Do Organizational Form Matter ? r Wirtschafts Innovation and - PowerPoint PPT Presentation

sforschung Do Organizational Form Matter ? ür Wirtschafts Innovation and liberalization in the German wastewater sector hes Institut fü ch-Westfälisch Harald Tauchmann (RWI Essen) Rheinisc Mark Oelmann (WIK) k O l ( ) Hartmut Clausen (RWI Essen) 8th Conference on Applied Infrastructure Research (INFRADAY 2009) Berlin, 9-10 October, 2009 M. Oelmann & H. Tauchmann INFRADAY 2009 1

sforschung Project ür Wirtschafts hes Institut fü This work originates from the research project “ Einflussfaktoren und Handlungsbedarfe für Innovationen zum Einflussfaktoren und Handlungsbedarfe für Innovationen zum ch-Westfälisch nachhaltigen Wirtschaften - Möglichkeiten und Grenzen einer nachhaltigen Wasserwirtschaft , nachhaltigen Wasserwirtschaft “ Rheinisc funded by the German Federal Ministry of Education and research (BMBF) under the research initiative h (BMBF) d th h i iti ti "Rahmenbedingungen für Innovationen zum nachhaltigen Wirtschaften :[riw]" M. Oelmann & H. Tauchmann INFRADAY 2009 2

sforschung Structure ür Wirtschafts hes Institut fü 1. Background & research question 2. Survey description y p ch-Westfälisch 3. Econometric model Rheinisc 4. Estimation results 5. Policy implications M. Oelmann & H. Tauchmann INFRADAY 2009 3

sforschung Background ür Wirtschafts Technical standard of German water services Technical standard of German water services hes Institut fü generally high Unsolved Problems e.g.: Unsolved Problems e.g.: ch-Westfälisch  Partly outdated grid-type network requiring enormous future investment Rheinisc  Some environmental problems not addressed yet (e.g. hormones, drug residua) , g )  Raising waste water charges/(alleged) economic inefficiency  Innovations considered as possible mean to solve such problems M. Oelmann & H. Tauchmann INFRADAY 2009 4

sforschung Policy Background ür Wirtschafts hes Institut fü  Liberalization of telecommunication and electricity markets in the 1990s ch-Westfälisch  Discussion about liberalizing water and waste water services too Rheinisc  No decision to substantially open the sector to some form of competition  How to improve performance of the sector alternatively?  Innovations might be such an alternative (cf state  Innovations might be such an alternative (cf. state ministers of economics) M. Oelmann & H. Tauchmann INFRADAY 2009 5

sforschung Research Questions ür Wirtschafts  What are determinants of firms’ innovativeness in the hes Institut fü h d i f fi ’ i i i h waste water sector and thus can innovativeness be fostered by policy measures? fostered by policy measures? ch-Westfälisch  Are innovations in fact substitutes to the introduction of some form of competition, rather than complements? ome fo m of ompetition the th n omplement ? Rheinisc  Might some form of competition and/or private commitment be a driver for innovations?  Do we get a similar result like Haug (2008) who analyzed Do we get a similar result like Haug (2008) who analyzed for the water sector that the more independent utilities are of municipal influence the more efficient they are? M. Oelmann & H. Tauchmann INFRADAY 2009 6

sforschung The Role of Local Governments ür Wirtschafts  Important role of municipalities/waste water disposal hes Institut fü sovereign duty of the local government  Local authorities responsible for sewage disposal ch-Westfälisch  Municipality can choose how the task is fulfilled Rheinisc (organizational arrangement)  Different organizational forms reflect certain levels of g municipalities’ interference  Reducing the influence of local authorities is regarded as g g a first step to open the sector to the market M. Oelmann & H. Tauchmann INFRADAY 2009 7

sforschung Organizational Arrangements ür Wirtschafts  Municipal department (Regiebetrieb) (24% )  Municipal department (Regiebetrieb) (24% ) hes Institut fü  Semi-autonomous agency (Eigenbetrieb) (40% )  P blic la  Public law incorporation (Anstalt öff. Rechts) (16% ) ch-Westfälisch inco po ation (Anstalt öff Rechts) (16% )  Inter-municipal agency (Zweck- bzw. Wasserverband) (9% ) (9% ) Rheinisc  Municipal enterprise under private law (Eigengesellschaft AG / GmbH) (4% ) AG / GmbH) (4% )  Operating /Co-operating Enterprise (Betreiber-/ Kooperationsgesellschaft AG / GmbH) (3% ) Kooperationsgesellschaft AG / GmbH) (3% )  Others (4% ) M. Oelmann & H. Tauchmann INFRADAY 2009 8

