Private research investments must be strengthened in order to safeguard long-term knowledge development in industry. at the same time, the government will increase research investments in the public sector
and make it easier for commercialising good business ideas the public sector is facing major challenges, which cannot be solved merely by increas
follow up investments in the high north strategy and present a national strategy for marine bioprospecting
and increase investments in research equipment Strengthen regional research activities by allocating nok 6 billion
/The HM Treasury website sets out the UK ten-year investment framework for science and innovation
Whoever is interested in the organisation, in terms of contracting, funding, VC investment, or acquisi -tion 2. 1. 3. Where Technology Audit applies
investment should be made, Magic Books decided to apply the Decision making Process The problem was defined already:"
Based on this information, Magic Books decided that getting a webpage was an investment which they were willing to risk.
preliminary investment requirements Programme breakeven time Proposed customer quotation Updated programme schedule Programme staffing issues
investment and budget approval Programme breakeven time Updated programme schedule and status Programme risk issues
-typing into their investment casting process In addition, they can be used in test markets prior to the entry of the
ï Equipment investment cost (â ï Influenced by need for special (expensive) equipment ï Equipment operating cost (â/car, â/hr
ï avoiding wasteful investment in research and development (R&d) and marketing ï creating a corporate identity through a trademark and branding strategy
on investment. An effective system of protection also benefits consumers and the public at large, by
growth of the national economy through employment creation, investments and exports. Despite the importance of SMES for the vitality of the economy and the potential offered by the IP system for en
-ple, in heavy investments, which are connected with this concept, but simply in the choice itself.
ï Cost effective return on R&d investments by entering into new markets where the IP owner
an investment is required. This is a major hurdle to many SMES which may have a very high potential
project, unless they have guarantees that they will be able to recover their investment in the case of
such as the European commission, the European Investment Bank and the European Investment Fund, have generated schemes to support innovation within SMES
"Innosupport: Supporting Innovation in SMES "-8. 1. Financing Innovation in Europe page 175 of 271
The investment is made not with view to an immediate profit, but is made expecting the company to grow
and thus increase the value of the investment "Innosupport: Supporting Innovation in SMES "-8. 1. Financing Innovation in Europe
so if the investment doesn†t bear fruit, the risk is with the investor as much as with the company
-tracted to investments related to his/her expertise. An added advantage is that there will not be a long
investment Business angels are unfortunately not merely pools of funding and experience, but will naturally wish
investment will be spent and also what return may be expected from the presented project All the sources for funding should be stated clearly (e g. internal funding, the amount requested, fund
Market research is a big investment, so it is a good idea to process the returns in a way that will allow
Thus, the investment that was necessary to implement the new linguistic skills has cer -tainly paid off
And from just 1997 to 1999, flows of foreign investment nearly doubled. The diversification of
Foreign Investment External Trade (as percentage of World Trade "Innosupport: Supporting Innovation in SMES "-12.3.
Thus, the investment that was necessary to implement the new linguistic skills has cer -tainly paid off
The bank provides loans for investment projects, such as water and sanitation, natural resource management education and health.
permanent intergovernmental body of the UN that aims to maximise the trade investment and development opportunities of developing economies and to assist their efforts to integrate into
internationalization, which do not require a high level of capital investments Potential strategies, for instance, could be
World Investment Report 2005: Transnational Corporations and the Internationalization of R&d, United nations Conference on Trade and Development
or their investments in innovations. Another key issue for SMES is their ability to keep abreast of the latest developments affecting their sector.
