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The Roles of R&D and networking for innovation by Irish and foreign-owned firms: evidence from the Irish CIS 2006-08

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  • Doran, Justin
  • O'Leary, Eoin

Abstract

This paper provides an empirical test of Cohen and Levinthal’s (1990) hypothesis that undertaking R&D and collaborating with external networks together enhance the probability that firms engage in product and process innovation. Following Doran, Jordan and O’Leary (2013) we test this hypothesis separately for Irish and foreign-owned firms based in Ireland using data from the Irish Community Innovation Survey 2006-08. In order to control for potential endogeneity of the external networking variables a two-step procedure is used with predicted probabilities used as instruments in the estimated production functions. The results suggest that Irish-owned firms which engage in external networks with public knowledge sources while simultaneously undertaking R&D are more likely to innovate than firms which perform these two activities individually. However, Irish-owned firms which engage in backward networking for product and forward networking for process innovation while also undertaking R&D are less likely to be innovative, perhaps suggesting a substitution effect. These results for Irish-owned firms provide some support for Cohen and Levinthal’s (1990) hypothesis. However, foreign-owned firms seems to be largely self-contained, relying exclusively on intramural R&D for innovation as the external networking variables, both individually and when interacted with R&D, have no effect on innovation likelihood.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 47291.

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Date of creation: 30 Apr 2013
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Handle: RePEc:pra:mprapa:47291

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Keywords: Innovation; R&D; External Networking;

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  1. Bruno Crepon & Emmanuel Duguet & Jacques Mairesse, 1998. "Research, Innovation, and Productivity: An Econometric Analysis at the Firm Level," NBER Working Papers 6696, National Bureau of Economic Research, Inc.
  2. Doran, Justin & Jordan, Declan & O'Leary, Eoin, 2012. "The effects of national and international interaction on innovation: evidence from the Irish CIS: 2004-6," MPRA Paper 48268, University Library of Munich, Germany.
  3. Janz, Norbert & Lööf, Hans & Peters, Bettina, 2004. "Firm Level Innovation and Productivity - Is there a Common Story Across Countries?," Working Paper Series in Economics and Institutions of Innovation 24, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  4. Paul A. David, Bronwyn H. Hall and Andrew A. Toole., 1999. "Is Public R&D a Complement or Substitute for Private R&D? A Review of the Econometric Evidence," Economics Working Papers E99-269, University of California at Berkeley.
  5. Leon A.G. Oerlemans & Marius T.H. Meeus & Frans W.M. Boekema, 1998. "Do Networks Matter for Innovation? The usefulness of the economic network approach in analysing innovation," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 89(3), pages 298-309, 08.
  6. Stephen Roper, 2001. "Innovation, Networks and Plant Location: Some Evidence for Ireland," Regional Studies, Taylor & Francis Journals, vol. 35(3), pages 215-228.
  7. Rachel Griffith & Elena Huergo & Jacques Mairesse & Bettina Peters, 2006. "Innovation and Productivity across Four European Countries," NBER Working Papers 12722, National Bureau of Economic Research, Inc.
  8. Justin Doran & Eoin O'Leary, 2011. "External Interaction, Innovation and Productivity: An Application of the Innovation Value Chain to Ireland," Spatial Economic Analysis, Taylor & Francis Journals, vol. 6(2), pages 199-222.
  9. Doran, Justin & Jordan, Declan & O'Leary, Eoin, 2013. "Effects of R&D spending on Innovation by Irish and Foreign-owned Businesses," MPRA Paper 44579, University Library of Munich, Germany.
  10. Olivier Godart & Holger Görg & Aoife Hanley, 2012. "Surviving the Crisis: Foreign Multinationals versus Domestic Firms," The World Economy, Wiley Blackwell, vol. 35(10), pages 1305-1321, October.
  11. Barry, F & Bradley, J, 1997. ""FDI and Trade : The Irish Host-Country Experience"," Papers 97/13, College Dublin, Department of Political Economy-.
  12. Zvi Griliches, 1979. "Issues in Assessing the Contribution of Research and Development to Productivity Growth," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 92-116, Spring.
  13. Lissoni, Francesco, 2001. "Knowledge codification and the geography of innovation: the case of Brescia mechanical cluster," Research Policy, Elsevier, vol. 30(9), pages 1479-1500, December.
  14. Roper, Stephen & Du, Jun & Love, James H., 2008. "Modelling the innovation value chain," Research Policy, Elsevier, vol. 37(6-7), pages 961-977, July.
  15. 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).
  16. James R. Hines, 2010. "Treasure Islands," Journal of Economic Perspectives, American Economic Association, vol. 24(4), pages 103-26, Fall.
  17. repec:fth:inseep:9833 is not listed on IDEAS
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