Riccardo Leoncini

Intersectoral innovation flows and national technological systems: network analysis for comparing Italy and Germany

Abstract The paper compares the innovative structure and performance of Italy and Germany by using the concept of the technological system which is defined as the result of the interaction of four different components: the industrial, the innovative, the commercial (domestic and foreign markets) and the institutional sub-systems. The analysis of the intersectoral innovation flows within the two national technological systems is based on an input-output database rearranged in vertically integrated sectors. Specific hypotheses have been formulated and valid proxies for the variables studied have been used. The final results have been obtained by using network analysis methodology and indicators. This called for a dicotornisation of the original matrices. These results take into account separately the existing differences between Italy and Germany in both absolute terms ( dimension effect ) and relative terms ( proportion effect ). The paper shows that Germany is characterised by a higher level of systemic connection both in absolute and (generally) in relative terms. The Italian technological system seems to be segmented in a dualistic structure where few high-tech sectors co-exist along with a pool of traditional ones, rather peripheral in the innovation flow network. The German system, on the contrary, appears to be homogeneous with a more evenly distributed structure of intersectoral innovation flows. The paper concludes by considering the effects of the introduction of other sub-systems: namely foreign market and public intervention. While the former introduces further elements of differentiation between Italy and Germany, the latter seems to perform a similar role in both systems.

The automobile technological systems: An empirical analysis of four European countries

The aim of this paper is to study the automobile industry of the most important European countries (France, Germany, Great Britain and Italy) from a sectoral, system perspective. The main relationships within and between the building blocks constituting the automobile technological system are mapped and evaluated, both in cross-sectional and in temporal terms. The importance of the sectoral TS as the unit of our analysis appears evident at both levels. Some general sectoral properties emerge, which however hold in the four countries to a different extent, thus suggesting how the institutional set-up works as a differentiating element. A sustained process of change in the various elements of the automobile TS is detected, nevertheless resulting in a relatively stable path of development. The countries considered reveal different patterns of motor vehicles trade specialisation in different geographical areas, with changes over time. Also foreign direct investments show the existence of very different trajectories and outward/inward balances.

Spatial Agglomeration, Production Technology and the Choice to Make and/or Buy: Empirical Evidence from the Emilia Romagna Machine Tool Industry

Antonietti R., Ferrante M. R. and Leoncini R. Spatial agglomeration, production technology and the choice to make and/or buy: empirical evidence from the Emilia Romagna machine tool industry, Regional Studies. Using a new firm-level dataset, the decision, and relative intensity, to source either fully or partially production activities by small mechanical firms in the Emilia Romagna region of Italy is analysed. A hurdle negative binomial model is estimated, controlling for endogeneity and composition of the production process. Full outsourcing is positively related to the share of skilled personnel, the presence abroad and the employment density in neighbouring firms. Concurrent sourcing is affected by firm size, age and labour cost. The insensitivity of concurrent outsourcing to the industrys spatial concentration reflects the lower transaction costs compared with full outsourcing.

Innovation and competition in complex environments

Summary The paper aims to shed light on the relation between technological research, competition and market dynamics, focussing on the role of product modularity. This relation is analysed via qualitative simulation modelling using a simple agent-based model. We define an economic system in which firms compete on the quality characteristics of a certain complex good, in a market where consumers have shown preferences for them. Firms are conceived as bounded rational agents that explore complex product technologies in order to improve their fitness in relation to the selection environment (i.e. the consumers’ evaluation of the characteristics of the final good). The architecture of the good produced in the system is characterised by different degrees of modularity (i.e. the lower the correlations between the contributions of the different product components to the fnal product fitness, the simpler the good’s technology and the higher the degree of modularity). On the other hand, the impact of product modularity on industrial dynamics is analysed using a set of quite homogeneous firms. First, the model yields highly differentiated dynamics for firms that start from similar initial conditions, pointing to the importance of their research strategies. Second, the dynamic patterns obtained show that firms may easily end up in technological lock-in in spite of initial good performance, suggesting that path-dependence could be broken. Third, modularity impinges directly upon market results: a decrease in modularity, by increasing the difficulty in searching the complex technology, selects a limited number of firms, thus determining concentration in market shares. Finally, the industrial dynamics are influenced by the evolution of the quality of the fnal good.

