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Innovate or Die? A critical review of the literature on innovation and performance

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Author Info
Stefano Brusoni (CESPRI-CRORA, Bocconi University and Silvio Tronchetti-Provera Foundation, Milano,Italy.)
Elena Cefis (Utrecht School of Economics, Utrecht University and Bergamo University)
Luigi Orsenigo (University of Brescia and CESPRI, Bocconi University, Italy)

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Abstract

The idea that innovation leads to positive economic performance has become a sort of truism in recent years. However, empirical evidence showing that innovating organizations and countries outperform non-innovating ones remains scant and scattered. In many ways, the jury is still out. First of all, there is still little agreement about what ‘performance’ means. The range of indicators adopted in the literature varies widely: financial performance, market shares, new products introduced into the market, patents, GDP growth, and so on. Second, the time lag between innovative efforts and performance is often so large, and so industry specific, that it remains just very hard to produce reliable estimates. Third, it is still unclear at what level of analysis one should go looking for positive economic performance. Studies exist that look at the relationship between performance and innovation at the level of design teams, projects, firms, networks, industries, and countries. This paper aims at critically reviewing the wide, yet remarkably scattered literature that aims at measuring and explaining the relationship between innovation and performance. It builds upon an extensive review of contributions in economics, management and organisation sciences to identify trends and results that are consistent and robust. In a nutshell, this paper argues that country- and sectoral-level approaches which emphasize the role that knowledge, spillovers and human capital play in fostering economic growth trough innovation need to consider the fundamental role played by competition among heterogeneous organisations in igniting the growth process. In this respect, micro-and firm-level studies can provide useful insights about how competition fosters learning, innovation and ultimately growth.

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Publisher Info
Paper provided by CESPRI, Centre for Research on Innovation and Internationalisation, Universita' Bocconi, Milano, Italy in its series CESPRI Working Papers with number 179.

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Length: 28 pages
Date of creation: Aug 2006
Date of revision: Sep 2006
Handle: RePEc:cri:cespri:wp179

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Related research
Keywords: Innovation; Growth; Knowledge; Performance; Competition.;

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Find related papers by JEL classification:
O14 - Economic Development, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes
O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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  1. Socio-Economics of Innovation
References listed on IDEAS
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