the birth of a new industry entry by start ups and the drivers of firm growth the case of encryption software the paper analyses the birth of the encryption software industry esi a new niche in the software industry using a chandlerian perspective this work reports the main facts about fir entry and growth with a particular focus on start up strategies and actions since scale economies do not play a major role in esi the paper investigates the different sources of fir competitive advantages this work shows that innovation and product differentiation along with investments in co specialised assets are variables strongly correlated to young fir probability to survive and grow in doing so we have collected highly detailed information on product introduction us patents granted worldwide alliances and biographical data of fir founders 2004 elsevier b v all rights reserved jel classificatio m13 l86 o32

u s european interest rate linkage a time series analysis for western germany switzerland and the united states the authors investigate whether there was an international linkage of interest rates between the united states west germany and switzerland during the period of flexible exchange rates 1974 84 euro market rates and bond market rates are considered during the two subperiods of falling and increasing u s dollar dm exchange rates 1974 to 1978 and 1979 to 1984 spectral analysis and granger causality tests are applied and trivariate autoregressive models are estimated it is shown that a strong linkage exists during the second period but during the first subperiod there was no or only a weakly pronounced linkage copyright 1987 by mit press

which way does water flow an econometric analysis of the global price integration of water stocks around us 600 billion of investment is desperately needed to address forecasted huge shortages in water supply globally a number of worldwide investors so called water funds have started to take up this challenge for these global water investors knowledge about the extent of integration between the water sectors of financial markets is highly important according to international portfolio diversification theory the less more integrated markets are the more less benefits there are from international diversification in this study we investigate the extent and manner of interdependence among the us european and asian water sector of the equity markets based on vector autoregression var granger causality and impulse response analyses we find that world water stock market prices are indeed significantly interdependent although this interdependence varies across time periods each market quickly responds to shocks from each other and completes its response within 3 days hence for water in

purchasing power parity in the long run a cointegration approach this paper utilizes cointegration analysis to examine purchasing power parity relationships over a long time horizon the results indicate that the exchange rate is cointegrated strongly with the wholesale price index ratio and somewhat weakly with the consumer price index ratio the cointegrating coefficient between the exchange rate and the price ratio is close to one when cointegration is confirmed the hypothesis that the real exchange rate follows a random walk is rejected in most cases finally a new test for common trends finds no such common trends in exchange rates or price ratios copyright 1990 by ohio state university press

balancing exploration and exploitation in alliance formation do firms balance exploration and exploitation in their alliance formation decisions and if so why and how we argue that absorptive capacity and organizational inertia impose conflicting pressure

national price levels purchasing power parity and cointegration a test of four high inflation economies abstract the time series properties of exchange rates and wholesale prices from four high inflation countries show some evidence in support of purchasing power parity tests for stationarity of real exchange rates and cointegration among price and exchange rate variables are presented for argentina brazil chile and israel during the 1970s and 1980s error correction models describe the mechanism of adjustment to long run equilibrium

co integration and error correction models the temporal causality between government taxes and spending several interesting papers have recently considered whether government taxes granger cause government spending or vice versa the findings based on standard granger 6 causality tests are not consistent manage and marlow 10 conclude that when evidence of one way causality exists federal taxes granger cause federal spending while anderson wallace and warner 1 conclude that the evidence supports one way causality in the opposite direction ram 11 reexamining the issue concludes that taxes granger cause spending at the federal level but that spending granger causes taxes at the state and local level von furstenberg green and jeong 13 in another related article examine the tax and spend spend and tax causality issue using a more general vector autoregressive var model they introduce in addition to federal taxes and spending two economic variables the gnp gap and the inflation rate decompose federal spending into several categories and remove the effects of automatic stabilizers when appropriate they find little evidence that taxes granger cause spending and limited evidence that spending causes taxes a finding which corresponds most closely to that of anderson wallace and warner 1 our purpose is to reconsider the causality issue with the aid of co integration and errorcorrection modeling our analysis illustrates with a specific example how sources of causality can be neglected in standard granger causality tests moreover addressing the question of temporal causality between government taxes and spending provides insight as to how different policies might or might not help control the growth of government the results of our estimating various co integration and error correction models with quarterly data suggest bi directional causality between government taxes and spending both for the federal and state and local sectors this finding counters the conclusions of previous studies when annual data are used however our

persistence of innovative activities sectoral patterns of innovation and international technological specialization abstract in this paper we focus on the role of persistence and heterogeneity of innovative activities at the level of the firm in determining the patterns of technological change in different industries and countries we ask are persistence and heterogeneity associated with higher degrees of concentration in innovative activities stability in the ranking of innovators and lower degrees of entry and exit in the population of innovators or do the patterns of innovation depend on other variables like firm size and industrial concentration moreover what are the relationships between the patterns of innovative activities their determinants and the technological specialization of countries we compute indicators of persistence and heterogeneity using the otaf spru patent database at the firm level for five european countries over the period 1969 1986 for 33 technological classes then we estimate the relationships between our indicators of the sectoral patterns of innovative activities and international technological specialization on the one hand and our indicators of persistence heterogeneity and market structure on the other results show that persistence and asymmetries are important and strongly related phenomena that affect the patterns of innovative activities across countries and sectors while the role of market structure variables is less clear finally international technological specialization is associated to a competitive core of persistent innovators

asset stock accumulation and sustainability of competitive advantage given incomplete factor markets appropriate time paths of flow variables must be chosen to build required stocks of assets that is critical resources are accumulated rather than acquired in strategic factor markets barney barney j 1986 strategic factor markets expectations luck and business strategy management sci october 1231 1241 sustainability of a firm s asset position hinges on how easily assets can be substituted or imitated imitability is linked to the characteristics of the asset accumulation process time compression diseconomies asset mass efficiencies inter connectedness asset erosion and causal ambiguity

