Canada has long been a proponent of free trade while at the same time defending the current supply management system that protects the dairy industry from import competition. In the most recent Doha Development Round of talks amongst nations belonging to the World Trade Organization, the validity of Canada's protectionist position has been questioned and it is conceivable that Canada may have to make significant changes in the dairy industry to allow more liberal trade policies to be enacted. The key purpose of this study is to find out how free trade will affect the research and development (R&D) incentives of Canadian dairy farmers. On one hand they may be induced to perform more R&D due to competition effects in order to lower costs and achieve a competitive advantage over the main competitor, the United States. On the other hand they may be induced to perform less R&D due to the spillover effect, which allows the Canadian R&D efforts to be used by the United States at no additional cost. It is found that the outcome of these two opposing forces depends on the market scale effect. If Canada is a net importer when the border opens the spillover effect may dominate and Canadian dairy producers may invest less into R&D than under the current protectionist policies. These results however will switch if Canada is found to be the net exporters. The results also depend on the level of the quota currently in place. If the current quota is chosen at a quantity relatively close to the amount supplied at the monopolistic level, a free trade regime may promote R&D efforts more so than supply management. On the other hand, if the current quota level in Canada is closer to the quantity that would be supplied in a competitive industry, Canadian dairy producers may invest less heavily in R&D efforts under a free trade regime than a supply management system.

Stegia AB har sedan ett antal år tillbaka använt sig av outsourcing i olika former. Initialt med ganska liten egen involvering för att sedan involveras allt mer på senare åt genom en egen fabrik först placerad i Taiwan och nu i Shanghai Kina. Verksamheter med global spridda enheter utsätts löpande för utmaningar och svårigheter internt vilka kan kopplas till språk, geografisk läge och kultur utöver de tekniska och organisatoriska utmaningar som finns inom verksamheten. Inom ramen för detta bedriver Stegia AB R&D och försäljning i Sverige samt produktion i Shanghai, Kina. Detta för med sig många svårigheter som detta examensarbete undersöker närmare. Genom en fallstudie har samtliga personer som utbyter information inom företagets enheter involveras i projektet där R&D och produktion i globalt spridda verksamheter undersökts hur det påverkar verksamheten genom olika svårigheter. För att genomföra detta har intervjuer skett såväl i Sverige och i Shanghai för att förstå den miljö som arbetet löpande sker i. Data har samlats in från företagets processer kopplade till produktion av egenutvecklade produkter där cykeltider, materialflöden, ledtider och studier i produktionen genomförts för att kartlägga olika faktorer som påverkar det dagliga arbetet. Det har visat sig att förtroende mellan de olika enheterna, tid som åtgår för att invänta återkoppling på olika uppgifter samt olika synsätt på arbetet är faktorer med stor inverkan på det dagliga arbetet. För att hantera dessa problem föreslås förflyttningar enheterna emellan för att skapa förståelse för respektive enhet internt såväl om externt. Vidare finns flertalet utmaningar kopplat till kvalitetssäkring och flöden som påverkas av kommunikationen internt i företaget där brist på data och i flera fall felaktig data ger följd fel inom organisationen. Sammantaget blir kommunikationsutmaningarna påtagliga inom dessa typer av verksamheter där många mindre problem snabbt påverkar verksamheten. / Stegia AB have during recent years been using outsourcing in different configurations. Initially with a small involvement in the supply chain, but today with a greater involvement though their fully owned off shore production unit; first located in Taiwan and now located in Shanghai, China. Organizations that are utilizing globally distributed units are facing a number of challenges on top of the daliy technical and organizational aspects. Those extra challenges could be cultural differences and language barriers, but the geographical positioning brings additional obstacles to the company. In this environment Stegia AB runs sales and R&D from Västerås with their production unit in Shanghai. This setup brings a lot of difficulties that this thesis will look deeper into. A case study have been conducted to investigate how the decision of a globally distributed organization brings difficulties. In this thesis, interviews have been conducted in Västerås and Shanghai. The aim is to involve all employees in R&D and the production units, as well as to gain understanding of their daily work. Data have been collected from the company’s manufacturing processes where cycle times, material flow, lead time and general production studies have been conducted in order to map and understand how different factors affect their organization. Through this study some factors have been found to critically affect the daily operation of the company, such as: trust, time to reply messages within the organization and employees’ opinions about the given tasks. In order to tackle those challenges, rotations between the units is suggested. This is to increase the employees' understanding of the units both internally and externally. On top of those challenges, quality control and logistics have been negatively affected by the lack of communication and insufficiency of relevant data within the organization. All together, the communication challenges very soon become crucial in globally distributed units; where small problems affect the daily operations.

