Capital, Technology, and Economic Performance

2004 ◽  
Author(s):  
Meric S. Gertler
Keyword(s):  
Technological Change ◽  
Regional Economics ◽  
Empirical Work ◽  
Growth Theory ◽  
Firm Level ◽  
Theoretical Inquiry ◽  
Contemporary Work ◽  
Manufacturing Technologies ◽  
Investment Process ◽  
Economic Vitality

Across economic doctrines of all stripes, one of the eternal verities is that capital plays a crucial role in determining the path and rate of growth in advanced economies. Contemporary work in geography, regional economics, and planning has reinforced this view, attesting to the key influence of investment—and investors—on the economic vitality of localities and regions. However, until comparatively recently, both our theoretical apparatus for understanding the role of capital in regional development and our collected body of empirical evidence to illuminate this process were rather limited (Gertler 1984b; 1987). Our understanding of the investment process has developed along new lines of theoretical inquiry only since the mid-1980s. At the macroeconomic scale, economists have attacked the study of growth theory with renewed vigour, in an attempt to incorporate some of the most important attributes of the capitalist system—such as technological change and scale economies—that had hitherto defied easy reconciliation with accepted theories of economic growth (Romer 1986; 1990a, b). At the microeconomic scale, the results of a set of detailed, firm-level studies in several countries have forced a reappraisal of the accepted wisdom concerning the relationship between investment, productivity, and firm performance (Meurer, Sobel, and Wolfe 1987; Gertler 1993). Within this second avenue of progress, economic geography has made an important contribution to our understanding of the process by which mobile financial capital becomes ‘fixed’ in place as productive apparatus. Furthermore, this work has suggested important implications for the objectives and shape of industrial policy intervention. In this chapter I shall consider two fundamental questions: one that is more general in nature and another that is explicitly geographical. First, why have the returns from investment in new manufacturing technologies frequently been so disappointing? In addressing this question, I shall critically review some of the more significant insights produced by the ‘new growth theory’ in economics. This literature argues that investment is the motive force for technological change, since new capital goods by definition embody new, productivity-enhancing technologies. I demonstrate the extreme limitations of this perspective, drawing on the important conceptual and empirical work of economic geographers, economic sociologists, and other social scientists in the process.

scholarly journals Growth Through Inter-sectoral Knowledge Linkages

2018 ◽  
Vol 86 (5) ◽  
pp. 1827-1866 ◽  
Author(s):  
Jie Cai ◽  
Nan Li
Keyword(s):  
General Equilibrium ◽  
Technological Change ◽  
Equilibrium Model ◽  
New Products ◽  
General Equilibrium Model ◽  
Fixed Costs ◽  
Aggregate Model ◽  
Firm Level ◽  
Firm Innovation ◽  
Aggregate Growth

Abstract The majority of innovations are developed by multi-sector firms. The knowledge needed to invent new products is more easily adapted from some sectors than from others. We study this network of knowledge linkages between sectors and its impact on firm innovation and aggregate growth. We first document a set of sectoral-level and firm-level observations on knowledge applicability and firms’ multi-sector patenting behaviour. We then develop a general equilibrium model of firm innovation in which inter-sectoral knowledge linkages determine the set of sectors a firm chooses to innovate in and how much R&D to invest in each sector. It captures how firms evolve in the technology space, accounts for cross-sector differences in R&D intensity, and describes an aggregate model of technological change. The model matches new observations as demonstrated by simulation. It also yields new insights regarding the mechanism through which sectoral fixed costs of R&D affect growth.

scholarly journals The bias of avoiding spatial dynamic panel models

REGION ◽  
2021 ◽  
Vol 8 (1) ◽  
pp. 153-180
Author(s):  
Lorenz Benedikt Fischer
Keyword(s):  
Dynamic Models ◽  
Regional Economics ◽  
Empirical Work ◽  
Optimal Estimation ◽  
Spatial Dimension ◽  
The Other ◽  
Omitted Variables ◽  
Time Dimension ◽  
Opposite Case ◽  
Dynamic Panel Models

