This monthly selection of articles has been carried out by Philippe Gugler and Damiano Lepori, the Center for Competitiveness, University of Fribourg. The entire selection, carried out since 2013, can be consulted on the academic articles page of our web.

Linking innovation and entrepreneurship to economic growth

By: L. Farinha, J. J.M. Ferreira, S. Nunes. Competitiveness Review, Vol. 28, Iss. 4, pp. 451-475, 2018.

Abstract: “The purpose of this paper is to study the linkage of innovation and entrepreneurship to economic growth in countries with different levels of development. Following quantitative analysis, the authors carry out three empirical approaches to examine the effects of innovation and entrepreneurship on competitiveness. In accordance with their initial study framework, they test the conceptual model of competitiveness through applying descriptive statistics, structural equation modelling (SEM) and hierarchical cluster analysis. Descriptive statistics and SEM data sources from the Global Competitiveness Report of the World Economic Forum were analysed for 148 countries. The hierarchical cluster analysis furthermore analysed Global Entrepreneurship Monitor data on 67 different countries. The study confirmed that innovation and sophistication factors are crucial to the competitiveness of economies. The study also revealed the definition of five clusters relative to the competitive performance of advanced economies following the introduction of new entrepreneurship variables. This research aims to open up avenues for the development of regional competitiveness studies.” [ABSTRACT FROM AUTHORS]

Labor congestion in the automotive cluster: the role of wages

By: A. Mendoza-Velazquez, J. A. Santillana, V. E. Zárate-Mirón, M. Cabanas. Competitiveness Review, Vol. 28, Iss. 4, pp. 386-407, 2018.

Abstract: “The purpose of this study is to investigate labor congestion in the automotive industry in Mexico. By using the cluster and subcluster definitions by Delgado et al. (2016) and relying on an efficiency and production function perspective, this study estimates a standard production function and measures marginal returns of labor at the regional cluster and subclusters levels. To assess whether wages affect the finding of congestion and productivity, the model also measures the individual impact of wages on both total productivity and marginal returns of labor. Among other results, this paper finds evidence of labor congestion in the automotive cluster in Mexico. This congestion deepens with wages and it is specific to some regions and some subclusters. The methods used are based on panel data techniques but are fundamentally cross-section in nature. The time period available may condition these findings. To the authors’ knowledge, this is the first study reporting congestion in the automotive cluster in Mexico.” [ABSTRACT FROM AUTHORS]

Silicon envy: How global innovation clusters hurt or stimulate each other across developed and emerging markets

By: N. Harmanciuglu, G. J. Tellis. Journal of International Business Studies, Vol. 49, Iss. 7, pp. 902-918, 2018.

Abstract: “The authors examine intercluster dynamics among rival global clusters on monthly counts of patents, startups, and new product commercializations between 1999 and 2014 while controlling for numerous exogenous variables. Results show that rival innovation clusters facilitate rather than hinder each other’s growth due to resources complementarities. Reverse fertilization occurs from emerging to developed clusters, contrary to the received wisdom. This study is the first to show intercluster dynamics as important drivers of cluster growth. To explain the counterintuitive findings, the authors draw upon the coopetition view which suggests mutually beneficial growth across all rival clusters rather than zero-sum gains.” [ABSTRACT FROM AUTHORS]

Effect of market orientation, network capability and entrepreneurial orientation on international performance of small and medium enterprises (SMEs)

By: A. Solano Acosta, A. Herrero Crespo, J. Collado Agudo. International Business Review, Vol 27, Iss. 6, pp. 1128-1140, 2018.