the interrelationships between u s and foreign equity market yields tests of granger causality this study examines the interrelationships between yields on the u s and several foreign market portfolios over the 1980 89 period tests of granger causality are used to investigate the effects of uni directional causality bi directional causality and contemporaneous adjustment in the determination of market rates of return the results indicate that international equity market returns are largely contemporaneously determined and the significance of contemporaneous effects varied over time uni directional and bi directional causality were found to be relatively weak

capital market integration over the past decade the case of the us dollar abstract this study investigates changing capital market integration over the decade 1973 83 as measured by the relationship between eurodollar and domestic us dollar yields the findings reveal that capital market integration has increased appreciably since the end of 1981

evolutionary dynamics of currency substitution abstract this paper examines the issues related to the competition between two currencies in an agent based computational economic model the economic environment is a two country overlapping generations economy with no restrictions on foreign currency holdings governments of both countries finance their deficits via seignorage agents make decisions about their savings and portfolio decisions they use the genetic algorithm to update their decision rules the results presented in the paper show that the currency of the country that finances larger of the two deficits becomes valueless the adjustment process is characterized by a flight away from the currency used to finance the larger of the two deficits the economy converges to a stationary equilibrium that corresponds to a single currency economy

foreign exchange market efficiency and cointegration in this note we examine an implication of the cointegration literature for the efficiency of foreign exchange markets in particular if foreign exchange markets are efficient then two spot exchange rates cannot be cointegrated this proposition is tested for 10 dollar bilateral exchange rates over the period january 1973 december 1985

the term structure of eurodollar interest rates and its relationship to the us treasury bill market abstract this paper examines an efficient market of the term structure of eurodollar interest rates and its relationship with the us treasury bill market standard test procedures and granger causuality tests are conducted which provide evidence showing that past changes in short term eurodollar or domestic interest rates are not useful in predicting changes in long term eurodollar interest rates the eurodollar market appears to be efficiently integrated with the us domestic financial market

interest rate linkages within the european monetary system further analysis j costas karfakis and demetrios m moschos 1990 examine the interest rate linkages within the european monetary system ems concluding that the german interest rate plays a dominate role within the ems the authors reexamine the interest rate linkages within the ems with the addition of the interest rate of the united states their results suggest that both the united states and german interest rates play an important but not dominant role in ems interest rate linkages copyright 1993 by ohio state university press

the international transmission of eurodollar and us interest rates a cointegration analysis abstract the relationship between us and eurodollar certificate of deposit cd rates for the period 1981 1988 is examined using an error correction model results indicate that there is a structural change in the cd rates in the earlier sub period 1981 1983 there exists unidirectional causality leading from the domestic to the external markets in the more recent sub period 1984 1988 however significant reverse causality is observed these results are likely due to expansion in the size of the eurodollar market and an increase in the volume of eurodollar futures trading

rational expectations endogenous currency substitution and exchange rate determination the paper employs the intergenerational model to derive the demands for domestic and foreign currencies from microeconomic optimizing behavior in the absence of government policy we obtain the kareken and wallace result that exchange rates are constant and indeterminate we discuss the reasons why nations may find it in their interests to impose probabilistic capital controls it is shown that the imposition of probabilistic capital controls yields a unique generally nonstationary exchange rate path and that this path is determined in accord with the monetary approach as the probability of controls tends to zero the exchange rate remains determinate

money and monetization in china s economic reform in addition to privatization marketization liberalization and pragmatization monetization has been argued as the fifth feature in china s economic reform if monetization is taken to mean a process through which variations in money supply or interest rate are to affect macroeconomic variables the construction of four causality relationships between interest rate and investment and money and national income do not support the evidence of such a process in china between the late 1970s and early 1990s

interest rate linkages in the eurocurrency market contemporaneous and out of sample granger causality tests abstract this paper examines linkages among major eurocurrency interest rates during 1994 2002 eurocurrency interest rate causal linkages are found to be much stronger with additional allowance for contemporaneous causality test results than the inference based solely on granger causality tests the impact of u s interest rates is clearly not dominant in the eurocurrency markets while the japanese interest rates are found to be quite influential german interest rates both cause and are caused by several other eurocurrency interest rates by contrast interest rates on the new currency the euro do not have a substantial influence on other eurocurrency interest rates which underscores its emerging status

is there a j curve abstract if the response of the value of the trade balance to movements in the real exchange rate is described by a j curve then a real depreciation initially worsens a balance of trade deficit only improving it over time this paper investigates whether a j curve can be detected in the last twenty five years of american data no statistically reliable evidence of a stable j curve is detected the model is checked extensively to support this finding

r d and the growth of firms empirical analysis of a panel of italian firms abstract this paper deals with the growth of firms and with their innovative activities the main hypothesis of the paper maintains that firms with a strong commitment to r d have a higher rate of growth because they succeed in the product market after a review of the related literature the paper presents an econometric analysis of the r d growth of firms relation based on a database of italian firms data on a sample of 500 firms with time series in the range 1989 1997 were drawn from the mediocredito survey of italian manufacturing descriptive analysis shows that the sales growth rate of firms with r d is higher than that of firms without r d econometric analysis is performed in two steps first we apply a panel unit root test im k pesaran h shin y 1997 testing for unit roots in heterogeneous panels dae university of cambridge mimeo to verify whether the firm size significantly affects firm growth the test confirms gibrat s law that firm size has a stochastic trend second we explore whether there are variables with stochastic trends that could account for firm size according to our estimates the growth rate of firms is positively correlated with research intensity in these estimates a further interesting result is that investment in ict is not significant or shows a parameter with negative sign

