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The relevance of marketing in the success of innovations

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  • Abraham Garcia

    ()
    (JRC-IPTS)

Abstract

This paper focuses on marketing expenditures and their relation with R&D investments and innovative sales. A higher investment in R&D is associated with the production of a higher quality or faster innovation, with a positive impact on sales and in a macro sense, an increase of GDP. This paper raises the issue that good innovation need a strong marketing effort in order for this innovation to have an impact on sales, it needs to be desired by consumers. This paper finds empirical evidence that marketing expenditures explain a lot of the success of the innovation 0.5 to 0.7% (measured in terms of the elasticity of this effort to innovative sales), even more than the flow of investment in R&D(which counts for 0.3 %). In fact, the size of the coefficient for marketing doubles those found for R&D, a quite surprising result taking into consideration the little importance that marketing has in innovation studies. The paper uses Community Innovation Survey data, the third wave (CIS 3) and set up a system of simultaneous equations like in Crepon et al. (1998).

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File URL: http://iri.jrc.ec.europa.eu/documents/10180/33525a73-cb4f-4330-b21f-078299704b32
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Bibliographic Info

Paper provided by Institute of Prospective Technological Studies, Joint Research Centre in its series JRC-IPTS Working Papers on Corporate R&D and Innovation with number 2011-09.

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Length: 26 pages
Date of creation: Dec 2011
Date of revision:
Handle: RePEc:ipt:wpaper:201109

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  1. Metin Cakir & Joseph V. Balagtas, 2010. "Econometric evidence of cross-market effects of generic dairy advertising," Agribusiness, John Wiley & Sons, Ltd., vol. 26(1), pages 83-99.
  2. Garcia-Torres, Abraham, 2009. "Consumer behaviour: evolution of preferences and the search for novelty," MERIT Working Papers 005, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
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  4. Becker, Markus C. & Lillemark, Morten, 2006. "Marketing/R&D integration in the pharmaceutical industry," Research Policy, Elsevier, vol. 35(1), pages 105-120, February.
  5. Philippe Aghion & Peter Howitt, 1990. "A Model of Growth Through Creative Destruction," NBER Working Papers 3223, National Bureau of Economic Research, Inc.
  6. Shantanu Dutta & Om Narasimhan & Surendra Rajiv, 1999. "Success in High-Technology Markets: Is Marketing Capability Critical?," Marketing Science, INFORMS, vol. 18(4), pages 547-568.
  7. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth Through Creative Destruction," Scholarly Articles 12490578, Harvard University Department of Economics.
  8. Bruno Crépon & Emmanuel Duguet & Jacques Mairesse, 1998. "Research, Innovation and Productivity : An Econometric Analysis at the Firm Level," Working Papers 98-33, Centre de Recherche en Economie et Statistique.
  9. Crepon, B. & Duguet, E. & Mairesse, J., 1998. "Research Investment, Innovation and Productivity: An Econometric Analysis at the Firm Level," Papiers d'Economie Mathématique et Applications 98.15, Université Panthéon-Sorbonne (Paris 1).
  10. Pollak, Robert A, 1970. "Habit Formation and Dynamic Demand Functions," Journal of Political Economy, University of Chicago Press, vol. 78(4), pages 745-63, Part I Ju.
  11. Isabel Busom, 2000. "An Empirical Evaluation of The Effects of R&D Subsidies," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 9(2), pages 111-148.
  12. Jonathan Temple, 1999. "The New Growth Evidence," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 112-156, March.
  13. repec:fth:inseep:9833 is not listed on IDEAS
  14. Kurt R. Brekke & Odd Rune Straume, 2009. "Pharmaceutical Patents: Incentives for Research and Development or Marketing?," Southern Economic Journal, Southern Economic Association, vol. 76(2), pages 351-374, October.
  15. Hashai, Niron & Almor, Tamar, 2008. "R&D intensity, value appropriation and integration patterns within organizational boundaries," Research Policy, Elsevier, vol. 37(6-7), pages 1022-1034, July.
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Cited by:
  1. Daria Ciriaci & Fernando Hervas Soriano, 2012. "Bridging ideas with markets. The impact of training, marketing and design on innovation," JRC-IPTS Working Papers JRC75493, Institute for Prospective and Technological Studies, Joint Research Centre, revised Oct 2012.

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