Panel Data

This paper attempts to quantify the aggregate net effect of government funding on business R&D in 17 OECD Member countries over the past two decades. Grants, procurement, tax incentives and direct performance of research (in public laboratories or universities) are the major policy tools in the field. The major results of the study are the following: Direct government funding of R&D performed by firms has a positive effect on business financed R&D (except if the funding is targeted towards defence activities). Tax incentives have an immediate and positive effect on business-financed R&D; Direct funding as well as tax incentives are more effective when they are stable over time: firms do not invest in additional R&D if they are uncertain of the durability of the government support; Direct government funding and R&D tax incentives are substitutes: increased intensity of one reduces the effect of the other on business R&D; The stimulating effect of government funding varies with respect to its generosity: it increases up to a certain threshold (about 10% of business R&D) and then decreases beyond; Defence research performed in public laboratories and universities crowds out private R&D; Civilian public research is neutral for business R&D. * We thank the participants to various seminars, including the OECD Committee for Scientific and Technology Policy and the NBER 2000 Summer Institute on Productivity for helpful comments and suggestions. All opinions expressed in this article are those of the authors and do not reflect necessarily the views of the OECD or Université Libre de Bruxelles.

tPerformance measurement (PM) systems have been popularized over the last 20 years and the oper-ations management literature is replete with discussion of metrics and measurement systems. Yet, acomprehensive nomological network relating types of PM system uses to organizational capabilitiesand performance is lacking. Furthermore, there is scant empirical evidence attesting to the explanatoryefficacy of PM systems as it relates to organizational performance. We view PM system uses throughthe lenses of the Resource Orchestration Theory (ROT) and explore specific relationships of underlyingvariables by relying on the Organizational Information Processing Theory (OIPT). Resting on the extantliterature, we identify two types of uses which include Diagnostic Use (the review of critical performancevariables in order to maintain, alter, or justify patterns in an organizational activity) and interactive use (aforward-looking activity exemplified by active and frequent involvement of top management envision-ing new ways to orchestrate organizational resources for competitive advantage) and relate them alongwith their interaction (i.e., dynamic tension) to organizational capabilities. We further link capabilities totarget performance, which subsequently impacts organizational performance (operationalized throughboth perceptual and objective financial performance measures). The nomological network is tested via across sectional study (386 Italian firms) while the efficacy of PM systems to explain organizational perfor-mance is examined by using longitudinal panel data approaches over a 10 year period. There is sufficientevidence to suggest that the use of PM systems leads to improved capabilities, which then impact per-formance. Contrary to the extant literature, however, we discovered that Diagnostic Use appears to bethe most constructive explanatory variable for capabilities. On the other hand, in light of a longitudi-nal study, we also uncovered that Diagnostic Use experienced depreciating returns as far as objectivefinancial measures are concerned. Also, when high levels of Diagnostic Use were coupled with low lev-els of Interactive Use, they produced the lowest levels of organizational capabilities. Conversely, highlevels of both types of PM system use generated extraordinary high levels of capabilities. There is suf-ficient evidence to suggest that organizations cannot rely merely on Diagnostic Use of PM systems. Wealso learned that the effects of PM systems (measured via adaptation) fade unless high learning ratesare applied. We offer detailed recommendations for future research which have theoretical as well asempirical implications.

We propose a new panel stationary test with cross-section dependency and Fourier approximation that models structural shifts as gradual process. The Monte Carlo simulations show that the test has good small sample properties. We examine the nature of shocks to the international commodity prices and find out the international commodity prices have non-stationary dynamics.