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Openness and Innovation - Home and Export Demand Effects on Manufacturing Innovation: Panel Data Evidence for Ireland and Switzerland

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Author Info
Martin Woerter () (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
Stephen Roper () (Centre for Small and Medium Enterprises, Warwick Business School, University of Warwick, Coventry, UK)

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Abstract

Recent studies in the tradition of Schmookler have re-emphasised the potential role of demand in stimulating innovation. Here, we reconsider the role of ‘home’ and ‘export’ market demand in stimulating manufacturing innovation using comparable panel data for two small open economies – Ireland and Switzerland. Our analysis is based on the estimation of reduced form innovation production functions using panel data estimators over the sample period 1994 to 2005. For a range of innovation indicators, however, we find little evidence of any significant market demand effects, with innovation performance instead determined largely by firm-level capability effects and characteristics. In policy and strategy terms this suggests the continued value of measures to improve innovation capability regardless of market demand conditions. In more methodological terms our results suggest the validity of the usual assumption implicit in modelling innovation outputs that supply-side factors predominate.

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Publisher Info
Paper provided by KOF Swiss Economic Institute, ETH Zurich in its series KOF Working papers with number 08-210.

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Length: 31 pages
Date of creation: Nov 2008
Date of revision:
Handle: RePEc:kof:wpskof:08-210

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Related research
Keywords: Innovation; demand; Ireland; Switzerland;

Find related papers by JEL classification:
O3 - Economic Development, Technological Change, and Growth - - Technological Change
O5 - Economic Development, Technological Change, and Growth - - Economywide Country Studies
P5 - Economic Systems - - Comparative Economic Systems

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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. [Downloadable!]
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  2. Gadi Barlevy, 2007. "On the Cyclicality of Research and Development," American Economic Review, American Economic Association, vol. 97(4), pages 1131-1164, September. [Downloadable!]
  3. Knut Blind & Andre Jungmittag, 2004. "Foreign Direct Investment, Imports and Innovations in the Service Industry," Review of Industrial Organization, Springer, vol. 25(2), pages 205-227, 06. [Downloadable!] (restricted)
  4. Cassiman, Bruno & Veugelers, Reinhilde, 2002. "Complementarity in the Innovation Strategy: Internal R&D, External Technology Acquisition and Cooperation," CEPR Discussion Papers 3284, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  5. Raymond,Wladimir & Mohnen,Pierre & Palm,Franz & Schneider,Berit, 2004. "An Empirically-Based Taxonomy of Dutch Manufacturing: Innovation Policy Implications," Research Memoranda 011, Maastricht : MERIT, Maastricht Economic Research Institute on Innovation and Technology. [Downloadable!]
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  6. Jacques Mairesse & Pierre Mohnen, 2001. "To Be or Not To Be Innovative: An Exercise in Measurement," NBER Working Papers 8644, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. 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).
  8. Francesco Daveri, 2002. "The New Economy in Europe, 1992--2001," Oxford Review of Economic Policy, Oxford University Press, vol. 18(3), pages 345-362.
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  9. Roper, Stephen & Du, Jun & Love, James H., 2008. "Modelling the innovation value chain," Research Policy, Elsevier, vol. 37(6-7), pages 961-977, July. [Downloadable!] (restricted)
  10. Mariacristina Piva & Marco Vivarelli, 2007. "Is demand-pulled innovation equally important in different groups of firms?," Cambridge Journal of Economics, Oxford University Press, vol. 31(5), pages 691-710, September. [Downloadable!] (restricted)
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  11. Kleinknecht, Alfred & Verspagen, Bart, 1990. "Demand and innovation: Schmookler re-examined," Research Policy, Elsevier, vol. 19(4), pages 387-394, August. [Downloadable!] (restricted)
  12. Roper, Stephen & Love, James H., 2002. "Innovation and export performance: evidence from the UK and German manufacturing plants," Research Policy, Elsevier, vol. 31(7), pages 1087-1102, September. [Downloadable!] (restricted)
  13. Sterlacchini, Alessandro, 1999. "Do innovative activities matter to small firms in non-R&D-intensive industries? An application to export performance," Research Policy, Elsevier, vol. 28(8), pages 819-832, November. [Downloadable!] (restricted)
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  14. Edler, Jakob & Georghiou, Luke, 2007. "Public procurement and innovation--Resurrecting the demand side," Research Policy, Elsevier, vol. 36(7), pages 949-963, September. [Downloadable!] (restricted)
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