is given of the characteristics of small business compared with large business as a basis for an assessment of strengths and weaknesses perhaps the most important characteristic of small business is its diversity and the article gives the conditions and sources of it other core characteristics are small scale personality and independence of the small firm from these derived characteristics strengths and weaknesses and core strategies can be inferred from the perspective of the firm strengths and weaknesses are subsequently analysed for the successive stages of innovation invention development tooling production introduction to practice market strengths and weaknesses in diffusion are analysed for the successive stages in the adoption process as proposed by rogers reference is made to theory and to empirical studies from the literature and from research by the present author

an economic model of representative democracy this paper develops an approach to the study of democratic policy making where politicians are selected by the people from those citizens who present themselves as candidates for public office the approach has a number of attractive features first it is a conceptualization of a pure form of representative democracy in which government is by as well as of the people second the model is analytically tractable being able to handle multidimensional issue and policy spaces very naturally third it provides a vehicle for answering normative questions about the performance of representative democracy

the right look conservative politicians look better and voters reward it previous research has established that good looking political candidates win more votes we extend this line of research by examining differences between parties on the left and on the right of the political spectrum our study combines data on personal votes in real elections with a web survey in which 2 513 non finnish respondents evaluated the facial appearance of 1 357 finnish political candidates we find that political candidates on the right are better looking in both municipal and parliamentary elections and also have a larger beauty premium in municipal but not in parliamentary elections we discuss possible explanations for these patterns based on the fact that municipal candidates are relatively unknown jel code d72 j45 j70

firm siz and efficiency in inovation reply economic activity moved away from large firms to small predominantly young firms in the 1970s and 1980s acs and audretsch 1993 and carlsson 1992 show evidence of manufacturing industries in countries in varying stages of economic development carlsson mentions two explanations for this shift the first deals with fundamental changes in the world economy from the 1970s onwards these changes relate to the increase of global competition the rising degree of uncertainty and the growth in market fragmentation the second deals with changes in the character of technological progress he shows that flexible automation has various effects resulting in a shift from large to smaller firms the pervasiveness of these changes results in a structural shift which affects the economies of all industri

a model of political equilibrium in a representative democracy abstract this paper studies political equilibrium in a two party representative democracy in which the political parties are policy motivated and voters trade off their policy preferences against their party identity it is shown that the parties will in general adopt differing policy positions in equilibrium and that under certain qualifications the winning policy will lie between the more popular party s preferred policy and a certain utilitarian optimum the winning policy will be closer to this utilitarian optimum the less biased the electorate is in terms of party identification

dynamic complementarities in innovation strategies using a panel of irish manufacturing plants over the period 1991 2008 we test for dynamic complementarities in the joint use of internal r d and external knowledge sources we find little evidence either from considering successive cross sectional waves of comparable surveys or in terms of the strategy switch choices of specific plants that there has been a systematic move towards the joint use of internal and external knowledge in innovation we then test formally for the presence of complementarities in the joint use of internal r d and external innovation linkages in static terms we find no evidence of complementarity but in dynamic terms find evidence that strategy switches by individual plants towards a more open strategy are accompanied by increased innovation outputs

balanced budget redistribution as the outcome of political competition this paper models balanced budget redistribution between socio economic groups as the outcome of electoral competition between two political parties equilibrium is unique in the present model and a sufficient condition for existence is given requiring that there be enough stochastic heterogeneity with respect to party preferences in the electorate the validity of hotelling s principle of minimum differentiation and of director s law are examined under alternative hypotheses concerning administrative costs of redistributions and voter s possibilities both of abstaining from voting and of becoming campaign activists for one of the parties the policy strategy of expected plurality maximization is contrasted with the strategy of maximizing the probability of gaining a plurality incomes are fixed and known so lump sum taxation is feasible however constraints on tax transfer differentiation between individuals are permitted in the analysis

paying politicians theory and evidence this paper looks at the theory behind the idea that paying politicians better will improve their performance the paper lays out a political agency model with adverse selection and moral hazard where politicians are subject to two period term limits this model provides a number of predictions about how the pay of politicians affects agency problems we also consider what happens when the pool of politicians is endogenous the main ideas in the model are confronted with data on u s governors jel d72 j33

r d in smes a paradox this paper has three objectives 1 to survey the relevant literature addressing the apparent paradox of research development investments carried out within small and medium enterprises 2 to provide focused summaries of the articles in this special issue 3 to draw some general conclusions in terms of policy implications

