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Does history matter for the relationship between R&D, Innovation and Productivity?

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  • Elena Huergo
  • Lourdes Moreno

Abstract

This paper analyzes the relationship between R&D expenditures, innovation and productivity growth, taking into account the possibility of persistence in firms’ behaviour. We study this relationship for a sample of Spanish manufacturing firms between 1990 and 2005, estimating a model with four equations: participation in technological activities, R&D intensity, the generation of innovations and the impact of these technological outputs on total factor productivity growth. Our results reflect the existence of true state dependence both in the decision of R&D investment and in the production of innovations. The omission of this persistence leads to an overestimation of the current impact of innovations on productivity growth. However, the presence of persistence in technological inputs and outputs entails current R&D activities having long–run effects on a firm’s productivity.

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Paper provided by Economics and Econometrics Research Institute (EERI), Brussels in its series EERI Research Paper Series with number EERI_RP_2010_41.

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Date of creation: 21 Oct 2010
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Handle: RePEc:eei:rpaper:eeri_rp_2010_41

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Keywords: CDM model; productivity growth; persistence in R&D and innovation.;

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  1. Bronwyn H. Hall, Jacques Mairesse, Lee Branstetter, and Bruno Crepon., 1998. "Does Cash Flow Cause Investment and R& D: An Exploration Using Panel Data for French, Japanese, and United States Scientific Firms," Economics Working Papers 98-260, University of California at Berkeley.
  2. José Miguel Benavente, 2002. "The Role of Research and Innovation in Promoting Productivity in Chile," Working Papers wp200, University of Chile, Department of Economics.
  3. Jacques Mairesse & Pierre Mohnen, 2002. "Accounting for Innovation and Measuring Innovativeness: An Illustrative Framework and an Application," American Economic Review, American Economic Association, vol. 92(2), pages 226-230, May.
  4. Mairesse,Jacques & Mohnen,Pierre, 2004. "The Importance of R&D for Innovation: A Reassessment Using French Survey Data," Research Memoranda 022, Maastricht : MERIT, Maastricht Economic Research Institute on Innovation and Technology.
  5. Elena Cefis & Luigi Orsenigo, 1998. "The Persistence of Innovative Activities. A Cross-Countries and Cross-Sectors Comparative Analysis," Department of Economics Working Papers 9804, Department of Economics, University of Trento, Italia.
  6. Pierre Mohnen & Jacques Mairesse & Marcel Dagenais, 2006. "Innovativity: A Comparison Across Seven European Countries," CIRANO Working Papers 2006s-11, CIRANO.
  7. Wladimir Raymond & Pierre Mohnen & Franz Palm & Sybrand Schim van der Loeff, 2006. "Persistence of Innovation in Dutch Manufacturing: Is it Spurious?," CIRANO Working Papers 2006s-04, CIRANO.
  8. Bettina Peters, 2005. "Persistence of Innovation: Stylised Facts and Panel Data Evidence," Development and Comp Systems 0511021, EconWPA.
  9. Bronwyn H. Hall & Francesca Lotti & Jacques Mairesse, 2008. "Innovation and Productivity in SMEs: Empirical Evidence for Italy," NBER Working Papers 14594, National Bureau of Economic Research, Inc.
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  12. Rachel Griffith & Elena Huergo & Jacques Mairesse & Bettina Peters, 2006. "Innovation and Productivity Across Four European Countries," Oxford Review of Economic Policy, Oxford University Press, vol. 22(4), pages 483-498, Winter.
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  14. Emmanuel Duguet & Stéphanie Monjon, 2004. "Is innovation persistent at the firm Level . An econometric examination comparing the propensity score and regression methods," Cahiers de la Maison des Sciences Economiques v04075, Université Panthéon-Sorbonne (Paris 1).
  15. Mariacristina Piva & Marco Vivarelli, 2009. "The role of skills as a major driver of corporate R&D," International Journal of Manpower, Emerald Group Publishing, vol. 30(8), pages 835-852, November.
  16. Piva, Mariacristina & Vivarelli, Marco, 2006. "Is Demand-Pulled Innovation Equally Important in Different Groups of Firms?," IZA Discussion Papers 1982, Institute for the Study of Labor (IZA).
  17. Chamberlain, Gary, 1980. "Analysis of Covariance with Qualitative Data," Review of Economic Studies, Wiley Blackwell, vol. 47(1), pages 225-38, January.
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  19. Gary Jefferson & Bai Huamao & Guan Xiaojing & Yu Xiaoyun, 2006. "R&D Performance in Chinese industry," Economics of Innovation and New Technology, Taylor and Francis Journals, vol. 15(4-5), pages 345-366.
  20. Juan A. M��Ez & Mar�A E. Rochina-Barrachina & Amparo Sanchis & Juan A. Sanchis, 2009. "THE ROLE OF SUNK COSTS IN THE DECISION TO INVEST IN R&D -super-* ," Journal of Industrial Economics, Wiley Blackwell, vol. 57(4), pages 712-735, December.
  21. Cohen, Wesley M. & Levin, Richard C., 1989. "Empirical studies of innovation and market structure," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 18, pages 1059-1107 Elsevier.
  22. Cefis, Elena, 2003. "Is there persistence in innovative activities?," International Journal of Industrial Organization, Elsevier, vol. 21(4), pages 489-515, April.
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Cited by:
  1. Esther Goya & Esther Vayá & Jordi Suriñach, 2012. "“Do intra- and inter-industry spillovers matter? CDM model estimates for Spain”," IREA Working Papers 201214, University of Barcelona, Research Institute of Applied Economics, revised Sep 2012.
  2. Xulia González & Daniel Miles-Touya & Consuelo Pazó, 2012. "R&D, Worker Training, and Innovation: Firm-level evidence," Working Papers 1203, Universidade de Vigo, Departamento de Economía Aplicada.

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