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Innovation and Firm Growth in High-Tech Sectors: A Quantile Regression Approach

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Author Info
Alex Coad
Rekha Rao

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Abstract

We relate innovation to sales growth for incumbent firms in four high-tech sectors. A firm, on average, experiences only modest growth and may grow for a number of reasons that may or may not be related to ‘innovativeness’. However, given that firms are heterogeneous and that growth rates distributions are heavy-tailed, it may be misleading to use regression techniques that focus on the ‘average firm’. Using a quantile regression approach, we observe that innovativeness is of crucial importance for a handful of ‘superstar’ fast-growth firms. We also discuss policy implications of our results.

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Paper provided by Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy in its series LEM Papers Series with number 2006/18.

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Date of creation: 23 Aug 2006
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Handle: RePEc:ssa:lemwps:2006/18

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Related research
Keywords: Innovation Firm Growth Quantile Regression Innovation Policy

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This paper has been announced in the following NEP Reports: References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Alex Coad, 2006. "Understanding the processes of firm growth - a closer look at serial growth rate correlation," Post-Print halshs-00118801_v1, HAL. [Downloadable!]
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  2. Giulio Bottazzi & Alex Coad & Nadia Jacoby & Angelo Secchi, 2005. "Corporate Growth and Industrial Dynamics: Evidence from French Manufacturing," LEM Papers Series 2005/21, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy. [Downloadable!]
  3. Dunne, Timothy & Roberts, Mark J & Samuelson, Larry, 1989. "The Growth and Failure of U.S. Manufacturing Plants," The Quarterly Journal of Economics, MIT Press, vol. 104(4), pages 671-98, November. [Downloadable!] (restricted)
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  4. Mahmut Yasar & Carl H. Nelson & Roderick Rejesus, 2006. "Productivity and Exporting Status of Manufacturing Firms: Evidence from Quantile Regressions," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 127(4), pages 675-694, December. [Downloadable!] (restricted)
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  5. Griliches, Zvi, 1990. "Patent Statistics as Economic Indicators: A Survey," Journal of Economic Literature, American Economic Association, vol. 28(4), pages 1661-1707, December. [Downloadable!] (restricted)
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  6. Bottazzi, Giulio & Dosi, Giovanni & Lippi, Marco & Pammolli, Fabio & Riccaboni, Massimo, 2001. "Innovation and corporate growth in the evolution of the drug industry," International Journal of Industrial Organization, Elsevier, vol. 19(7), pages 1161-1187, July. [Downloadable!] (restricted)
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  7. Francesca Lotti & Enrico Santarelli & Marco Vivarelli, 2003. "Does Gibrat's Law hold among young, small firms?," Journal of Evolutionary Economics, Springer, vol. 13(3), pages 213-235, August. [Downloadable!] (restricted)
  8. Van Reenen, John, 1997. "Employment and Technological Innovation: Evidence from U.K. Manufacturing Firms," Journal of Labor Economics, University of Chicago Press, vol. 15(2), pages 255-84, April. [Downloadable!] (restricted)
  9. Freel, Mark S, 2000. " Do Small Innovating Firms Outperform Non-innovators?," Small Business Economics, Springer, vol. 14(3), pages 195-210, May. [Downloadable!] (restricted)
  10. Giulio Bottazzi & Elena Cefis & Giovanni Dosi, 2002. "Corporate growth and industrial structures: some evidence from the Italian manufacturing industry," Industrial and Corporate Change, Oxford University Press, vol. 11(4), pages 705-723, August.
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  11. Cefis, Elena & Orsenigo, Luigi, 2001. "The persistence of innovative activities: A cross-countries and cross-sectors comparative analysis," Research Policy, Elsevier, vol. 30(7), pages 1139-1158, August. [Downloadable!] (restricted)