linkages among interest rates in the united states germany and norway the johansen multivariate cointegration methodology is used to analyze relationships among short term and long term interest rates in the united states germany and norway a variance decomposition approach is applied to estimate the proportion of each interest rate s forecast error variance attributable to innovations in the other interest rates impulse response functions are plotted to illustrate the speed with which interest rate events are transmitted between capital markets the analyses illustrate that us interest rates have a significant influence on both german and norwegian interest rates while the reverse effect is modest norway is also strongly exposed to german interest rate movements which reflects the consequences of a small country linking its currency to the value of european currencies

cointegration market integration and market efficiency abstract this paper uses a standard dynamic general equilibrium asset pricing model to study the relationship among the concepts of efficient markets integrated markets and cointegrated prices within this setting we show that these concepts are independent of one another and any zero one two or three of these characteristics can emerge in equilibrium depending upon taste endowment and technology parameters in particular the results of tests of cointegration among asset prices have no implications about market efficiency or market integration without additional restrictions on the economy or economies

the international financial market and us interest rates abstract this paper examines the linkages between the eurodollar and us domestic financial markets it is shown that using weekly data allows the isolation of significant fluctuations being transmitted between markets in both directions in particular financial markets in the us are affected significantly by foreign events it is impossible to reach precise conclusions about the causes of historical variation in the rates however this paper provides evidence that at most 40 of the variation in eurodollar interest rates over the 1975 1978 period can be traced to domestic us sources and that between about one fifth and two thirds of the variation in domestic rates can be traced to foreign sources

autoregressive modelling and money income causality detection abstract a step wise procedure based on granger s concept of causality and abaike s final prediction error criterion is suggested as a practical means to identify the order of lags of each variable in a multivariate autoregressive process the model seems useful because it can serve as a reduced form formulation to avoid imposing often spurious or false restrictions of the model it also provides a reasonably powerful test of causality the idea is applied to u s postwar money and income data it is found that between m1 and gnp a bivariate feedback model fits the data best between m2 and gnp a one way causal model from money to income performs better diagnostic checks applied to our model seem to indicate the adequacy of our approach

market efficiency and cointegration an application to the sterling and deutschemark exchange markets abstract the assumption that the foreign exchange market is efficient that is that agents are risk neutral and use all available information rationally so that the forward exchange rate is an unbiased predictor of the future spot rate is a property often imposed in theoretical international macroeconomic models although a vast empirical literature has evolved to test market efficiency we use recent developments in the theory of cointegration to provide new methods of testing several aspects of foreign exchange market efficiency we ffind evidence inconsistent with market efficiency for both germany and the united kingdom

cointegration between exchange rates and relative prices another view abstract in this paper the cointegration property of exchange rates and relative prices as implied by the purchasing power parity theory ppp is reexamined using a time varying parameter tvp approach such an approach recognizes the possibility that the lack of cointegration between exchange rates and relative prices found in recent literature may be the result of the nonstationarity of the cointegrating regression parameters themselves the tests of cointegration in a tvp framework indicate that ppp is better supported and point to the presence of structural instability in the long run equilibrium relationship between exchange rates and relative prices

measuring global money market interrelationships an investigation of five major world currencies abstract this paper extends the study of global money market integration in two primary directions first a technique which combines stationarity and cointegration tests as a basis for constructing an error correction model is applied to assess the existence of long run equilibrium relationships between money market series second analysis for the increasingly significant asian offshore markets of singapore and hong kong is added to traditional european and national markets analysis major findings are 1 the error correction model is an appropriate technique for identifying causality relationships and 2 major domestic markets and included offshore markets are partially segmented

the federal funds market and the overnight eurodollar market abstract this paper investigates the effect of daily management of federal reserve accounts by us depository institutions on the interest rate outside the us spindt and hoffmeister journal of financial and quantitative analysis 23 1988 401 griffiths and winters journal of banking and finance 19 1995 1265 and hamilton journal of political economy 104 1996 22 found that the fed funds rate exhibited calendar day effects caused by federal reserve regulations i find that the overnight eurodollar rate shows similar predictable daily changes as does the fed funds rate although the absolute magnitudes are slightly less the empirical results support the hypothesis that the tendencies in daily changes in the two overnight interest rates are caused by the characteristics of the fed funds market

