EXPLORING THE RELEVANCE OF TWO-PART MODELS IN INNOVATION RESEARCH: TOWARDS A BETTER UNDERSTANDING OF INNOVATION SALES

Camille Pedersen, Jesper N. Wulff and Anders R. Villadsen
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Camille Pedersen: Department of Economics and Business Economics, Aarhus University, Building 2621-16, Fuglesangs Allé 4, 8210 Aarhus V, Denmark
Jesper N. Wulff: Department of Economics and Business Economics, Aarhus University, Building 2621-16, Fuglesangs Allé 4, 8210 Aarhus V, Denmark
Anders R. Villadsen: Department of Management, Aarhus University, Nordre Ringgade 1, 8000 Aarhus Centrum, Denmark

International Journal of Innovation Management (ijim), 2025, vol. 29, issue 01n02, 1-44

Abstract: In empirical studies, firms’ innovation is often measured as the proportion of sales that can be attributed to new products or services. In a review of 20 years of research on innovation, we find this variable to be used in 141 studies providing a useful common ground to compare and contrast findings. We argue that two-part models are attractive when modelling innovation as they separate the decision to innovate from the amount of sales generated by innovation. Our review shows that only a minority of studies employ two-part models, most often in sub-optimal ways. We develop a two-part modelling framework that is suitable for innovation research and different from the conventional methods prevalent in econometrics. Furthermore, we provide a worked example of how it can be implemented. This paper contributes new knowledge about two-part models for innovation research and hopes to lay the ground for new theorising in the future.

Date: 2025
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DOI: 10.1142/S1363919625500070

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