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Persistence of innovation and patterns of firm growth

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  • Guarascio, Dario
  • Tamagni, Federico

Abstract

In this work we exploit a long-in-time panel of Spanish manufacturing firms observed during the period 1990–2012 to examine the long-run contribution of innovation persistence to sales growth and market share dynamics. We examine two main research questions. First, do persistent innovators grow more than other firms? Second, do persistent innovators show more persistent growth patterns over time compared to other firms? We find negative answers to both questions: firms that persistently innovate over the first decade, do not grow more and do not display more persistent growth dynamics in the succeeding years, regardless of whether innovation persistence is defined in terms of R&D, patenting activity, or product or process innovation. These findings lend support to luck and random theories of firm growth, in turn challenging innovation persistence theories commonly suggesting that persistent innovators enjoy large and sustained comparative advantages.

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  • Guarascio, Dario & Tamagni, Federico, 2019. "Persistence of innovation and patterns of firm growth," Research Policy, Elsevier, vol. 48(6), pages 1493-1512.
    • Handle: RePEc:eee:respol:v:48:y:2019:i:6:p:1493-1512
    DOI: 10.1016/j.respol.2019.03.004
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    More about this item

    Keywords

    Innovation persistence; Firm growth and market success; Innovation inputs and outputs; Product and process innovation; R&D; Patents;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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