Innovation and Firms’ Productivity Growth in Slovenia: Sensitivity of Results to Sectoral Heterogeneity and to Estimation Method

Joze Damijan, Crt Kostevc and Matija Rojec

Chapter Chapter 8 in Innovation, Growth and Competitiveness, 2011, pp 165-193 from Springer

Abstract: Abstract The paper examines implications of endogenous growth theory on the relationship between innovation and firm productivity (productivity growth) by combining information on firm-level innovation (CIS) with accounting data for a large sample of Slovenian firms in the period 1996–2002. We employ several different estimation methods in order to control for the endogeneity of innovation and idiosyncratic firm characteristics. We find a significant and robust link between productivity levels and firm propensity to innovate, while the results on the link between innovation activity and productivity growth are not robust to different econometric approaches. Although OLS estimates indicate that successful innovation positively impacts productivity growth, further analysis reveals that these results are mainly driven by the exceptional performance of a specific group of services firms located in the fourth quintile with respect to size, productivity and R&D propensity measure. Estimates based on matching techniques, on the other hand, do not reveal any significant positive effects of innovation on productivity growth, regardless of the sectors, firm size and type of innovation.

Keywords: Ordinary Little Square; Firm Performance; Productivity Growth; Total Factor Productivity; Process Innovation (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:spr:adspcp:978-3-642-14965-8_8

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DOI: 10.1007/978-3-642-14965-8_8

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