This dissertation examines the relationship between productivity growth and research activities of heterogeneous firms, and the contribution of firm heterogeneity to business cycle fluctuations. The first chapter uses a dynamic model to study firms' decisions on whether to conduct research in house, with external units or via both modes. Productivity is modeled to evolve endogenously according to Research and Development (R&D) modes, and the costs of starting and continuing research are random and mode specific. Model estimates from a panel of Chinese manufacturing firms show that in-house R&D is more effective and costs less to maintain, but smaller firms choose external R&D because of its lower startup cost. These estimates are consistent with the observed cross-sectional differences in firm size by research status, and can match the persistence and transition dynamics in R&D modes. Simulation exercises show that continuation cost reduction induces more changes in R&D decisions, but start up cost reduction leads to most of the aggregate productivity gain. The second chapter investigates the impact of innovation on firm level prices. This impact depends on how innovation affects quality and efficiency and how the firm passes these changes onto prices. Estimation results of the empirical model with a panel of Spanish firms show that firms take advantage of process innovations to enlarge markups by not completely passing onto prices the decrease in cost. Product innovations could increase or decrease cost but they do not affect markups, thus we do not find prices to change systematically with them. The third chapter examines the contribution of firm level shocks to output fluctuations for four OECD countries (US, Germany, Canada and the UK). Recent studies stemming from Gabaix (2011) show that when few firms account for a disproportionately large share of production, shocks to these firms can propagate to generate business cycle fluctuations. However, we find that while firm size distribution is highly skewed in these four economies, the ability of the largest firms to transmit shocks is not universal and thus should not be taken for granted.

Prior research shows returns are positive when firms meet or beat analysts’ consensus forecasts but negative when firms miss. Past studies also show managers frequently cut R&D expenses in order to meet the consensus forecast. Despite these findings, there is limited evidence about how the market responds when firms beat the forecast by cutting R&D. This study shows the stock market penalizes firms that use R&D cuts to manage earnings and exacts a discount to the market reward if beating the forecast requires cutting R&D. The discount is only partial and firms are still better off doing so in the short run. Furthermore, this study shows the R&D cuts used to manage earnings are concentrated in specific industries and are likely temporary, as firms tend to increase R&D spending in the subsequent period. Investors appear to recognize these short-term cuts and treat them similar to accruals. / 10000-01-01

Canada has long been a proponent of free trade while at the same time defending the current supply management system that protects the dairy industry from import competition. In the most recent Doha Development Round of talks amongst nations belonging to the World Trade Organization, the validity of Canada's protectionist position has been questioned and it is conceivable that Canada may have to make significant changes in the dairy industry to allow more liberal trade policies to be enacted. The key purpose of this study is to find out how free trade will affect the research and development (R&D) incentives of Canadian dairy farmers. On one hand they may be induced to perform more R&D due to competition effects in order to lower costs and achieve a competitive advantage over the main competitor, the United States. On the other hand they may be induced to perform less R&D due to the spillover effect, which allows the Canadian R&D efforts to be used by the United States at no additional cost. It is found that the outcome of these two opposing forces depends on the market scale effect. If Canada is a net importer when the border opens the spillover effect may dominate and Canadian dairy producers may invest less into R&D than under the current protectionist policies. These results however will switch if Canada is found to be the net exporters. The results also depend on the level of the quota currently in place. If the current quota is chosen at a quantity relatively close to the amount supplied at the monopolistic level, a free trade regime may promote R&D efforts more so than supply management. On the other hand, if the current quota level in Canada is closer to the quantity that would be supplied in a competitive industry, Canadian dairy producers may invest less heavily in R&D efforts under a free trade regime than a supply management system. / Land and Food Systems, Faculty of / Graduate

Using data from the Kauffman Firm Survey (KFS), this thesis explores the effects that innovation activities has on the survival of new firms. The KFS follows 4,928 American start-ups from 2004 to 2011. A probit model is used to examine the relationships that may exist between a number of different variables relating to innovation and survival. The results indicate that firms that invest in research and development (R&D) and machinery and equipment persistently are more likely to survive than those that do not, or those that only invest once in these types of innovative business activities. Also, with regards to intellectual property (copyrights, trademarks and patents), firms that hold these types of intellectual property have a better chance of survival than those that do not hold any intellectual property.