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  12. Bronwyn H. Hall, 2004. "Exploring the Patent Explosion," NBER Working Papers 10605, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  13. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January. [Downloadable!] (restricted)
  14. Nicholas Bloom & John Van Reenen, 2002. "Patents, Real Options and Firm Performance," Economic Journal, Royal Economic Society, vol. 112(478), pages C97-C116, March. [Downloadable!] (restricted)
  15. repec:fth:harver:1473 is not listed on IDEAS
  16. Harhoff, Dietmar & Stahl, Konrad & Woywode, Michael, 1998. "Legal Form, Growth and Exit of West German Firms--Empirical Results for Manufacturing, Construction, Trade and Service Industries," Journal of Industrial Economics, Blackwell Publishing, vol. 46(4), pages 453-88, December. [Downloadable!] (restricted)
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  17. Arundel, Anthony & Kabla, Isabelle, 1998. "What percentage of innovations are patented? empirical estimates for European firms," Research Policy, Elsevier, vol. 27(2), pages 127-141, June. [Downloadable!] (restricted)
  18. Bronwyn H. Hall and Adam Jaffe, and Manuel Trajtenberg., 2001. "Market Value and Patent Citations: A First Look," Economics Working Papers E01-304, University of California at Berkeley.
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  19. John Sutton, 1997. "Gibrat's Legacy," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 40-59, March. [Downloadable!] (restricted)
  20. Giulio Bottazzi & Angelo Secchi, 2003. "Common Properties and Sectoral Specificities in the Dynamics of U.S. Manufacturing Companies," Review of Industrial Organization, Springer, vol. 23(3), pages 217-232, December. [Downloadable!] (restricted)
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  21. Hart, Peter E & Oulton, Nicholas, 1996. "Growth and Size of Firms," Economic Journal, Royal Economic Society, vol. 106(438), pages 1242-52, September. [Downloadable!] (restricted)
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  22. Alex Coad, 2005. "Testing the principle of 'growth of the fitter': The relationship between profits and firm growth," Emory Economics 0531, Department of Economics, Emory University (Atlanta). [Downloadable!]
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  23. Roger Koenker & Kevin F. Hallock, 2001. "Quantile Regression," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 143-156, Fall. [Downloadable!] (restricted)
  24. Giulio Bottazzi & Elena Cefis & Giovanni Dosi & Angelo Secchi, 2003. "Invariances and Diversities in the Evolution of Manufacturing Industries," LEM Papers Series 2003/21, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy. [Downloadable!]
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  25. Alex Coad & Rekha Rao, 2006. "Innovation and firm growth in "complex technology" sectors : a quantile regression approach," Cahiers de la Maison des Sciences Economiques r06050, Université Panthéon-Sorbonne (Paris 1). [Downloadable!]
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  26. Bronwyn H. HALL & Raffaele ORIANI, 2004. "Does the Market Value R&D Investment by European Firms? Evidence from a Panel of Manufacturing Firms in France," Economics Working Papers ECO2004/13, European University Institute. [Downloadable!]
  27. Joao Pedro Azevedo, 2004. "GRQREG: Stata module to graph the coefficients of a quantile regression," Statistical Software Components S437001, Boston College Department of Economics, revised 01 Jan 2006. [Downloadable!]
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Alex Coad, 2006. "A Closer Look at Serial Growth Rate Correlation," LEM Papers Series 2006/29, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy. [Downloadable!]
    Other versions:
  2. A. Coad & R. Rao, 2007. "The Employment Effects of Innovations in High-Tech Industries," Papers on Econonmics and Evolution 2007-05, Max Planck Institute of Economics, Evolutionary Economics Group. [Downloadable!]
  3. Alex Coad, 2008. "Distance to Frontier and Appropriate Business Strategy," LEM Papers Series 2008/13, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy. [Downloadable!]
    Other versions:
  4. Alexander Coad & Rekha Rao, 2007. "Firm Growth and R&D Expenditure," Papers on Econonmics and Evolution 2007-10, Max Planck Institute of Economics, Evolutionary Economics Group. [Downloadable!]
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