Firm-level heterogeneity is substantial even in narrowly defined industries. This chapter focuses on formulating evolution dynamics which can account for the observed heterogeneity and its maintenance. Based on examination of data on Swedish firms' supply pattern across different markets over time, we present a parsimonious model that has the ambition to capture the picture of heterogeneous firms, while accommodating the simultaneous exit and entry of destination varieties in firms' supply pattern. The model assumes both scale economies of firms and path-dependence, where the latter is manifested in such a way that the arrival rate of innovation ideas to an individual firm is a function of each firm's stock of varieties at every given point in time. The path-dependence phenomenon is an "explosive" non-linearity, whereas conservation mechanisms include development of demand and exit of established varieties. The described path dependence explains the skewed distribution of varieties across firms. Exit of obsolete varieties and growth of demand keep the "equilibrium" away from competitive exclusion where only few large firms remain. We make use of simulations to depict and assess the innovation dynamics of the proposed model.

A well-formed spatial model should most likely not produce spatial autocorrelation at all. From this perspective spatial autocorrelation is not (pure) statistical nuisance but a sign of that a model lacks a representation of an important economic phenomenon. In a Knowledge Production Function (KPF) context, this paper shows that a representation of space reflecting the potential of physical interaction between localities by means of accessibility variables on the "right-hand-side"aEuro"a simple alternative to spatial lag and spatial error which can be estimated by OLS-captures substantive spatial dependence. Results are verified with Monte Carlo simulations based on Anselin's (Int Reg Sci Rev 26(2):153-166, 2003) taxonomy of modelled and unmodelled effects. The analysis demonstrates that an accessibility representation of explanatory variables depict the network nature of spatial interaction, such that spatial dependence is actually modelled.

This paper examines start-ups in knowledge-intensive business services (KIBS) across Swedish regions by individuals with a formally recognized capacity to produce and develop advanced business services. The empirical analysis focuses on whether their involvement in entrepreneurship may be explained by location attributes. As much as 75 percent of the KIBS founders have prior work experience from business services, suggesting that KIBS start-ups are more frequent in regions where the KIBS sector is already large. Controlling for the stock of potential entrepreneurs and the stock of KIBS firms, it is shown that variables reflecting both supply-side conditions and market size influence KIBS start-up activity. Results are consistent with the hypothesis that KIBS entrepreneurship in a region is stimulated by the simultaneous presence of (i) knowledge resources conducive for the generation and diffusion of knowledge and ideas upon which new firms can be established and (ii) a large market.

Multinational companies play a large and growing role in the world economy. Theycontribute about 10 percent to world GDP and about two thirds to global exports. Inthe vast majority of the countries in the world, the presence of multinationals has alsobeen growing over time.

This report presents a case study of the role of a large multinational company, activein one of the most R&D and knowledge intensive industries of the world, withestablishments in a small open economy. The case study examines the role ofAstraZeneca in the Swedish economy, i.e. an economy dominated by multinationalcompanies. They account for almost all of Sweden’s aggregate investments in privateR&D, over 90 percent of the country’s exports and imports as well as a significantshare of the total number of employees in the private sector. The analyses in the reportmake it possible to assess the importance of the local presence of such a largeknowledge-intensive multinational for Sweden.

Firm-level heterogeneity is substantial even in narrowly defined industries. This paper focuses on formulating evolution dynamics which can account for the observed heterogeneity and its maintenance. Based on examination of data on Swedish firm’ supply pattern to different markets over time, we present a parsimonious model that has the ambition to capture the picture of heterogeneous firms, while accommodating the simultaneous exit and entry of destination varieties in firms’ supply pattern. The model assumes both scale economies of firms and pathdependence, where the latter is manifested in such a way that the arrival rate of innovation ideas to an individual firm is a function of each firm’s stock of varieties at every given point in time. The path-dependence phenomenon is an “explosive” non-linearity, whereas conservation mechanisms include development of demand and exit of established varieties. The described path dependence explains the skewed distribution of varieties across firms, but the question of what keeps the “equilibrium” away from competitive exclusion where only few large firms remain. We make use of simulations to depict and assess the innovation dynamics of the proposed model.

