Organization and Financing of Innovation, and the Choice between Corporate and Independent Venture Capital
Paolo Fulghieri, Merih Sevilir
Journal of Financial and Quantitative Analysis,
No. 6,
2009
Abstract
This paper examines the impact of competition on the optimal organization and financing structures in innovation-intensive industries. We show that as an optimal response to competition, firms may choose external organization structures established in collaboration with specialized start-ups where they provide start-up financing from their own resources. As the intensity of the competition to innovate increases, firms move from internal to external organization of projects to increase the speed of product innovation and to obtain a competitive advantage with respect to rival firms in their industry. We also show that as the level of competition increases, firms provide a higher level of financing for externally organized projects in the form of corporate venture capital (CVC). Our results help explain the emergence of organization and financing arrangements such as CVC and strategic alliances, where large established firms organize their projects in collaboration with external specialized firms and provide financing for externally organized projects from their own internal resources.
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The Formation of Photovoltaic Clusters in Eastern Germany
Matthias Brachert, Christoph Hornych
Wirtschaft im Wandel,
No. 2,
2009
Abstract
One of the weaknesses of the East German economy is the relative lack of management functions and headquarters along with the relatively low research and developing efforts of the companies. With the emergence of new industries, there is a chance to respond to these weaknesses. Against this background, the article examines the emergence and development of the photovoltaic industry in Eastern Germany. The strong production and sales growth of the industry in the recent years is a result of central government funding programs. But up to now, East German regions have profited disproportionately from the growth of the sector. In 2008, we find about 14 000 direct industry employees in this sector in Eastern Germany.
Based on the Window of Locational Opportunity concept (WLO) by Storper and Walker – a stage model of industrial development –, this article describes the reasons of the development of the industry in Eastern Germany from 1996 until 2008. In spite of persistent growth processes and the foundation of new companies within the photovoltaic industry, a concentration on some certain locations, linked with the process of the formation of industrial clusters, becomes apparent. In a first result of the emergence of clusters, the regions of Bitterfeld-Wolfen, Dresden/Freiberg, Erfurt/Arnstadt, Frankfurt (Oder) and Berlin build leading sites in Eastern Germany.
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Export Promotion Needs the Disclosure of Industrial Potentials – A Case Study for the Federal State of Thuringia
Udo Ludwig, Brigitte Loose, Cornelia Lang
Wirtschaft im Wandel,
No. 5,
2008
Abstract
In countries and regions with weak domestic markets, the orientation towards external markets plays an important rule. This applies even more for economies emerging from the transformation process from a state to a market economy with a small export sector and a continuous decline in the number of residents. The federal state Thuringia presents such an example. There is still a large gap in exports compared to Germany as a whole. The paper deals with the role of exports in economic development and economic measures to increase the export activities of small and medium-sized companies (SMEs) in Thuringia. The study is based on a survey among SMEs in Thuringia on the performance of exporters and non-exporters. One of the main findings shows that export promotion was important only for one among three exporting companies during the last three years. That speaks for the confidence of the firms in their own power. The most measures used to implement or advance export activities are participation in a fair, information sessions on foreign markets and two general instruments to support companies: investment and innovation stimulation. As a result, economic measures make sense, but it should not depend on the age or the size of a company. Besides, the support should not only be given by department of foreign trade, but also by other departments. Finally, especially newcomers should be supported to entry foreign markets.
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Innovations as driving force of the knowledge society – concepts and contemporary theoretical approaches
Jutta Günther, Björn Jindra
Wirtschaft im Wandel,
No. 9,
2007
Abstract
In response to the question what secures Europe’s future competitiveness, it is often in the context of “knowledge society” referred to location advantages for research and development (R&D), innovation and knowledge. Respective point of view is not only represented by decision makers of high-duty industrial countries, but also by so called catching up economies in Central and Eastern Europe as well as Asia. The present article deals against the background of current innovation theoretic approaches with the question of what indeed constitutes the abstract notion of the knowledge society, which actors play a role and how R&D and innovation are geographically distributed. Systemic approaches are outlined, which place emphasis on the relation among different knowledge generating actors, in particular among science and economy. In effort to elucidate the geographical distribution of R&D and innovation the authors refer to the regional economic theory, which constitute the reasons why such processes are marked by spatial concentration. Thereby, the hypotheses are competing in associating the spatial concentration with either sectoral specialization or diversification. The article shows the domination of multinational companies of research and development (R&D) in the private sector and that these businesses connect regional centers of innovations beyond national borders. Based on the theory of technological accumulation and internationalization of companies, the globalization of R&D and innovation processes are explained. Thereby, it must be recognized that a hierarchy of regional innovation systems is emerging in which the disparities are increasing both at home and abroad.
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Vernetzung und einzelwirtschaftliche Effekte von Unternehmen der Kunststoff- und Biotechnologiebranche in Mitteldeutschland - eine Analyse am Beispiel der Clusterinitiativen „Chemie/Kunststoffe“ und „Biotechnologie/Life Sciences“
Walter Komar
IWH-Sonderhefte,
No. 2,
2006
Abstract
According to theoretical implications the success of enterprises benefits from co-operation in clusters and networks. Studies of cluster and network processes show this for the industries chemistry/plastics and biotechnology/Life Sciences in Central Ger-many. Therefore enterprises which are organized in networks have better economic characteristics. Estimations of the productivity of firms using co-operation-based and non-co-operation-based factors as independent variables reveal a significantly positive influence of the propensity to co-operate as well as networking. In this regard scientific institutions and universities located in the region of firms play an important role. From this analysis it can be generalized and concluded, also concerning other industries, that networks emerge automatically under certain conditions. Nevertheless their creation and development should be encouraged, e.g. by efficiency strengthening of public research and university education as well as the intensification of co-operation and networking between the scientific and the corporate sector. This can promote the technology and human capital transfer.
