Publications
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Covid-19 and the resilience of European firms
Using EIBIS data, this paper shows how firms with higher productivity, before the pandemic, were less likely to cut employment… Show more during the crisis, while the adoption of digital technologies was led by firms that were already relatively advanced digital users. Past research suggests that economic crisis lead to a reallocation of resources from less productive to more productive firms, with many firms taking action to boost their own productivity. This paper uses data from the EIB Investment Survey and the ORBIS database to analyse how the COVID-19 crisis affected the level of employment and digitalisation efforts of European firms. Moreover, it examines how these changes relate to the pre-crisis performance of firms, in terms of productivity, digitalisation and growth. It finds that firms were less likely to reduce their number of employees, both in the short and in the long term, if they exhibited higher productivity or higher growth, or were in highly digitalised sectors. It also finds that firms were more likely to increase their use of digital technologies during the crisis if they were already relatively advanced users of digital technologies. Show less
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Which European firms were hardest hit by COVID-19?
The COVID-19 shock hit firms hard, on average. This paper uses graphical techniques and quantile regression to analyse the effect… Show more of the shock across the distribution of firms. The COVID-19 shock had a strong negative effect on aggregate economic performance, with the average firm taking a hit on sales revenues and financial performance. However, the effects varied from firm to firm. Were already-struggling firms hit hardest, threatening their very survival? Or did the COVID-19 shock disproportionately deter tomorrow’s superstars at the upper end of the distribution, thus sacrificing future growth potential? This paper investigates where the COVID-19 shock hit the firm growth distribution, using graphical techniques and quantile regressions to analyse the full distribution of firm growth rates. We investigate how the COVID-19 shock relates to growth outcomes for four dependent variables: growth of sales, value added, employment, and labour productivity. Our results confirm that COVID-19 policy support reached its intended recipients. Show less
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PDF Europe’s Technology Sovereignty and the Role of Knowledge Diffusion in Global Value Chains
The rise of China as the ‘workshop of the world’, combined with experiences with supply shortages during the COVID-19 pandemic,… Show more have led to a re-assessment in recent years of the dependencies of countries on foreign sources of technology. This study seeks to contribute to this discussion by analysing technology dependency in a global value-chain framework. We employ input-output and R&D investment data to assess how dependency on imported R&D inputs has developed over the last decade. Our results indicate that there has been no general trend towards greater technological dependency on foreign R&D. In the last decade, the share of imported R&D in total R&D increased in around half of the countries in the analysis and remained unchanged in the United States and in the EU-27. Both the EU-27 and United States show comparable levels of dependency on foreign sources of technology. At industry level, low-tech sectors revealed the highest rates of dependency on foreign sources of technology. The data also confirm that dependency on China for imported R&D has at least doubled in most countries over the last decade. China, in contrast, was able to reduce its own dependence on foreign sources of technology in the past decade dependency due to fast-growing domestic R&D investments. In addition, regional integration in technology flows between Asian countries is much greater today than it was 10 years ago. Show less
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Industrial Innovation for Open Strategic Autonomy - leaving no one and no place behind
This working paper sets the scene and provides background information on 'Industrial Innovation for Open Strategic Autonomy”, the main focus… Show more of the 9th edition of the European Conference on Corporate R&D and Innovation (CONCORDi 2023), as well as introduces scientific contributions that will be presented at the conference. It thus aims to stimulate fruitful discussion between academia, experts and policy-makers at the conference, identifying potential policy initiatives and areas where additional research and evidence are needed. Show less
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Regional incidence and persistence of high-growth firms: Testing ideas from the Entrepreneurial Ecosystems literature
Policy-makers and scholars often assume that a higher incidence of high-growth firms (HGFs) is synonymous with vibrant regional economic dynamics… Show more and that HGF shares are persistent over time as Entrepreneurial Ecosystems (EEs) have slowly-changing features. In this paper, we test these hypotheses deeply rooted in the EE literature. We draw upon Eurostat data for up to 20 countries over the period 2008-2020 and study HGF shares in NUTS-3 regions in Europe. Analysis of regional rankings yields the puzzling finding that the leading EEs in Europe, apparently, are in places such as southern Spain and southern Italy. These places would not usually be considered Europe’s foremost entrepreneurial hotspots. Additional results do not provide strong support for the hypothesis that more developed regions feature higher HGF shares. We do find evidence consistent with HGF shares displaying persistency over time. However, we show that more developed regions do not have higher persistence in their HGF shares and that the strength in persistence does not increase across the HGFs distribution, which does not support path dependency as the main mechanism behind the observed persistence. Overall, we call for a more nuanced interpretation of both regional HGF shares and the EEs literature. Show less