Many questions in urban and regional economics can be characterized as including both a spatial and a time dimension. However, often one of these dimensions is neglected in empirical work. This paper highlights the danger of methodological inertia, investigating the effect of neglecting the spatial or the time dimension when in fact both are important. A tale of two research teams, one living in a purely dynamic and the other in a purely spatial world of thinking, sets the scene. Because the researcher teams' choices to omit a dimension change the assumed optimal estimation strategies, the issue is more difficult to analyze than a typical omitted variables problem. First, the bias of omitting a relevant dimension is approximated analytically. Second, Monte Carlo simulations show that the neglected dimension projects onto the other, with potentially disastrous results. Interestingly, dynamic models are bound to overestimate autoregressive behavior whenever the spatial dimension is important. The same holds true for the opposite case. An application using the well-known, openly available cigarette demand data supports these findings.

Technological Change, Relative Worker Productivity, and Firm-Level Substitution

2014 ◽  
Vol 15 (5) ◽  
pp. 478-496
Author(s):  
Grant Gannaway ◽  
Craig Palsson ◽  
Joseph Price ◽  
David Sims
Keyword(s):  
Technological Change ◽  
Worker Productivity ◽  
Firm Level

scholarly journals Soy dairy performance metrics

2021 ◽  
Vol 21 (105) ◽  
pp. 19016-19039
Author(s):  
J Krause ◽  
◽  
M Cornelius ◽  
P Goldsmith ◽  
M Mzungu ◽  
...  
Keyword(s):  
Performance Metrics ◽  
Dairy Product ◽  
Value Added ◽  
Regulatory Compliance ◽  
Fixed Costs ◽  
Firm Level ◽  
Recordkeeping System ◽  
Tropical Environments ◽  
Level Data ◽  
Manufacturing Technologies

Soybean (Glycine max (L. Merr.) has been a crop of interest to address both poverty and malnutrition in the developing world because of its high levels of both protein and oil, and its adaptability to grow in tropical environments. Development practitioners and policymakers have long sought value added opportunities for local crops to move communities out of poverty by introducing processing or manufacturing technologies. Soy dairy production technologies sit within this development conceptual model. To the researchers’ knowledge, no research to date measures soy dairy performance, though donors and NGOs have launched hundreds of enterprises over the last 18 years. The lack of firm-level data on operations limits the ability of donors and practitioners to fund and site sustainable dairy businesses. Therefore, the research team developed and implemented a recordkeeping system and training program first, as a 14-month beta test with a network of five dairies in Ghana and Mozambique in 2016-2017. Learning from the initial research then supported a formal research rollout over 18 months with a network of six different dairies in Malawi and key collaboration from USAID’s Agricultural Diversification activity. None of the beta or rollout dairies kept records prior to the intervention. The formal rollout resulted in a unique primary dataset to address the soy dairy performance knowledge gap. The results of analysis show that the dairies, on average, achieve positive operating margins of 61%, yet cannot cover the fixed costs associated with depreciation, amortization of equipment and infrastructure, working capital, marketing and promotion, and regulatory compliance. The enterprises in our sample operate only at 9% of capacity, which limits their ability to cover the normal fixed costs associated with the business. The challenge is not the technology itself, as when operated, it produces a high-quality dairy product. The challenges involve a business that requires too much capital for normal operations relative to a nascent and small addressable market.

Inter-firm differences in mergers and acquisitions: a study of the pharmaceutical sector in India

2017 ◽  
Vol 44 (5) ◽  
pp. 861-878 ◽  
Author(s):  
Santosh Kumar Sahu ◽  
Nitika Agarwal
Keyword(s):  
Mergers And Acquisitions ◽  
Empirical Work ◽  
Capital Intensity ◽  
Profit Margin ◽  
Pharmaceutical Sector ◽  
Export Intensity ◽  
Firm Level ◽  
Content Type ◽  
Probit Models ◽  
Matching Techniques