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Can Export Activities of Firms Contribute to the Catching-Up Process of Transitional Economies?
Brigitte Loose, Udo Ludwig
Can the transitional and development economies ever catch up? The Materials from The International Scientific Conference Cracow,
2006
Abstract
In contrast to the majority of the former centrally planned economies, the East German economy has suffered from enormous losses in the transformation process. In the study the question is analyzed whether exports can contribute to the catching-up process in transitional economies. Here it must be explained why the firms emerging out of the privatization process in economies in transition are successful if the export sector consists of small and medium sized enterprises. That is the case with East German manufacturing industry. The study is based on individual company data from the surveys of the East Germany's and North Rhine Westphalia's manufacturing industry between 1995 and 2001 stemming from official statistics.
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Kooperation, Vernetzung und Erfolg von Unternehmen - die Biotechnologiebranche
Walter Komar
List Forum für Wirtschafts- und Finanzpolitik,
No. 2,
2005
Abstract
According to theoretical implications the succes of enterprises benefits from co-operation and integration into networks. Enterprises of the biotechnology sector in particular have a high propensity to build up co-operations. Estimations of the growth of firms using co-operation-based and non-co-operation-based factors as independent variables reveal a significantly positive influence of the propensity of co-operation as well as networking. In this regard scientific institutions and universities located in geographical proximity of firms play an important role. From this analysis it can be generalized and concluded, concerning other industries too, that networks emerge automatically under certain conditions. Nevertheless their creation and development should be encouraged, e.g. by efficiency incentives for public research and education of universities as well as an intensification of co-operation and networking between the scientific and the corporate sector. This can promote the technology and human capital transfer.
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“Law on loyalty to collectively agreed standards“ - no means for adjusting competitive conditions in construction industry
Andrea Besenthal
Wirtschaft im Wandel,
No. 2,
2004
Abstract
Due to the increasing competition from abroad which is able to offer services for lower prices because of lower wage standards the stress of competition intensifies in Germany. With regard to West Germany the East German companies - paying lower wages – represent an immediate business competition. The supporter of the Tariftreuegesetze (laws concerning the construction industry which restrict public contracts only to contractors who pay union wages) see the laws` advantage in eliminating the existing differences in competitive conditions, which emerge from differences on the wage level. The IWH study concludes that the named wage laws do not seem necessary from an economic point of view.
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Evolving Structural Patterns in the Enlarging European Division of Labour: Sectoral and Branch Specialisation and the Potentials for Closing the Productivity Gap
Johannes Stephan
IWH-Sonderhefte,
No. 5,
2003
Abstract
This report summarises the results generated in empirical analysis within a larger EU 5th FP RTD-project on the determinants of productivity gaps between the current EU-15 and accession states in Central East Europe. The focus of research in this part of the project is on sectoral specialisation patterns emerging as a result of intensifying integration between the current EU and a selection of six newly acceding economies, namely Estonia, Poland, the Czech and Slovak Republics, Hungary and Slovenia. The research-leading question is concerned with the role played by the respective specialisation patterns for (i) the explanation of observed productivity gaps and for (ii) the projection of future potentials of productivity growth in Central East Europe.
For the aggregated level, analysis determines the share of national productivity gaps accountable to acceding countries’ particular sectoral patterns, and their role for aggregate productivity growth: in Poland, the Slovak Republic and Hungary, sectoral shares of national productivity gaps are considerable and might evolve into a ‘barrier’ to productivity catch-up.Moreover, past productivity growth was dominated by a downward adjustment in employment rather than structural change. With the industrial sector of manufacturing having been identified as the main source of national productivity gaps and growth, the subsequent analysis focuses on the role of industrial specialisation patterns and develops an empirical model to project future productivity growth potentials. Each chapter closes with some policy conclusions.
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Intra-industry trade between European Union and Transition Economies. Does income distribution matter?
Hubert Gabrisch, Maria Luigia Segnana
IWH Discussion Papers,
No. 155,
2002
Abstract
EU-TE trade is increasingly characterised by intra-industry trade. For some countries (Czech Republic), the share of intra-industry trade in total trade with the EU approaches 60 percent. The decomposition of intra-industry trade into horizontal and vertical shares reveals overwhelming vertical structures with strong quality advantages for the EU and shrinking quality advantages for TE countries wherever trade has been liberalised. Empirical research on factors determining this structure in an EU-TE framework has lagged theoretical and empirical research on horizontal trade and vertical trade in other regions of the world. The main objective of this paper is, therefore, to contribute to the ongoing debate over EU-TE trade structures, by offering an explanation of intra-industry trade. We utilize a cross-country approach in which relative wage differences and country size play a leading role. In addition, as implied by a model of the productquality
cycle, we examine income distribution factors as determinates of the emerging
EU-TE structure of trade flows. Using OLS regressions, we find first, that relative
differences in wages (per capita income) and country size explain intra-industry trade, when trade is vertical and completely liberalized and second, that cross country differences in income distribution play no explanatory role. We conclude that if increasing wage differences resulted from an increasing productivity gap between highquality and low-quality industries, then vertical structures will, over the long-term create significant barriers for the increase in TE incomes and lowering EU-TE income differentials.
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