Rui Baptista

The Diffusion of Process Innovations: A Selective Review

This paper surveys some of the most noteworthy literature on the diffusion of process technologies from the point of view of economics. It examines the main theoretical approaches to the diffusion phenomenon: epidemic and learning effects, equilibrium models associated with firm characteristics and strategic interaction. It also discusses the role of the supply side. Empirical work modelling inter-firm diffusion is reviewed, and special attention is given to the role of geography and inter-firm networking in the process of knowledge transfer and diffusion. Some suggestions for further research are presented as a conclusion.

Geographical Clusters and Innovation Diffusion

Abstract There is a considerable body of evidence to demonstrate that the diffusion of new technologies is spatially variable. If firms rely on each other to learn about new technology, the diffusion process is punctuated by cognitive externalities, allowing for an easier spread of usage and improvements. The present paper argues that externalities promoting the adoption of new technology are stronger at the regional level and depend positively on the proximity of early users. The results of the empirical work presented verify the importance of geography and inter-firm networking in the process of knowledge transfer and diffusion, suggesting new approaches to technology transfer and technology policy.

Productivity and the Density of Local Clusters

Several streams of theoretical literature, including regional and urban economics, economic geography and economic growth, explain the geographic concentration of economic activity as the result of increasing returns to scale in production. In one strand of literature, agglomeration results from demand linkages between firms, which are created by the interaction of fixed production costs and transport costs (see, for instance, Krugman 1991). In other, earlier strand of literature, agglomeration economies arise from positive spillovers between firms that share the same locality (Henderson 1974, Lucas 1988). This second stream suggests that if there are spillovers in the accumulation of human capital, a worker will be more productive the greater the agglomeration of educated workers with which he/she shares a given location.

A Systematization of the Literature on Entrepreneurship Education: Challenges and Emerging Solutions in the Entrepreneurial Classroom

This article reviews the literature on entrepreneurship education in the higher education context published over the first decade of the 2000s. The article has two purposes: to propose a framework of analysis to systematize and assess the literature; and to examine its main insights and contributions towards practice in the entrepreneurial classroom. The first decade of the 2000s is particularly relevant because it witnessed significant developments in the theoretical and empirical frameworks for the assessment of entrepreneurship education programmes and methodologies. The authors find that a very significant share of the research on entrepreneurship education over the period of analysis has sought to evaluate its results. There is not yet a consistent body of knowledge that can provide general insights and tools for practice. Practitioners need to pick and choose among pedagogical approaches and methods to select those that best suit their particular context.

The dynamics of causality between entrepreneurship and unemployment

This paper examines the dynamic interrelationship between different measures of entrepreneurship ? business-ownership rates and entry rates ? and unemployment rates for Portugal over the period 1983?2000. On the one hand, unemployment rates may stimulate start-up activity of self-employment. On the other hand, higher start-up rates, or higher self-employment, may facilitate industrial restructuring and renewal, decreasing unemployment in subsequent periods. The overlap between these two effects results in ambiguity about the interrelationship between unemployment and entrepreneurial activity. This paper uses a two-equation Vector Autoregression (VAR) model capable of reconciling these ambiguities and tests it with data from 30 Portuguese regions. The empirical results confirm that the relationship between unemployment and entrepreneurship is ambiguous, regardless of the specific measure used to account for increases in entrepreneurial activity.

Entrepreneurial Skills and Workers' Wages in Small Firms

This paper contributes to the understanding of how small firms are organized and managed. It tests an entrepreneur-worker matching model in small entrepreneurial firms. The model contemplates the existence of complementarities between workers’ and entrepreneur’s skills. Using a Portuguese longitudinal matched employer–employee dataset for the period 1995–2003, the empirical analysis provides descriptive results consistent with the matching model: skill stratification—entrepreneurs are more skilled than workers; scale effects—more skilled entrepreneurs run larger firms, though limited by the restriction on firm size; and positive sorting—more skilled entrepreneurs matched with more skilled workers. The estimation of wage regressions shows that the higher the level of education and experience of the entrepreneur, the higher the wage premium for workers. Results suggest that workers’ wages reflect the value of the match with entrepreneur’s skills. Thus, entrepreneurial skills have an impact not only on job creation, but also on the quality of jobs created.

Inward FDI and ICT: are they a joint technological driver of entrepreneurship?

This paper investigates whether inward foreign direct investment (FDI) and investment in information and communication technologies (ICTs) advance the development of entrepreneurial activity in the host economy. We propose that the combination of inward FDI with investment in ICT is a joint technological driver of entrepreneurship. Under a feedback causality context, a co-integrated vector autoregressive approach is used to examine the pull effect of ICT and the push effect of FDI. On the one hand, ICT pulls FDI; on the other hand, FDI pushes investment in ICT. Under a neo-Schumpeterian approach, the long term economic relationship among entrepreneurial activity, FDI and ICT drives creative destruction through the creation of further SMEs, thus revitalising the entrepreneurial innovative capacity of the host economies.

Long-term effects of new firm formation by type of start-up

We examine the regional effects of new business formation on subsequent employment growth, observing in particular the effects of different kinds of start-ups on employment change, and the lag structure of these effects. We differentiate new firms according to three criteria: 1) size; 2) presence of foreign capital; 3) incorporation of knowledge/technology. In all cases, results suggest that effects on new firm formation on subsequent employment change are significantly different according to the type of start-up. Start-ups that are larger, foreign-owned, and knowledge-based have considerably stronger effects on industrial re-structuring and employment change, whether due to market selection processes or supply-side spillovers. The results therefore suggest that recognising the types of entrants that generate greater impacts on employment growth is of foremost importance for the design of public policies towards entrepreneurship.

Productivity Gaps Among European Regions

How is the R&D-productivity link affected by the environment where firms locate? Are companies located with their registered offices in more R&D favorable environments better able to translate their R&D knowledge into productivity gains? Our paper tries to answer these questions analyzing - in the European context - if R&D performing companies cluster themselves in “higher-order R&D regions”, as the Economic Geography theories postulate, inducing a polarisation in terms of labour productivity in comparison with firms located in “lower-order R&D regions”. The proposed microeconometric estimates are based on a unique longitudinal database of publicly-traded companies belonging to manufacturing and service sectors. The final unbalanced sample comprises 626 European companies for a total of 3,431observations, covering the period 1990-2008. Results show that European “higher-order R&D regions” not only invest more in R&D, but also achieve more in terms of productivity gains from their own research activities. Results also show that in the case of “lower-order R&D regions”, physical capital stock is still playing a dominant role.

The Dynamics of Causality between Entrepreneurship and Employment

This paper examines the dynamic inter-relationship between different measures of entrepreneurship - business ownership rates and entry rates - and unemployment rates for Portugal over the period 1983-2000. On the one hand, unemployment rates may stimulate start-up activity of self-employment. On the other hand, higher start-up rates, or higher self-employment, may facilitate industrial re-structuring and renewal, decreasing unemployment in subsequent periods. The overlap between this two effects results in considerable ambiguity about the interrelationship between unemployment and entrepreneurial activity. This paper uses a two-equation vector auto-regression model capable of reconciling these ambiguities and tests it for data from 30 Portuguese regions. The empirical results confirm that the relationship between unemployment and entrepreneurship is ambiguous, regardless of the specific measure used to account for increases in entrepreneurial activity.