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How does competition affect the relationship between innovation and productivity? Estimation of a CDM model for Norway

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  • Fulvio Castellacci

Abstract

The paper investigates the effects of industry-level competition on firm-level innovation and productivity. We propose a refined version of the CDM (Crepon, Duguet, and Mairesse) model that analyses the impacts of competition on four interrelated stages of the innovation process: the choice of a firm to engage in innovation, its R&D intensity, its innovation output and labour productivity. We test the model on a firm-level panel data set based on the last three waves of the innovation survey for Norway (CIS3, CIS4 and CIS5). The econometric results provide empirical support for the refined version of the CDM model. They show that enterprises in oligopolistic sectors have, on average, a greater propensity to engage in innovative activities and tend to invest a greater amount of resources in R&D. On the other hand, firms in competitive industries are characterized by a stronger impact of innovation input on their technological and economic performance.

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Bibliographic Info

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

Volume (Year): 20 (2011)
Issue (Month): 7 (August)
Pages: 637-658

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Handle: RePEc:taf:ecinnt:v:20:y:2011:i:7:p:637-658

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Citations

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Cited by:
  1. Fulvio Castellacci, 2014. "Service innovation and the proximity-concentration trade-off model of trade and FDI," Economics of Innovation and New Technology, Taylor & Francis Journals, Taylor & Francis Journals, vol. 23(1), pages 92-108, January.
  2. Bruno Amable & Ivan Ledezma & Stéphane Robin, 2014. "Product market regulation, innovation and productivity," Documents de travail du Centre d'Economie de la Sorbonne, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne 14025, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  3. Michael Peneder & Martin Woerter, 2014. "Competition, R&D and innovation: testing the inverted-U in a simultaneous system," Journal of Evolutionary Economics, Springer, Springer, vol. 24(3), pages 653-687, July.
  4. Castellacci, Fulvio & Fevolden, Arne, 2012. "Capable companies or changing markets? Explaining the export performance of firms in the defence industry," MPRA Paper 36026, University Library of Munich, Germany.
  5. Casey, Eddie & O'Toole, Conor, 2013. "Bank-lending constraints and alternative financing during the financial crisis: Evidence from European SMEs," Papers, Economic and Social Research Institute (ESRI) WP450, Economic and Social Research Institute (ESRI).

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