new human resource management practices complementarities and the impact on innovation performance in this paper we take our theoretical point of departure in recent work in organisational economics on systems of human resource management hrm practices we develop the argument that just as complementarities between new hrm practices influence financial performance positively there are theoretical reasons for expecting them also to influence innovation performance positively we examine this overall hypothesis by estimating an empirical model of innovation performance using data from a danish survey of 1 900 business firms using principal component analysis we identify two hrm systems which are conducive to innovation in the first one seven of our nine hrm variables matter almost equally for the ability to innovate the second system is dominated by firm internal and firm external training of the total of nine sectors that we consider we find that the four manufacturing sectors correlate with the first system firms belonging to wholesale trade and to the ict intensive service sectors tend to be associated with the second system

uncertainty and endogenous technical change in climate policy models until recently endogenous technical change and uncertainty have been modeled separately in climate policy models in this paper we review the emerging literature that considers both these elements together taken as a whole the literature indicates that explicitly including uncertainty has important quantitative and qualitative impacts on optimal climate change technology policy

labor unions and the adoption of new technology the paper examines whether unionization by workers discourages the adoption of labor saving techniques this is done in the context of an oligopolistic industry with a small number of firms some of which are unionized we find that unionization can actually encourage the adoption of labor saving technology provided that the technological improvement is mild and that demand is sufficiently high or demand elasticity sufficiently low if there is an effective threat of entry that causes the union to moderate its wage demands then unionization may encourage the adoption of new technology even at low levels of demand

the effects of human resource management practices on productivity a study of steel finishing lines the authors investigate the productivity effects of innovative employment practices using data from a sample of thirty six homogeneous steel production lines owned by seventeen companies the productivity regressions demonstrate that lines using a set of innovative work practices which include incentive pay teams flexible job assignments employment security and training achieve substantially higher levels of productivity than do lines with the more traditional approach which includes narrow job definitions strict work rules and hourly pay with close supervision their results are consistent with recent theoretical models which stress the importance of complementarities among work practices

the message in weekly exchange rates in the european monetary system mean reversion conditional heteroscedasticity and jumps weekly rates of the european monetary system ems vis a vis the deutsche mark from april 1979 to march 1991 are modeled as a combined ma 1 garch 1 1 jump process the moving average ma part accounts for mean reversion required for the rates to stay inside the target zone the generalized autoregressive conditional heteroscedasticity garch part accounts for changing volatility whereas the jump process models parity changes and other erratic movements using an adjusted pearson chi squared goodness of fit test we find similar results for the bernoulli and the poisson jump processes in those cases in which the bernoulli normal distribution does not pass the goodness of fit test a mixture of three normals does finally the ma 1 garch 1 1 bernoulli jump models are jointly estimated assuming a constant contemporaneous correlation matrix for the disturbances and a common jump probability for all the currencies

hrm practices r d expenditure and innovative investment evidence from the uk s 1990 workplace industrial relations survey wirs uk labour flexibility is often portrayed as necessary for an innovative economy using evidence from the uk s 1990 workplace industrial relations survey we investigate the relationships between firms human resource management practices and innovation our results suggest that low road hrm practices short term contracts etc are negatively correlated with investment in r d and new technology high road work practices high commitment organization and other systems are positively correlated with investment in r d and new technology copyright 1999 by oxford university press

joint management of emission abatement and technological innovation for stock externalities we investigate how emission abatement and technological innovation provide different solutions to reduce pollutant emissions in the case of a stock externality emission abatement leads to a smooth and continuous adjustment of emissions conversely technological innovation has to be interpreted as an option on a less polluted environment and can justify the use of a pollution threshold above which it is optimal to start a research and development programme for a less polluting technology it is shown that technological innovation interferes with the traditional emission abatement approach the optimal abatement level is logically lowered once the less polluting technology is available nevertheless a temporary increase in emissions is optimal during the research and development period the usual pigouvian tax system proves to remain an efficient corrective instrument a numerical application to the greenhouse effect is provided

peer pressure and partnerships partnerships and profit sharing are often claimed to motivate workers by giving them a share of the pie but in organizations of any significant size the free rider effects would seem to choke off

more labour market flexibility for more innovation evidence from employer employee linked micro data this paper examines labour market flexibility in various definitions and its impact on innovation the results demonstrate that the relationship strongly depends on the type of innovation as well as the predominant innovation regime in which a company operates thereby labour market flexibility does not influence innovation in an entrepreneurial innovation regime characterised by high competition low market entry barriers and generally available knowledge that might explain why the silicon valley has been successful despite of having a labour market with a strong strong hire and fire mentality in contrast labour market flexibility significantly reduces the likelihood of innovation in a routinised innovation regime with leading innovators and high entry barriers similar to the us automobile industry and steel districts that did not succeed these findings emphasise that the currently discussed structural labour market reforms might hamper innovation as technological change still requires a level of security and stability

technological learning environments and organizational practices cross sectoral evidence from britain this study explores the co occurrence of technological and organizational learning processes by analyzing the adoption and use of four types of human resource management hrm practices rewarding problem solving top down management and decentralization in the 1990s across different technological learning environments using a sample of british workplaces we show that the level of use of diverse hrm practices aimed at creating different learning incentives is persistently heterogeneous across technological learning environments suggesting that hrm forms an essential part of the technological learning structure of firms copyright 2011 the author 2011 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

the effects of unions on investment and innovation evidence from wirs the above is representative of much popular discussion of the effects of unions on investment and innovation in the professional literature the view that unions deter investment by expropriating quasi rents is also commonplace see e g simons i944 baldwin i983 grout i984 in addition it is argued that union foisted restrictive work practices might make investment a more costly process see e g denny and nickell i989 in recent years the above theoretical notions have appeared to receive some empirical support in that in the united states the level of the investment capital ratio does appear to be lower in union firms see hirsch i988 and references therein in this paper we use information contained in the i 984 workplace industrial relations survey in order to investigate the actual impact of unions on investment the rest of the paper is organised as follows in section i i we informally review the alternative channels through which unions might affect investment section i 2 contains a simple theoretical model of investment which embodies all the alternative channels our results are to be found in section ii and finally some conclusions are contained in section iii

