Types of Innovation and Firm performance

Michele Cincera and Ela Ince

No 2019-032, Working Papers TIMES² from ULB -- Universite Libre de Bruxelles

Abstract: The paper brings together firm-level R & D spending information with patent information and aims to investigate the impact of different types of patented inventions on firm output growth performance controlling for R & D spending and other firm financials. We consider forward-looking indicators of breakthrough and general innovation, and backward-looking indicators of originality and radicalness in innovation activities. Firm performance is estimated through a Cobb-Douglas production function. We allow for non-linearity in relationship between innovation strategy and firm performance and we investigate sectoral heterogeneity looking at the impact in health industries and ICT producers. Models are estimated using two-stage least squares and generalised method of moments to control for potential endogeneity of innovation indicators. Our findings confirm non-linearity and sectoral heterogeneity in relationship between the different types of innovation and firm performance. While ICT producers are growing with breakthrough innovations, general-purpose technologies and, to a certain extend, with original and radical innovations, the growth of firms operating in health industries is not explained by breakthrough innovations nor by specific trend of feature of ICT and the choice of incremental innovation strategy by pharmaceutical and biotechnology firms

Keywords: Breakthrough innovation; Generality; Originality; Radicalness; Firm growth (search for similar items in EconPapers)
Pages: 36 p.
Date: 2019-07
New Economics Papers: this item is included in nep-cse, nep-eff, nep-ict, nep-ino and nep-sbm
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