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Industry Diversity and Its Impact on the Innovation Performance of Firms: An Empirical Analysis Based on Firm-level Panel Data

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Abstract

This paper investigates empirically the impact of diversity on the innovation performance of a firm. We created a measure for diversity that mirrors differences in the resource base of firms within an industry and tested its impact on innovation in addition to more traditional factors like technology-push, demand-pull, and firm-size, based on panel data stemming from three representative cross sectional surveys carried out in the years 1996, 1999, and 2002 respectively. In fact, diversity has a significant positive impact on the innovation intensity of firms and thus supports more theoretical findings in this area. We also find empirical evidence for the technology push and the demand pull hypotheses as well as the importance of competition for innovation.

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Bibliographic Info

Paper provided by KOF Swiss Economic Institute, ETH Zurich in its series KOF Working papers with number 07-165.

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Length: 30 pages
Date of creation: May 2007
Date of revision:
Handle: RePEc:kof:wpskof:07-165

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Keywords: Diversity; Innovation Performance; Evolution of Industries; Jacobs Externalities; Panel data;

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