Pandemic Effects: Do Innovation Activities of German Firms Suffer from Long-COVID?

Markus Trunschke (markus.trunschke@zew.de), Bettina Peters (bettina.peters@zew.de), Dirk Czarnitzki and Christian Rammer
Additional contact information
Markus Trunschke: KU Leuven, BE & ZEW, DE

DEM Discussion Paper Series from Department of Economics at the University of Luxembourg

Abstract: The COVID-19 pandemic has affected firms in many economies. Exploiting treatment heterogeneity, we use a difference-in-differences design to causally identify the short-run impact of COVID-19 on innovation spending in 2020 and expected innovation spending in subsequent years. Based on a representative sample of German firms, we find that negatively affected firms substantially reduced innovation expenditure not only in the first year of the pandemic (2020) but also in the two subsequent years, indicating ’Long–Covid’ effects on innovation. In 2020, innovation expenditure fell by 4.7% due to the pandemic. In 2022, innovation spending was even 5.4% lower compared to the counterfactual scenario without the pandemic. Firms with higher pre-treatment digital capabilities show higher innovation resilience during the pandemic. Moreover, COVID-19 leads to a decrease in innovation spending not only in firms that were strongly negatively affected by the pandemic, but also in those firms that experienced a positive demand shock from the pandemic, presumably to increase production capacity.

Keywords: COVID-19; innovation; difference-in-differences; economic crisis; resilience. (search for similar items in EconPapers)
JEL-codes: O31 O33 (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Working Paper: Pandemic effects: do innovation activities of German firms suffer from Long-COVID? (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:luc:wpaper:23-05

Access Statistics for this paper

More papers in DEM Discussion Paper Series from Department of Economics at the University of Luxembourg Contact information at EDIRC.
Bibliographic data for series maintained by Marina Legrand (marina.legrand@uni.lu).