This article assesses the spatial-temporal persistence of a dynamic phenomenon: start-ups. Two mechanisms that explain persistence in start-up rates are distinguished: (i) determinants of start-ups that are spatially 'sticky' and durable and (ii) path dependence in start-up activities in the form of a response mechanism between previous and current start-up activities. A dynamic panel analysis of the relationship between lagged start-up rates and current start-up rates confirms that both effects are important in explaining persistence. The second mechanism implies a regional dimension in persistence, such that regions with high levels of start-up rates will exhibit stronger persistence. We find empirical evidence of this using quantile regression techniques.

Do agglomerations stimulate productivity? An extensive literature on agglomeration economies, or urban increasing returns, has analyzed this question with aggregated spatial data. This paper estimates the relationship between agglomeration and productivity at the firm level using static and dynamic models. It makes use of a rich dataset comprising register information on all manufacturing firms in Sweden with 10 or more employees over the period 1997-2004. Three things emerge. First, firms located in larger regions are more productive when controlling for size, human capital, physical capital, ownership structure, import: and export, industry classification, and time trend. Second, results from dynamic panel estimations suggests a learning effect in that agglomeration enhances firms' productivity. Third, the role of agglomeration phenomena does not seem to have a clear coupling to firm size.

This paper presents a comprehensive description and analysis of the international trading activities of firms based on novel and detailed Swedish data. We provide robust evidence of selection operating from market to market which is consistent with that low productive firms are confined to markets with low productivity thresholds. We further show that selection also applies to the number of products traded. There is a substantial heterogeneity among exporters and importers in terms of the number of markets they trade with and in terms of the number of products they trade. Productivity premiums increase in the number of markets and the number of products traded, respectively. Firms that both export and import (i.e. two-way traders) are more productive than firms that only export or only import. This finding can be explained by that two-way traders are deeply engaged in the international division of labor and employ inputs based on frontier knowledge and technology in their production process, which increase their productivity and success on export markets.

We use a decade of longitudinal data on start-ups and employment in Swedish regions to analyze the effect of start-ups on subsequent employment growth. We extend previous analyses by decomposing the effect of start-ups on total employment change into within- and cross-sector effects. We find that start-ups in a sector influence employment change in the same as well as in other sectors. The results illustrate that the known S-shaped pattern can be attributed to the different effects of start-ups in a sector on employment change in the same sector and in others. Start-ups in a sector have a positive impact on employment change in the same sector. The effects on employment change in other sectors may be negative or positive, and depend on the sector under consideration. In particular, start-ups in high-end services deviate from manufacturing and low-end services in that they have significant negative impacts on employment change in other sectors. The findings are consistent with the idea that start-ups are a vehicle for change in the composition of regional industry.

This paper focuses on a much cited but seldom measured micro-foundation for agglomerations: inter-firm labor mobility. Labor mobility has been advanced as a vehicle for knowledge flows and labor market efficiency, and is often maintained to be an important source of agglomeration economies. Based on matched employer-employee data, we estimate the influence that spatial employment density has on the probability of inter-firm job-switching, while controlling for ample attributes of each worker and employer. The rate of inter-firm labor mobility varies substantially across regions and we document a systematic and robust positive influence of density on the probability of job switching. The likelihood that such switching is intra-regional is significantly higher if the employees operate in denser regions, verifying that labor mobility (and thus the effects mediated by it) is indeed localized. Higher rates of inter-firm labor mobility appear as a likely mechanism behind the empirically verified productivity advantage of dense regions.

Since the contribution of Cohen et al. (2002), it is well established that linkages between firms andpublic research organisations (PROs) serve purposes of both suggesting new R&D projects andcompleting existing projects. However, the extant literature has little to say about whether these twotypes of outcomes are linked or independent effects. This paper examines how a firm’s ability toabsorb useful impulses to new R&D projects from interaction with public research organisationsdepends on how and how well the firm is able to utilise such linkages in project completion. Ananalysis of Swedish firms suggests that interaction provides impulses to further R&D primarily whenit is successfully linked to achieving objectives in ongoing R&D projects of the firm. However,linkages which are focused on contributions to short-term projects are less likely to generate usefulimpulses. Moreover, not only are linkages which support both long-term and short-term objectivesbetter than linkages which solely serve short-term objectives; firm-PRO linkages in which short-termobjectives play a less accented role are most likely to facilitate valuable impulses to further R&D andinnovation.