warranted to correct market failures that affect the financing of investment in innovation, including in
investment tax credits and allowances •Encourage cooperative agreements with government -paid R&d infrastructure (universities, research
returns of investment. The SME instrument addresses all types of innovative SMES so as to be able to
9†Assessing the Investment Potential of SMES Emerging from Phase I of the SME Instrument 34
growth, and create high return on investment. The SME instrument addresses all types of innovative SMES so as to be able to promote growth champions in all sectors
2 to increase the return in investment in innovation activities. The proposal should contain an
ï Increase of private investment in innovation, notably leverage of private co -investor and/or follow-up investments
ï The expected impact should be described clearly in qualitative and quantitative terms (e g. on turnover, employment, market seize, IP management, sales, return on
investment and profit Type of action: SME Instrument The conditions related to this common call are provided below and in the General Annexes
follow-up investments ï Contribute to regional smart specialisation strategies by capitalising upon concentrated and complementary competences for the development of new industrial value chains
9†Assessing the Investment Potential of SMES Emerging from Phase I of the SME Instrument
This action will establish a group of investment specialists, operating in a personal capacity to assess the investment potential of SMES emerging from Phase I of the SME Instrument
24 The work of the expert group will be essential to get a better overview of the investment
-readiness landscape in Europe, to ensure that entrepreneurs are prepared better to negotiate effectively with potential investors, to increase the number of investments made into early
-stage firms and to ensure a greater commercialisation of scientific knowledge in Europe The experts concerned will be qualified highly, with specialist expertise in the field of
This action is linked to an investment readiness measure (Call H2020-BIR-2014 in the Access
associated with less private investment, higher consumer prices and greater corruption. Employment regulation which the World bank finds is generally more flexible in
less research and development as well as less investment in technology Barriers to exit may also discourage entry, since exit
Figure 2. Venture capital investment, 1999-2002 Percentage of GDP Note: 1998-2001 for Australia, Japan, Korea and New zealand.
providing risk capital or limit international investment in venture capital they should be reviewed with a view to
require finance, particularly for small-scale investment. Regional and local equity initiatives (e g. regional funds) are
investment. Such equity programmes should be created in parallel with the development and support of regional and local business angel networks as well
investment community that has expertise in venture capital-backed initial public offerings avoids the need to create new institutions
and social returns on public and private investment result from physical or cultural proximity that encourages human
-intensive foreign direct investment, and the governance structures and means of evaluating cluster initiatives SMES must
SMES with large investments in intellectual property †and poses challenges But globalisation can also pose challenges and threats
direct investment which can serve as a vehicle for SMES to access international markets indirectly by joining the supply
investment is often an efficient way to diffuse technology and better business methods to SMES and enhance their
â Promote the role that foreign direct investment can play as a vehicle for SMES
encourage investment in new technological infrastructure, content and applications and ensure neutrality across competing and developing
complement private investment where appropriate provided it does not preempt private sector initiative or inhibit competition
private initiative or inhibiting competition, complement private investment with public financial assistance to expand coverage for under-served groups and
and investment opportunities Recent assessments of growth recognise an understanding that an important influence on the rate at
global economy through trade and investment. Enterprises in transition and developing economies face major challenges in strengthening their human and institutional
While governments make trade and investment policies, it is enterprises that trade and invest. Therefore, supply-side
bottlenecks in the trade and investment areas and the way in which governments, development partners and the
markets require substantial investments in sustainable development of institutional and physical infrastructure and service delivery to SMES in all areas,
investment capacities of SMES must be strengthened SMES must be able to respond quickly and efficiently to
investment opportunities and reap the benefits of the international trading system. This means they need to be
investment capacity. Business support agencies (including financial institutions) must be oriented customer and have a demonstrated ability to deal with the SME sector.
investment to local SMES should be maximised The potential benefits of foreign direct investment to
host economies include sources of external capital technology and knowledge transfer, job generation, skills enhancement and enterprise development through linkages
to help with initial investment costs (Ireland; and subsidized training and consultancy necessary for enhancing supplier capability (Chinese Taipei
investment capacity building in transition and developing economies. These have to go hand in hand with market
support whole of government approaches so that trade and investment policies and standard setting are aligned with development co-operation objectives and policies
firms are one of most critical benefits of foreign direct investment for host countries Support policy frameworks and multinational enterprise behaviour that facilitate
understanding of the contribution of foreign direct investment in progression of development  OECD 2004
Enterprise Investment Scheme) 2 590 Total 7 932 as a per cent of GDP)( 0. 8
along with investment in equipment enhances the likelihood of having both process and product innovation. Both these kinds of innovation have
insufficient R&d investment (European commission, 2006 The latter aspect has been explained largely by the unquestionable fragmentation of the
of aggregate R&d investment Nevertheless, many scholars have argued that small firms are the engines of
variables, one should look at the results of R&d investment: training, technology adoption, sales of products new to the market or the firm.
