Stephen Roper

Innovation and export performance: evidence from the UK and German manufacturing plants

Using comparable plant-level surveys we demonstrate significant differences between the determinants of export performance among the UK and German manufacturing plants. Product innovation, however measured, has a strong effect on the probability and propensity to export in both countries. Being innovative is positively related to export probability in both countries. In the UK the scale of plants’ innovation activity is also related positively to export propensity. In Germany, however, where levels of innovation intensity are higher but the proportion of sales attributable to new products is lower, there is some evidence of a negative relationship between the scale of innovation activity and export performance. Significant differences are identified between innovative and non-innovative plants, especially in their absorption of spill-over effects. Innovative UK plants are more effective in their ability to exploit spill-overs from the innovation activities of companies in the same sector. In Germany, by contrast, non-innovators are more likely to absorb regional and supply-chain spill-over effects. Co-location to other innovative firms is generally found to discourage exporting.

The Determinants of Innovation: R&D, Technology Transfer and Networking Effects

The traditional analysis of innovation has focused on the Schumpeterian hypothesis of a positive link between market power and innovation. This often includes an implicitly linear view of the innovation process, with R & D as a necessary first step. This paper widens the determinants of innovation beyond R & D to include technology transfer and networking effects, thus extending the standard Schumpeterian analysis. When tested on a dataset of c. 1300 UK manufacturing plants, R & D, technology transfer and networking are found to be substitutes in the innovation process, with the two latter intensities especially important in increasing the extent of innovation. There is no evidence that (actual) monopoly power increases the extent of innovation, but there are significant plant and sectoral effects on innovation.

SME innovation, exporting and growth: A review of existing evidence

This article summarises and synthesises the evidence on SME innovation, exporting and growth, paying particular attention to internal and external (eco-system) enablers, and for the interplay between innovation and exporting in SME growth. We highlight those areas for which the evidence base is secure and where the evidence base remains limited, and develop policy suggestions and an agenda for further research.

Internal Versus External R&D: A Study of R&D Choice with Sample Selection

This paper extends previous analyses of the choice between internal and external R&D to consider the costs of internal R&D. The Heckman two-stage estimator is used to estimate the determinants of internal R&D unit cost (i.e. cost per product innovation) allowing for sample selection effects. Theory indicates that R&D unit cost will be influenced by scale issues and by the technological opportunities faced by the firm. Transaction costs encountered in research activities are allowed for and, in addition, consideration is given to issues of market structure which influence the choice of R&D mode without affecting the unit cost of internal or external R&D. The model is tested on data from a sample of over 500 UK manufacturing plants which have engaged in product innovation. The key determinants of R&D mode are the scale of plant and R&D input, and market structure conditions. In terms of the R&D cost equation, scale factors are again important and have a non-linear relationship with R&D unit cost. Specificities in physical and human capital also affect unit cost, but have no clear impact on the choice of R&D mode. There is no evidence of technological opportunity affecting either R&D cost or the internal/external decision.

Differential gains from Business Link support and advice:a treatment effects approach

The provision of advisory support to small firms is almost ubiquitous in OECD countries, although it is organised in different ways and is justified on slightly different grounds. In England publicly supported advisory services are provided through the Business Link (BL) network. Here, we consider two questions: what sort of companies receive advisory support from BL; and, what types of firms benefit most from that support? Our analysis is based on a telephone survey of 2000 firms, around half of which had received intensive assistance from BL between April and October 2003. Probit analysis suggests that the probability of receiving assistance was greater among younger businesses, those with larger numbers of directors in the firm, and those with more gender diversity among the firms leadership team. Our business-growth models suggest that BL intensive assistance was having a positive effect on employment growth in 2003. BL had a positive but insignificant impact on sales growth over the period. Employment growth effects tend to be larger where firms have a management and organisational structure, which is more conducive to absorbing and making use of external advice. The analysis suggests that BL might increase its impact through targeting these larger, more export-orientated, businesses. Employment growth effects differ little, however, depending on either the ethnic or the gender diversity of the leadership team.

