Openness and Innovation - Home and Export Demand Effects on Manufacturing Innovation: Panel Data Evidence for Ireland and Switzerland

Martin Woerter and Stephen Roper

No 08-210, KOF Working papers from KOF Swiss Economic Institute, ETH Zurich

Abstract: Recent studies in the tradition of Schmookler have re-emphasised the potential role of demand in stimulating innovation. Here, we reconsider the role of 'home' and 'export' market demand in stimulating manufacturing innovation using comparable panel data for two small open economies - Ireland and Switzerland. Our analysis is based on the estimation of reduced form innovation production functions using panel data estimators over the sample period 1994 to 2005. For a range of innovation indicators, however, we find little evidence of any significant market demand effects, with innovation performance instead determined largely by firm-level capability effects and characteristics. In policy and strategy terms this suggests the continued value of measures to improve innovation capability regardless of market demand conditions. In more methodological terms our results suggest the validity of the usual assumption implicit in modelling innovation outputs that supply-side factors predominate.

Keywords: Innovation; Demand; Ireland; Switzerland (search for similar items in EconPapers)
Pages: 31 pages
Date: 2008-09
New Economics Papers: this item is included in nep-cse, nep-ino, nep-ipr, nep-pr~, nep-knm and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://dx.doi.org/10.3929/ethz-a-005703343 (application/pdf)

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Journal Article: Openness and innovation--Home and export demand effects on manufacturing innovation: Panel data evidence for Ireland and Switzerland (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:kof:wpskof:08-210

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