the organisation of innovation collaboration cooperation and multifunctional groups in uk and german manufacturing marked differences exist between the institutional and social context for innovation in the uk and germany the question addressed here is how these different contexts affect the objectives and organisation of innovation in uk and german manufacturing in particular the paper examines the extent to which uk and german plants engage in inter plant collaboration and cooperation and multifunctional working as part of their innovative activity and explores the reasons for differences in these patterns of involvement the investigation is based on a large scale comparative survey of manufacturing plants in the two countries in germany institutional and social norms are found to encourage collaborative inter plant innovation but aspects of the german skills training and industrial relations systems make the adoption of more flexible internal systems more difficult in the uk by contrast the more adversarial nature of inter firm relations makes it more difficult to establish external collaborations based on mutual trust but less restrictive labour market structures make it easier for uk plants to adopt multifunctional working this is linked to differences in attitudes to the property rights and transaction cost problems inherent in innovation

uncertain r d backstop technology and ghgs stabilization abstract this paper analyses optimal investments in innovation when dealing with a stringent climate target and with the uncertain effectiveness of r d the innovation needed to achieve the deep cut in emissions is modeled by a backstop carbon free technology whose cost depends on r d investments to better represent the process of technological progress we assume that r d effectiveness is uncertain by means of a simple analytical model we show how accounting for the uncertainty that characterizes technological advancement yields higher investments in innovation and lower policy costs we then confirm the results via a numerical analysis performed with a stochastic version of witch an energy economy climate model the results stress the importance of a correct specification of the technological change process in economy climate models

labour market deregulation flexibility and innovation labour flexibility is often portrayed as important to competitive success using evidence from an original survey of uk firms this paper investigates the relationships between firms use of on the one hand various flexible work practices human resource management techniques and industrial relations systems and on the other hand the innovative activities of those firms our results suggest that the sort of low road labour flexibility practices encouraged by labour market deregulation short term and temporary contracts a lack of employer commitment to job security low levels of training and so on are negatively correlated with innovation

innovation and employment a reinvestigation using revised pavitt classes the relationship between innovation and employment is addressed in this article through a model and empirical test at industry level for eight european countries in 1994 2004 we investigate this relationship for manufacturing and services and propose a revised pavitt taxonomy covering both of them in order to identify specific patterns of technological change and job creation and loss the contrasting effects of strategies of technological or cost competitiveness are investigated using innovation variables from cis2 and cis3 together with demand wages and industry dynamics they account for changes in employees and hours worked the diversity in these relations across industries is also explored when the model is applied to each revised pavitt class different mechanisms of technological change and effects on jobs emerge

corporate governance and innovation a survey abstract the traditional economics of innovation inspired by schumpeter and more recent advances on his work seem unable to explain why firms with similar external conditions may show greatly different performance in innovation contrastingly the literature on corporate governance provides some useful insights for understanding corporate innovation activity to the extent that such literature examines the economic effects of different modes of coordination between firm members the process through which individuals integrate their human and physical resources within the firm is central to the dynamics of corporate innovation this paper provides the first survey of the literature on this issue we start by discussing how various theoretical approaches to the analysis of the firm deal with technological innovation we then describe three main channels corporate ownership corporate finance and labour through which a system of corporate governance shapes a firm s innovation activity finally we examine the relationship between country level institutional settings national patterns of corporate governance and the aggregate innovation activity of corporations we conclude by suggesting that future research should focus more deeply on the interrelation between the various dimensions of corporate governance and on their joint effect on firm innovation

labor flexibility and innovation in new ventures the study investigates how labor flexibility affects innovation in new ventures more specifically drawing upon a sample of 143 greek ventures less than 8 years old it examines empirically the individual and interactive effects of functional and numerical flexibility on product innovation it also considers how these effects are moderated by the entrepreneur s political skill results suggest that functional flexibility has a positive direct effect on incremental innovation whereas numerical flexibility has a positive direct effect on radical innovation the interactions between numerical and functional flexibility affect both types of innovation the results also suggest that the labor flexibility innovation relationship is positively moderated by the entrepreneur s political skill these findings point toward aspects of knowledge related with flexible labor engagement and entrepreneurial relational capital that affect innovation

the founder s self assessed competence and venture performance abstract a large body of recent research seeks to understand organizational founding and the performance of emerging businesses although much of this research has focused on the characteristics of the business founder there is only mixed support for relationships between founders characteristics and venture performance begley and boyd 1987 gartner 1988 low and macmillan 1988 sexton and bowman 1984 this study is based on research that identifies the entrepreneurial managerial and technical functional functions as three roles that founders must competently enact in order to be successful hofer and sandberg 1987 mintzberg and waters 1982 pavett and lau 1983 schein 1987 effective performance in the entrepreneurial role requires the founder to have the ability to recognize business opportunities and the drive to see firm creation through to fruition hofer and sandberg 1987 timmons et al 1987 effective execution of the managerial role requires conceptual interpersonal and political competence pavett and lau 1983 to be competent in the technical functional role founders must be able to use the tools or procedures required in their specialized field pavett and lau 1983 to measure the competencies necessary for effectiveness in the entrepreneurial managerial and technical functional roles we developed a questionnaire to allow founders to provide self evaluations of their competencies the results provide strong evidence for the reliability of measurement and the validity of the constructs the relationships revealed in this study suggest some preliminary recommendations for potential entrepreneurs career counselors and educators the number of businesses previously initiated and the years spent as an owner manager do not appear to be strongly related to the performance of the venture however the most successful entrepreneurs are strongly convinced of their ability to recognize business opportunity they believe that they have the drive to see the venture through to fruition and report that they subjugate outside interests to the demands of their businesses thus although self assessed proficiency in the entrepreneurial function does not appear to be contingent on the length of previous experience as a founder it does appear to be a necessary component in the development of high performance companies founders of the most successful firms also gave themselves high ratings on the abilities associated with effective performance in the managerial role they had high self evaluation scores on the items measuring organizational and interpersonal skills competence in the managerial role appears to be enhanced by business education and the years of general managerial experience the founders of highly successful firms also evaluated their technical skills highly they believed they were experts in their fields and could use the specialized tools and procedures to produce high quality products and services thus the results indicate that the most successful founders those whose firms show higher levels of growth and earnings rate themselves as competent in the entrepreneurial managerial and technical functional roles they see themselves as competent generalists and in a result that is most gratifying for those in higher education it appears that a business education and experience in general managerial positions lays the ground work for a successful entrepreneurial career