process innovation is linked directly to firm†s investment in fixed capital. In comparing those results from the ones we obtain in this paper,
investment 5 We adopt the OECD definition for high-and low-tech industries. High-tech industries encompasses high and medium-high technology industries (chemicals;
firms display a significantly lower R&d intensity but roughly comparable investment intensities. These figures can be explained partially by the different firm size
volatility of R&d investment over time, the results were very similar to those reported below. 7
investment at the firm level, see Cohen and Klepper, 1996 3. 2. The knowledge production function
The only exception is the investment rate, which is assumed to be related to process innovation but not to product innovation.
investment in research is fundamental for product innovation, but at the same time, it increases firm†s ability to absorb
We also note that investment intensity is associated positively with process innovation in both high and low tech firms.
with the presence of investment in these equations until after we present the productivity results
ki is investment intensity our proxy for physical capital, PRODI and PROCI are knowledge inputs, proxied by
investment as a proxy for capital; as before, estimates are reported separately for all firms, high-and low-tech industries.
investment intensity When investment is included not in the regression, process innovation displays a sizeable and positive impact on productivity for all the categories of firms under exam
column (1),(2) and (3). Process innovators have a productivity level approximately two and one half times that of non-innovators, ceteris paribus.
investment is included, the coefficients of process innovation are not significant because the same investment variable was included in the previous step in order to
predict process innovation. Thus the coefficient of process innovation in the productivity equation already encompasses the effect of investment in new machinery
and equipment. However, because the investment rate is a better measure than the process innovation dummy,
when both are included, it tends to dominate Product innovation enhances productivity considerably, although to a lesser extent than
inclusion of investment intensity, whether or not investment intensity is used included in the second step
11 The first is estimated probability of process and not product from the bivariate probit model in Table 4
3. 4. Investment and innovation In our preferred specification in Table 4, we assumed that capital investment †which
to a great extent means the purchase of new equipment †should contribute significantly to process innovation, but not to product innovation.
impact of investment on process innovation that was approximately the same for high and low-tech industries (0. 05
Because the assumption that investment is associated with process and not with product innovation may be somewhat arbitrary,
investment is devoted to process innovation only (column 1), to product innovation only (column 2), to both (column 3) or to none (column 4). In the same columns we
without investment. Although column (1) still represents our preferred specification column (3) suggests that physical investment has a small (0. 02) positive impact on
product innovation as well. Turning to the productivity equation, it can be noted that the inclusion of investment wipes out the significance of process innovation, since
investment is one of its main determinants, but not of product innovation, which is more dependent on R&d investment.
Excluding investment from the productivity equation reveals that the process innovation associated with investment is more
relevant for productivity than predicted product innovation (compare the process innovation coefficients for step 3 in columns 1 and 3
3. 5. Further robustness checks The estimation method used in the body of the paper is sequential, with three steps:
1 the R&d intensity equation estimated only on firms that report doing R&d continuously; 2) A bivariate probit for process and product innovation that contains
proxy capital intensity by investment intensity, in order to be comparable to the results in Griffith et al. 2006.
available, constructed from investment using the usual declining balance method with a depreciation rate of 5 per cent and an initial stock from the balance sheet of the firm in
Column (3) simply replaces investment 12 The sample size in this table is reduced 9, 014 from 9, 674 in the main tables of the paper due to the
while column (4) uses investment as an instrument for process innovation, but capital in the production function.