This paper studies the role of geographic proximity for interaction on R&D, by exploring the special case of university-industry contacts. While numerous studies find that geographic proximity facilitates spillover effects between university and industry by utilising evidence from e.g. patenting and publishing activities, the geographical dimension is largely understudied in studies that report evidence from direct interaction. To explore when geographical proximity matters for university-industry interaction, a series of interviews with R&D managers in Swedish engineering firms is conducted. These interviews suggest that linkages in geographical proximity are more likely to generate impulses to innovation and create significant learning effects at the firm. Similarly, geographic proximate interaction is more likely to successfully contribute to R&D projects with short time to market. For long-term R&D projects, geographic proximity is generally seen as a less critical factor. A survey to 425 R&D managers in Swedish engineering firms provides evidence that supports these hypotheses.

This paper studies the role of geographic proximity for interaction on R&D by exploring the special case of formalised university-industry interaction in the engineering sector While numerous studies find that geographic proximity facilitates spillover effects between university and industry by utilising evidence from e g patenting and publishing activities the geographical dimension is largely understudied in studies that report evidence from direct interaction A series of interviews with R&D managers suggests that linkages in geographical proximity are more likely than distant linkages to generate impulses to innovation and create significant learning effects at the firm Similarly geographic proximate interaction is more likely to successfully contribute to R&D projects with short time to market For long-term R&D projects geographic proximity is generally seen as a less critical factor A survey to 425 R&D managers in Swedish engineering firms provides evidence that supports these hypotheses.

The issue—how a firm’s R&D (Research and Development) interaction with universities affects its innovation performance—remains under-researched. This study explores the relationship between firms’ collaboration with universities and their capabilities for innovation, as perceived by R&D managers. Drawing on a series of interviews with R&D managers of 45 randomly selected firms collaborating with two research universities in Sweden, we explicitly recognize mechanisms through which university relationships contribute to successful R&D management.

This paper examines how the institutional set-up of public research organisations (PROs) affects how firms are able to utilise direct interaction with publicly employed researchers. We argue that the role that PRO interaction has to play in the firm’s innovation processes depend on the organisational and cognitive distances between the firm and the PRO. In particular, this paper empirically explores how Swedish engineering firms assess the value of R&D partnerships with universities and research institutes. Our theoretical discussion of organizational distance suggests that managers should perceive institute contacts to be more strongly associated with short-term R&D projects than university contacts. This hypothesis cannot be verified. Following from our discussion of cognitive distance, we find that firms with advanced R&D capabilities obtain differential benefits. Their interaction with universities provides impulses for innovation and offers opportunities to learn to a greater extent than contacts with public research institutes. However, firms with less advanced R&D capabilities perceive no significant differences between university and institute interaction. Thus, both organizational and cognitive distance affect firms’ interactions with PROs, and our results have implications for the current push in Europe to reform universities and institutes.

This paper examines how the institutional set-up of public research organisations (PROs) affects how firms are able to utilise direct interaction with publicly employed researchers. We argue that the role that PRO interaction has to play in the firm’s innovation processes depend on the organisational and cognitive distances between the firm and the PRO. In particular, this paper empirically explores how Swedish engineering firms assess the value of R&D partnerships with universities and research institutes. Our theoretical discussion of organizational distance suggests that managers should perceive institute contacts to be more strongly associated with short-term R&D projects than university contacts. This hypothesis cannot be verified. Following from our discussion of cognitive distance, we find that firms with advanced R&D capabilities obtain differential benefits. Their interaction with universities provides impulses for innovation and offers opportunities to learn to a greater extent than contacts with public research institutes. However, firms with less advanced R&D capabilities perceive no significant differences between university and institute interaction. Thus, both organizational and cognitive distance affect firms’ interactions with PROs, and our results have implications for the current push in Europe to reform universities and institutes.

