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Is Demand-Pulled Innovation Equally Important in Different Groups of Firms?

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  • Piva, Mariacristina

    ()
    (Università Cattolica del Sacro Cuore)

  • Vivarelli, Marco

    ()
    (Università Cattolica del Sacro Cuore)

Abstract

Previous empirical literature - mainly cross-sectional - has tested the demand-pull hypothesis and found that overall, evidence does not conflict with the idea that innovation may be driven by output. Using a balanced panel of 216 Italian manufacturing firms over the 1995-2000 period, and checking for fixed effects, time, sectoral and size dummies and for the path-dependent nature of R&D, we also find a (barely significant) role of sales in inducing R&D expenditures. However, at the micro level, the demand-pull effect plays a varying role for the different sub-samples of firms. In particular, exporting firms, those which are liquidity-constrained, those not receiving public subsidies and those not heading a business group, seem to be particularly sensitive to sales in deciding their R&D expenditures. These microeconometric results have been obtained using a Least Squares Dummy Variable Corrected (LSDVC) estimator, a recently-proposed panel data technique particularly suitable for small samples.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1982.

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Length: 31 pages
Date of creation: Feb 2006
Date of revision:
Publication status: published in: Cambridge Journal of Economics, 2007, 31(5), 691-710
Handle: RePEc:iza:izadps:dp1982

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Keywords: LSDVC estimator; R&D expenditures; demand-pull; innovative firms;

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Citations

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Cited by:
  1. García-Quevedo, José & Pellegrino, Gabriele & Vivarelli, Marco, 2011. "R&D Drivers in Young Innovative Companies," IZA Discussion Papers 6136, Institute for the Study of Labor (IZA).
  2. Filippetti, Andrea & Archibugi, Daniele, 2010. "Innovation in Times of Crisis: The Uneven Effects of the Economic Downturn across Europe," MPRA Paper 22084, University Library of Munich, Germany.
  3. Mohieddine Rahmouni & Murat Yildizoglu & Mohamed Ayadi, 2011. "Export Behaviour and Propensity to Innovate in a Developing Country: The Case of Tunisia," Working Papers halshs-00608239, HAL.
  4. Martin Woerter & Stephen Roper, 2008. "Openness and Innovation - Home and Export Demand Effects on Manufacturing Innovation: Panel Data Evidence for Ireland and Switzerland," KOF Working papers 08-210, KOF Swiss Economic Institute, ETH Zurich.
  5. Barge-Gil, Andrés & López, Alberto, 2012. "R&D Determinants: accounting for the differences between research and development," MPRA Paper 41270, University Library of Munich, Germany.
  6. Elena Huergo & Lourdes Moreno, 2010. "Does history matter for the relationship between R&D, Innovation and Productivity?," EERI Research Paper Series EERI_RP_2010_41, Economics and Econometrics Research Institute (EERI), Brussels.
  7. Gabriele Pellegrino & Maria Savona, 2013. "Is Money All? Financing Versus Knowledge and Demand Constraints to Innovation," SPRU Working Paper Series 2013-01, SPRU - Science and Technology Policy Research, University of Sussex.
  8. Antonelli Cristiano & Gehringer Agnieszka, 2013. "Demand pull and technological flows within innovation systems: the intra-European evidence," Department of Economics and Statistics Cognetti de Martiis. Working Papers, University of Turin 201303, University of Turin.
  9. Vivarelli, Marco, 2014. "Structural Change and Innovation as Exit Strategies from the Middle Income Trap," IZA Discussion Papers 8148, Institute for the Study of Labor (IZA).
  10. Elizabeth Webster & Paul H. Jensen, 2009. "Macroeconomic Conditions and Successful Commercialization," Melbourne Institute Working Paper Series wp2009n09, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  11. Filippetti, Andrea & Archibugi, Daniele, 2011. "Innovation in times of crisis: National Systems of Innovation, structure, and demand," Research Policy, Elsevier, vol. 40(2), pages 179-192, March.
  12. Simon Wiederhold, 2012. "The Role of Public Procurement in Innovation: Theory and Empirical Evidence," ifo Beiträge zur Wirtschaftsforschung, Ifo Institute for Economic Research at the University of Munich, number 43, July.
  13. Antonelli,Cristiano & Gehringer,Agnieszka, 2012. "Knowledge externalities and demand pull: The European evidence," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 201214, University of Turin.
  14. Lee, Chang-Yang, 2010. "A theory of firm growth: Learning capability, knowledge threshold, and patterns of growth," Research Policy, Elsevier, vol. 39(2), pages 278-289, March.
  15. José García-Quevedo & Gabriele Pellegrino & Marco Vivarelli, 2011. "The determinants of YICs’ R&Dactivity," Working Papers 2011/31, Institut d'Economia de Barcelona (IEB).
  16. Martin Wörter, 2011. "Konjunktur und Innovationsverhalten von Schweizer Firmen," KOF Analysen, KOF Swiss Economic Institute, ETH Zurich, KOF Swiss Economic Institute, ETH Zurich, vol. 5(4), pages 55-71, December.
  17. Courvisanos, Jerry, 2009. "Political aspects of innovation," Research Policy, Elsevier, vol. 38(7), pages 1117-1124, September.
  18. Mohieddine Rahmouni, 2013. "Innovativeness of Exporting firms in a Developing Country: The Case of Tunisia," Economics Bulletin, AccessEcon, vol. 33(2), pages 914-930.

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