Assessing the effectiveness of business support services in England: evidence from a theory based evaluation

In England, publicly supported advice to small firms is organized primarily through the Business Link (BL) network. Using the programme theory underlying this business support, we develop four propositions and test these empirically using data from a new survey of over 3000 English SMEs. We find strong support for the value to BL operators of a high profile to boost take-up. We find support for the BL’s market segmentation that targets intensive assistance to younger firms and those with limited liability. Allowing for sample selection, we find no significant effects on growth from ‘other’ assistance but find a significant employment boost from intensive assistance. This partially supports the programme theory assertion that BL improves business growth and strongly supports the proposition that there are differential outcomes from intensive and other assistance. This suggests an improvement in the BL network, compared with earlier studies, notably Roper et al. (2001), Roper and Hart (2005). En Angleterre, l’aide aux petites entreprises, soutenue par le secteur public, est principalement organisée par le réseau Business Link (BL). Nous basant sur la théorie des programmes qui servent de base à ce soutien entrepreneurial, nous définissons quatre propositions que nous testons empiriquement à l’aide d’informations obtenues dans le cadre d’un nouveau sondage réalisé auprès de plus de 3000 petites et moyennes entreprises anglaises. Nous bénéficions d’un grand soutien eu égard la valeur accordée aux agents de BL dont le profil privilégié accroît le pourcentage d’adhésion. Nous bénéficions d’un grand soutien pour la segmentation du marché de BL qui concentre ses efforts à aider les entreprises naissantes et celles à responsabilité limitée. Si l’on tient compte de la sélection d’échantillons, on observe que les “autres” types d’aide n’ont pas d’influence majeure sur la croissance mais, par contre, on note une augmentation considérable de l’emploi suite à une aide intensive. Ces résultats soutiennent en partie la thèse de la théorie des programmes, à savoir que BL accroît l’essor de l’entreprise et soutient vigoureusement la proposition que l’aide intensive et des autres types d’aide sont sources de résultats différentiels. Ces conclusions suggèrent une amélioration au sein du réseau BL, par rapport aux études antérieures, particulièrement celles de Roper et al. (2001), Roper and Hart (2005). En Inglaterra, el asesoramiento a las pequeñas empresas, apoyado por el sector público, se organiza principalmente a través de Business Link (BL),una red de vinculaciones empresariales. Empleando la teoría de programas que sirve de base a este apoyo empresarial, desarrollamos cuatro propuestas y las comprobamos empíricamente con datos obtenidos de una nueva encuesta de más de 3000 PYME inglesas. Encontramos mucho apoyo al valor para los operadores de BL de ocupar un lugar destacado para incentivar la tasa de aceptación. Encontramos apoyo a la división del mercado de BL que concentra la ayuda intensiva en las empresas incipientes y en las de responsabilidad limitada. Teniendo en cuenta la selección de muestras, no encontramos que el crecimiento era afectado significativamente por otros tipos de asistencia, pero se evidencia un aumento considerable en el nivel de empleo debido a la ayuda intensiva. Estos resultados respaldan en parte la aseveración que BL aumenta el crecimiento comercial y apoya totalmente la propuesta que la asistencia intensiva y de otros tipos produce consecuencias diferenciales. Estas conclusiones sugieren una mejora en la red BL en comparación con los estudios anteriores, notablemente Roper et al (2001) Roper and Hart (2005). In England wird die öffentlich unterstützte Unternehmensberatung für kleine Unternehmen hauptsächlich durch das Business Link (BL) Netzwerk organisiert. Mit der Programmtheorie, die dieser Unternehmensbetreuung zugrunde liegt, entwickeln wir vier Vorschläge und prüfen diese empirisch mit Daten aus einer neuen Umfrage unter mehr als 3000 englischen KMUs. Wir finden bedeutende Hinweise, dass ein BL Betreiber einen hohen Bekanntheitsgrad benötigt, damit seine Dienste angenommen werden. Wir finden eine Fundierung für die Marktsegmentierung der BL Netzwerke, die das Ziel hat, intensive Unterstützung speziell für junge Unternehmen und solche mit beschränkter Haftung zu bieten. Unter Berücksichtigung der Stichprobenauswahl finden wir keine bedeutenden Auswirkungen auf das Wachstum durch „andere“ Unterstützung, finden jedoch eine erhebliche Beschäftigungssteigerung durch intensive Unterstützung. Dies untermauert teilweise die Behauptung der Programmtheorie, dass das BL Netzwerk Unternehmenswachstum fördert und bekräftigt die These, dass intensive und andere Unterstützung unterschiedliche Ergebnisse liefern. Dies deutet auf eine Verbesserung des BL Netzwerks im Vergleich zu früheren Studien, insbesondere Roper et al. (2001) sowie Roper and Hart (2005) hin.

Organizing the Innovation Process: Complementarities in Innovation Networking

This paper contributes to the developing literature on complementarities in organizational design. We test for the existence of complementarities in the use of external networking between stages of the innovation process in a sample of UK and German manufacturing plants. Our evidence suggests some differences between the UK and Germany in terms of the optimal combination of innovation activities in which to implement external networking. Broadly, there is more evidence of complementarities in the case of Germany, with the exception of the product engineering stage. By contrast, the UK exhibits generally strong evidence of substitutability in external networking in different stages, except between the identification of new products and product design and development stages. These findings suggest that previous studies indicating strong complementarity between internal and external knowledge sources have provided only part of the picture of the strategic dilemmas facing firms.

