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Bivariate Probit Models for Analysing how “Knowledge” Affects Innovation and Performance in Small and Medium Sized Firms

Salvatore Farace and Fernanda Mazzotta

No 120, CELPE Discussion Papers from CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy

Abstract: This paper examines the determinants of innovation and its effects on small- and medium-sized firms We use the data from the OPIS databank, which provides a survey on a representative sample of firms from a province of the Southern Italy. We want to study whether small and medium sized firms can have a competitive advantage using their innovative capabilities, regardless of their sectoral and size limits. The main factor influencing the likelihood of innovation is knowledge, which is acquired through different ways. The econometric methodology consists of two bivariate models in order to estimate the probability of increased sales conditioned to the probability of innovation. We found that knowledge positively influences the probability of innovation; at the same time, knowledge has also a positive indirect effect on the increase of sales through innovation.

Keywords: innovation; small and medium sized firms; human capital; networks; bivariate probit (search for similar items in EconPapers)
JEL-codes: C24 C25 O31 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2011-10-11
New Economics Papers: this item is included in nep-cis, nep-cse, nep-ent, nep-ino, nep-knm and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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