ECONOMIC CYCLE AND REGIONAL INNOVATIVE ACTIVITY IN THE POMERANIAN INDUSTRIAL SYSTEM IN 2009-11 - Polish Journal of Management Studies

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ECONOMIC CYCLE AND REGIONAL INNOVATIVE ACTIVITY IN THE POMERANIAN INDUSTRIAL SYSTEM IN 2009-11

Abstracts > Vol 7

ECONOMIC CYCLE AND REGIONAL INNOVATIVE ACTIVITY IN THE POMERANIAN INDUSTRIAL SYSTEM IN 2009-11
Świadek A.

Abstract: Industrial systems in countries with a significant technological gap is generally characterized by low competitiveness, manifested, among others, the low share of high technology products in international trade. The aim of the study was to determine the impact of the various phases of the directions of the economic cycle on the behavior of innovative firms with the determination of the strength of this effect. Achieved results confirmed the presence of cyclic of innovative activity in the Pomeranian region. Based on the analysis performed on a group of 680 industrial companies using probit regression can be stated that in the period boom innovative activity occurs much more frequently than in other phases of the business cycle - recession and stagnation. The economic situation is therefore an important and time-varying factor in the decisions of innovative enterprises. On this basis, there is a need for a reference to the current market conditions, the impact of the phenomenon of programming innovation processes in our country.

Key words:
innovation, economic cycle, system, region, industry.

Introduction

Currently, we are observing the slow process of the European economy coming out of the crisis, what is confirmed by various economic measures. This allows for an optimistic look into the future. Nonetheless, the current condition of the crisis may still last for a certain period of time. Companies being in this phase of the cycle, being under the forced economic pressure, generally select in a short period of time strategies of cost-cutting, devoting less time to searching and building the long-term comparative advantage based on the innovative activity [1]. In the shorter term this means the limitation of the financing of such activity, what may cause its extension in time or the reduction of budgets for innovations. This will lead to delays in the implementation of new technologies, will influence their quality, and even may result in the withholding of innovative projects.
At the level of particular companies, the economic literature indicates the diversified effects of particular phases of the economic cycle on the dynamics of innovative expenditures. In this scope there is a widely described dispute among scientists. Traditionally, in fact, investments in innovations are treated as the anti-cyclical argument for the economic subjects working in the market. Restrictions being the effect of slowing down transfer to their profitability, and this in turn forces them to look for new ways of maintaining high productivity. According to the concept of “creative destruction" by J. Schumpeter, the crisis thus creates new possibilities for companies. As a result, many of them should seek to reconfigure and improve the quality of the conducted innovative activity. An example of such behaviour is the R&D department, which in the crisis is subject to the phenomenon of “work storage" [2]. While this is the potential possibility of developing the organisation. Besides, the revenue lost in the company resulting from a smaller demand for the previously manufactured products may be a stimulus for the companies during the recession for investments in new technologies [3,4,5].
Despite many rational arguments in favour of that innovative activity has a anti-cyclical character, in the economic literature we often encounter the view that companies do not treat the innovative activity differently than other types of activity, what means that this activity has a purely cyclical character. Previous experiences has shown that the implementation of new technologies, especially the radical ones, is delayed in the recession phase, and the companies await the next boom in the economy [6,7]. At the same time there is no consensus in the area of the hypothesis of “accelerating the innovation” of Gerhard Mensch from 1975, assuming that innovation are more often implemented during recession as the effect of looking for chances to survive in the shrinking market [9].
The current phase of the economic cycle is an important factor, which repeatedly influences the decisions about undertaking or leaving the innovation activity in industrial companies, both in Poland and in more developed countries [8]. Polish provinces due to their low technological advancement are considered peripheral regions, and their development depends more often on the changes in their surroundings, and therefore in the more developed areas. This is an important premise to conduct research on the intensity of the advancement of national companies in particular areas of the innovative activity as the result of changes of the stages of the economic cycle.  
Recent research carried out by Joint Research Centre in the area of the business phases impact in the innovative activity of companies became the main theme and inspiration to undertake an attempt to evaluate the analogous phenomena occurring in Poland [10]. The results of the research conducted there are not clear and because of that foreign literature raises a question: is the economic growth or recession the factor accelerating technological changes in companies?
The main objective of the conducted research was the attempt to search crucial directions and the power of influence of the economic cycle phases on the innovative behaviours of companies within the Pomeranian industrial system. As a result this allowed to determine the critical areas of support for the functioning of the regional industrial system and its innovative activity, taking into account its specificity. The effects of original research presented in this article are only a small part of conclusions obtained as a result of the conducted analyses in this province.
The exemplification part of the article was based on the regional case study of the Pomeranian province. Research was conducted in 2012 for the years 2009-11 based on the questionnaire. There were collected 680 properly filled-in questionnaires. The basic procedure of obtaining data included the initial phone conversation together with sending the questionnaire by mail or traditionally. The complementary form was the telephone interview.  
All tests have been of the static character and have been performed in the three years system, in accordance with methodological standards of tests on innovations used in all OECD countries.
The methodical layer of analyses was based on the theory of probability, and more precisely on probit models. They allowed the evaluation of the statistical significance and chances of the occurrence of the considered innovative phenomena due to particular phases of the business cycle. The probit regression allowed the precise estimation of the parameter value with the determination of their significance for the dependant variables expressed in binary. Such method gives satisfactory and stable results in case of a large and static sample of companies, in which the dependant variable takes the quality form, when it is difficult to present changes in time within the studies phenomena.
All variables adopted for testing
dependent and independent have binary character, meaning they reach values 0 or 1. As a result of this, the interpretation of the achieved test results was conducted based on the structural form of the model, achieved probability results and necessary statistics (standard errors, t-students statistics, Chi-square statistics, probability of the models significance). A positive sign appearing with the main parameter informs us that the probability of the occurrence of the event of the innovative character is statistically significantly higher in the specified group of industrial subjects towards the rest of the community. The negative sign is interpreted opposite. Probit type of modelling constitutes an extremely effective research tool, what has been confirmed with its many usages by the test author in many regions in the country.