Column (5) includes both investment and capital in both equations The results are somewhat encouraging:
investment enters only via its impact on process innovation. On the other hand, investment is a better predictor of process
innovation, although capital still plays a role. However, recall that innovation is measured over the preceding three years,
so that some of the investment associated with process innovation is likely to be included already in beginning of year capital
investment, and that such process innovation has a large impact on productivity 3. 6. Comparison to Griffith et al. 2006
Investment intensity is somewhat more strongly related to process innovation than in the other countries. Also noteworthy is
In the productivity equation, only investment intensity enters, although product innovation has a large but insignificant impact, larger than that for any of the other
Investment in new equipment and machinery matters more for process innovation than for product innovation
fact, Cohen and Levinthal (1989) show that R&d investments develop the firm†s ability to identify,
the associated investment. Moreover, larger and older firms seem to be, to a certain extent, less productive, ceteris paribus
norms can also influence investment in innovation. Choosing among these alternatives definitively is beyond the scope of this paper,
There is limited evidence that lower rates of R&d investment in larger Italian firms is due to the fact that they face a higher cost of capital than other firms in continental
market values for Italian R&d investment in large firms that do not have a majority shareholder, which suggests a high required rate of return and therefore a high cost of
carries the implication that investment in these firms may not be profit driven. These conclusions suggests that a â€oebank-centered†capital market system, such as the Italian
. and R. Oriani (2006), â€oedoes the Market value R&d Investment by European Firms? Evidence from a Panel of Manufacturing Firms in France
. and D. Siegel (1991), â€oethe Impact of R&d Investment on Productivity: New Evidence using Linked R&d-LRD Dataâ€, Economic Inquiry
Investment intensity: mean/median*7. 90/4. 05 6. 92/4. 01 Public support (in%)45.49 50.51
Investment intensity: mean/median*6. 22/3. 36 8. 62/4. 38 Public support (in%)46.27 45.16
Investment per employee 0. 125***0. 050 0. 120***0. 047 0. 129***0. 051
Investment per employee 0. 099***0. 073***0. 109 ***in logs)( 0. 010)( 0. 015)( 0. 015
***Investment intensity†0. 023***0. 022***0. 029***0. 037***0. 054***0. 049 ***Pseudo R-squared 0. 213 0. 202 0. 225 0. 184 0. 050 0. 091
Investment intensity†0. 130***0. 109***0. 061***0. 059***0. 129 0. 109 ***Process Innovation 0. 069**0. 022-0. 038 0. 029-0. 874 0. 011
Investment intensity: investment in machinery per employee, in logs Public support: dummy variable that takes value 1
if the firm has received a subsidy during the three years of the survey Regional †National †European †International (non EU) competitors:
Investment per employee (mean) †6. 0 8. 3 8. 3 6. 3 8. 0 7. 9
Investment intensity 0. 125***0. 050-0. 137***0. 055 -0. 011)( 0. 011 Step 2-Product Innovation
Investment intensity-0. 021*0. 008 0. 055***0. 020 -0. 011)( 0. 011 Step 3-Productivity including investment in the equation
Predicted process inno 0. 193-0. 395 0. 010-0. 432 0. 267)( 0. 275)( 0. 255)( 0. 277
Investment intensity 0. 099***0. 099***0. 093***0. 105 ***0. 010)( 0. 006)( 0. 009)( 0. 006
Step 3-Productivity without investment in the equation Predicted process inno 2. 624***1. 318***2. 286***0. 171
Specifications (1)-(4) encompass alternative assumptions for investment, whether it is devoted to process or product innovation, neither, or both
with investment with investment with capital investment in process, capital in productivity with both Method of estimation:
Sequential pooled ML pooled ML pooled ML pooled ML Step 2-Process Innovation Predicted R&d intensity 0. 440***0. 400***0. 416***0. 399***0. 389
Log investment 0. 131***0. 142***0. 145***0. 120 ***per employee (0. 011)( 0. 013)( 0. 011)( 0. 013
Log investment 0. 081***0. 072***0. 018 per employee (0. 011)( 0. 017)( 0. 015
require large capital investments. Thus, it is understandable that half of the innovation in the
which means higher and more continuous investment in incremental innovation (March-Chorda et al. 2002 Wright et al.
because investments are less in â€oer†and more in â€oedâ€, such as in design and engineering tools (CAD), prototypes, customization, etc
typically service innovations require much less capital investment. Service innovations usually require less R&d, require less in fixed assets,
and need less investment on patents and licenses for the development of new services (Brouwer and Kleinknecht, 1997.
investment may be low, organizational aspects play a larger role in the success of service innovation.