In spite of a long-standing interest in the distribution of knowledge spillovers from university research, there is only limited theoretical understanding of if and when opportunities to interact with a research university constitute a significant force of attraction for globally mobile investment in RD. Based on an empirical investigation of the benefits of interaction with universities, this paper proposes an analytical framework and four ideal types of strategy for localised collaboration between RD subsidiaries and universities. This taxonomy, which largely transcends industry sectors, and the illustrative cases presented in this paper provide insights into the potential scope for localised university-industry interaction from the perspective of multinational enterprises. By connecting the empirical results to the question whether these benefits are significant enough to enhance a region's attractiveness as a location for RD, we are able to develop a better understanding of the alternative strategies for policymakers and university leaders interested in stimulating such linkages.

This paper explores the relationship between knowledge creation, entrepreneurship, and economic growth in the United States over the last 150 years. According to the “new growth theory,” investments in knowledge and human capital generate economic growth via spillovers of knowledge. But the theory does not explain how or why spillovers occur, or why large investments in R&D do not always result in economic growth. What is missing is “the knowledge filter” - the distinction between general knowledge and economically useful knowledge. Also missing is a mechanism (such as entrepreneurship) converting economically relevant knowledge into economic activity. This paper shows that the unprecedented increase in R&D spending in the United States during and after World War II was converted into economic activity via incumbent firms in the early postwar period and increasingly via new ventures in the last few decades.

Many efficiency studies have been conducted to look at the relative performance of universities. Judgments were made on the overall performance of universities compared to the best performing ones in the sample. Meanwhile the possibility of efficiency variation within the same university was not taken into account. The focus of this paper is on the measurement of technical efficiency within the units of the same university. It is interesting to see if the average efficiency score of university can reflect the performance of various units operating within the same technical university. The analysis is conducted for the Royal Institute of Technology of Sweden (KTH), using the data from the Research Assessment Exercise conducted by KTH in 2008. *It provides a unique opportunity of quantifying different teaching and research outputs while controlling for quality. Technical efficiency scores are estimated using non-parametric production frontier methodologies. Different model specifications are tested.

In general there is agreement about the positive impacts of R&D on performance of firms measured as productivity, profitability and growth. However, the opposite relationship is less obvious and very little attention has been paid on examining the feedback from performance on investment. This study is an attempt to contribute to the empirical analysis of the causal relationship between investment and performance. We examine the interaction between a number of financial indicators represented by investments in R&D and tangible capital and a number of performance variables including sales, value added, profit, cash flow, capital structure and employment on R&D and physical capital investments. Empirical results are based on a large panel data set of Swedish manufacturing firms over the period 1992-2000. The results show evidence of weak feedback effects from performance on investment.

A product group consists of product varieties (phenotypes) that compete for the same customer budget. The paper introduces an approach to identifying separate markets by means of product group (genotype) delineation. The paper contrasts two basic ideas for analysing competition within a product group. The first idea relates to Lancaster's suggestion that every product variety can be identified by its attributes or characteristics (L-model). The second idea relates to the monopolistic-competition model as popularised by Krugman (DS-model). With this latter approach, a product group potentially contains a large set of varieties, where customers as a group have a taste for variety. For each of the two paradigms, the paper presents and compares the process by which novel product varieties are introduced. In the framework of Lancaster, evolution tends to reduce the number of varieties due to development of superior alternatives. The Krugman framework rather predicts an evolution where the number of varieties may increase without limits. The contribution of the paper is to contrast the two perspectives, by comparing the change processes and by assessing the adhering equilibrium solutions. A major question is how these two conflicting perspectives should be interpreted. The paper ends by suggesting a framework that can resolve the conflict between the two perspectives. The L-model provides a theoretical framework for how a separated market can be delineated, whereas the DS-model is more ad hoc in this sense. The prime demarcation aspect is however that in the DS-model diversity of products is generated by customers' taste for variety. This must not be interpreted as a case, in which each customer consumes of all varieties at each point in time. A more reasonable interpretation is that a customer during a time period exercises the taste for variety. In contrast, a customer in the L-model purchases two or several varieties only when there is no product available with the desired combination of attributes. Hence, in the L-model the tendency is towards a smaller set of superior varieties. However, heterogeneity among customers will counteract this tendency and generate product diversity in the L-model. The possibility of a superior product variety for each customer group is inherent in the L-model. One may also observe this phenomenon can associated with so-called technology lock-in effects (Arthur, 1989). In order to understand this, we may consider a product group for which an essential feature is mutual compatibility with other product variants. As some variant gets a large market share, the compatibility aspect will be an important attribute with a decisive role in customers' preference functions. This type of feature is completely absent in the DS-model. In the L-model scale economies explain the dynamics when a superior product increases its market share by replacing established products. Scale economies are the driving force behind competitive exclusion. In the DS-model scale economies provide incentives for firms to develop economies of scope and to continue to expand the number of varieties.

