IDEAS home Printed from https://ideas.repec.org/p/zbw/zewdip/2889.html
   My bibliography  Save this paper

The Link Between Firms? Innovation Decision and the Business Cycle: An Empirical Analysis

Author

Listed:
  • Heger, Diana

Abstract

The sensitivity of innovation activities with respect to the business cycle is often assumed to be small. In this paper the hypothesis on cyclical dependence of innovation activities is tested for firms in the German manufacturing, and additionally for SMEs. To this end firms? innovation decisions are considered. The decision to innovate in one period is modelled via a first-order Markov chain approach. The results suggest that the patterns in innovative behavior are linked to the business cycle.

Suggested Citation

  • Heger, Diana, 2004. "The Link Between Firms? Innovation Decision and the Business Cycle: An Empirical Analysis," ZEW Discussion Papers 04-85, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:2889
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/24092/1/dp0485.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Prescott, Edward C., 1986. "Theory ahead of business-cycle measurement," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 25(1), pages 11-44, January.
    2. Mervyn A. King & Mark Robson, 1989. "Endogenous Growth and the role of History," NBER Working Papers 3151, National Bureau of Economic Research, Inc.
    3. Steven J. Davis & John C. Haltiwanger & Scott Schuh, 1998. "Job Creation and Destruction," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262540932, December.
    4. Nguyen Van P. & Laisney F. & Kaiser U., 2004. "The Performance of German Firms in the Business-Related Service Sector: A Dynamic Analysis," Journal of Business & Economic Statistics, American Statistical Association, vol. 22, pages 274-295, July.
    5. Beise, Marian & Stahl, Harald, 1999. "Public research and industrial innovations in Germany," Research Policy, Elsevier, vol. 28(4), pages 397-422, April.
    6. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626, National Bureau of Economic Research, Inc.
    7. Saint-Paul, Gilles, 1993. "Productivity growth and the structure of the business cycle," European Economic Review, Elsevier, vol. 37(4), pages 861-883, May.
    8. Brouwer, Erik & Kleinknecht, Alfred, 1999. "Keynes-Plus? Effective Demand and Changes in Firm-Level R&D: An Empirical Note," Cambridge Journal of Economics, Oxford University Press, vol. 23(3), pages 385-391, May.
    9. Fryges, Helmut, 2004. "Stepping In and Out of the International Market: Internationalisation of Technology-Oriented Firms in Germany and the UK," ZEW Discussion Papers 04-65, ZEW - Leibniz Centre for European Economic Research.
    10. Geroski, P. A. & Van Reenen, J. & Walters, C. F., 1997. "How persistently do firms innovate?," Research Policy, Elsevier, vol. 26(1), pages 33-48, March.
    11. Utterback, James M & Abernathy, William J, 1975. "A dynamic model of process and product innovation," Omega, Elsevier, vol. 3(6), pages 639-656, December.
    12. Kleinknecht, Alfred & Verspagen, Bart, 1990. "Demand and innovation: Schmookler re-examined," Research Policy, Elsevier, vol. 19(4), pages 387-394, August.
    13. Shleifer, Andrei, 1986. "Implementation Cycles," Journal of Political Economy, University of Chicago Press, vol. 94(6), pages 1163-1190, December.
    14. Czarnitzki, Dirk & Kraft, Kornelius, 2004. "An empirical test of the asymmetric models on innovative activity: who invests more into R&D, the incumbent or the challenger?," Journal of Economic Behavior & Organization, Elsevier, vol. 54(2), pages 153-173, June.
    15. Alfred Kleinknecht, 1987. "Innovation Patterns in Crisis and Prosperity," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-18559-7, October.
    16. Caballero, Ricardo J & Hammour, Mohamad L, 1994. "The Cleansing Effect of Recessions," American Economic Review, American Economic Association, vol. 84(5), pages 1350-1368, December.
    17. Aghion, Philippe & Saint-Paul, Gilles, 1998. "VIRTUES OF BAD TIMES Interaction Between Productivity Growth and Economic Fluctuations," Macroeconomic Dynamics, Cambridge University Press, vol. 2(3), pages 322-344, September.
    18. Jovanovic, Boyan & Lach, Saul, 1997. "Product Innovation and the Business Cycle," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(1), pages 3-22, February.
