The Effects of Innovation on Performance of Korean Firms
AbstractThis study empirically examines the relationship between knowledge capital and performance heterogeneity at the firm level. The model is based on a knowledge production function comprising of four interdependent equations linking innovativeness to innovation input, innovation output and productivity. The empirical part is based on Korean firm level innovation data. The model is estimated using advanced econometric methods. We investigate whether innovation is a significant and contributing determinant of performance heterogeneity among firms. In examining the relationship between innovation and productivity we correct for selectivity and simultaneity biases. The results show that there is a two-way causal relationship between knowledge capital and labor productivity. Firm-specific effects positively contribute to innovation output but they are negatively related to productivity. Industry heterogeneity does not affect innovation output or productivity.
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Bibliographic InfoPaper provided by The Ratio Institute in its series Ratio Working Papers with number 90.
Length: 35 pages
Date of creation: 25 Apr 2006
Date of revision:
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Innovation Input; Innovation Output; Productivity; Korea;
Find related papers by JEL classification:
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
- O32 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Management of Technological Innovation and R&D
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-04-29 (All new papers)
- NEP-EFF-2006-04-29 (Efficiency & Productivity)
- NEP-ENT-2006-04-29 (Entrepreneurship)
- NEP-INO-2006-04-29 (Innovation)
- NEP-SEA-2006-04-29 (South East Asia)
- NEP-TID-2006-04-29 (Technology & Industrial Dynamics)
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