Chapter 1: Tradable Permits under Environmental and Cost-reducing R&D: This chapter models simultaneous investments in both environmental and cost-reducing R&D by asymmetric Cournot duopolist. Pollution rights (emission permits) are allocated by the regulator and can be traded between firms. Both R&D competition and cooperation are considered. In a three-stage game, firms first invest in R&D, then trade permits, and then compete in output. The strategic interaction between different types of R&D investments is analyzed. It is found that giving more permits to one firm induces it to conduct more cost-reducing but less environmental R&D. The second-best optimal allocation of pollution rights is also analyzed. This allocation matters for social welfare under R&D competition, but is irrelevant under R&D cooperation. Moreover, the optimal allocation depends on R&D spillovers. This paper also studies the grandfathering of permits based on historical output. Compared with the second-best optimal allocation, the higher the emissions reduction level, the more likely that grandfathering allocates too few permits to the large firm and too many permits to the small firm. Adding an R&D budget constraint leads firms to under-invest in cost-reducing R&D relative to environmental R&D. Chapter 2: Tradable Permits under Environmental R&D between Upstream and Downstream Industries: This chapter models the simultaneous investments in environmental R&D by both downstream and upstream industries, with two symmetric firms within each industry competing à la Cournot. Pollution rights are allocated by the regulator, and firms can trade permits. R&D competition, intra-industry (horizontal), inter-industry (vertical) and both intra- and inter-industry (generalized) R&D cooperations are considered. In a four-stage game, firms first invest in R&D, then trade permits, then upstream firms compete in intermediate good production, and finally downstream firms compete in final food production. The strategic interactions between R&D investments are analyzed. It is found that an increase in either vertical or horizontal R&D spillovers reduce the permit price but increase production, but the spillover effects on R&D investments are ambiguous and they depend on the number of permits that a firm receives from the government. However, firms undertake more R&D under generalized cooperation than vertical cooperation, irrespective of spillovers and the allocation of permits, and this results in higher social welfare under generalized cooperation than vertical cooperation. The optimal allocation of pollution rights by the regulator is also considered. This allocation matters for social welfare under R&D competition and horizontal cooperation, but is irrelevant under vertical and generalized cooperations. Chapter 3: Is There a Principle of Targeting in Environmental Taxation?: This chapter studies whether the "principle of targeting", which is referred to by Dixit (1985) as the tax formulae for dirty goods have "additivity property" (Sandmo 1975) and externality-generating sources should be directly targeted (Bhagwati and Johnson 1960), can be applicable in the presence of a uniform commodity tax with an additional emissions tax. We consider three perfectly competitive markets, one of them produces a non-polluting good and the other two produce polluting goods. The regulator chooses optimal taxes on all three markets to maximize social welfare and finances an exogenous public expenditure. First all, it is found that the additivity property does not hold under differentiated taxes, and is even further weakened with a uniform commodity tax. It is also shown that the Pigouvian tax is unlikely to apply on the top of the uniform commodity tax. Furthermore, if there is only tax instrument available -- i.e. either the uniform commodity tax or the emissions tax -- then the uniform commodity tax (emissions tax) induces higher social welfare when marginal social damage is low (high).

We build a two-stage stochastic R&D portfolio model for climate policy analysis. This model can help policy makers allocate a limited R&D budget to minimize the total social cost. We develop several methods, including genetic programming and a greedy algorithm, to deal with the computational challenges of the model that arise due to the inclusion of uncertainties. From the R&D model, we have several key results. First, the optimal portfolios are robust against the climate risks. Second, policy makers should put most of their investment into Carbon Capture and Storage (CCS) projects when the R&D budget is relatively low. We further show Fast Reactor (FR) and 3rd generation PV are the two most unattractive technologies in the portfolio. Finally, more sophisticated expert elicitations on climate change energy technologies should be done in the future, because the potential benefit can be up to 11 billion dollars.

