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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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References

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  1. Paul A. David & Bronwyn H. Hall & Andrew A. Toole, 1999. "Is Public R&D a Complement or Substitute for Private R&D? A Review of the Econometric Evidence," NBER Working Papers 7373, National Bureau of Economic Research, Inc.
  2. 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.
  3. Barry, Frank & Bradley, John, 1997. "FDI and Trade: The Irish Host-Country Experience," Economic Journal, Royal Economic Society, vol. 107(445), pages 1798-1811, November.
  4. Peters, Bettina & Lööf, Hans & Janz, Norbert, 2003. "Firm Level Innovation and Productivity: Is there a Common Story Across Countries?," ZEW Discussion Papers 03-26, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  5. Zvi Griliches, 1998. "Issues in Assessing the Contribution of Research and Development to Productivity Growth," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 17-45 National Bureau of Economic Research, Inc.
  6. 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.
  7. 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.
  8. Justin Doran & Declan Jordan & Eoin O'Leary, 2012. "The Effects of National and International Interaction on Innovation: Evidence from the Irish CIS: 2004--06," Industry and Innovation, Taylor & Francis Journals, vol. 19(5), pages 371-390, July.
  9. repec:fth:inseep:9833 is not listed on IDEAS
  10. 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.
  11. 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).
  12. 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.
  13. 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.
  14. Rachel Griffith & Elena Huergo & Jacques Mairesse & Bettina Peters, 2006. "Innovation and Productivity Across Four European Countries," Oxford Review of Economic Policy, Oxford University Press, vol. 22(4), pages 483-498, Winter.
  15. Roper, Stephen & Du, Jun & Love, James H., 2008. "Modelling the innovation value chain," Research Policy, Elsevier, vol. 37(6-7), pages 961-977, July.
  16. Stephen Roper, 2001. "Innovation, Networks and Plant Location: Some Evidence for Ireland," Regional Studies, Taylor & Francis Journals, vol. 35(3), pages 215-228.
  17. James R. Hines, 2010. "Treasure Islands," Journal of Economic Perspectives, American Economic Association, vol. 24(4), pages 103-26, Fall.
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