Robert W. Vossen

Market power, industrial concentration and innovative activity

This paper discusses the paradox between the positive effect of industrial concentration on R & D spending, and its non-positive effect on the number of innovations. Also, I analyze whether concentration has different effects on small- and large-firm R & D. The analysis shows that the positive effect of industrial concentration on R & D spending is at least as strong for small firms as it is for large firms within an industry, which indicates that the possession of market power is not in itself conducive to innovative effort. In addition, high concentration appears to be attended with a loss of efficiency in R & D spending.

NETWORK INTERACTIONS AND MUTUAL DEPENDENCE: A TEST IN THE CAR INDUSTRY

By engaging in specific investments a firm may develop a unique competence value for its partner, which makes the partners mutually dependent. This may neutralize any hold-up risk of an opportunistic partner that is tempted to exploit the dependence and appropriate a greater share of the value added in the relation. The purpose of this paper is to investigate such mechanisms of mutual dependence. The analysis builds on previous theoretical and empirical research by the authors. It is based on an integration of transaction cost economics with the resource (competence, capabilities) view and a social exchange view, from a dynamic perspective. The paper asks the following: How do competencies develop in interaction between firms? The social exchange view brings in trust as an important dimension of governance. The research question asks how risks of mutual dependence between firms may be mitigated without either hierarchical or legal control. Five hypotheses concerning such mechanisms of mutual dependence are tested on data from the car industry.

Firm Size and Participation in R&D

In this chapter we employ a model of research and development where it is modelled as a stochastic race in which the winner takes all, as the basis of an empirical study of the relationship between firm size and innovative activity. This model, first proposed by Nooteboom (1991), is an extension of earlier models by Loury (1979), Lee and Wilde (1980) and Dasgupta and Stiglitz (1980, 1981) to incorporate several possible effects of scale.

Firm Size and Efficiency in R&D Spending

The empirical tradition of Schumpeterian studies of the relation between innovation on the one hand and firm size and market structure on the other is linked with a theoretical tradition in which R&D is modeled as a stochastic race in which the winner takes all. Industry effects are taken into account on the basis of a classification introduced by Pavitt in 1984. The empirical study compares results on a survey of Dutch industry with results on a survey of American industry. For both data bases small firms are concluded to be more R&D-efficient in all Pavitt classes, except Science Based industry.

The effects of firm- and relation-specific characteristics on quality of supplier relationships

This study develops theoretical hypotheses that have been primarily inspired by relations between private firms. These hypotheses are subsequently tested with data on buyer-supplier relationships in the US automobile industry. Some of the concepts used however are fairly general and may well be applicable to relations in the public sector, such as relations between government institutions, or between politicians and civil servants.