britain s industrial performance since 1960 underinvestment and relative decline this article argues first that britain s industrial performance since i960 has been relatively poor secondly that despite the views of crafts and others the deindustrialisation which has resulted from this relatively poor industrial performance is a serious problem for the whole economy not just for the industrial sector itself thirdly that neither the specific problem of deindustrialisation nor the consequent general problem of continued relative economic decline were solved in the 1980s and fourthly that the key reason why british industry has been doing relatively poorly has been underinvestment in manufacturing this underinvestment has been allowed to persist by the lack of any strong modernising forces within british society with the trade union movement having been either too weak or too defensive and with government policy at best being rather ineffectual and at worst positively harmful the reasons for this policy failure lie in britain s economic history and in the resulting distorted nature of both the economy and society this fundamental problem of a lack of any strong modernising force has if anything been exacerbated since 1979

weaker jobs weaker innovation exploring the effects of temporary employment on new products this work explores the relationship between temporary employment and product innovation focusing on five major european economies france germany italy spain and the netherlands observed betwee

foreign direct investment and export upgrading this study presents evidence suggesting that attracting foreign direct investment fdi offers potential for raising the quality of exports in developing countries our analysis relates unit values of exports at the four digit sitc level to data on sectors treated by investment promotion agencies as a priority in their efforts to attract fdi the sample covers 105 countries from 1984 to 2000 the findings are consistent with a positive effect of fdi on unit values of exports in developing countries the evidence for high income economies is ambiguous there is no indication that fdi increases the similarity of export structure of developing and developed economies

a simple account of the behavior of long term interest rates recent empirical research on the term structure of interest rates has shown that the long term interest rate is well described by a distributed lag on short term interest rates but does not conform to the expectations theory of the term structure it has been suggested that the long rate overreacts to the short rate this paper presents aunified taxonomy of risk premia or deviations from the expectations theory this enables the hypothesis of overreaction to be formally stated it is shown that if anything the long rate has underreacted to the short rate however the independent movement of the long rate is primarily responsible for the failure of the expectations theory

modes of labor flexibility at firm level are there any implications for performance and innovation evidence for the swiss economy the aim of this study is to define and measure numerical and functional labor flexibility at the firm level and investigate empirically the impact of each of these flexibility modes on performance and innovation measures as well as the interrelationship between them our estimation equation contains besides the classical production factors labor and physical capital information and communication technologies ict capital human capital variables for flexible organizational practices as well as measures for numerical labor flexibility the empirical investigation is based on data for about 1400 swiss firms copyright 2005 oxford university press

technological change and uncertainty in environmental economics abstract technological change is widely believed to play a crucial role in mastering the challenges of man made climate change the drivers and impacts of technological change have therefore become an important research issue in the field of climate economics while models to analyze the interactions between economy energy and the environment initially treated technological change as exogenous more recent modeling approaches often represent technological change as endogenously induced typically models of induced technological change in climate economics are based on perfect foresight in a deterministic world however both technological change and climate impacts are subject to large uncertainties that may substantially affect the design of efficient climate policies against this background the special issue presents five articles contributing to the study of uncertainty and technological change in climate change economics

labor market regulation the diversity of knowledge and skill and national innovation performance abstract the diversity of knowledge and skill is an important element of a national system of innovation we propose a theory of how certain labor market institutions affect diversity and through that route affect levels of innovation specifically unemployment protection up encourages diversity by reducing the risk burden of a broad range of learning or human capital investment for that reason up fosters innovation employment protection ep reduces the risk burden of a much narrower range of learning for this reason it will not enhance diversity to the extent up does and it may actually depress overall diversity and innovation our approach differs from previous research on labor market insurance and skill formation much of which has dealt with a distinction between general and specific skills and which has treated the effects of up and ep as similar estimating the effects of up and ep on patenting for 25 oecd countries over 24 years we find a positive effect from up a negative effect from ep and evidence that the up effect is mediated by diversity of skill

efficient climate policies under technology and climate uncertainty this article explores efficient climate policies in terms of investment streams into fossil and renewable energy technologies the investment decisions maximise social welfare while observing a probabilistic guardrail for global mean temperature rise under uncertain technology and climate parameters such a guardrail constitutes a chance constraint and the resulting optimisation problem is an instance of chance constrained programming not stochastic programming as often employed our analysis of a model of economic growth and endogenous technological change mind suggests that stringent mitigation strategies cannot guarantee a very high probability of limiting warming to 2 c since preindustrial time under current uncertainty about climate sensitivity and climate response time scale achieving the 2 c temperature target with a probability p of 75 requires drastic carbon dioxide emission cuts this holds true even though we have assumed an aggressive mitigation policy on other greenhouse gases from e g the agricultural sector the emission cuts are deeper than estimated from a deterministic calculation with climate sensitivity fixed at the p quantile of its marginal probability distribution 3 6 c we show that earlier and cumulatively larger investments into the renewable sector are triggered by including uncertainty in the technology and climate response time scale parameters this comes at an additional gwp loss of 0 3 resulting in a total loss of 0 8 gwp for observing the chance constraint we obtained those results with a new numerical scheme to implement constrained welfare optimisation under uncertainty as a chance constrained programming problem in standard optimisation software such as gams the scheme is able to incorporate multivariate non factorial probability measures such as given by the joint distribution of climate sensitivity and response time we demonstrate the scheme for the case of a four dimensional parameter space capturing uncertainty about climate and technology