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Summary

Summing up, the Pomeranian province is classified in the economically medium-strong regions in the country. Innovative activity realized in the industrial companies in this area is strongly dependent on the phases of the economic cycle. This action has a clear cyclical character, therefore the interest in its conduct grows during the recovery and drops in the recession period. The transitional period, meaning the stagnation phase, remained unknown. Approximate results showed that this period also affects negatively on the innovative decisions of the companies. What
s more, the system of such impact is even higher than in the recession period, although the scale of limitations is sometimes lower, but sometimes even greater.

In the studied region, the cyclical factor strongly influences the behaviours of the companies and thus the innovative politics in this province should flexibly correspond to the needs of companies in different phases of the economic cycle. Therefore, it should be the important and integral part of the effective implementation of the regional strategy of innovation

References


[1]. Barrett C. W., Musso C. S., Padhi A., Upgrading R&D in a downturn, “The McKinsey Quarterly” 2009, No.2
[2]. Soete L., Challenges for making European research an engine of competitiveness, Presented at VINNOVA workshop: How can a future ERA support and stimulate research, innovation, and sustainable economic growth in Europe? Berlin 2009, March 17th.
[3]. Stiglitz J., Endogenous Growth and Cycles, NBER WP N°4286, 1993.
[4]. Aghion P., Saint-Paul G., Uncovering some causal relationships between productivity growth and the structure of economic fluctuations: A tentative survey. “Labour” 1998, 12(2), s.279-303.
[5]. Canton E., Uhlig H., Growth and the cycle: Creative destruction versus entrenchment, “Journal of Economics” 1999, Vol. 69, No. 3, s. 239-266.
[6]. Shleiffer A., Implementation Cycles, “The Journal of Political Economy” 1986, Vol. 94, No. 6, s. 1163-1190.
[7]. Francois P., Lloyd-Ellis H., Animal Spirits through Creative Destruction, “The American Economic Review” 2003, Vol. 93, No. 3, s. 530-550.
[8]. Pachura P., Nowicka-Skowron M., „Theory of innovation in spatial perspective”, Polish Journal of Management Studies, vol. 1/2010.
[9]. Clark J., Freeman C., Soete L., Long waves, inventions, and innovations, “Futures” 1981, No. 13(4), s. 308-322.
[10]. JRC: Cincera M., Cozza C., Tübke A., Voigt P., Doing R&D or not, that is the question (in a crisis…), IPTS working paper on corporate R&D and innovation, 2010, No. 12.


KONIUNKTURA GOSPODARCZA A AKTYWNOŚĆ INNOWACYJNA W POMORSKIM SYSTEMIE PRZEMYSŁOWYM W LATACH 2009-11

Streszczenie: Systemy przemysłowe w krajach ze znaczną luką technologiczną cechują się na ogół niską konkurencyjnością, przejawiającą się między innymi niskim udziałem produktów wysokiej techniki w międzynarodowym handlu. Celem opracowania było określenie kierunków oddziaływania różnych faz cyklu gospodarczego na zachowania innowacyjne przedsiębiorstw wraz z określeniem siły tego wpływu. Osiągnięte rezultaty badań potwierdziły występowanie cyklicznej aktywności innowacyjnej w regionie pomorskim. Na podstawie analizy wykonanej na grupie 680 przedsiębiorstw przemysłowych przy wykorzystaniu regresji probitowej można stwierdzić, że w okresie ożywienia aktywność innowacyjna występuje znacznie częściej, niż w pozostałych fazach cyklu koniunkturalnego recesji i stagnacji.  Koniunktura gospodarcza jest zatem istotnym i zmiennym w czasie czynnikiem wpływającym na decyzje innowacyjne przedsiębiorstw. Na tej podstawie zachodzi potrzeba odniesienia aktualnych warunków rynkowych do programowania oddziaływania na zjawisko procesu innowacyjnego w naszym kraju.

Słowa kluczowe: innowacja, cykl koniunkturalny, system, region, przemysł


 
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