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PDF Walking the Green Line: Government Sponsored R&D and Clean Technologies
The study analyses whether government sponsored R&D induces the development of clean technologies with a high impact on subsequent technological… Show more development. The analysis uses information on USPTO patents granted between 2005 and 2015 and combines different methods to control for possible sorting of projects into public funding and for non-random (public) treatment. We also assess the distributional effect of government sponsored R&D. Results show that patents from public funded projects have a significantly higher impact and that this is particularly true for highly cited patents, thus supporting a role for technology-push policies in determining a clean technological transition. Show less
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High-Growth Enterprises in times of COVID-19: an overview
This paper contributes to a fast-growing literature on the impact of COVID-19 on the business economy, by focusing on how… Show more a particular group of firms - High-Growth Enterprises (HGEs) have been affected by COVID-19 across several dimensions, such as investment expectations, investment priorities, employment decisions, and their post-COVID-19 green and digital transitions. Using the EIB Investment Survey (EIBIS) and relying on descriptive statistics and basic regressions, the results suggest that COVID-19 has had a significant impact on the investment expectations of HGEs, although they continue to invest slightly more than non-HGEs. Preliminary results suggest that HGEs appear to be more optimistic than non-HGEs in a variety of dimensions, such as optimism surrounding the use of digital technologies, and willingness to invest in climate mitigation and adaptation. However, our evidence shows that the HGEs in the 2020 survey wave have still been hit hard by the COVID-19 shock, compared to HGEs in previous years, which suggests that there may be a role for policy for supporting these valuable firms. Show less
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Economic crisis accelerates urban structural change via inter-sectoral labour mobility
Are recessions drivers of structural change? Here we investigate the resilience of cities, and argue that a re-allocation of labour… Show more between industrial sectors in times of crisis induces an acceleration in structural change. Using UK data, we find that cities experienced a sharp increase in inter-sectoral job transitions, and that local employment in skill-related sectors is most strongly associated with employment growth, during the recession, which we identify with the period of employment contraction between 2008 and 2011. This coincides with a massive but short-lived increase in the rate of structural change (i.e. the total change in employment shares of different industries) around 2009. These findings suggest that cities with skill-related sectors re-allocate workers in a crisis, thus inducing structural change. Show less
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Do capacity constraints trigger high growth for enterprises?
High-Growth Enterprises (HGEs) have a large economic impact, but are notoriously hard to predict. Previous research has linked high-growth episodes… Show more to the configuration of lumpy indivisible resources inside firms, such that high capacity utilisation levels might stimulate future growth. We theorize that firms reaching critically high capacity utilisation levels reach a ‘trigger point’ involving either broad-based investment in further growth, or shrinking back to previous levels. We analyse EIBIS survey data (matched to ORBIS) which features a question on time-varying capacity utilisation. Overcapacity is a transitory state. Firms enter into overcapacity after a period of rapid growth of sales and profits, and the years surrounding overcapacity have higher employment growth rates. Firms operating at overcapacity make incremental investments (e.g. capacity expansion, process improvements, and modern machinery) rather than investing in R&D and new product development. We find support for the ‘fork in the road’ hypothesis: for some firms, overcapacity is associated with launching into massive investments and subsequent sales growth, while for other firms, overcapacity is negatively related to both investments and sales growth. Show less
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The birth of new high growth enterprises: internationalisation through digitalisation
Internationalisation and the adoption of new digital technologies play an important role in the formation of new high growth enterprises.… Show more This paper examines this relationship for high growth enterprises in Europe and the UK, using data from the EIB Investment Survey and ORBIS. Its results highlight the complex influence of exporting and foreign direct investment on the capacity to become a high growth enterprise and the role of new digital technologies in this process. Show less