the ambitious entrepreneur abstract during the last two decades researchers have sought to develop categories of entrepreneurs and their businesses along a variety of dimensions to better comprehend and analyze the entrepreneurial growth process some of this research has focused on differences related to industrial sectors firm size the geographical region in which a business is located the use of high technology or low technology and the life cycle stage of the firm i e start up vs more mature formalized companies researchers have also considered ways in which entrepreneurs can be differentiated from small business managers one of these classifications is based on the entrepreneur s desire to grow the business rapidly this is the focus of our study to date the media have paid considerable attention to rapidly growing new ventures however still lacking are large scale research studies guided by theory through which we can expand our knowledge of the underlying factors supporting ambitious expansion plans some research has identified factors that enhance or reduce the willingness of the entrepreneur to grow the business factors include the strategic origin of the business i e the methods and paths through which the firm was founded previous experience of the founder owner and the ability of the entrepreneur to set realistic measurable goals and to manage conflict effectively our study attempted to identify the strategic paths chosen by entrepreneurs and the relation of those paths to the growth orientation of the firm the entrepreneurs sampled in this study are women entrepreneurs across a wide range of industrial sectors recent reviews of entrepreneurship research have suggested the need for more studies comparing high growth firms with slower growth firms to better delineate their differences in strategic choices and behaviors our study sought to answer the following questions what characterizes a high growth oriented entrepreneur is this distinction associated with specific strategic intentions prior experience equity held in previous firms the type of company structure in place or success factors the entrepreneur perceives are important to the business do high growth entrepreneurs show greater entrepreneurial intensity i e commitment to the firm s success are they willing to pay the price for their own and their firm s success i e the opportunity costs associated with business success and growth other relationships under investigation included different patterns of financing the business start up and early growth do high growth entrepreneurs use unique sources of funding compared with lower growth entrepreneurs eight hundred thirty two entrepreneurs responded to a survey in which they were asked to describe their growth intentions along nineteen strategic dimensions as well as respond to the foregoing questions some of the strategic activity measures included adding a new product or service expanding operations selling to a new market and applying for a loan to expand operations actual growth rates based on sales revenues were calculated and average annualized growth rates of the industrial sectors represented in the sample were obtained this study showed that high growth oriented entrepreneurs were clearly different from low growth oriented entrepreneurs along several dimensions the former were much more likely to select strategies for their firms that permitted greater focus on market expansion and new technologies to exhibit greater intensity towards business ownership my business is the most important activity in my life and to be willing to incur greater opportunity costs for the success of their firms i would rather own my own business than earn a higher salary while employed by someone else the high growth oriented entrepreneurs tended to have a more structured approach to organizing their businesses which suggests a more disciplined perception of managing the firm in summary results showed the group of high growth oriented entrepreneurs labeled ambitious as having the following distinctions strategic intentions that emphasize market growth and technological change stronger commitment to the success of the business greater willingness to sacrifice on behalf of the business earlier planning for the growth of the business utilization of a team based form of organization design concern for reputation and quality adequate capitalization strong leadership and utilization of a wider range of financing sources for the expansion of the venture the purpose in uncovering these differences is to enable entrepreneurs and researchers to identify more clearly the attributes of rapid growth ventures and their founders and to move closer to a field based model of the entrepreneurial growth process which will help delineate the alternative paths to venture growth and organizational change

swinging a double edged sword the effect of slack on entrepreneurial management and growth resource slack represents a double edged sword simultaneously fueling and hindering growth drawing on penrose s growth theory and stevenson s entrepreneurial management theory we have developed and tested a conceptual model that provides a more nuanced account of the resource slack growth relationship using a large dataset spanning six years we have found that slack has a positive direct effect on growth but a negative effect on entrepreneurial management and that entrepreneurial management has a positive effect on growth our empirical and conceptual findings are important to the development of firm growth theory and explicate causal mechanisms transforming slack into firm level outcomes

cointegration based tests of daily foreign exchange market efficiency abstract an immediate implication of cointegration is the existence of granger causal orderings among cointegrated series this implies that asset prices determined in a weakly efficient market cannot be cointegrated this proposition is tested using daily data for 18 foreign currencies tests are conducted for both pairwise combinations of currencies and higher order systems no significant evidence of cointegration among exchange rates is found

resource constraints as triggers of radical innovation longitudinal evidence from the manufacturing sector abstract despite the significant role of radical innovation as a driver of firm growth and performance the consequences of resource constraints for radical innovation outcomes remain unknown our paper addresses this gap we combine arguments from entrepreneurship theory and the theory of recombinative innovation to construct an overarching theoretical framework that argues why resource constraints can promote rather than impede radical innovation we then build hypotheses on two specific resource constraints knowledge and financial and test these by a lagged variable random effects tobit model with longitudinal data from an exceptionally large and detailed innovation survey controlling for absorptive capacity firm age and firm growth we find full support for the hypothesis that knowledge constraints spur radical innovation and partial support for the hypothesis that financial constraints spur radical innovation we discuss the theoretical significance of these findings and point to managerial implications and paths for future research

evolution in dynamic linkages across daily national stock indexes abstract this article investigates how dynamic linkages among the daily rates of return of eight national stock indexes have evolved since 1972 a dynamic simultaneous equations model is estimated to describe the contemporaneous and lead lag relationships across national equity markets over three different years 1972 1980 and 1987 results reveal growing market interdependence within the same geographical region over time while there are many significant intermarket relationships within the same 24 hour period there are few significant lagged responses across markets beyond 24 hours this suggests a high degree of international market efficiency furthermore japan s market influence has been growing to rival that of the usa

measurement of repressed inflation in china abstract we estimate a measure of the repression of the chinese price level by developing a simple analytical model which derives a true rate of inflation on the basis of the different rates of change of the stock of money in circulation and the nominal value of retail sales this true rate of inflation is then used to explain changes in quasi money balances we estimate this model for the period 1979 1988 using quarterly data the results strongly support the hypothesis of repressed inflation the annual rate of inflation of the true price index is approximately 12 4 percent higher than that of the official price index over the 10 year period

china s inflation 1979 1983 measurement and analysis one of china s economic achievements since the founding of the people s republic has been the maintenance of a relative price stability over a considerable period of time inflation however did emerge several times over the past 30 years after the rapidly rising prices of the late 1940s were brought under control in 1950 some inflationary pressures appeared in 1953 and then again in 1956 but in both cases these pressures were relatively mild and were quickly removed the serious production shortfalls and financial deficits that followed the great leap forward of 1958 59 caused price levels to rise rapidly in 1960 62 this time the inflationary pressures were stronger and lasted longer since 1979 inflation once again has become a major problem in the chinese economy in 1979 the chinese press began to report price increases and these increases apparently became substantial and widespread in 1980 although official reports indicated a slowdown in the growth of prices in 1981 83 inflation has continued to represent a latent threat to china s economic stability and growth 2 since the chinese economy is organized and operated under a socialist system with centralized allocation of major resources and state control over the prices of essential products the character and dimensions of inflation in china should be very different from those in a market economy an analysis of chinese inflation therefore not only may add to the existing knowledge about the operation of the nonmarket economy in china but also may shed light on the complexity of the economic reforms that are being undertaken a fundamental