Abstract: “This study contributes to literature on the internationalization of SMEs by analysing the influence of International Market Orientation, Network Capability, and International Entrepreneurial Orientation on the International Performance of this kind of businesses. Particularly, both the direct effects of explanatory variables of International Performance and interdependence relations between them are analysed. Results obtained from a sample of 161 Mexican SMEs using SEM-PLS analysis show that the International Performance of this kind of businesses is favourably influenced by their Network Capability and International Entrepreneurial Orientation, but not by their International Market Orientation. Similarly, it is verified that interdependence relations exist among the explanatory variables of International Performance of SMEs, where positive impact of International Entrepreneurial Orientation is observed on Network Capability and the International Market Orientation of SMEs.” [ABSTRACT FROM AUTHORS]

Establishment modes and network relationships of foreign subsidiaries

By: A. Valentino, M. Caroli, U. Mayrhofer. International Business Review, Vol 27, Iss. 6, pp. 1250-1258, 2018.

Abstract: “This research examines the effects of the establishment mode of foreign subsidiaries (greenfield vs acquisition) on the type of network relationships (social vs business) they develop in local markets. The authors use the network approach to better understand the role played by local subsidiaries for the development of networks in multinational enterprises. The empirical study is based on a dataset covering 120 foreign-owned subsidiaries in Italy. The findings show that acquired subsidiaries are more directly involved in business relationships, whereas greenfield subsidiaries pay more attention to social relationships before building business networks. The establishment mode thus affects the type of network relationships developed by local subsidiaries, which can help them to overcome the liabilities of foreignness and outsidership.” [ABSTRACT FROM AUTHORS]

Does foreign direct investment lead to industrial agglomeration

By: W.-T. Hsu, Y. Lu, X. Luo, L. Zhu. Institutional Knowledge at Singapore Management University, Paper No. 16-2018, 2018.

Abstract: “This paper studies the effect of foreign direct investment (FDI) on industrial ag- glomeration. Using the differential effects of FDI deregulation in 2002 in China on different industries, we find that FDI actually affects industrial agglomeration negatively. This result is somewhat counter-intuitive, as the conventional wisdom tends to suggest that FDI attracts domestic firms to cluster for various agglomeration benefits, in particular technology spillovers. To reconcile our empirical findings and the conventional wisdom, we develop a theory of FDI and agglomeration based on two counter-veiling forces. Technology diffusion from FDI attracts domestic firms to clus- ter, but fiercer competition drives firms away. Which force dominates depends on the scale of the economy. When the economy is sufficiently large, FDI discourages agglomeration. We find various evidence on this competition mechanism.” [ABSTRACT FROM AUTHORS]

Incubators, accelerators and regional economic development

By: M. Madaleno, M. Nathan, H. Overman, S. Waights. Centre for Economic Performance, London School of Economics and Political Science, CEP Discussion Paper No. 1575, 2018.

Abstract: “A growing wave of co-location programmes promises to boost growth for young firms. Despite great public and policy interest we have little idea whether such programmes are effective. This paper categorises accelerators and incubators within a larger family of ‘co-location' interventions. We then develop a single framework to theorise workspace-level impacts. We summarise available evaluation evidence and sketch implications for regional economic policy. We find clear evidence programmes are effective overall. But we know little about how effects operate – or who benefits. Providers and policymakers should experiment further to establish optimal designs.” [ABSTRACT FROM AUTHORS]

The formation and take-off of the Sao Paulo automobile-industry cluster

By: T. Fernández-de-Sevilla, J. A. dalla Costa. Solvay Brussels School of Economics and Management, Free University of Brussels (ULB), 2018.

Abstract: “The bulk of the automotive-industry in Brazil, country which is ranked in the top-ten of world cars producer since the mid-1960s, has been concentrated around the city of São Paulo. We aim to explain the formation and growth of the São Paulo auto-industry cluster. In doing so, four explanations are used: the presence of external economies (Marshall, 1890; Porter, 1990); the capabilities of large companies, which act as regional hubs (Chandler, 1990; Markusen, 1996; Lazonick, 2010); the adoption of active industrial policies (Amsden, 1989, 2001; Chang, 2002); and the institutional environment (Bagnasco, 1977; Brusco, 1982; Becattini, 1990; Porter, 1998).” [ABSTRACT FROM AUTHORS]