on endogenous growth under uncertainty this paper incorporates uncertainty in two distinct models of endogenous growth in both models the representative agent is uncertain about the productivity of knowledge creation as represented by a probability measure over the relevant parameter the main purpose of this paper is to analyze the effects of risk or volatility in productivity of knowledge creation on the decision variables and the expected long run growth rate both the first and the second models may explain part of the observed negative link between volatility and growth

the failure of training in britain analysis and prescription in the last decade education and training et reform has become a major issue in many of the world s industrial powers one theme which runs throughout these reform initiatives is the need to adapt et systems to the changing economic environment these changes include the increasing integration of world markets the shift in mass manufacturing towards newly developed nations and the rapid development of new technologies most notably information technologies education and training are seen to play a crucial role in restoring or maintaining international competitiveness both on the macro level by easing the transition of the workforce into new industries and at the micro level where firms producing high quality specialized goods and services require a well qualified workforce capable of rapid adjustment in the work process and continual product innovation this paper will highlight the need for policy makers and academics to take account of the two way nature of the relationship between et and the economy

measurement of energy rebound effect in households evidence from residential electricity consumption in beijing china abstract energy efficiency improvement policies have special significance for carbon emissions reduction and the mitigation of the effects of climate change however the energy rebound effect caused by technological progress will indirectly increase energy consumption the magnitude of the rebound effect largely determines the effectiveness of energy efficiency in mitigating energy consumption this study reviews the main theory behind estimated methods of energy rebound effect measurement focuses on constructing a double logarithm energy demand model and an error correction model of the asymmetric demand responses of electricity price changes to empirically analyse the direct rebound effect on residential electricity use in beijing it integrates consumer s demand theory with the embodied electricity of household spending from a seven sector environmental energy input output e i o analysis to estimate the indirect rebound effect the three income elasticity weight change and proportional re spending scenario simulation results show that residential electricity use in beijing exhibits a partial rebound effect and the long term direct and indirect rebound effects are 46 to 56 and the short term direct rebound effect is 24 to 37 finally the direct and indirect energy rebound effect for various income groups needs further research an appropriate policy mix should be adopted to mitigate effectively the rebound effect in china s current lower energy price and lower energy efficiency market

innovation and entrepreneurship schumpeter revisited in a large part of the literature on schumpeter one finds that attention is paid to either his early contributions with reference to the role of the entrepreneur as the personification of innovation or to his later contributions stressing the role of large companies as main drivers of innovation this paper complements some recent contributions to the assessment of the influence of schumpeter on economics and social sciences in general it demonstrates that a careful reading of his writings reveals that there is no simple dichotomy between the old and the young entrepreneurial activities play an active role in understanding the dynamics of innovation throughout schumpeter s theory copyright 1996 by oxford university press

schumpeterian patterns of innovation using patent data for four countries germany france united kingdom and italy for the period 1968 1986 the authors find that the patterns of innovative activities differ systematically across technological classes while remarkable similarities emerge across countries in the patterns of innovative activities for each technological class this result strongly suggests that technological imperatives and technology specific factors closely linked to technological regimes play a major role in determining the patterns of innovative activities across countries schumpeter proposed two major patterns of innovative activities the first one labelled by nelson and winter 1982 and kamien and schwartz 1982 as schumpeter mark i is proposed in the theory of economic development 1934 in this work schumpeter examined the typical european industrial structure of the late nineteenth century characterised by many small firms according to this view the pattern of innovative activity is characterised by technological ease of entry in an industry and by a major role played by new firms in innovative activities new entrepreneurs come in an industry with new ideas new products or new processes launch new enterprises which challenge established firms and thus continuously disrupt the current ways of production organisation and distribution and wipe out the quasi rents associated with previous innovations the second one labelled schumpeter mark ii is proposed in capitalism socialism and democracy 1942 in this work inspired by the features of the american industry of the first half of the twentieth century schumpeter discussed the relevance of the industrial r d laboratory for technological innovation and the key role of large firms according to this view the pattern of innovative activities is characterised by the prevalence of large established firms and by relevant barriers to entry for new innovators large firms have institutionalised the innovation process with the creation of r d laboratories filled with researchers technicians and engineers with their accumulated stock of knowledge in specific technological areas their advanced competence in large scale r d projects production and distribution and their relevant financial resources they create barriers to entry to new entrepreneurs and small firms

garch vs stochastic volatility option pricing and risk management this paper examines the out of sample performance of two common extensions of the black scholes framework namely a garch and a stochastic volatility option pricing model the models are calibrated to intraday ftse 100 option prices we apply two sets of performance criteria namely out of sample valuation errors and value at risk oriented measures when we analyze the fit to observed prices garch clearly dominates both stochastic volatility and the benchmark black scholes model however the predictions of the market risk from hypothetical derivative positions show sizable errors the fit to the realized profits and losses is poor and there are no notable differences between the models overall we therefore observe that the more complex option pricing models can improve on the black scholes methodology only for the purpose of pricing but not for the value at risk forecasts author s abstract

is labour rigidity harming europe s competitiveness the effect of job protection on the pattern of trade and welfare abstract we develop a model to analyse the implications of firing costs on international specialization to avoid paying the firing cost the country with a rigid labor market will tend to produce relatively secure goods at a late stage of their product life cycle an international product cycle emerges where new goods are first produced in the low firing cost country and then move to the high firing cost country an increase in firing costs in the high firing cost country lowers welfare there and increases welfare in the low firing cost country it also narrows the range of goods produced by the high firing cost country biasing its specialization towards more mature goods