currency substitution and monetary autonomy the foreign demand for us demand deposits abstract this paper presents new evidence of currency substitution using the two step estimator of cointegrated systems developed by engle and granger 1987 we estimate and find cointegration among variables suggested by the money services model of currency substitution following engle et al 1989 we estimate an error correction model for each of five countries allowing isolation of long term from short term influences on the foreign demand for us demand deposits our results suggest that currency substitution is a potentially significant phenomenon influencing long term monetary policy independence

r d and absorptive capacity from theory to data this paper presents a unified model that integrates the theoretical literatue on schumpeterian endogenous growth the microeconometric literature on r d and productivity and the empirical literature on productivity convergence starting from a structural model of endogenous growth following aghion and howitt 1992 1998 we provide microeconomic foundations for a reduced form equation for total factor productivity tfp growth that is commonly used in the empirical literature we allow a role for r d in innovation and technology transfer absorptive capacity the analysis suggests that many existing studies underestimate r d s social rate of return and provides an explanation for long run productivity levels at the industry level

what s experience got to do with it sources of cost reduction in a large specialty chemicals producer conventional learning curves relating unit cost to measures of production experience are estimated for 221 specialty chemicals produced by a fortune 500 company detailed records on cost and r d coupled with insights from company personnel are used to explain the variation across products in the rate of cost reduction products that exhibited the strongest relationship between unit cost and measures of production experience were subject to specific initiatives particularly process r d the r d was not however generally motivated or informed by production experience however cumulative past output the most commonly used measure of production experience was related to expected future output which conditioned the expected future returns from r d and the choice of r d projects thus cumulative output was connected to unit costs through its role in conditioning incentives to undertake process r d rather than as a proxy for production experience this suggests that the strong relationship commonly found between unit cost and measures of production experience may reflect incentives to reduce cost as much as learning from production experience

customer power strategic investment and the failure of leading firms why might firms be regarded as astutely managed at one point yet subsequently lose their positions of industry leadership when faced with technological change we present a model grounded in a study of the world disk drive industry that charts the process through which the demands of a firm s customers shape the allocation of resources in technological innovation a model that links theories of resource dependence and resource allocation we show that established firms led the industry in developing technologies of every sort even radical ones whenever the technologies addressed existing customers needs the same firms failed to develop simpler technologies that initially were only useful in emerging markets because impetus coalesces behind and resources are allocated to programs targeting powerful customers projects targeted at technologies for which no customers yet exist languish for lack of impetus and resources because the rate of technical progress can exceed the performance demanded in a market technologies which initially can only be used in emerging markets later can invade mainstream ones carrying entrant firms to victory over established companies

complementarities between obstacles to innovation evidence from france abstract this paper investigates obstacles to innovation faced by french manufacturing firms using cis2 data we distinguish between obstacles in postponed projects and obstacles in abandoned projects first we highlight the most important barriers to innovation faced by firms and find that lack of skilled personnel is one of these second based on descriptive analysis correspondence analysis and multivariate probit models we explore factors explaining the perception of obstacles and study complementarities between those obstacles we show that while adopting a package of policies increases the pace of innovation a more targeted choice among policies is needed to encourage firms to persevere in their innovative efforts

a resource based theory of the firm knowledge versus opportunism this paper develops a resource based knowledge based theory of the firm its thesis is that the organizational mode through which individuals cooperate affects the knowledge they apply to business activity we focus on the polar cases of organization within a firm as compared to market contracting there will be a difference in the knowledge that is brought to bear and hence in joint productivity under the two options thus as compared to opportunism based transaction cost theory we advance a separate yet complementary answer to the question why do firms exist our aim is to develop an empirically relevant and complementary theory of why firms are formed a theory based on irreducible knowledge differences between individuals rather than the threat of purposeful cheating or withholding of information we assume limited cognitive abilities on the part of individuals bounded rationality and assume that opportunistic behavior will not occur the latter allows us to determine whether resource based

co integration tests for long run equilibrium in the monetary exchange rate model abstract the monetary model of exchange rate determination is tested as a long run equilibrium relation tests of co integration among the variables in this model over a wide range of specifications are generally unfavorable to the monetary approach

firms transfer strategies with universities and the relationship with firms innovation performance based on a representative sample of swiss firms we empirically investigated strategies for knowledge and technology transfer ktt activities between business firms and universities as well as other public research institutions based on a cluster analysis of 19 different forms for ktt three types of ktt strategies were identified they were significantly correlated mainly to i the absorptive capacity of a firm ii several factors hampering ktt activities and iii some characteristics of the transfer process such as the number of partners the existence of contacts to foreign universities and the utilization of the mediating services of transfer offices furthermore it was found that ktt strategies related to the core transfer activities such as r d contracts are stronger correlated with innovation performance compared to strategies related to softer transfer forms copyright 2009 the author 2009 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

the international transmission of interest rates a note on causal relationships between short term external and domestic u s dollar returns abstract this study extends the literature of capital market integration by investigating the relationship between u s dollar yield behavior in the domestic and in the external dollar market recognizing recent increases in world capital market speed of adjustment the analysis is based on daily changes in yields using granger causality tests much of the adjustmemt appears to be contemporaneous if contemporaneous is defined as weekly as opposed to daily changes and the eurodollar market adjusts more rapidly and more completely to changes in the domestic market than the domestic market adjusts to changes in the eurodollar market