) Thus, investments in process-enabling IT can yield multiple benefits, increasing the generation of new ideas, accelerating the development of new services based on those ideas, and
It is accepted now generally that these investments have been largely unsuccessful There are several reasons for this.
"Customer power, strategic investment, and the failure of leading firms.""Strategic Management Journal 17 (3): 197-218
The Foreign Direct Investment Strategy...18 Policy implications: Broadening Government Support and Coping with the Diversity of Needs...
investment, international capital flows, and inter-country labour mobility. But in order to answer how these 1. During the last five years, SMES were responsible for more than 80%of the jobs created (European SME co
Investment in innovative activities seems to be on the rise in SMES. The National Science Foundation (1999) shows that total expenditures for industrial R&d by SMES has increased by almost
and not limited to formal R&d investments 20. In a more systematic approach to understanding innovation in SMES, the European community
that the pattern of innovation in SMES is mostly non-R&d investment based. Only as firm size increases
does the importance of R&d investment in innovation increase too. For SMES, non-R&d inputs are more
SMES are thus a large and very heterogeneous group of firms whose investments in and use of
which may or may not involve own investments in R&d â'The information technology strategy, which makes innovative uses of information technology
â'The foreign direct investment strategy, in which SMES exploit firm-specific ownership advantages abroad
For example, if the unit of observation is countries, the relationship between R&d investments and patenting is very strong.
also tend to undertake high investments in R&d. By contrast little patent activity is associated with
therefore able to appropriate some of the returns accruing to investments in new knowledge made
order to recoup your R&d investment "11 "The Little Guys Are Making It Big Overseas,"Business week, 27 february 1989, pp. 67-69
Foreign direct investment plays a central role in these companies. And their five -year revenue growth was 16.2,
They investment abroad in plant, equipment, and technology, and they investment in people. Even when a high initial investment may not be justified in terms of short-term returns, the small
and medium-sized enterprises consider it important to undertake such global investments because of the demonstration effect--to show potential customers and business partners that they are committed to the
local economy. The Mittelstand companies also espouse a strategy whereby they insist on the same high
standards in the host market as they do in the home market, particularly in servicing their production
careful devotion to consumer needs, that makes a strategy of foreign direct investment so central to the
because it maximises the ability of firms to appropriate economic value accruing from their investments in
and high investments in human capital â'Continual innovation. Both the nature of the products,
experienced high levels of investment into process technologies, particularly in manufacturing automation NC, CAD-CAM,
The Foreign Direct Investment Strategy 62. There is considerable evidence that the transnational economic activities of SMES have been
Not only has the absolute value of foreign direct investment activities by small and medium-sized enterprises increased over time,
but so has their share of the total foreign direct investment at least in several countries including Italy, The netherlands and Japan
The effectiveness of a foreign direct investment strategy for enhancing SME competitiveness is shaped by three fundamental sets of factors.
Examples of this new policy approach include measures to encourage R&d investment venture capital creation, and the rapid establishment of start-up firms.
As for SME specific measures, a great emphasis is placed now on promoting investments in innovation.
available for access to or investment in innovation and new firm creation. Perhaps best known is the Small
Governments should encourage such a trend by improving the conditions for private capital investments to
rating that would help reduce the uncertainty that limits private sector investments in high risk innovation
investments of leading technology users (i e. they do not substitute the existing R&d budgets 82.
and provide a greater financial incentive for private investments in R&d. The problem is that technology followers do not under-invest in R&d,
-investment in R&d. Instead, public support should be used to â€oelegitimise†the role of innovation agents
ic1 Initial investment capital sic1 Self-financed initial capital ic2 Costs for the intake and absorption of new technologies
by investments in these technologies and total costs of production. All these parameters are calculated per periodicity unit.
initial investment costs, self-financed initial capital of investment, and profit margin (a neutral percent figure
At the external environment level, the input indicators that could be used in performance evaluation are the four components of innovation capital:
investment figures, and total investment (Altman 1968,1983, Altman et al. 1977,1994, Caves 1998 Although I utilized these input indicators
when constructing the intended model I integrated them differently than the classical ones. I tried to relate them to each other in a
initial investment, which the classical performance models do not include. I used a ratio between the self-financed initial capital and the initial investment capital.