content and performance of growth seeking strategies a comparison of small firms in high and low technology industries abstract the question of how to grow and gain market share is repeatedly asked by small firm managers yet little help exists in the academic literature in terms of identification of specific business practices and competitive tactics associated with the pursuit of market share growth rather most discussion of appropriate strategies for small firm growth centers around the prescription of broad strategy types e g the often recommended niche strat egy furthermore the environment s potential effects on the viability of growth strategies seldom receive adequate treatment in the small firm strategy literature despite the long acknowledged influence of environmental conditions on strategy content this paper describes a study of the business strategies used by small growth seeking firms in high and low technology industries the construct of strategy was examined from both a micro level focusing on individual strategy dimensions and a macro level focusing on the firms overall strategic postures and patterns of strategy related variables data were collected from the senior executives of 57 small manufacturing firms whose mission strategies were to aggressively increase sales and market share the data indicate that growth seeking firms in high technology industries relative to those in low technology industries 1 rely more heavily on advertising 2 place more emphasis on product related issues e g new product development superior product warranties as a basis for building market share 3 rely more heavily on formal planning activities 4 place more emphasis on customer service support 5 rely more heavily on external financing 6 rely more heavily on premium pricing strategies and 7 have more entrepreneurial strategic postures the data also indicate that an entrepreneurial strategic posture is more positively associated with firm performance among growth seeking firms in low tech industries than among those in high tech industries although there are exceptions to this finding cluster analysis was used to identify the content and performance of various strategies operationally defined as patterns of strategic variables associated with growth seeking firms in high and low technology industries four strategies were identified through this technique two of which are most common among firms in low tech industries one of which is most common among firms in high tech industries and one of which is equally prevalent in both industry types these results corroborate several of the aforementioned findings regarding the effects of industry technological sophistication on dimensions of firm strategy for example they demonstrate the general aversion among growth seeking firms in low tech industries to premium pricing furthermore they suggest that overall growth seeking firms in low tech industries may be somewhat more disposed to pursuing cost leadership strategies and less disposed to pursuing differentiation strategies than growth seeking firms in high tech industries there were no overall performance differences across the four strategy types identified through the cluster analysis however the data suggest that an entrepreneurial strategic posture is most strongly associated with high performance among firms that have a cohesive and focused strategic mix or pattern of strategic decisions this finding holds for growth seeking firms in both industry types

how do different drivers of r d investment in foreign locations affect domestic firm performance an analysis based on swiss panel micro data the aim of this article is to investigate the differences between specific motives of rd 2817 companies shows first that factors related to firm specific knowledge oriented advantages are more important for explaining the likelihood of foreign r d activities than factors reflecting disadvantages related to home location second knowledge oriented motives of foreign r d positively influence the innovation performance of domestic firms whereas market and resource oriented strategies have a positive impact on labor productivity copyright 2011 the author 2011 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

feature flexible forms of employment boon and bane in recent decades economic policy makers across europe have sought to increase labour market flexibility by promoting the use of temporary employment the articles in this feature provide new results on how fixed term and agency work contracts affect firm productivity and how the segments of two tier labour markets interact this article points to a possible trade off between efficiency and equity when deregulating labour markets taken together the evidence presented in this feature suggests that flexible forms of employment can be both a boon and a bane for labour markets and for society as a whole

capital requirements for securities firms regulatory authorities set capital requirements to cover the position risk of securities firms and to protect against losses arising from fluctuations in the value of their holdings the requirements may be set using the comprehensive approach required by the u s securities and exchange commission the building block approach required by the european community or the portfolio approach required by the united kingdom we compare these three alternatives using a large sample of u k equity trading books the portfolio approach systematically specifies larger requirements for riskier books and vice versa it is more efficient than the building block approach and far more efficient than the comprehensive approach

employment protection and industry innovation we examine the impact of the strictness of employment protection legislation epl on innovation intensity to this purpose we use a panel of annual data from organisation for economic co operation and development countries and analyze the variation of innovation intensity within country between industries our estimates indicate that stricter epl led to significantly lower innovation intensity in industries with higher job layoff propensity our findings are robust to additional industry covariates and other labor market institutions that may affect innovation performance and industry job layoff propensity

technologies energy systems and the timing of co2 emissions abatement an overview of economic issues abstract this paper provides an overview of economic issues involved in timing limitations on co2 emissions from energy systems it highlights issues relating to technology availability development and diffusion and the inertia of energy systems as being particularly important the paper sets this in the context of wider uncertainties surrounding the problem and briefly considers other aspects relevant to timing the paper is stimulated by the debate in the usa about optimal abatement paths in particular recent claims that it would be economically preferable to defer such abatement action in favour of measures that support technology development but do not affect emission trends for many years this paper categorizes the various economic issues involved and concludes that for each economic argument that has been advanced to justify deferring emission constraints there are counter vailing economic arguments that could be used in support of rapid near term emissions abatement rational policy lies between these extremes a policy of deferring all emissions abatement exposes economic systems and industries as well as the environment to significantly greater costs and risks than those arising from a more balanced approach furthermore the modelling studies that have been used to justify deferring emissions abatement do so because they embody the economic factors favourable to delay and largely neglect the countervailing issues to the point where their results have little relevance to the overall problem of timing emissions abatement

profits r d and innovation a model and a test in this article we investigate both conceptually and empirically the relationships between three interconnected elements of the schumpeterian engine of progress the ability of industries rd the ability of innovations to lead to high entrepreneurial profits the commitment of industries to invest profits in further technological efforts we build a simultaneous three equation model with appropriate lags and we test it at industry level for 38 manufacturing and service sectors on eight european countries over two time periods from 1994 to 2006 the results show that the model effectively accounts for the dynamics of european industries

investment in risky r d programs in the face of climate uncertainty we analyze how the socially optimal technology rd and that uncertainty in damages interacts with uncertainty in the returns to rd and r d that reduces the emissions to output ratio and argue that this is a good representation of r d into fossil fuel technologies for r d programs into non carbon technologies optimal investment is higher in riskier programs our empirical model indicates that the optimal investment in a risky program is about 3 1 2 times larger than in a program with certain returns for r d programs aimed at reducing emissions in fossil fuel based technologies our results show that qualitatively investment is higher in less risky programs under most uncertain damage scenarios our empirical model shows however that the risk profile of fossil fuel based r d programs generally has little quantitative impact on optimal investment the exception is that when the probability of a catastrophe inducing full abatement is very high investment is about twice as high in risky programs compared to programs with certain returns

