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Does the relationship between innovation and competition vary across industries? Comparison of public and private research enterprises

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  • Syoum Negassi
  • Stephane Lhuillery
  • Jean-François Sattin
  • Tsu-Yi Hung
  • Florent Pratlong

Abstract

The relationship between innovation and competition remains unclear despite the substantial number of theoretical and empirical papers on this topic. Firms in different industries differ substantially in terms of the innovation strategy they adopt and the technological performance they achieve: sectors provide firms with a set of opportunities and constraints shaping the way they organize their innovation activities. By introducing, national factors, knowledge, capital, firm’s external linkage, sectoral characteristics and R&D public policies, our econometric study confirms that the relationship between competition and innovation takes an inverted U-shape due to the simultaneous influence of two opposing forces (‘Schumpeterian effect’ and the ‘escape competition effect’). However, we show further that this general result does not hold if we distinguish between public and private sector industries: we find an inverted-U shaped relationship between innovation and competition in the public sector, but, due to the high level of competition among private firms, not in the private sector. Moreover, we show that the public research sector is ‘innovative’ while the private sector seems to be a ‘catch-up’ sector. It suggests the key theoretical assumption that public manufacturing industries are technologically neck-and-neck with their counterparts in the private sector.

Suggested Citation

  • Syoum Negassi & Stephane Lhuillery & Jean-François Sattin & Tsu-Yi Hung & Florent Pratlong, 2019. "Does the relationship between innovation and competition vary across industries? Comparison of public and private research enterprises," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 28(5), pages 465-482, July.
    • Handle: RePEc:taf:ecinnt:v:28:y:2019:i:5:p:465-482
    DOI: 10.1080/10438599.2018.1527552
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    Cited by:

    1. Kyungmin Kim, 2022. "Supervisor Leadership and Subordinates’ Innovative Work Behaviors: Creating a Relational Context for Organizational Sustainability," Sustainability, MDPI, vol. 14(6), pages 1-15, March.
    2. Daragh O'Leary & Justin Doran & Bernadette Power, 2022. "Intensity of competition and firm innovative behavior," Economics and Business Letters, Oviedo University Press, vol. 11(2), pages 53-69.
    3. Abbas, Sadia & Adapa, Sujana & Sheridan, Alison & Azeem, Muhammad Masood, 2022. "Informal competition and firm level innovation in South Asia: The moderating role of innovation time off and R&D intensity," Technological Forecasting and Social Change, Elsevier, vol. 181(C).
    4. Hannu Littunen & Timo Tohmo & Esa Storhammar, 2021. "Innovation among SMEs in Finland: The impact of stakeholder engagement and firm-level characteristics," Journal of Entrepreneurship, Management and Innovation, Fundacja Upowszechniająca Wiedzę i Naukę "Cognitione", vol. 17(4), pages 157-196.
    5. Priyanka, & Jain, Mahima & Dhir, Sanjay, 2022. "Antecedents of organization ambidexterity: A comparative study of public and private sector organizations," Technology in Society, Elsevier, vol. 70(C).
    6. Mulier, Klaas & Samarin, Ilia, 2021. "Sector heterogeneity and dynamic effects of innovation subsidies: Evidence from Horizon 2020," Research Policy, Elsevier, vol. 50(10).
    7. Madan Dhanora & Ruchi Sharma & Walter G. Park, 2021. "Technological Innovations and Market Power: A Study of Indian Pharmaceutical Industry," Millennial Asia, , vol. 12(1), pages 5-34, April.
    8. Qi Jun & Hasan Dinçer & Serhat Yüksel, 2021. "Stochastic hybrid decision‐making based on interval type 2 fuzzy sets for measuring the innovation capacities of financial institutions," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(1), pages 573-593, January.
    9. Aurelien Quignon, 2022. "Market Regulation and Innovation: Direct and Indirect Effects," Journal of Industry, Competition and Trade, Springer, vol. 22(3), pages 429-456, December.
    10. Ganguly, Madhuparna, 2021. "Competition and Innovation: the effects of scientist mobility and stronger patent rights," MPRA Paper 107831, University Library of Munich, Germany.
    11. Muhammad Zeeshan Younas & Muhammad Iftikhar Husnain, 2022. "Role of market structure in firm-level innovation: an extended CDM model for a developing economy," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 49(1), pages 91-104, March.
    12. Zhenjun Yan & Xinyan Wu & Jing Li & Bingqing Liang, 2022. "Competition and Heterogeneous Innovation Qualities: Evidence from a Natural Experiment," Sustainability, MDPI, vol. 14(13), pages 1-21, June.

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