more evidence on the undercounting of small firm r d abstract drawing from the seo national survey on r d and innovation in the netherlands we argue that there must be an underrecording of small scale r d by orders of magnitude in the r d survey by the dutch central statistical office such underrecording holds for manufacturing and even more so for service firms this finding is confirmed by estimates based on records of firms receiving r d subsidies which we use as a third independent source in order to allow for international comparability of r d data the survey methods of the dutch central statistical office are similar to those in other oecd countries therefore our findings in the dutch manufacturing and service industries are likely to have an impact for the measurement of r d in other oecd countries the results have implications for our judgement about the famous schumpeterian hypotheses concerning the influence of firm size and market structure on r d

market versus corporate structure in plant level innovation performance this paper examines the effect which market and corporate structure have on the extent of innovation for a sample of circa 300 manufacturing plants located in scotland innovation is defined as the introduction of a commercially significant new product at the establishment level the theoretical model of geroski 1990 is extended to incorporate plant level variables such as size multiplant operation the presence of r d facilities and external indigenous ownership a distinction is made between the direct and indirect effects of these variables negative binomial estimations indicate that corporate structure influences are more important in determining the number of innovations than market structure and barrier to entry variables plant size foreign ownership and the presence of r d are all positively associated with innovation direct effects greatly outweigh indirect effects tobit estimations on the number of innovations per employee support the findings of acs and audretsch 1988 that smaller enterprises are more innovation intensive than larger enterprises at least up to a limit of around 1200 employees the positive effect of r d arises principally from increasing the probability of a plant becoming an innovator rather than from making a plant more innovation intensive by contrast the importance of size lies principally in encouraging further innovations among plants which are already innovators but less than proportionately with the increase in employment size

measuring r d in small firms how much are we missing the oecd surveys on r d are considerably biased towards underestimating r d in small firms this conclusion is derived from the author s comparison between the official dutch r d survey and the findings of his own survey among 3000 firms although being based on dutch observations only the author s considerations have an impact on other oecd countries since the official dutch r d survey is fully compatible with those in other countries the findings call into question the results from a number of empirical studies bearing on subjects such as market structure and r d firm size and r d or r d and growth

effectiveness and efficiency of sme innovation policy this paper assesses uk innovation policy impact on a large population weighted sample of both service and manufacturing smes by focussing on self reported innovation the study achieves a wider coverage of the effects of sme innovation policy than possible with more traditional indicators propensity score matching indicates that smes receiving uk state support for innovation were more likely to innovate than unsupported comparable enterprises innovating enterprises are shown to have grown significantly faster over the years 2002 2004 when other growth influences are appropriately controlled combining these two results and comparing the outlays on sme innovation policy with the estimated effects suggests that policy was efficient as well as effective there is evidence that sme tax credits were expensive compared with earlier support instruments but the overall high returns estimated suggest that even in times of public spending cuts persisting with sme innovation policy would be prudent

why beauty matters we decompose the beauty premium in an experimental labor market where employers determine wages of workers who perform a maze solving task this task requires a true skill which we show to be unaffected by physical attractiveness we find a sizable beauty premium and can identify three transmission channels a physically attractive workers are more confident and higher confidence increases wages b for a given level of confidence physically attractive workers are wrongly considered more able by employers c controlling for worker confidence physically attractive workers have oral skills such as communication and social skills that raise their wages when they interact with employers our methodology can be adopted to study the sources of discriminatory pay differentials in other settings

demand side secular stagnation abstract the experience of first japan and now europe and the usa suggests that hansen s concept of secular stagnation is highly relevant recovery has been anemic and follows a generation of financially unsustainable and often lackluster growth investment demand has declined while the supply of saving has increased leaving the economy vulnerable to liquidity traps although some us indicators have improved forward real rates have declined sharply european prospects remain muddled and the zero bound will likely constrain again during the next recession infrastructure and private investment are the best ways to both minimize the risk of secular stagnation and raise demand

managerial efficiency and the schumpeterian link between size market structure and innovation revisited this research uses a unique survey on innovation conducted in belgian high tech industries to investigate a the effects of managerial efficiency on the firm s innovative activity and b the effects of controlling explicitly for managerial efficiency on the schumpeterian like relationship that firm size and market concentration are both conducive to innovation the key findings are managerial efficiency is an important determinant of the firm s innovation performance only when one controls for managerial variables considered as success factors for innovation the schumpeterian effect of the impact of the firm s market share emerges for a wide range of measures of performance which confirms rothwell s suggestion 18 that small firms have a advantage in the management of their innovation

