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R&D, firm growth and the role of innovation persistence: an analysis of Finnish SMEs and large firms

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  • Matthias Deschryvere

Abstract

R&D investment and growth in SMEs and large firms relate in a complex way. This paper analyses what role persistence of innovation output plays in shaping that relationship. We apply a vector auto-regression model to Finnish firm-level data and summarize the lead–lag relationship and complex co-movements of R&D growth and firm growth series. We found only continuous product and process innovators to have positive associations between R&D growth and sales growth. Also the associations between sales growth and subsequent R&D growth were stronger for continuous innovators than for occasional innovators, but only for product innovators. In the case of process innovators it is the occasional innovators that exhibit a stronger association between sales growth and subsequent R&D growth. In addition, our results vary between large and small firms. We express the need for further research on innovation dynamics and growth of SMEs analysing the interactions between different innovation activities. Copyright Springer Science+Business Media New York 2014

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  • Matthias Deschryvere, 2014. "R&D, firm growth and the role of innovation persistence: an analysis of Finnish SMEs and large firms," Small Business Economics, Springer, vol. 43(4), pages 767-785, December.
    • Handle: RePEc:kap:sbusec:v:43:y:2014:i:4:p:767-785
    DOI: 10.1007/s11187-014-9559-3
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    More about this item

    Keywords

    Firm growth; R&D; Innovation; SME; Panel VAR; Finland; L10; L20; L26; O31; O32;
    All these keywords.

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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