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Innovation Complimentarity and Scale of Production

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  • Miravete, Eugenio J
  • Pernias, Jose C

Abstract

This Paper is an empirical study on the existence of complementarity between product and process innovation. We present an econometrically feasible model that uses the information contained in the innovation profile of each firm to test for the existence of complementarity among production and innovation strategies. We apply the model to analyse the Spanish ceramic tiles industry where the adoption of the single firing furnace in the 1980s facilitated the introduction of new product designs as well as to opening new ways of organizing production. Our econometric results show that there is significant complementarity between product and process innovation. We are able to separate the nature of complementarity relationships and thus, our results show that both intrinsic – technologically driven – and induced complementarity – due to firms unobserved heterogeneity – are significant. Small firms tend to be more innovative overall.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4483.

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Date of creation: Jul 2004
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Handle: RePEc:cpr:ceprdp:4483

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Related research

Keywords: complementarity; process innovation; product innovation; supermodularity; unobserved heterogeneity;

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Cited by:
  1. Boris Lokshin & Rene Belderbos & Martin Carree, 2006. "Internal and external R&D: complements or substitutes? Evidence from a dynamic panel data model," Hi-Stat Discussion Paper Series d06-163, Institute of Economic Research, Hitotsubashi University.

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