labour market regulation industrial relations and technological regimes a tale of comparative advantage in this paper we present comparative evidence from oecd countries concerning the impact of labour market institutions and regulations on technological specialization the interplay between the degree of labour market flexibility the system of industrial relations and the knowledge base of different industries determines the viability of different human resource strategies thereby shaping the patterns of comparative advantage our empirical results show that countries with coordinated industrial relations systems and strict employment protection tend to specialize in industries with a cumulative knowledge base we argue that two mechanisms explain these patterns the larger the scope for resorting to internal labour markets the lower the adjustment costs imposed by labour market regulation furthermore employment protection and coordinated industrial relations regimes by aligning workers and firms bjectives encourage firm sponsored training as well as the accumulation of firm specific competencies allowing firms to fully exploit the potential of the internal labour market copyright 2002 oxford university press

uncertainty and climate change uncertainty is pervasive in analysis of climate change how should economists allow for this and how have they allowed for it this paper reviews both of

social security in a classical growth model this paper develops a growth model with overlapping generations of workers who save for life cycle reasons and ricardian capitalists who save from a bequest motive the population of workers accommodates growth so that the rate of capital accumulation is endogenous and determines the growth of employment two regimes are possible one in which workers saving dominates the long run and a second in which the long run equilibrium growth rate is determined completely by the capitalist saving function sometimes called the cambridge equation the second regime exhibits a version of the pasinetti paradox changes in workers saving affect the level but not the growth rate of capital in the long run applied to social security this result implies that an unfunded system relying on payroll taxes reduces workers lifetime wealth and saving creating level effects on the capital stock without affecting its long run growth rate these effects are mitigated by the presence of a reserve fund various levels of which are examined calibrating the model to realistic parameter values for the us facilitates an interpretation of the controversies over the percentage of the national wealth originating in life cycle saving and the effects of social security on saving the model is offered as an analytical framework for the review of current topics in fiscal policy in particular identifying the social security reserve fund as a potential vehicle for generating capital accumulation and effecting a progressive redistribution of wealth copyright 2004 oxford university press

little innovation many jobs an econometric analysis of the italian labour productivity crisis during the past twenty years italy has realized changes in labour legislation leading to a decentralization of wage bargaining and increased flexibility in labour relations both these factors have helped to curb wage growth and to enhance employment growth but have also led to a crisis in italian labour productivity growth our estimates among 3 000 firms show that firms with high shares of flexible workers a high labour turnover and lower costs of labour relative to capital experienced significantly lower rates of labour productivity growth our findings raise doubts about the mainstream call for flexibilisation of european labour markets we argue hat the italian shift towards a low productive and labour intensive growth path is problematic gainst the background of an ageing population

benchmarking the expectations hypothesis of the interest rate term structure an analysis of cointegration vectors i test cointegration restrictions that are consistent with the expectations hypothesis of the term structure by employing the full information maximum likelihood methods developed by johansen yield curves appear to be the result of cointegration among interest rates the cointegration vectors that best describe the long term impact of interest rate levels on interest rate changes can often be written as linear combinations of interest rate spreads there is however difficulty in keeping short term yields in such a restricted cointegrated system with other interest rates short term speculative returns from long term bonds do not conform to the expectations hypothesis

dismissal costs and innovation empirical evidence suggests that dismissal costs are negatively associated with r d intensity across countries but positively within countries over time this evidence can be rationalized theoretically with a negative entry effect and a positive innovation effect for incumbent firms

competition imitation and growth with step by step innovation is more intense product market competition and imitation good or bad for growth this question is addressed in the context of an endogenous growth model with step by step innovations in which technological laggards must first catch up with the leading edge technology before battling for technological leadership in the future in contrast to earlier schumpeterian models in which innovations are always made by outsider firms who earn no rents if they fail to innovate and become monopolies if they do innovate here we find first that the usual schumpeterian effect of more intense product market competition pmc is almost always outweighed by the increased incentive for firms to innovate in order to escape competition so that pmc has a positive effect on growth second that a little imitation is almost always growth enhancing as it promotes more frequent neck and neck competition but too much imitation is unambiguously growth reducing the model thus points to complementary roles for competition anti trust policy and patent policy

rigidities through flexibility flexible labour and the rise of management bureaucracies judging from organisation level survey data we find that organisations employing high shares of flexible workers have higher shares of managers in their personnel this is in line with earlier findings that anglo saxon countries with deregulated labour markets have thicker management bureaucracies than countries with more regulated labour markets of the rhineland style we argue that flexibility in labour markets i e easier firing and higher labour turnover damages trust loyalty and commitment this requires more management and control related research suggests that easy hire and fire is at the cost of organisational learning knowledge accumulation and knowledge sharing thus damaging innovation and labour productivity growth

technological change in economic models of environmental policy a survey this paper provides an overview of the treatment of technological change in economic models of environmental policy numerous economic modeling studies have confirmed the sensitivity of mid and long run climate change mitigation cost and benefit projections to assumptions about technology costs in general technical progress is considered to be a noneconomic exogenous variable in global climate change modeling however there is overwhelming evidence that technological change is not an exogenous variable but to an important degree endogenous induced by needs and pressures hence some environmenteconomy models treat technological change as endogenous responding to socio economic variables three main elements in models of technological innovation are i corporate investment in research and development ii spillovers from r d and iii technology learning especially learning by doing the incorporation of induced technological change in different types of environmental economic models tends to reduce the costs of environmental policy accelerates abatement and may lead to positive spillover and negative leakage

the determination of r d empirical evidence on the role of unions abstract this paper examines the empirical evidence of the role of union bargaining on innovation we review the existing empirical evidence and emphasis some of the problems with the theoretical assumptions we outline a simple model of strategic rd b the union bargains only over wages

labour markets and innovation ex post bargaining abstract there is considerable interest in how labour market conditions affect innovation lying behind much of the existing work on this question is a simple model of a single union bargaining with a single firm in which in the absence of binding contracts the union reduces the returns to innovation without bearing any of the costs this misses an important feature of some rd with efficient contracts there are cases where being faced with a stronger union will help a firm to win a patent race it would otherwise have lost