A product group consists of product varieties (phenotypes) that compete for the same customer budget. The paper introduces an approach to identifying separate markets by means of product group (genotype) delineation. The paper contrasts two basic ideas for analysing competition within a product group. The first idea relates to Lancaster’s suggestion that every product variety can be identified by its attributes or characteristics (L-model). The second idea relates to the monopolistic-competition model as popularised by Krugman (DS-model). With this latter approach, a product group potentially contains a large set of varieties, where customers as a group have a taste for variety. For each of the two paradigms, the paper presents and compares the process by which novel product varieties are introduced. In the framework of Lancaster, evolution tends to reduce the number of varieties due to development of superior alternatives. The Krugman framework rather predicts an evolution where the number of varieties may increase without limits. The contribution of the paper is to contrast the two perspectives, by comparing the change processes and by assessing the adhering equilibrium solutions. A major question is how these two conflicting perspectives should be interpreted. The paper ends by suggesting a framework that can resolve the conflict between the two perspectives. The L-model provides a theoretical framework for how a separated market can be delineated, whereas the DS-model is more ad hoc in this sense. The prime demarcation aspect is however that in the DS-model diversity of products is generated by customers’ taste for variety. This must not be interpreted as a case, in which each customer consumes of all varieties at each point in time. A more reasonable interpretation is that a customer during a time period exercises the taste for variety. In contrast, a customer in the L-model purchases two or several varieties only when there is no product available with the desired combination of attributes. Hence, in the L-model the tendency is towards a smaller set of superior varieties. However, heterogeneity among customers will counteract this tendency and generate product diversity in the L-model. The possibility of a superior product variety for each customer group is inherent in the L-model. One may also observe this phenomenon can associated with so-called technology lock-in effects (Arthur, 1989). In order to understand this, we may consider a product group for which an essential feature is mutual compatibility with other product variants. As some variant gets a large market share, the compatibility aspect will be an important attribute with a decisive role in customers’ preference functions. This type of feature is completely absent in the DS-model. In the L-model scale economies explain the dynamics when a superior product increases its market share by replacing established products. Scale economies are the driving force behind competitive exclusion. In the DS-model scale economies provide incentives for firms to develop economies of scope and to continue to expand the number of varieties. 

The general motivation for this paper is the current interest in globalization as a phenomenon that strongly affects the conditions of local economic development. Our purpose is to contribute to some of the current development aspects, in particular those that foster the evolution of entrepreneurs in local-global processes. We present four eras of globalization, in recent decades and which have been described as different aspects of globalization are not new at all. In conclusion, we stress that those global patterns of change that are observed, and reported in the media and by social scientists are the result of innumerable local processes driven by economic, political and social entrepreneurs in localities, regions, and nations all around the globe.

