How does competition affect innovation behaviour in french firms?

Benoit Mulkay ()
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Benoit Mulkay: MRE - Montpellier Recherche en Economie - UM - Université de Montpellier

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Abstract: This paper investigates the relationship between competition and innovation at the firm level. Recent papers (Aghion et al., 2005; Askenazy et al., 2013; Rafique Hashmi, 2013) advocate a non-linear relationship, conciliating the Schumpeterian and Arrowian views. In this paper, the effect of competition on innovation is studied at the firm level using a large dataset for France coming from the annual surveys on R&D, covering the period 2000-2013, where a dummy variable is available for product or process innovation. The econometric results do not confirm the inverted-U shape relationship between the Lerner index and innovation, found by Aghion et al. (2005). This may be due to the use of firm-level data rather than industry-level data. However, for most firms, there is a negative effect of competition on innovation, meaning that more competition in the industry or a small market share has a negative effect on the propensity to innovate, either in products or processes, and the effect seems to be slightly stronger for product than for process innovation.

Date: 2019-12
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Citations: View citations in EconPapers (12)

Published in Structural Change and Economic Dynamics, 2019, 51, pp.237 - 251. ⟨10.1016/j.strueco.2019.05.003⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03511763

DOI: 10.1016/j.strueco.2019.05.003

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