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The impact of process innovations on firm's productivity growth: the case of Spain

Rafael Llorca Vivero

Applied Economics, 2002, vol. 34, issue 8, 1007-1016

Abstract: The main aim of this paper is to investigate about the effect that a measure of the process innovation performance of a firm has on its labour productivity growth. This analysis is mainly a consequence of two considerations. The first one results from a clear differentiation of the role that product and process innovations have on a firm's performance. The second one is to assume that the knowledge capital of a firm is mainly composed by its successful research. The study demonstrates that process innovation has a positive and significant effect on firm's productivity growth. Moreover, this result is robust under a wide range of alternative specifications and, in any case, the variable behaves much better than R&D intensity. Following previous research, the detected quadratic relationship between vertical product differentiation and process innovation performance leads to the existence of some firms for which there exist a trade-off between quality and productivity.

Date: 2002
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DOI: 10.1080/00036840010019684

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