a note on euroyen and domestic yen interest rates abstract this study examines interest rate transmission between the london euroyen market and the japanese domestic cd market the results which span 1984 through the beginning of 1993 indicate that these two interest rate series are cointegrated in the earlier part of the sample period causality is strongest from the euroyen market to domestic yen interest rates however strong feedback effects are observed in both directions in more recent years the use of both vector autoregressive modeling and cointegration analysis for forecasting is supported over random walk models

overcoming scarcities through innovation what do technologists do when faced with constraints abstract the question that still divides many debates about sustainability is the possibility of technological substitution of scarce natural resources while there is considerable debate among economists whether technology can mitigate scarcities through development of substitutes there is little actual research on the mechanisms and limitations of this substitution process in this study i seek to build a bridge between scarcity and innovation literatures to study when technologists decide to develop technological substitutes my starting point is the theory of technology as a recombination of existing mental and physical components combining this theory with modern scarcity literature that differentiates between absolute relative and quasi scarcities yields a more nuanced framework for understanding both different types of scarcities and how technologists decide whether or not to develop or adopt technological substitutes this improves our understanding of the possibilities and limitations of scarcity induced innovation i then illustrate the use of this framework with two brief historical case studies about constraint induced innovation i conclude that the mainstream economic practice of assuming that substitution will occur automatically even in cases of absolute scarcity may hide extremely important phenomena from discussion and debate behind a veil of circular reasoning

continued entrepreneurship ability need and opportunity as determinants of small firm growth the purpose of this research was to enhance our understanding of the growth or non growth of individual small businesses growth here being regarded as an indication of continued entrepreneurship taken together earlier studies have suggested a very large number of determinants of entrepreneurship and growth yet no very strong explanatory factors emerge it is argued here that all of the specific lowlevel explanatory variables that have previously been used can be regarded as aspects of either of three major determinants ability need and opportunity a model based on these three major factors is developed and the results of previous studies are reviewed in the light of this more abstract model in the model objective factors are separated from their subjective counterparts and it is suggested that subjective factors or reality as perceived influence growth motivation and direct behavior although objective factors only partly determine subjective perceptions they can have important direct effects on outcomes i e actual growth using survey data from more than 400 swedish small firms and applying partial least squares analysis which is a technique for analyzing structural relations among indirectly measured concepts the parameters of the model are empirically estimated the results largely lend support for the usefulness of the model more specifically the analyses suggest that 1 objective measures of ability need and opportunity can explain a substantial share of the variation in actual historical growth rates 2 objective and subjective measures of these three factors can explain a substantial share of the variation in growth motivation 3 in both cases need related issues appear more important than ability and opportunity which would mean that satiation is the major reason why small firms stop growing 4 subjective factors contain growth relevant information that is not captured by objective measures 5 direct effects of objective variables on actual growth can be traced 6 some relations are consistent whereas others seem to vary considerably across industries and 7 while the model largely gains support the analyses also suggest some additional relations that are theoretically reasonable and may deserve consideration in future studies finally it is argued that for the advancement of entrepreneurship research conceptual models at a higher level of abstraction like the one developed in this article are needed such models can add meaning to empirical facts and have the virtue of reducing complexity without assuming away too many potential contingencies it is also suggested that entrepreneurship is a matter of degree and can show itself in different ways such as start up growth innovation etc in practice the sole measure of entrepreneurship has often been a person s current status as being or not being the founder or owner manager of a small firm in future studies the use of a composite measure of the degree of entrepreneurship may prove more fruitful than the comparison of characteristics approach has been

to protect or not to protect modes of appropriability in the small enterprise sector abstract what appropriation strategies are chosen by innovative small firms a cluster analysis of data from the german cis was carried out to indentify four distinct modes of appropriability in the small enterprise sector the results show that for many innovative small firms the key question is not whether to use intellectual property rights iprs or not but whether to protect their innovations from imitation at all furthermore formal and informal innovation protection mechanisms should not be seen as mutually exclusive since several are employed jointly secrecy and lead time advantages over competitors are often combined with iprs yet a number of small firms use complexity of design as a substitute to patent protection the relevance of each appropriation mode depends on such factors as the degree of innovativeness the type of innovator and the general market environment which implies that the importance of iprs is limited to specific business contexts furthermore regarding firm performance as measured by innovation effects some evidence is found that choosing both ipr and non ipr oriented appropriation strategies can prove to be effective in achieving company goals taken all together the study implies that the use of iprs by innovative small firms is highly selective the paper concludes with a discussion of the implications for policy and research

resource and capability constraints to innovation in small and large plants in an attempt to enhance firm s competitiveness policy initiatives have sought to encourage more firms to innovate with a particular focus on small firms the success of such initiatives however depends on a clear understanding of the factors that are constraining innovation activity and whether these differ for firms of different sizes this paper examines those resources and capabilities that firms identify as constraining their innovation activity the difference in these for small and larger plants and the actual impact of these perceived constraints on the probability of innovating and the degree of innovation success drawing on longitudinal data the paper demonstrates that innovation is an evolutionary process with the constraints to innovation being different for small and larger plants from a policy perspective initiatives to overcome constraints to innovation in small plants should extend beyond those of finance to include greater networking opportunities cost reduction programmes and marketing strategies to increase the profit margin on new products human resource management practices on implementing change and easier access to information about new technologies in contrast policies to promote innovation in larger plants should focus on minimising the risk of development and enhancing access to specialist expertise