Background: As the global pharmaceutical industry continues to generate significant wealth, the demand for equitable access to medicine remains at the forefront of political and grassroots agendas. In recent years, poor drug coverage coupled with unaffordable drug prices have contributed to access issues for a growing number of Canadians (Morgan et al, 2015). Although the industry cites various reasons for an increase in cost, such as high-risk research, lengthy clinical trials and significant advances in technology (DiMasi et al., 2016; Ridley, 2005), there is a growing body of research that is contradictory to the industry’s reasoning for higher drug costs (Kohler et al., 2016; Siddiqui & Rajkumar, 2012; Light & Warburton, 2011). Whereas other initiatives to date focus on drug coverage, this work proposes the Canadian Government investigate the feasibility of the public production and distribution of pharmaceuticals. Thus, the research question addresses whether successful publicly funded pharmaceutical research and development initiatives, including production and distribution, could be applicable in the Canadian pharmaceutical sector where inequity is an issue. A scoping review was conducted to draw in all relevant literature on publicly funded research models pertaining to the research and development of pharmaceuticals. Methods: The research undertaken for this thesis is exploratory and comprised of qualitative work that is guided by the Arksey & O’Malley (2005) scoping review methodological framework. The data collected for the scoping review was analyzed with the thematic analysis method. Findings: Following the thematic analysis, three key themes were identified: Local Production, Public Private Sector and National Production. Although there have been some successes in low to middle income countries with regard to the local production of medicine, the likelihood of success is contingent on whether there is a need to import active pharmaceutical ingredients (API). With regard to the public and private sector, the pre-competitive sphere serves as the typical space for collaboration. The public sector typically conducts research, whereas the private sector oversees drug development. The national production of medicine is underpinned by government intervention, which is evidenced by the varied measures taken to increase access to medicine. The preliminary literature review revealed that an Advisory Council was created to assess the viability of Pharmacare 2020. This council may be used to conduct the necessary research to assess the feasibility and strategy of publicly producing pharmaceuticals in Canada. Conclusions: Healthcare inequity that is linked to unaffordable medicine is exacerbated by poor drug coverage. The findings revealed that considerable investment into infrastructure, a strong civil society that pressures the government to act, and a pharmaceutical sector characterized by high prices may encourage a government to produce medicine when faced with a health crisis. Further findings revealed that API production may prevent a country from feasibly producing medicine. Considering Canada’s standing as an industrialized and developed nation with access to state-of-the-art public infrastructure, in addition to a pharmaceutical market characterized by high drug prices and a strong civil society sector, the Canadian Government is in a likely position to produce medicine. However, the necessary research must be conducted to assess whether such an endeavour is feasible. / Thesis / Master of Science (MSc) / As the global pharmaceutical industry continues to generate significant wealth, the demand for equitable access to medicine remains at the forefront of political and grassroots agendas. In recent years, poor drug coverage coupled with unaffordable drug prices have contributed to access issues for a growing number of Canadians (Morgan et al, 2015). Although the industry cites various reasons for an increase in cost, such as high-risk research, lengthy clinical trials and significant advances in technology (DiMasi et al., 2016; Ridley, 2005), there is a growing body of research that is contradictory to the industry’s reasoning for higher drug costs (Kohler et al., 2016; Siddiqui & Rajkumar, 2012; Light & Warburton, 2011). Whereas other initiatives to date focus on drug coverage, this work proposes the Canadian Government investigate the feasibility of the public production and distribution of pharmaceuticals. Thus, the research question addresses whether successful publicly funded pharmaceutical research and development initiatives, including production and distribution, could be applicable in the Canadian pharmaceutical sector where inequity is an issue. A scoping review was conducted to draw in all relevant literature on publicly funded research models pertaining to the research and development of pharmaceuticals.