entry spending and firm size in a stochastic r d race a model is developed to explain participation and spending on rd a flow cost of expenditure for the duration of the race which affects both the profitability of winning and the speed of development the poisson parameter both with diminishing returns allowance for an effect of firm size on the effectiveness profit cost of development the operational decision concerning the level and intensity of commitment in case of participation is modelled in a traditional fashion as the maximization of expected returns the strategic decision whether or not to participate at an optimal level and intensity is modelled as a stochastic process of deliberation between different makers and influencers of decisions in the firm the latter is to be seen as an introduction of the political and resource dependence views of organisations the resulting model of r d participation as a function of firm size is tested empirically on data from an r d survey in the netherlands

under reporting of r d in small firms the impact on international r d comparisons there is a widely recognised tendency for conventional measures of r d activity to under estimate the r d investments of small companies this arises due to small firms emphasis on developmental rather than fundamental research and because this activity is often informally organised international survey evidence suggests a greater degree of formality in the organisation of r d in german small firms this reduces the likely degree of under estimation of german small firms r d activity relative to that in the u k as a result aggregate r d figures may be under estimating the true level by 13 9 per cent in the u k and 2 4 per cent in germany this is equivalent to around half of the historical difference between aggregate levels of business r d in the u k and germany

some new evidence on the determinants of large and small firm innovation empirical analyses presented by acs and audretsch suggest differences in the market structure determinants of innovation between large and small firms in u s manufacturing the evidence they offer is ambiguous by using data for a different country the netherlands a different measure of innovation and a different aggregation level we offer new evidence allowing a revaluation of the findings for the u s material moreover the influence of the market structure determinants does not appear to differ between a period of sluggish growth 1983 and one of relatively high growth 1989

the scope and limits of accounting and judicial courts intervention in inefficient public procurement cost inefficiencies in public procurement tend to come from two sources corruption moral hazard and incompetence adverse selection in most countries audit authorities are responsible for monitoring costs but do not distinguish both sources of inefficiency in their audits judicial courts typically rely on these cost audits but only sanction corruption in a model of public procurement by politicians we study how the respective quality of the two courts affects corruption as well as cost efficiency we find that while better courts have the direct effect of decreasing corruption they may have a negative indirect effect on the abilities of the pool of politicians so that the net effect on cost efficiency is ambiguous

social preferences self interest and the demand for redistribution preferences for redistribution may be influenced by values and beliefs about distributive justice as well as by self interest people may prefer more redistribution to the poor if they believe that poverty is caused by circumstances beyond individual control therefore beliefs about the causes of income may affect demand for redistribution alternatively the effect of these beliefs on redistributive preferences may be spurious if they are correlated with income and self interest is not properly controlled for they may also measure incentive cost concerns using social survey data i find that self interest cannot explain the effect of these beliefs on redistributive preferences 2001 elsevier science b v all rights reserved

large firms in the production of the world s technology an important case of non globalisation us patenting by 686 of the world s largest manufacturing firms shows that their share of the world s production of technology is less than their share of r d activities and varies greatly amongst sectors in most cases the technological activities of these large firms are concentrated in their home country the characteristics of which influence the volume and trends in their technological activities much more strongly then the international component of these activities at the same time these large firms are major elements in the volume and the pattern of sectoral specializations in their home countries technological activities

why have women become left wing the political gender gap and the decline in marriage the last three decades have witnessed the rise of a pohtical gender gap in the united states wherein more women than men favor the democratic party we trace this development to the decline in marriage which we posit has made men richer and women poorer data for the united states support this argument first there is a strong positive correlation between state divorce prevalence and the political gender gap higher divorce prevalence reduces support for the democrats among men but not women second longitudinal data show that following marriage divorce women are less more likely to support the democratic party

the anatomy of industry r d intensity distributions using firm data disaggregated by industry we establish a set of regularities in the distribution of firm r d intensities within manufacturing industries we show how a simple probabilistic process in which chance influences a key unobserved determinant of r d and firm size conditions the returns to r d can account for these regularities and other features of the distributions the model provides a unified noncausal explanation of a series of long observed relationships across mean r d intensity market concentration and the coefficient of variation it also offers a novel explanation for the inverse relationship between r d productivity and firm size jel 031