Purpose Mergers and acquisitions (M&A) are common strategies of firms to increase its performance. Although the motives of M&A are different, the determinants are discreet. The purpose of this paper is to determine the factors affecting M&A activities in the Indian pharmaceutical sector. Design/methodology/approach Using a balanced panel data of the pharmaceuticals sector in India, this study arrives at the determinants of M&A. The authors use regression techniques such as panel probit models, ordered probit models and matching techniques for a comparable and robust estimates for the factors related to M&A activities at firm level. Findings The empirical findings suggest that export intensity, import intensity, firm size and R&D intensity as the major determinants of M&A in the Indian pharmaceutical sector. In the context of acquisition, there is a riskiness associated with the any business strategy, for to which a firm may choose to finance the deal either via cash, stock or assets. This study further looks at the firm’s decision on the types of acquisitions and arrives at the determinants of such decisions. The factors such as capital intensity were found more important when acquisition by share was undertaken compared to others. The success of the M&A is observed by considering the financial performance of the firm measured in terms of the profit margin at firm level. Using the propensity score matching technique, this study concludes that M&A have a positive effect on the profit margin in the post-M&A scenario. Research limitations/implications The study seeks to add to the existing literature and empirical work done in the field of M&A, by not only looking at determinants that motivate a firm to merge and/or acquire but also if the decision of the firm is reflected positively in the firm’s performance. The study concludes that export intensity is an important factor for the pharmaceutical firms in India since exports are a major proportion of firm’s total sales. Technology transfers as technology imports and R&D conducted by the firm are both very important for the drug manufacturers. Any gap in the flow of drugs to the market would hamper the growth of the firm. The growth of the pharmaceutical industry depends on the close collaboration between small R&D units that lack resources to sell their work and large business houses, both domestic and foreign affiliated that will provide them the required market. However, all comprehensive work has been done in this study to cover all aspects of M&A including the financial pathway taken by the firm yet, the study has certain limitations as it does not take into account the entry and exit of firms from the industry. Practical implications Policies related to small and large firms should aim at making them export oriented and multinational affiliated to compete at the international market with corporate restructuring through M&A. This will help in firm’s growth and sharing of knowledge capital. Originality/value No such study is conducted that differentiate type of M&A and their determinants for the Indian pharma sector.

scholarly journals The implementation of supply chain management theory in practice: an empirical investigation

2015 ◽  
Vol 20 (1) ◽  
pp. 56-70 ◽  
Author(s):  
Edward Sweeney ◽  
David B. Grant ◽  
D John Mangan
Keyword(s):  
Supply Chain ◽  
Supply Chain Management ◽  
Critical Success Factors ◽  
Success Factors ◽  
Empirical Work ◽  
Theory And Practice ◽  
Firm Level ◽  
Chain Management ◽  
Content Type ◽  
Critical Success

Purpose – The purpose of the research described in this paper is to disentangle the rhetoric from the reality in relation to supply chain management (SCM) adoption in practice. There is significant evidence of a divergence between theory and practice in the field of SCM. Design/methodology/approach – Based on a review of extant theory, the authors posit a new definitional construct for SCM – the Four Fundamentals – and investigated four research questions (RQs) that emerged from the theoretical review. The empirical work comprised three main phases: focussed interviews, focus groups and a questionnaire survey. Each phase used the authors’ definitional construct as its basis. While the context of the paper’s empirical work is Ireland, the insights and results are generalisable to other geographical contexts. Findings – The data collected during the various stages of the empirical research supported the essence of the definitional construct and allowed it to be further developed and refined. In addition, the findings suggest that, while levels of SCM understanding are generally quite high, there is room for improvement in relation to how this understanding is translated into practice. Research limitations/implications – Expansion of the research design to incorporate case studies, grounded theory and action research has the potential to generate new SCM theory that builds on the Four Fundamentals construct, thus facilitating a deeper and richer understanding of SCM phenomena. The use of longitudinal studies would enable a barometer of progress to be developed over time. Practical implications – The authors’ definitional construct supports improvement in the cohesion of SCM practices, thereby promoting the effective implementation of supply chain strategies. A number of critical success factors and/or barriers to implementation of SCM theory in practice are identified, as are a number of practical measures that could be implemented at policy/supply chain/firm level to improve the level of effective SCM adoption. Originality/value – The authors’ robust definitional construct supports a more cohesive approach to the development of a unified theory of SCM. In addition to a profile of SCM understanding and adoption by firms in Ireland, the related critical success factors and/or inhibitors to success, as well as possible interventions, are identified.

Sign in / Sign up

Export Citation Format

Share Document