An important characteristic of the economic development in Europe and North America during the last few decades is a fast expansion of the business-service sector. The present paper aims at modeling the location dynamics of three categories of firms: (i) knowledge-intensive business-service firms, (ii) ordinary business-service firms and other firms, where the latter form the rest of the economy. In the theoretical framework, business-service firms have random-choice preferences and respond in a non-linear way to time distances in their contact efforts to customer firms. Business-service firms make their location decisions in response to local, intra-regional and extra-regional access to market demand. The econometric analysis makes use of information about time distances between zones in urban areas as well as between urban areas in the same agglomeration and between urban areas in different agglomerations. The empirical analysis shows how the number of jobs in the different sectors change in response to accessibility to purchasing power. The estimation results show that the change processes feature non-linear dependencies with varying spatial reach.

This paper applies a CDM-model framework to depict the successive links (correlations) between (i) innovation expenditure, (ii) innovation output, and (iii) firm productivity. The CDM model has become popular in many countries among scholars using data from the Community Innovation Survey (CIS). First, the study contrasts a general structural OECD version of the model against a model with country-specific design. Second, the study examines the gains from separating the labour force into ordinary and knowledge labour – as a means to avoid double counting of R&D investments. Third, the paper examines the difference between recognising a firm as a member of an unspecified company group versus a multinational group. Fourth, the paper explores how well sales per employee serves as a proxy for labour productivity proper. Fifth, the paper scrutinises the quality of CIS information by comparing key variables from the voluntary CIS survey with the same variables (for the same firms) recorded in the compulsory and audited register data in Sweden.

During a sequence of decades we can observe a co-evolution of globalization through network formation of multinational (MNE) firms and concentration in specific places due to agglomerative forces. First, innovation ideas arrive at a faster speed to firms with past experience of innovation activities and with established export market contacts. Second, innovativeness is strongly dependent on corporate and ownership structure. Third, the returns to innovation efforts are positively influenced by firms’ capability to exploit extended markets. All these phenomena can be theoretically explained by MNE’s capacity to coordinate global supply chains and orchestrate localized R&D activities and knowledge flows. The paper illuminates how attributes of MNEs and non-MNEs differ, and how these differences affect the productivity and export intensity. It also shows how agglomeration economies affect MNEs and non-MNEs.

This paper investigates how a firm’s R&D strategy influences the firm performance as measured byproductivity and profitability. A formal production model is introduced to define and interpretalternative ways of measuring the impact of R&D. Studying 1,767 randomly selected firms from theSwedish manufacturing sector, the main findings are: (i) firms which apply persistent R&D performbetter than firms with occasional as well as no R&D, (ii) occasional R&D is associated with lowerperformance than no R&D, and (iii) in quantile regressions the positive effect from R&D persistencyis lacking for low productivity firms (lowest quartile) indicating a non-linear response. Moreover, theanalysis recognises the different roles of ordinary and knowledge labour in production whenspecifying alternative performance measures and when identifying knowledge labour as a firm’s R&Dcapacity, which has a highly significant impact on firm performance. Introducing a formal productionmodel in order to define and interpret alternative ways of measuring the impact of R&D, we applysimple ordinary OLS and quantile regressions on the economic model for analyzing the importance fora particular R&D strategy on firms’ productivity and profitability. To the best of our knowledge, webelieve that the main findings of the analysis make contributions to the R&D literature.

This paper examines the influences of accessibility to R&D on the export diversity in Swedish regions. A theoretical model with fixed R&D cost predicts that spatial knowledge spillovers generate external economies of scale in R&D activities. These external effects are presumed to increase regions' innovative capacity. Moreover, the model implies that the effects of R&D on regional export performance are reflected by the size of the export base rather than by the export volumes. The empirical analysis focuses on three different indicators of export diversity: the number of exported goods, the number of exporting firms and the number of export destinations. The hypothesis that regional accessibility to R&D facilities in the private business sector, on the one hand, and university research departments on the other hand, increases the export diversity in regions is tested in a spatial cross-regressive model. Since knowledge cannot be regarded as a spatially trapped resource the empirical analysis includes two measures of R&D accessibility: intra-regional and inter-regional. The empirical results indicate that the three indicators of regional export diversity are positively affected by the intra-regional accessibility to company R&D in commodity groups that have a relatively high R&D-intensity in production. Inter-regional accessibility to company R&D has significant positive impacts on the number of export goods and the number of export destinations also in less R&D-intensive industries. In the case of university R&D, the empirical results are weaker, in particular in the case of intra-regional accessibility. Yet, the inter-regional accessibility to university R&D has a significant positive impact on the number of export goods and the number of export destinations in the majority of commodity groups.

