The aim of this project was to analyse five centrally linked aspects of economic growth:

1. Management and Organisational Practices
This part concentrated on understanding and explaining management and organisational practices in firms across Europe, the US and Asia. A comprehensive international dataset on management practices was set up which allowed the analysis of management's contribution to international growth and productivity differences.
2. Economic Growth and Environmental Consequences
Not all growth is good; there are trade-offs involved between basic productivity growth and other dimensions of human wellbeing. The project thus investigated the environmental performance of well-managed firms, the trade-off between a firm's financial performance and its environmental friendliness, and firms' incentives to adopt environmental innovations as a function of regulatory and firm-specific circumstances.
3. Information and Communication Technologies (ICT)
A large part of the EU-US difference in labour productivity growth can be linked to ICT use. Furthermore, even within Europe, the subsidiaries of US multinationals appear to make more effective use of ICT than either domestic European firms or non-US multinationals. Previous research suggested that this may be linked to organisational and regulatory factors across Europe. The project addressed as to why US firms are so much better at deploying ICT both domestically and through their European subsidiaries, as to what extent managerial and organisational practices contribute to this, and the role of an ageing workforce for firm's adoption of ICT and for firm performance.
4. Innovation
Many commentators have argued that while Europe's institutions and firms were well suited to the post-war period of imitation when innovations from the US were diffused internationally, Europe is now closer to the technology frontier and must grow through innovation pushing the frontier out rather than simply adopting and updating US innovations. In addition, it is argued that Europe is missing large, technology-leading champion firms. Recent reforms in the competition policy framework have made efficiency considerations an integral part of the treatment of merger, acquisition and dominant firms. However, the link between competition and innovation is not as obvious. This project, in contrast to previous single country studies, took an integrated international perspective to address whether European firms can adapt their practices and structures to become more innovative, how international technology transfer can be accelerated, whether tax-based or grant-based innovation policies are more cost effective, and the link between competition on innovation with a special emphasis on M&A activities.
5. Globalisation
The investment decisions of multinational firms are critical for productivity, but our understanding of outsourcing and offshoring is limited. Competition for footloose multinational investment operates within Europe between countries like Poland and the richer EU nations (e.g. Germany). But it also operates between Europe as a regional bloc and the US, Japan and emerging nations such as India and China. The project looked at the specific patterns of vertical disintegration and their impact on productivity of European and US firms as well as at whether capital mobility and financial openness foster country's specialisation on more productive industries.

For further information see project description at CEP.

Selected Publications

Articles in Refereed Journals

Bertschek, Irene and Jenny Meyer (2009), Do Older Workers Lower IT-enabled Productivity? Firm-Level Evidence from Germany, Jahrbücher für Nationalökonomie und Statistik 229/2+3, 327-342.

Discussion and Working Papers

Dobbelaere, Sabien, Roland Iwan Luttens and Bettina Peters (2009), Starting an R&D Project under Uncertainty, DRUID Working Paper No. 08-09, Kopenhagen. Download

Aschhoff, Birgit (2008), Who Gets the Money? The Dynamics of R&D Project Subsidies in Germany, ZEW Discussion Paper No. 08-018, Mannheim, LLL:citation.label.journal: Jahrbücher für Nationalökonomie und Statistik. Download

Expertises

Kretschmer, Tobias (2009), Explaining Productivity and Growth in Europe, America and Asia, Anglo-German Foundation for the Study of Industrial Society, München. Download