The technology intake costs are devised out of my understanding of the value of innovation in elevating firm
-term investments that tolerate fluctuation and short-term risks, while shareholders advocate an avoidance of any risk.
because investments in innovation and new projects involve higher short term risks. Fourthly, managers meet competitive threats by
increasing their cost-cutting investments to rationalize on the firm†s resources and by pushing for innovation in management and operational aspects.
investment, while long-term growth was attributed to exogenous technological change 40 Corley et al. 2002. Higher productivity of economies was attributed to â€oeinvestment in
investments did not consider cross-country effects. This contrasts with other studies, which have shown that even
when tangible and intangible investments are considered, there are still cross-country differences in productivity. These differences indicate the effects of the firm†s
investments in an attempt to reduce the size of the unexplained portion of growth due to
intangible investments, such as R&d, into consideration (Corley et al. 2002. Acs and Yeung 1999) indicated that product
the initial investment cost and the self-financed initial capital of investment. One does not find these parameters in the classical models
although they are important in measuring the efficiency of the firm†s operations. When it
initial capital of investment to initial investment costs provides a good indication of the degree to which the entrepreneur relied on his
includes the initial investment costs and the self-financed initial capital of investment; all the rest are clustered in the first subset
investments in innovation activities and its innovation acquirements. The intake and absorption of new technologies are indicated by the ratio between investment in innovation
and technology acquirements and the total costs of production, or the technology-intake index Innovation†s positive impact on the efficiency and performance of firms requires
The first point is that investments in innovation and technology intake should be treated as positive inputs into the efficiency of the firm rather than as cost
) The second point is that such investment needs to be related to the production costs to reflect the true utilization of the firm†s resources.
firm management†s high level of commitment to investment in innovation and absorption of 53
initial investment in the firm as well as the extent to which the firm was self-financed is not hard
about the initial investment in the firm and the extent to which the firm was financed self is
Information about the initial investment in the firm as well as the extent to which the firm was financed self is possible to deduct from the firm†s accountancy information.
used to start the firm via the ratio of self-financing to initial investment. A good model for
In this paper, the investment in development was not differential meaning that it was a sum of the inward and outward technology intakes
initial total investment, self-financed initial investment, and cost of technology intake. The qualitative parameters are firm size and firm age
firm via the self-financed proportion of the total initial investment. A model for evaluating
case, the investment in development was not differential. Rather, it was a sum of the two
intake and absorption of new technologies as indicated by investment and the total costs of
production, the initial investment costs, the self-financed initial capital of investment, and the profit margin (a neutral percent figure
Owner-manager conflict and financial theories of investment instability A critical assessment of Keynes, Tobin, and Minsky.
R&d investment and international productivity differences. NBER Working Paper No. 4161 Likert, R. 1961. New patterns of management.
Investment in humans, technological diffusion, and economic growth. A e. R. Papers and Proc 56 (May), 69†75
The Investment Analyst: The Journal of the Society of Investment Analysts (83), 23†27 120
Peel, M. J. and Peel, D. A. 1987. Some further empirical evidence on predicting private
The Investment Analyst: The Journal of the Society of Investment Analysts (75), 3†12 Peel, M. J.,Peel, D. A. and Pope, P. F. 1986.
Predicting corporate failure†some results for the UK corporate sector. Omega 14 (1), 5†12
The philosophy of investment: A post Keynesian perspective. Journal of Post Keynesian Economics 25 (1), 105†121
Investment in human capital: The role of education and of research New york, New york: Free Press
Applying artificial networks to investment analysis Financial Analysts Journal 48 (5), 78†80 Taylor, F. W. 1911.
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