'The world is experiencing the fourth globalization trend since the collapse of the Berlin Wall twenty years ago. This trend unlike previous ones is characterized by both broader global interconnection and deeper localization. In other words, the world is both flatter and spikier at the same time. The key to a successful development policy is to integrate these two seemingly counter intuitive trends. The solution to this is a more or less regional strategy with a very strong focus on entrepreneurship. While this approach is not new and is not the first, it is the best one that I have seen. The editors of this collection are some of the best informed, most careful and deep thinking scholars in the business and have produced a work worthy of their stature.

This paper is an introductory overview highlighting some of the current knowledge as regards three critical questions related to the emerging knowledge economy: i) Why does human capital and talent tend to agglomerate in large urban regions?, ii) How does this agglomeration affect the location of different types of economic activities?, and iii) How does this agglomeration affect regional growth? There are different underlying agglomerative forces creating spatially concentrated increasing returns to scale. Also, cities become centres of various amenities due to general increases in real incomes offering people spare time activities. One major reason for the agglomeration of production in urban regions and metro-politan areas today is the existence of various positive externalities, providing good settings for industries and firms with knowledge-intensive and knowledge-creation activities, specialised business service firms and headquarters of multinational firms. There are strong tentative empirical evidences that the agglomeration of human capital contributes to regional development and growth. However, there is uncertainty concerning the size of the human capital externalities.

Innovation processes in emerging fields of technology frequently utilize scientific knowledge and technical skills from several research areas. Likewise, technological development frequently involves a diverse set of organizations including for example private firms, universities, corporate research labs and public or semi-public research and technology organizations (RTOs). These processes spur the need for both organizational and institutional change and adjustment, e.g. in order to facilitate research and development (R&D) and formation of innovation networks. The main question analyzed in the paper is how RTOs cope with integrating new skills in their competence base in the quest for exploring new emerging science fields and technology applications. The empirical setting consists of Swedish semi-public industrial research institutes active in the fields of pulp & paper technology and electronics, optics & communication technology respectively. The results of the study bring attention to three ways of integrating diverse skills and types of actors in R&D networks. These are: organization of collaborative research in formalized industry-specific R&D programs, purposeful organizational change also including redefinition of categories of core research competence and finally by targeting ‘open’ innovation processes characterized by incorporation of both end-users and skills of neighboring technology areas.

This paper serves as another complementary link in a chain of a rather limited number of investigations in the R&D-innovation-productivity relationship within service industries. Innovation has been found to be a major contributor to productivity growth in manufacturing. In this paper, the importance of innovation is explored by comparing manufacturing and service firms in a sample of knowledge intensive industries. In particular, we intend to find evidence on the following two issues. First, is there any evidence that the reported weak rate of productivity growth in knowledge intensive services can be explained by a low propensity to be innovative? Second, is it possible that knowledge-intensive service firms are less efficient in deriving benefits from innovation than knowledge-intensive manufacturing firms? Empirical results based on innovation survey data indicate a surprising similarity in innovation performance between the two categories of firms.

We investigate the impact of international knowledge transfers on productivity at the firm level. The flow of knowledge across borders is measured through imports from different markets. Using a dynamic panel GMM estimation on Swedish manufacturing firms with 10 or more employees over the period 1997-2004, three important results emerge. First, there is an instantaneous positive effect of imports on productivity. Second, the evidence points towards a distinct role of imports from the G7 countries, which accounts for 80 per cent of global R&D. Third, sensitivity analyses show that G7 imports are also important for small and non-affiliated firms.