r d investment strategy for climate change abstract the economic costs of stabilizing greenhouse gas concentrations over the coming century depend critically on the development of new technologies in the energy sector our research and development r d investment strategy is the control variable for technology availability this paper proposes an analytic framework for determining optimal r d investment allocation and presents some numerical results to demonstrate the implementation of the methodology the value of technological advance in three targeted areas fossil based generation renewables and carbon capture and storage is represented by the increase in expected welfare in the presence of an emissions policy constraint of initially uncertain stringency r d expenditure increases the probability of advance optimal investment is determined by its relationship with success probability which is assumed to exhibit decreasing returns to scale relative to the value of success while the numerical results are speculative the paper offers insights into the nature of an optimal technology strategy for addressing climate change

the internationalization of new and small firms a resource based view abstract this paper seeks to enhance understanding of the internationalization of small and medium sized enterprises smes the study focuses upon the following issues can the characteristics of principal founders businesses and the external environment at one point in time be used to explain at a later date whether a firm is still an exporter or a nonexporter whether exporting firms are larger in size than nonexporting firms whether exporting firms report superior performance than nonexporting firms and whether exporting firms are more likely to survive than nonexporting firms to address these questions this study draws upon a sample of 621 manufacturing construction and services businesses located in twelve contrasting environments in great britain surveyed first in 1990 91 and then re interviewed in 1997 a resource based view is reviewed to identify the range of factors encouraging some owner managed smes to enter export markets four categories of human and financial capital are examined general human capital resources the principal founder s management know how the principal founder s specific industry know how and a principal founder s ability to obtain financial resources that can act as a buffer against random shocks variables relating to resource availability in the external environment were also collected and considered control variables previous studies have highlighted substantial industry differences in the propensity for businesses to enter export markets as well as to survive the principal industrial activity of each business in 1990 91 was therefore considered a control variable variables collected during the 1990 91 survey were selected to explain variations in the propensity to export reported by surviving independent firms in 1997 after elimination of missing values the working sample was reduced to 116 independent firms for this study 86 nonexporters and 30 exporters in 1997 in addition the 21 variables were selected to explain variations in business size in 1997 profit performance relative to competitors reported in 1997 changes in employment over the 1990 91 to 1997 period and business survival over the 1990 91 to 1997 period 213 survivors and 395 nonsurvivors multivariate statistical analysis confirmed that previous experience of selling goods or services abroad is a key influence encouraging firms to export businesses with older principal founders with more resources denser information and contact networks and considerable management know how are significantly more likely to be exporters further businesses with principal founders that had considerable industry specific knowledge are markedly more likely to be exporters businesses principally engaged in the service sectors and those located in urban areas are significantly less likely to be exporters a key finding of this study is that the explanatory variables significantly associated with the propensity to export sales abroad are not the same as those significantly associated with selected size and performance measures the resource based explanatory variables selected fail to significantly detect employment growing firms over the 1990 91 to 1997 period they also fail to significantly distinguish surviving independent firms from nonsurviving firms results from this study will provide policy makers and practitioners with additional insights into the key resource based factors associated with the decision by new and small independent firms to export sales abroad practitioners and policy makers can focus upon the characteristics of principal founders businesses and the external environment to predict the subsequent propensity of an independent firm to be an exporter policy makers and practitioners who want more new and small firms to export outside their local areas may prefer to target their resources and assistance to the relatively smaller proportion of firms that have the business and principal founder profiles that are significantly associated with a firm being an exporter

value at risk models for dutch bond portfolios this study investigates the consequences of dynamics in the term structure of dutch interest rates for the accurateness of value at risk models therefore value at risk measures are calculated using both historical simulation variance covariance and monte carlo simulation methods for a ten days holding period the best results were obtained for a combined variance covariance monte carlo method using a term structure model with a normal distribution and garch specification term structure models with a t distribution or with cointegration performed much worse 2000 elsevier science b v all rights reserved jel classification e43 g28

is labour market flexibility harmful to innovation in a neoclassical framework one can argue that unemployment can be reduced by means of institutional changes that allow for a better working of the labour market and notably by achieving downward wage flexibility i argue that although various policy recommendations about removing labour market rigidities are indeed advantageous in the short trun they are detrimental from a schumpeterian perspective since they discourage product and process innovation reduced innovation efforts will in turn weaken the supply side strength of an economy the paper explores the implications of schumpeter s notion of creative destruction and of schmookler s hypothesis of demand pulled innovations borrowing from recent empirical innovation research

is flexible labour good for innovation evidence from firm level data whether the use of flexible workers is damaging to innovation or not depends on the dominant innovation regime in a sector in sectors with a routinised innovation regime high shares of low paid temporary workers have a negative impact on the probability that firms invest in r d in sectors that tend towards a garage business regime however flexibility has no impact the two innovation regimes differ in the nature of their knowledge base reliance on generally available knowledge or dependence on a firm s historically accumulated knowledge base innovation in the latter regime benefits from longer job durations our results are consistent with findings in macro level studies that coordinated market economies with rigid labour markets have higher labour productivity gains than liberalised market economies

mobilizing private finance for low carbon innovation a systematic review of barriers and solutions this paper analyses the field of innovation studies regarding barriers to low carbon innovation and consequences for finance investment and divestment and contributes to a more holistic understanding of the underlying mechanisms a combination of technological barriers combined with economic barriers institutional and political barriers contribute to sub optimal low carbon investment all along the innovation cycle policy makers need to take a systemic approach to enable the redirection of diverse private financial sources instruments range from cutting dirty r d subsidies and support for clean technology innovation and diffusion levelling the institutional playing field and making risks of high carbon and low carbon technologies transparent to providing a consistent but adaptive long term transition strategy this would allow financiers to gradually shift their investments away from high carbon mainstream markets and scale low carbon technology niche markets however financiers also need to sharpen their competencies with regard to new clean technologies and markets