The Determinants of Export Performance: Evidence for Manufacturing Plants in Ireland and Northern Ireland

The dramatic GDP and export growth of Ireland over the last decade forms a marked contrast with that of its nearest neighbour Northern Ireland. In Ireland, export volume growth averaged 15.5% p.a. from 1991 to 1999 compared with 6.3% from Northern Ireland. Using data on individual manufacturing plants this paper considers the determinants of export performance in the two areas. Larger, externally owned plants with higher skill levels are found to have the highest export propensities in both areas. Other influences (plant age, R&D, etc.) prove more strongly conditional on location, plant size, and ownership. Structural factors (e.g. ownership, industry) explain almost all of the difference in export propensity between larger plants in Northern Ireland and Ireland but only around one-third of that between smaller plants. Significant differences are also evident between plants in terms of their sources of new technology. For indigenously owned plants, inhouse R&D is important. For externally owned plants, R&D conducted elsewhere in the group - typically outside Ireland and Northern Ireland - proves more significant. This external dependency and lower than expected export propensity on the part of small plants in Northern Ireland represent significant policy challenges for the future.© 2006 Scottish Economic Society. Published by Blackwell Publishing Ltd.

Output Additionality of Public Support for Innovation: Evidence for Irish Manufacturing Plants

Public support for private R&D and innovation is part of most national and regional innovation support regimes. In this article, we estimate the effect of public innovation support on innovation outputs in Ireland and Northern Ireland. Three dimensions of output additionality are considered: extensive additionality, in which public support encourages a larger proportion of the population of firms to innovate; improved product additionality, in which there is an increase in the average importance of incremental innovation; new product additionality, in which there is an increase in the average importance of more radical innovation. Using an instrumental variable approach, our results are generally positive, with public support for innovation having positive, and generally significant, extensive, improved and new product additionality effects. These results hold both for all plants and indigenously owned plants, a specific target of policy in both jurisdictions. The suggestion is that grant aid to firms can be effective in both encouraging firms to initiate new innovation and improve the quality and sophistication of their innovation activity. Our results also emphasize the importance for innovation of in-house R&D, supply-chain linkages, skill levels and capital investment, all of which may be the focus of complementary policy initiatives.

Innovation and the Use of Technology in Manufacturing Plants and SMEs: An Interregional Comparison

In this paper we are concerned with the nature and extent of product and process innovation and adoption of information and communications technologies (ICTs) in manufacturing plants and SMEs. The paper is based on extensive postal surveys conducted in southeast (SE) England, Northern Ireland (NI), and the Republic of Ireland (RoI) with a harmonised survey instrument. We confirm the findings of a number of previous studies by demonstrating a positive association between product and process innovation and business performance. Data collected from all three surveys show that sales growth, employment growth, and profit margins were higher for innovators than growth, for noninnovators. It also appears that although foreign-owned plants show a higher propensity for innovation than indigenously owned plants, the latter grew faster than their foreign owned counterparts in all three regions. This suggests that a targeting strategy focused on innovative, indigenously owned SMEs may be particularly rewarding. With regard to the nature and extent of the use of ICT and electronic business (e-business), the survey found a higher level of adoption of nearly all ICT facilities in SE England compared with the levels in NI and the RoI. Differences in ICT capability between the regions are greatest in the case of smaller plants, with the adoption of various ICT facilities being particularly favoured amongst the smallest plants in SE England, most of which are indigenously owned. However, there is evidence to suggest that the technology may be underutilised in each region, possibly reflecting a lack of in-house knowledge and resources in some applications and external barriers in others. SE England was found to have the highest proportion of plants engaged in some R&D compared with the two Irish regions, particularly NI. Unsurprisingly, there is a tendency for the propensity of a firm to be engaged in R&D to increase with firm size. The surveys also underlined sectoral differences in explaining the relative importance of R&D. ‘Technology transfer’ was significantly more common in the two Irish regions, reflecting the higher proportion of externally controlled plants. With respect to the role of external linkages in innovation, links with customers and suppliers were the ones most commonly identified in all three regions. In SE England there is a particularly low propensity to engage in collaboration with external agencies and research institutions, indicating scope here for further policy intervention. We conclude with a number of suggestions for the agenda of the new regional centre of manufacturing excellence in SE England.