in search of complementarity in innovation strategy internal r d and external knowledge acquisition empirical research on complementarity between organizational design decisions has traditionally focused on the question of existence of complementarity in this paper we take a broader approach to the issue combining a productivity and an adoption approach while including a search for contextual variables in the firms strategy that affects complementarity analysis of contextual variables is not only interesting per se but also improves the productivity test for the existence of complementarity we use our empirical methodology to analyze complementarity between innovation activities internal research and development r d and external knowledge acquisition our results suggest that internal r d and external knowledge acquisition are complementary innovation activities but that the degree of complementarity is sensitive to other elements of the firms strategic environment we identify reliance on basic r dthe importance of universities and research centers as an information source for the innovation processas an important contextual variable affecting complementarity between internal and external innovation activities

innovation and corporate growth in the evolution of the drug industry abstract this work studies the processes of growth of the worlds top 150 pharmaceutical firms on the grounds of an original database which also allows disaggregate analysis at the level of single therapeutical classes and chemical entities our findings show that the industry whose long term evolution is driven by innovation imitation and permanent creation of new markets displays i fat tails in the distribution of growth shocks present at all levels of aggregation with relatively rare big spurs of growth ii a significant autocorrelation of growth rates iii a fall of variance of growth rates with size entirely dependent on corporate diversification patterns in turn plausibly shaped by the competence scope of each firm and iv different lifecycles of diverse types of products and persistent forms of heterogeneity across firms in terms of innovative output which however do not not seem to affect comparative growth performances

international linkage of interest rates the case of japan and the united states 1 r r xl 1 r1 x where r is the current yen interest rate on bonds with a term to maturity of length 1 r is the dollar interest rate on bonds with a term to maturity of length 1 and xl is the expected average rate of appreciation of the dollar against the yen over the time period 1 further suppose that purchasing power parity holds even in the short run then x1 will be determined by the difference in the expected rates of inflation between japan and the united states as

causal linkages between us and eurodollar interest rates further evidence this study examines causal linkages between us and eurodollar interest rates during 1983 2002 recursive cointegration analysis shows that a stable cointegration relationship between the two interest rates emerges only since the early 1990s when the fed used federal funds rate targeting and eliminated the reserve requirement on eurocurrency deposits the study further reveals that bidirectional causality exists between the two rates over the period of 1993 to 2002 while unidirectional causality from eurodollar rate to the us rate is found to exist over the period of 1983 to 1991 these findings consistently support increased interest rate linkages especially since the early 1990s

the duality of collaboration inducements and opportunities in the formation of interfirm linkages i argue that the linkage formation propensity of firms is explained by simultaneously examining both inducement and opportunity factors drawing upon resource based and social network theory literatures i identify three forms of accumulated capital technical commercial and social that can affect a firm s inducements and opportunities to form linkages firms possessing these capital stocks enjoy advantages in linkages formation however firms lacking these accumulated resources can still form linkages if they generate a radical technological breakthrough thus i identify paths to linkage formation for leading as well as peripheral firms i test these arguments with longitudinal data on technical collaborative linkages in the global chemicals industry copyright 2000 john wiley sons ltd

technological innovation in the pharmaceutical industry the use of organizational control in managing research and development the literature on the management of r d professionals strongly advocates managing r d projects on a project by project basis this literature suggests that projects should be managed differently depending upon project characteristics such as risk ambiguity and nonroutineness while the primary emphasis of the r d professional literature has been on project teams the purpose of this study is to examine the impact of organization wide controls on innovativeness at the firm level in a sample of 57 pharmaceutical firms this study investigates the influence of organizational controls on the research and development activities of r d professionals this study is one of a handful of studies that simultaneously explores the use of input behavior and output controls two categories of innovation are considered as dependent variables incremental innovations in the form of drug enhancements and radical innovations in the form of new drugs contrary to existing theory and hypotheses developed in this study the results show that input behavior and output control enhanced radical innovation and input and output controls enhanced incremental innovation these results challenge several important features of existing models of r d management and diverge from common beliefs about r d management at the project level while it is commonly accepted that incremental and radical innovation should be managed differently the results of this study suggest otherwise in this instance the management of r d activities may be considered more similar than previously thought

on the relationship between the exchange regime and the portfolio rules of optimizing agents the paper utilizes the overlapping generations framework to derive demand functions for money and capital we show that many of the macroeconomic comparisons of alternative exchange regimes are not legitimate since changing the exchange regime alters the portfolio rules of rational agents one cannot simply postulate a set of asset demand equations and then hold various income interest rate and wealth elasticities constant when the exchange regime changes having derived the demands for money and capital from optimizing behavior we show how changing the exchange regime affects expected capital holdings and expected utility levels of optimizing agents

the provision of finance to innovation a survey conducted among italian technology based small firms financial constraints to the development of innovation are often considered one of the main impediments to high technology firms seeking to expand and grow in particular this is the case of small and medium size high tech firms in the u s and the u k a variety of sources of finance are available to the start ups of innovative firms in the other european countries and particularly in italy these means are still uncommon so that the development of technology is often prevented this paper based on an empirical analysis on a survey of 46 small high tech italian firms aims at exploring the problems experienced by small businesses in gaining access to debt and equity finance the results highlight that traditional financial sources are inadequate to finance innovative projects the questioned firms rely mainly on personal finance and secondly on short term bank debt they are truly involved in maintaining control over the firm activities and are willing to issue outside equity only if the new investors also provide non financial competencies among the 46 interviewed firms only 10 are willing to be listed in the future on small firms stock markets