Le travail de recherche que nous présentons dans ce document porte sur la dynamique des centres de R&D industriels implantés à l'étranger. Comme Ronstadt (1978), Asakawa (2001) et Asakawa & Som (2008), nous constatons que la mission et la position des centres de R&D dans le réseau interne d'innovation de la firme évoluent. Nous avons modélisé cette évolution en quatre phases distinctes : l'implantation du centre, la double phase de la construction de son identité grâce à son intégration au réseau interne d'innovation de la firme et à la construction de son réseau externe d'innovation et enfin la maturité du centre.Nous avons ensuite cherché à comprendre comment le centre passait de sa phase d'implantation,durant laquelle il n'a pas encore d'identité propre, à sa phase de maturité, où il est parvenu à se spécialiser et à devenir un élément clé du réseau interne d'innovation de la firme. Nous avons caractérisé chacun des moments de l'évolution du centre par les types de relations entre le centre,son réseau interne d'innovation et son environnement local. Pour y parvenir, nous nous sommes appuyée sur la littérature sur les clusters qui s'est intéressée aux types de liens nécessaires à l'échange de savoirs et de savoir-faire et à la construction de rapports de confiance entre plusieurs organismes au-delà de la seule considération de leur proximité géographique. Cette littérature apporte un outil peu mobilisé dans la littérature sur la globalisation de la R&D : les proximités (Boschma,2005). Nous avons utilisé six types de proximités pour comprendre et analyser de quelle manière un centre de R&D implanté à l'étranger évoluait : les proximités géographique, institutionnelle organisée, institutionnelle inorganisée, structurelle, cognitive et sociale. Il ressort de nos travaux que chacune des phases de l'évolution du centre se caractérise par une architecture de proximités spécifique entre le centre, son réseau interne d'innovation et son environnement local.Pour parvenir à ces résultats et pour les valider, nous avons combiné plusieurs outils méthodologiques : 1/ nous avons construit et animé pendant deux ans un focus group composé de managers de la R&D industrielle sur le thème de la globalisation de la R&D, 2/ nous avons étudié les centres de R&D implantés à Bangalore de quatre entreprises multinationales : ABB, AkzoNobel,Procter & Gamble et Siemens, 3/ enfin, nous nous sommes appuyée sur un grand nombre de « minicas», recueillis lors d'entretiens informels ou de réunions relatives à la question de la globalisation de la R&D. L'ensemble de ce travail empirique a été fait dans le cadre d'une thèse CIFRE avec l'association européenne pour le management de la recherche industrielle (EIRMA). / This thesis addresses the question of the dynamics of foreign industrial R&D centres.Just as Ronstadt (1978), Asakawa (2001) and Asakawa & Som (2008) did before us, we notice thatthe mission and the position of the R&D centres in their internal innovation network are changing over time. We have identified four different phases in these dynamics: 1/ the setting up of the centre, 2/ the double phase during which the centre builds up its own identity, thanks to its integration into its internal innovation network and the creation of its external innovation network, 3/ its maturity.One of the key questions was then to understand how the centre was able to rise from its first phase, during which it did not have its own identity, to its maturity phase, where it has its own speciality and is recognized as one of the key elements of its internal innovation network. In order to answer this question, we have identified the types of relationships between the centre, its internal innovation network and its local environment during each phase of its dynamics. We used the academic literature on clusters which tried to determine the types of relationships other than geographical proximity that make the exchanges of knowledge and know-how, as well as the creation of confidence between organisms possible. To answer this question, it introduces a concept which is not widely used in the academic literature on the globalisation of the R&D: the concept of proximities (Boschma 2005). Weused six types of proximities in order to understand the dynamics of the foreign R&D centres: the geographical proximity, the formal and informal institutional proximities, the organisational, cultural and social proximities. The results of our study show that each phase of the evolution of the foreign R&D centre can be characterised by an architecture of proximities between the centre, its internal innovation network and its local environment.Our results come from several empirical observations: 1/ we have built and organized a focus groupon the globalisation of R&D during two years. This focus group was made of several industrial R&Dmanagers, 2/ we have studies the Indian foreign R&D centres of four multinational companies: ABB,AkzoNobel, Procter & Gamble and Siemens, 3/ we have used several short case studies gatheredduring informal interviews and professional meetings on the globalisation of R&D. This empirical work has been realized in the framework of a public-private partnership between our laboratory and the European Association for Industrial Research Management (EIRMA).