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Services Innovation and Economic Performance: An analysis at the firm level

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Author Info
Luísa Ferreira Lopes
Manuel Mira Godinho

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Abstract

We present a model that links innovation effort to economic performance, along the lines of the Crépon et al (1998) model. However, in contrast to Crépon et al, that analyze R&D intensive manufacturing sectors, the present application examines the relationship between innovation and performance for services sectors. This is relevant since much effort has been made to explore that relationship for manufacturing but very little is known about it in the case of services sectors. In trying to fulfill this gap the paper uses firm-level data from the Second Community Innovation Survey to estimate a simultaneous equations model for firms in ten services sectors in Portugal. The present model also differs from former approaches by the specific explanatory structure proposed to estimate the complex relationship between innovation and economic performance. Instead of estimating a direct link between innovation and labor productivity, three specific relationships were put forward. The first of them explains the innovation effort intensity (an input in the innovation process). The second one relates service innovation (an output of the innovation process) to effort intensity and to other explanatory variables. Finally, the third relationship links labor productivity to both service innovation and effort intensity considering also some other influences. Sensitivity analysis of the results to alternative estimation techniques was performed.

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Publisher Info
Paper provided by DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies in its series DRUID Working Papers with number 05-08.

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Date of creation: 2005
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Handle: RePEc:aal:abbswp:05-08

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Related research
Keywords: Innovation and performance Innovation in services Technology Service sectors Labor productivity CIS

Find related papers by JEL classification:
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes
L8 - Industrial Organization - - Industry Studies: Services

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This item is featured on the following reading lists:
  1. Socio-Economics of Innovation
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