why are japanese firms so innovative in engineering technology abstract japanese firms belonging to the electric and electronics industry have been producing a large number of innovations concentrated in the field of engineering technology and directly related to commercial products one reason why japanese firms have such characteristics can be explained by their unique behavior and organization of research and development r d the behavior of the r d division of japanese firms is characterized by less independence from other divisions of the firms a close relationship with other divisions and concerted behavior to maximize total corporate profits these are indicated by the fact that r d funds are allocated flexibly by taking into account the intentions of other operational divisions or the headquarter s office and the fact that there exists a unique career path in a japanese firm by which r d personnel do not always stay in the research division but are frequently assigned to other various divisions as they climb upward however these structural and behavioral characteristics of japanese corporate r d which so far have been efficient in applied research and product development are not adaptable to basic research recently japanese firms are seeking a new r d organization and management system to solve the problem

optimal and time consistent exchange rate management in an overlapping generations economy abstract this paper analyzes exchange rate management in a simple overlapping generations model this framework is used to evaluate alternative policies in terms of their implications for the welfare of individuals in the economy and for generating seigniorage when the chief concern is to provide a desirable store of value a policy of fixing the exchange rate does better when shocks are primarily of domestic origin while floating becomes more desirable when foreign shocks predominate the same is true when the government is concerned with maximizing total expected seigniorage although more intervention is typically desirable when generating seigniorage is the major objective when seigniorage concerns are paramount and when the monetary authority cannot establish a reputation for conducting monetary policy in a way that makes the currency a desirable store of value a national currency may not be viable in the absence of exchange controls such controls may be justified in this situation

the technological origins of radical inventions this paper aims to trace down the origins of radical inventions in spite of many theoretical discussions on the effect of radical inventions the specific nature of radical inventions has received much less attention in the theoretical and empirical literature we try to fill that void by an empirical investigation into the specific origins of radical inventions we explore this issue by a close examination of 157 individual patents which are selected from a pool of more than 300 000 patents in contrast to the conventional wisdom that radical inventions are based less on existing knowledge we find that they are to a higher degree based on existing knowledge than non radical inventions a further result that follows from our analysis is that radical inventions are induced by the recombination over more knowledge domains the combination of knowledge from domains that might usually not be connected seems to deliver more radical inventions

a multivariate cointegration analysis of interest rates in the eurocurrency market abstract a multivariate cointegration methodology is utilized to analyze relations among interest rates on us dollars uk pounds german marks french francs and japanese yen in the eurocurrency market over a period with major capital market deregulations and increasingly globalized money market trading three major results appear it is appropriate to model these interest rates as a multivariate cointegrated system no interest rate may be excluded from the cointegrating relations a recursive cointegration approach indicates that the number of cointegration vectors increases in the later part of the sample period consequently this study supports the hypothesis of a substantial increase in euromarket interest rate comovements jel e40 f02 1997 elsevier science ltd

price discovery between private and public housing markets public and private housing markets are usually differentiated in terms of price regulations and policies but they are not necessarily segmented any integration as opposed to segmentation between private and public markets implies that the prices of private housing are interrelated with the prices of public housing determined in the open market if so information revealed in one market will be pertinent for making inferences on prices in the other market this paper addresses the price discovery or relation between public and private housing in view of singapore s substantial public housing programme that has an actively traded secondary market implications for the direction of price causality and upward mobility for households between housing price strata are examined

causal relationships among economic aggregates in china using china s macro data from 1952 to 1989 the stationarity and causality tests to two types of economic aggregates are applied the first type relates to the conventional money income and consumption relationship and the other is associated with the interest rate money and investment income relationship as embodied in a financial repression model stationarity test results show that a different direction of causality exists when different measurement of price is used a causal relationship between interest rate money and investment income is also found

opening the black box of innovation a common feature of the existing patent race and endogenous growth literatures is their representation of r d activities as being performed by a collection of individuals playing simultaneously the roles of financier creator owner and user of the innovation in practice however r d takes place either within firms where researchers inventors are subject to employment contracts or through contractual agreements between independent research units and users of their innovations in both cases the contractual provisions on how to finance the research activities how to share property rights on innovations and how to structure the monetary compensations to the inventors are complex and suggest that the aggregated view of the r d process may be too limited

survival of businesses using collaborative relationships to commercialize complex goods authors with many theoretical and managerial perspectives argue that businesses commercializing technologically complex goods benefit when they collaborate closely with other businesses collaboration is viewed as a means for businesses to overcome competency limitations and to achieve the close configuration of components required for complex goods we predict that collaborative relationships often assist businesses to produce complex goods but that the relationships might also cause problems for the collaborating businesses we find that firms using development oriented and marketing oriented collaborative relationships in the hospital software systems industry are less likely to shut down than businesses that follow independent approaches when the environment changes gradually but businesses using collaborative relationships are sometimes susceptible to being acquired by other firms following a sudden environmental shock businesses with collaborative relationships for activities central to the shock became more likely to shut down while businesses with collaborative relationships for activities outside the focus of the shock became more likely to survive the study critically evaluates and tests the widely stated but little tested argument that interfirm collaboration is usually beneficial the results address the issue of whether organizational choices affect comparative business performance

an empirical examination of long run purchasing power parity using cointegration techniques this paper presents an empirical analysis of long run purchasing power parity ppp for five major exchange rates using recently developed econometric techniques on the cointegration of economic time series our empirical results are extremely unfavourable to the ppp hypothesis as a long run equilibrium condition even with an allowance made for measurement error and or tranportation costs in particular we are unable to reject the hypothesis of non cointegration of the exchange rate and relative prices for any of the countries concerned far from finding a stable long run proportionality between exchange rates and relative prices our results therefore suggest that they tend to drift apart without bound

innovation in services the purpose of this article is to lay the foundations of a theory that can be used to interpret innovation processes in the service sector the hypothesis underpinning this article is based on lancaster s definition of the product in both manufacturing and services as a set of service characteristics the article follows the example of those who have sought to apply lancaster s work to technological phenomena various modes of innovation in the service sectors are highlighted and illustrated