Measuring China’s innovative capacity. A stochastic frontier exercise

We adopt a stochastic frontier analysis of innovative activity to disentangle countries’ patenting capacity from patenting efficiency. We analyse the determinants of innovative capacity of a set of 26 OECD countries plus China, over the period 1992–2007, to show if and how Chinas technological activity is growing faster than commonly held as compared to the most innovative countries of the world. Our results highlight that both internal and external elements jointly contribute to enhance countries’ innovative capacity and efficiency. In particular, while government-funded R&D is more important for innovative capacity, privately funded R&D as well as foreign direct investments (FDIs) affects technical efficiency (TE). Moreover, as for the whole set of countries, FDIs seem to exert a resource-seeking role (as they negatively affect TE), this does not happen for China, where FDIs exert a positive effect. Results are robust to the use of alternative measures of innovative inputs (such as higher education expenditure in R&D and R&D personnel, but also FDI flows rather than stocks). Finally, human capital measures are generally not very effective in enhancing patenting efficiency, apart from tertiary education.

Dynamic Capabilities: Evolving Organisations in Evolving (Technological) Systems

This paper aims at exploring the nature and the determinants of the dynamic capabilities of the firm: a notion which, while increasingly more fashionable, remains still conceptually diffuse. Through a critical review of the massive and heterogeneous literature which refers, either explicitly or implicitly, to dynamic capabilities in explaining the dynamic performances of the firm, the paper detects a certain gap between an organizational and an environmental kind of approach to the issue. The nature of the firm and that of the firm environment are in fact focused on alternatively, thus implying a dynamic capabilities analysis which turns out to be biased. The pros and the cons of a combined approach, which tries to integrate the two, are shown and contrasted to a more satisfactory approach, which deal with the firm as a system operating within an institutional setting of techno-economic relationships, i.e. a technological system.

Let it snow! Let it snow! Let it snow! Estimating cocaine production using a novel dataset based on reported seizures of laboratories in Colombia

BACKGROUND Data on the cocaine market appear inconsistent, as they tend to show declining prices vis-a-vis steady or increasing demand and a declining supply. This paper proposes an explanation for this trend by providing evidence of an under-estimation of the supply of cocaine. METHODS We propose a conservative estimate of cocaine production in Colombia for 2008, using data based on all reported seizures from 328 laboratories made by the counteracting organisations operating within the Colombian territory. RESULTS Our conservative estimate of 935 tons from the seized laboratories is at least twice the estimate declared in official statistics of 295-450 tons. We are careful to keep all variables to their minimum boundary values. Our methodology could prove to be a useful tool, especially if used in parallel with the standard tools. Moreover, its characteristics (affordability, ease of use and potential for worldwide adoption) make it a powerful instrument to counteract cocaine production.

Organisation of Industry and Innovation Dynamics

The paper aims at investigating how the organization of a certain industry evolves once the competition among its firms, producing a ‘complex’ (i.e. non-modular) product, is modeled as the intertwining of innovative search and organizational change. In order to take the full roster of participants into account, and to retain the inner complexity of their decisions, a Pseudo–NK model is built–up in which a population of firms is called to match a technological frontier. By evolving along different stagesof the sector’s life-cycle, such a kind of technological calls for a trade–off between two strategies of cost–reduction through either outsourcing ortechnological search. Overall, the simulation results confirm previous literature as, for example, in the introductory stage of the industry life–cycle,marked by frequent and intense jumps of the technological frontier, firms need to vertically integrate in order to have higher chances to win the competition for a new standard. On the contrary, in the decline stage,in which the technological frontier almost stabilizes, deverticalization allows firms to better compete on costs. These results change if suppliers are allowed to innovate, as they are more likely to lock the market in sub–optimal configurations.

Infrastructure endowment, social capital and outsourcing: evidence from Emilia Romagna, Italy

Using an original dataset of small, machine-tool firms located in Emilia Romagna, Italy, we estimate the effect of social capital on the propensity to fully or partially outsource production activities. In particular, we investigate whether social capital favours outsourcing in contexts characterized by a relatively high infrastructure endowment. We show that the likelihood to fully outsource production activities increases with the local level of social capital. We also find that this effect is higher in regions where the density of transport infrastructures is higher. On the other hand, we do not find any significant effect of social capital on the propensity to partially outsource production activities. We argue that social capital is more effective in reducing the scope for opportunistic behaviour when monitoring costs are higher and where mobility is easier.