Persistence in lnnovation and Profitability

Elena Cefis

Rivista Internazionale di Scienze Sociali, 2003, vol. 111, issue 1, 19-37

Abstract: The paper investigates the relationship between the strong inertia of finns profits and the persistence in innovative activities. The empirical analysis implements a non-parametric approach based on modelling the dynamics of the evolving cross-section distributions to analyse firms' intradistribution mobility and persistence. Results suggest that firms which are systematic innovators and earn profits above the average have large probabilities to keep innovating and earning profits above the average, as well as vice versa. Firm's relative position in innovation matters in the long run: the probability to earn profits above the average, is higher if firms start as systematic innovators.

Keywords: innovation; patents; persistence; profitability; Transition Probability Matrices (search for similar items in EconPapers)
JEL-codes: D21 L20 L60 O31 (search for similar items in EconPapers)
Date: 2003
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