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The Relationship Between Firm Size and Innovation Activity: A Double Decision Approach

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Author Info

  • Ester Martinez-Ros
  • Jose Labeaga

Abstract

The main purpose of this paper is to analyse the relationship between firm size and innovation activity using Spanish data at firm level corresponding to the manufacturing sector for the period 1990-93. This exercise is different to previous applications because we allow for different size effects in the decision to innovate and the innovation count equation, in the context of a double-hurdle approach. Several tests confirm the hurdle negbin model. We find that firm size is a relevant factor, although size effects are different in both decisions. A robust result from the different specifications estimated is the rejection of the Gilbert and Newbery hypotheses. We find out that the behaviour of firm size is neither linear in the decision nor in thc count equation. We also provide additional, and sometimes different, evidence to previous Spanish studies on R&D.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Economics of Innovation and New Technology.

Volume (Year): 11 (2002)
Issue (Month): 1 ()
Pages: 35-50

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Handle: RePEc:taf:ecinnt:v:11:y:2002:i:1:p:35-50

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Related research

Keywords: Product Innovation; Process Innovation; Count Data; Negbin Hurdle Model;

References

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  1. Cameron, A Colin & Trivedi, Pravin K, 1986. "Econometric Models Based on Count Data: Comparisons and Applications of Some Estimators and Tests," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 1(1), pages 29-53, January.
  2. Jones, Andrew M, 1989. "A Double-Hurdle Model of Cigarette Consumption," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 4(1), pages 23-39, Jan.-Mar..
  3. Gilbert, Richard J & Newbery, David M G, 1982. "Preemptive Patenting and the Persistence of Monopoly," American Economic Review, American Economic Association, vol. 72(3), pages 514-26, June.
  4. Blundell, Richard & Griffith, Rachel & Van Reenen, John, 1995. "Dynamic Count Data Models of Technological Innovation," Economic Journal, Royal Economic Society, vol. 105(429), pages 333-44, March.
  5. Blundell, Richard & Bond, Stephen & Devereux, Michael & Schiantarelli, Fabio, 1992. "Investment and Tobin's Q: Evidence from company panel data," Journal of Econometrics, Elsevier, vol. 51(1-2), pages 233-257.
  6. Hausman, Jerry & Hall, Bronwyn H & Griliches, Zvi, 1984. "Econometric Models for Count Data with an Application to the Patents-R&D Relationship," Econometrica, Econometric Society, vol. 52(4), pages 909-38, July.
  7. Zvi Griliches, 1991. "Patent Statistics as Economic Indicators: A Survey," NBER Working Papers 3301, National Bureau of Economic Research, Inc.
  8. Cameron, A. Colin & Trivedi, Pravin K., 1990. "Regression-based tests for overdispersion in the Poisson model," Journal of Econometrics, Elsevier, vol. 46(3), pages 347-364, December.
  9. Winfried Pohlmeier & Volker Ulrich, 1995. "An Econometric Model of the Two-Part Decisionmaking Process in the Demand for Health Care," Journal of Human Resources, University of Wisconsin Press, vol. 30(2), pages 339-361.
  10. repec:fth:harver:1473 is not listed on IDEAS
  11. Cohen, Wesley M. & Levin, Richard C., 1989. "Empirical studies of innovation and market structure," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 18, pages 1059-1107 Elsevier.
  12. Mullahy, John, 1986. "Specification and testing of some modified count data models," Journal of Econometrics, Elsevier, vol. 33(3), pages 341-365, December.
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Citations

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Cited by:
  1. Koski, Heli & Marengo, Luigi & Mäkinen, Iiro, 2009. "Managerial Practices, Performance and Innovativeness: Some Evidence from Finnish Manufacturing," Discussion Papers 1176, The Research Institute of the Finnish Economy.
  2. Tingvall, Patrik & Karpaty, Patrik, 2011. "Offshoring and Home Country R&D," Ratio Working Papers 180, The Ratio Institute.
  3. Koski, Heli, 2013. "ICT outsourcing, user-driven and open innovation strategies in the generation of new data-based solution," ETLA Working Papers 7, The Research Institute of the Finnish Economy.
  4. Heli Koski & Luigi Marengo & Iiro Mäkinen, 2009. "Firm size, managerial practices and innovativeness: some evidence from Finnish manufacturing," LEM Papers Series 2009/01, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  5. Ester Martínez Ros & Vicente Salas Fumás, . "The effect of innovation activity on innovating quasi-rents: an empirical application," Studies on the Spanish Economy 03, FEDEA.
  6. José M. Labeaga & Ester Martínez Ros, . "Persistence and ability in the innovation decisions," Working Papers 2005-16, FEDEA.
  7. Koski, Heli, 2012. "The Role of Data and Knowledge in Firms’ Service and Product Innovation," Discussion Papers 1272, The Research Institute of the Finnish Economy.

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