sforschung Survey Description ür Wirtschafts hes Institut fü  Survey among ATV-DVWK members  683 firms randomly drawn stratified by location and size  683 firms randomly drawn, stratified by location and size ch-Westfälisch  237 completed questionnaires, 161 used for estimation Rheinisc  Majority of questions concerned with perceptions about drivers and obstacles to innovations  Here focus is on questions concerning adaptation of organizational novelties ( already implemented, implementation planned, or implementation not i l t ti l d i l t ti t considered ) M. Oelmann & H. Tauchmann INFRADAY 2009 9

sforschung Organizational Innovations ür Wirtschafts hes Institut fü Distribution of dependent variables: ch-Westfälisch O Organizational neither planned adaptation already innovation nor implemented planned adapted Split waste water charges 93 24 44 S Success-related fees l t d f 133 133 21 21 7 7 Rheinisc Service and operation directions 50 33 78 Cost and activity accounting 80 30 51 Internal performance indicators 105 24 32 Benchmarking 117 16 28 Management systems Management systems 128 128 20 20 13 13 Incentive wages 137 13 11 M. Oelmann & H. Tauchmann INFRADAY 2009 10

sforschung Explanatory Variables ür Wirtschafts Preferred Specification: p hes Institut fü  Dummies for organizational form  Controls for size (population) and (p p ) ch-Westfälisch characteristics of disposal area (population density) Rheinisc Explanatory Variable E l t V i bl Mean M M di Median Std. Dev. Std D Measuring Unit M i U it municipal department 0.2733 0.4470 indicator semi-autonomous agency 0.3602 0.4816 indicator inter-municipal agency 0.2360 0.4260 indicator public law incorporation 0.0621 0.2421 indicator private law 0.0683 0.2531 indicator 10 6 people population 0.1198 0.0185 0.4031 10 4 people/km 2 0.0210 population density 0.0490 0.0673 M. Oelmann & H. Tauchmann INFRADAY 2009 11

sforschung The Econometric Model ür Wirtschafts hes Institut fü The Modeling Strategy:  Innovations are measured by output not inputs ch-Westfälisch  Individual innovations are observed  Analysis is interested in innovativeness in general, not  Analysis is interested in innovativeness in general not Rheinisc single innovations  No ex ante measure of innovativeness is constructed  No ex ante measure of innovativeness is constructed  Multivariate analysis & structural model allow for identification of effects on the unobserved variable identification of effects on the unobserved variable “innovativeness” M. Oelmann & H. Tauchmann INFRADAY 2009 12

sforschung The Structural Model ür Wirtschafts 1 1. Propensity X * to implement an innovation is Propensity X li * to implement an innovation is hes Institut fü determined by observable firm-specific variables z i and the latent variable innovativeness Y li * : li ch-Westfälisch         * * X Y ' z 1 i i 10 11 1 i 1 i            * * * * Rheinisc X Y ' z 2 i i 20 21 2 i 2 i              * * * * X Y ' ' z . Li i L 0 L 1 L i Li 2. Innovativeness is determined by characteristics z i too: o a e ess s de e ed by a a e s s i oo  '    * Y z i i i M. Oelmann & H. Tauchmann INFRADAY 2009 13

sforschung ür Wirtschafts hes Institut fü ch-Westfälisch Rheinisc 14 INFRADAY 2009 The Structural Model M. Oelmann & H. Tauchmann

sforschung A Reduced Form Representation ür Wirtschafts  Structural model not operation since Y li * is not Structural model not operation since Y li is not hes Institut fü observed  Substituting Y li * leads to a reduced form Substituting Y li leads to a reduced form ch-Westfälisch  Reduced form can easily be estimated using L ordered probit models probit models Rheinisc  Left hand side: 0, 1, 2 , i.e. innovation not implemented, implementation planned, already p , p p , y implemented  Right hand side: z i  Problem: structural parameters  matter, not the reduced form coefficients M. Oelmann & H. Tauchmann INFRADAY 2009 15

sforschung Identification of the Structural Parameters ür Wirtschafts Two assumptions necessary to identify  : Two assumptions necessary to identify  : hes Institut fü 1. An explanatory variable cannot systematically influence the propensity to implement innovations in any other way than propensity to implement innovations in any other way than ch-Westfälisch through a firms’ innovativeness, i.e.: L 1      0 0 l l Rheinisc L  l 1 2. Effects of innovativeness needs an innocent normalization, e.g.: L 1    1 l L L  l l 1   calculated as average of the reduced form coefficients M. Oelmann & H. Tauchmann INFRADAY 2009 16