This paper explores how financial constraints affect intangible investment for knowledge intensive and less capital intensive firms. In this paper, a knowledge intensive firm implies a firm supplying knowledge intensive services which requires the firm to hire highly educated employees. In economics investment is defined as the act of incurring an immediate cost in the expectation of future reward, which also fits to the hiring of skilled employees. Drawing advantage of unique firm-level data comprising all Swedish knowledge intensive consulting firms I conclude that the accessibility to adequate collateral significantly affects the relationship between employment and internal funds at the firm level. The accessibility ofadequate collateral is more important in an economic downturn than in an expansion and more important for highly knowledge intensive consulting firms. In this paper I make a novel attempt to incorporate knowledge intensive services firms into the financial constraints literature.

During the mid and late 1990s young, high-tech firms in the U.S. experienced a supply shift in both internal and external equity fueling a finance driven boom in corporate R&D. I estimate dynamic R&D regression models for high-tech firms, separately for the U.K. and Continental Europe, and find significant cash flow effects for newly listed firms in both samples, but only the new, high-tech firms in the U.K. experienced a supply shift in external equity as well. The findings of this paper suggest a channel through which market based financial systems outperform the bank based economies of Continental Europe.

The motivation of this paper is the rather naive approach to debt as a financing source of R&D investment in the empirical investment literature. I focus on long-term relational debt based onits appealing contractual properties and discover a debt overhang effect for the relationship between additional long-term debt and R&D investment. I augment an error correction accelerator-profit specification to include changes in long-term debt as a transitory determinant of R&D investment as has been done with internal finance previously. Firms with previous period debt levels around 0.60 display a positive relationship between additional long-term debt and R&D investment.

This paper introduces an alternative environmentally sensitive productivity growth index, which is circular and free from the infeasibility problem. In doing so, we integrated the concept of the global production possibility set and the directional distance function. Like the conventional Malmquist-Luenberger productivity index, it can also be decomposed into sources of productivity growth. The suggested index is employed in analyzing 26 OECD countries for the period 1990-2003. We also employed the conventional Malmquist-Luenberger productivity index, the global Malmquist productivity index and the conventional Malmquist productivity index for comparative purposes in this empirical investigation.

This paper presents an alternative environmentally sensitive productivity growth index to incorporate group heterogeneities into a conventional Malmquist-Luenberger productivity growth index. The proposed approach allows the calculation of both efficiency and technical changes, for economic agents operating under different technologies. Moreover, it also enables the computation of changes in the technological gap between regional and global frontier technologies. The proposed index is employed in measuring productivity growth and its decomposed components in 46 countries between 1993 and 2003. The main finding is that Europe has taken the lead in the world frontier technology and that Asia has attempted to move towards the frontier technology. Subsequent policy implications are provided based on some empirical studies. (C) 2009 Elsevier B.V. All rights reserved.

By using a plentiful plant-level data-set, we examined productivity growth of the Korean manufacturing industry for the period 1993-2003. In doing this, we employed the Malmquist productivity growth index. We also investigated decomposed components of productivity growth. A second-stage regression analysis was employed to find determinants of productivity growth. Empirical results show that after the 1997 financial crisis productivity and efficiency decreased, whereas technology improved. The result of the second regression analysis indicates that a competitive market condition, R&D activities, export activities and innovativeness increased the rate of productivity growth. It also shows that productivity converged during the study period.

This study proposes an index for measuring environmentally sensitive productivity growth which appropriately considers the nature of technical change. The rationale of this methodology is to exclude a spurious technical regress from the macroeconomic perspective. In order to incorporate this in developing the index, a directional distance function and the concept of the successive sequential production possibility set are combined. With this combination, the conventional Malmquist-Luenberger productivity index is modified to give the sequential Malmquist-Luenberger productivity index. This index is employed in measuring environmentally sensitive productivity growth and its decomposed components of 26 OECD countries for the period 1970-2003. We distinguish two main empirical findings. First, even though the components of the conventional Malmquist-Luenberger productivity index and the proposed index are different, the trends of rates of average productivity growth are similar. Second, unlike in previous studies, the efficiency change is the main contributor to the earlier study period, whereas the effect of technical change has prevailed over time.