market risk in commodity markets a var approach we put forward value at risk models relevant for commodity traders who have long and short trading positions in commodity markets in a 5 year out of sample study on aluminium copper nickel brent crude oil and wti crude oil daily cash prices and cocoa nearby futures contracts we assess the performance of the riskmetrics skewed student aparch and skewed student arch models while the skewed student aparch model performs best in all cases the skewed student arch model delivers good results and its estimation does not require non linear optimization procedures as such this new model could be relatively easily integrated in a spreadsheet like environment and used by market practitioners

advanced solar r d combining economic analysis with expert elicitations to inform climate policy the relationship between r d investments and technical change is inherently uncertain in this paper we combine economics and decision analysis to incorporate the uncertainty of technical change into climate change policy analysis we present the results of an expert elicitation on the prospects for technical change in advanced solar photovoltaics we then use the results of the expert elicitations as inputs to the minicam integrated assessment model to derive probabilistic information about the impacts of r d investments on the costs of emissions abatement

good and bad institutions is the debate over cross country firm level evidence from the textile industry using firm level data from nine developing countries we demonstrate that certain institutions like restrictive labour market regulations that are considered bad for economic growth might be beneficial for production efficiency whereas good business environment which is considered beneficial for economic growth might have an adverse impact on production efficiency we argue that our results suggest that there might be significant difference in the macro and micro impacts of institutional quality such that the classification of institutions into good and bad might be premature

human capital and growth of information and communication technology intensive industries empirical evidence from open economies murphy g and siedschlag i human capital and growth of information and communication technology intensive industries empirical evidence from open economies regional studies this paper examines the effect of human capital on the growth of information and communication technology ict intensive industries using data from a sample of open economies over the period 1980 1999 the econometric analysis suggests that value added and employment in ict intensive industries grew relatively faster in countries with a higher ex ante human capital stock and in countries with a fast improvement in human capital further in countries with fast human capital accumulation labour productivity in ict intensive industries grew faster the results are robust to controls for other determinants of industry growth and country characteristics affecting industry specialization and to using alternative human capital measures

when labour market rigidities are useful for innovation evidence from german iab firm level data abstract supply side economists made numerous pleas for removing labour market rigidities through structural reforms from a schumpeterian viewpoint however one can argue that labour market rigidities create useful incentives for innovation our estimates on german panel data 2007 2015 support the schumpeterian view using the taxonomy of industries by peneder 2010 we find that evidence of the schumpeterian view is particularly strong in r d intensive manufacturing industries as well as in service industries with high degrees of cumulativeness of knowledge evidence of the schumpeterian view is weaker in low technology industries and in start ups when firms rely more on generally available knowledge rather than on firm specific and tacit knowledge accumulated in the past

welfare improving employment protection this paper derives new results on the welfare effects of employment protection using data from 17 oecd countries we show that there exists an inverse u shape relationship between employment protection and economic growth using a simple theoretical model with non contractible specific investments we show that over some range increasing employment protection does indeed raise welfare we also show that the optimal level of employment protection depends on other labour market features such as the bargaining power of workers and the existence of wage rigidities like the minimum wage

the treasury yield curve as a cointegrated system this paper examines the temporal relationship between interest rates on treasury securities ranging in maturity from three months to 30 years we find strong empirical support that the seven treasury rates selected are cointegrated a conclusion that is insensitive to the normalization chosen in particular the hypothesis of noncointegration is rejeeted decisively regardless of the rate selected as the dependent variable in the cointegrating equation to determine whether this information can be used to improve forecasts of treasury rates the seven rates are forecasted with a corresponding erroreorrection model that is shown to outperform an augmented var model that ignores the cointegration of the rates the results are consistent with the belief that arbitrage limits the extent to which rates on different maturities of a given security diverge in addition the results confirm the appropriateness of imposing a common stochastic process for interest rates in equilibrium models of the term structure

labour markets bargaining and innovation much of the recent empirical work on the impact of unions on rd ii under some circumstances an increase in union strength can make both firms and unions worse off we survey a more recent theoretical literature which takes account of the fact that r d is often undertaken for strategic reasons by firms that are in competition with one another we show that in this framework the prevailing theoretical paradigm may be overturned thus when firms and unions can enter into long term bargains then an increase in union strength will increase decrease r d spending if successful innovation causes employment to rise respectively fall however when r d falls then this increase in union strength can cause both firms and unions to be better off when firms and unions engage in short term bargaining then an increase in union bargaining strength will cause r d to fall when bargaining is over wages alone however when bargaining takes place over wages and employment then if unions care a lot about employment the relationship between union strength and r d is inverse u shaped

the economics of technical change this paper reviews the recent rapidly growing literature on technical change in the economy it concentrates on innovations and their diffusion at firm and industry level since this was the area designated as relatively weak in earlier literature surveys the review argues that the extensive empirical evidence and theoretical analysis now available presents a basic challenge to neoclassical theory after indicating some weaknesses in the neo schumpeterian literature the paper concludes by advocating an experiment with a new form of assessment by neighboring disciplines to economics itself which would take full account of the fundamental issues at stake in this modern methodenstreit c 1994 academic press inc copyright 1994 by oxford university press

bootstrapping financial time series it is well known that time series of returns are characterized by volatility clustering and excess kurtosis therefore when modelling the dynamic behavior of returns inference and prediction methods based on independent and or gaussian observations may be inadequate as bootstrap methods are not in general based on any particular assumption on the distribution of the data they are well suited for the analysis of returns this paper reviews the application of bootstrap procedures for inference and prediction of financial time series in relation to inference bootstrap techniques have been applied to obtain the sample distribution of statistics for testing for example autoregressive dynamics in the conditional mean and variance unit roots in the mean fractional integration in volatility and the predictive ability of technical trading rules on the other hand bootstrap procedures have been used to estimate the distribution of returns which is of interest for example for value at risk var models or for prediction purposes although the application of bootstrap techniques to the empirical analysis of financial time series is very broad there are few analytical results on the statistical properties of these techniques when applied to heteroscedastic time series furthermore there are quite a few papers where the bootstrap procedures used are not adequate