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Innovative R&D and optimal investment under uncertainty in high-tech industries: An implication for emerging economies

Author

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  • Tsai, Yingyi
  • Lin, Justin Yifu
  • Kurekova, Lucia
Abstract
In order to continue on the path to convergence with advanced countries, emerging countries need to strengthen their research capabilities. Often they try to do this through the development of strategic industries. The objective of this paper is to contribute to the debate on the effectiveness of policies aimed at the development of strategic industries in emerging economies. The paper develops a three-phase model for product innovation with capital investment under uncertainty to study the investment decisions of a manufacturer in an industry facing a volatile market demand for new inventions. The findings demonstrate the importance of interactions between market structure, a firm's market power and the associated cost of adjustment. The paper draws out implications for emerging economies with regard to policies striving to develop strategic industries in sectors such as semiconductors and information technology.

Suggested Citation

  • Tsai, Yingyi & Lin, Justin Yifu & Kurekova, Lucia, 2009. "Innovative R&D and optimal investment under uncertainty in high-tech industries: An implication for emerging economies," Research Policy, Elsevier, vol. 38(8), pages 1388-1395, October.
    • Handle: RePEc:eee:respol:v:38:y:2009:i:8:p:1388-1395
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    References listed on IDEAS

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    Cited by:

    1. Prud'homme, Dan & von Zedtwitz, Max & Thraen, Joachim Jan & Bader, Martin, 2018. "“Forced technology transfer” policies: Workings in China and strategic implications," Technological Forecasting and Social Change, Elsevier, vol. 134(C), pages 150-168.
    2. Liu, Yang & Lv, Diwei & Ying, Ying & Arndt, Felix & Wei, Jiang, 2018. "Improvisation for innovation: The contingent role of resource and structural factors in explaining innovation capability," Technovation, Elsevier, vol. 74, pages 32-41.
    3. Helen Wei Hu & Jiamin Zhang, 2023. "How do Corporate Social Responsibility and Innovation Co-evolve with Organizational Forms? Evidence from a Transitional Economy," Journal of Business Ethics, Springer, vol. 186(4), pages 815-829, September.
    4. Niu, Wenju & Shen, Houcai & Zhang, Lianmin, 2022. "Impact of power structure on decarbonizing investment with uncertain innovation: A triple bottom line perspective," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 160(C).
    5. Lange, Knut & Müller-Seitz, Gordon & Sydow, Jörg & Windeler, Arnold, 2013. "Financing innovations in uncertain networks—Filling in roadmap gaps in the semiconductor industry," Research Policy, Elsevier, vol. 42(3), pages 647-661.

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