    19. repec:cup:macdyn:v:2:y:1998:i:3:p:322-44 is not listed on IDEAS
    20. R. M. Cyert & H. J. Davidson & G. L. Thompson, 1962. "Estimation of the Allowance for Doubtful Accounts by Markov Chains," Management Science, INFORMS, vol. 8(3), pages 287-303, April.
    21. Geroski, P A & Walters, C F, 1995. "Innovative Activity over the Business Cycle," Economic Journal, Royal Economic Society, vol. 105(431), pages 916-928, July.
    22. Andrew Bernard & Joachim Wagner, 2001. "Export entry and exit by German firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 137(1), pages 105-123, March.
    23. Kleinknecht, Alfred, 1990. "Are There Schumpeterian Waves of Innovations?," Cambridge Journal of Economics, Oxford University Press, vol. 14(1), pages 81-92, March.
    24. Werner Smolny, 2003. "Determinants of innovation behaviour and investment estimates for west-german manufacturing firms," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 12(5), pages 449-463.
    25. Judd, Kenneth L, 1985. "On the Performance of Patents," Econometrica, Econometric Society, vol. 53(3), pages 567-585, May.
    26. Cefis, Elena, 2003. "Is there persistence in innovative activities?," International Journal of Industrial Organization, Elsevier, vol. 21(4), pages 489-515, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hingley, Peter & Park, Walter G., 2017. "Do business cycles affect patenting? Evidence from European Patent Office filings," Technological Forecasting and Social Change, Elsevier, vol. 116(C), pages 76-86.
    2. Jung, Hyejin & Hwang, JungTae & Kim, Byung-Keun, 2018. "Does R&D investment increase SME survival during a recession?," Technological Forecasting and Social Change, Elsevier, vol. 137(C), pages 190-198.
    3. Hud, Martin & Rammer, Christian, 2014. "FuE- und Innovationsausgaben während der Krise: Strategien zur Sicherung des Innovationserfolgs," ZEW Dokumentationen 14-03, ZEW - Leibniz Centre for European Economic Research.
    4. Neil Thompson & Erik Stam, 2010. "Macroeconomic Dynamics and Innovation: SME innovation in the Netherlands, 1999-2009," Innovation Studies Utrecht (ISU) working paper series 10-03, Utrecht University, Department of Innovation Studies, revised May 2010.
    5. Tobias Schmidt & Birgit Aschhoff, 2007. "Die Nutzung der Innovationsdaten des Mannheimer Innovationspanels für die Politikberatung," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 76(3), pages 17-28.
    6. Behrens, Vanessa & Berger, Marius & Hud, Martin & Hünermund, Paul & Iferd, Younes & Peters, Bettina & Rammer, Christian & Schubert, Torben, 2017. "Innovation activities of firms in Germany - Results of the German CIS 2012 and 2014: Background report on the surveys of the Mannheim Innovation Panel Conducted in the Years 2013 to 2016," ZEW Dokumentationen 17-04, ZEW - Leibniz Centre for European Economic Research.
    7. Christian Rammer, 2011. "Auswirkungen der Wirtschaftskrise auf die Innovationstätigkeit der Unternehmen in Deutschland," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 80(3), pages 13-34.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Juan Máñez & María Rochina-Barrachina & Amparo Sanchis-Llopis & Juan Sanchis-Llopis, 2015. "The determinants of R&D persistence in SMEs," Small Business Economics, Springer, vol. 44(3), pages 505-528, March.
    2. Hud, Martin & Rammer, Christian, 2015. "Innovation budgeting over the business cycle and innovation performance," ZEW Discussion Papers 15-030, ZEW - Leibniz Centre for European Economic Research.
    3. Hartl, Jochen & Herrmann, Roland, 2006. "The Role of Business Expectations for New Product Introductions: A Panel Analysis for the German Food Industry," Journal of Food Distribution Research, Food Distribution Research Society, vol. 37(2), pages 1-11, July.
    4. Hud, Martin & Hussinger, Katrin, 2015. "The impact of R&D subsidies during the crisis," Research Policy, Elsevier, vol. 44(10), pages 1844-1855.
    5. Bettina Peters, 2009. "Persistence of innovation: stylised facts and panel data evidence," The Journal of Technology Transfer, Springer, vol. 34(2), pages 226-243, April.
    6. Florin O. Bilbiie & Fabio Ghironi & Marc J. Melitz, 2012. "Endogenous Entry, Product Variety, and Business Cycles," Journal of Political Economy, University of Chicago Press, vol. 120(2), pages 304-345.
    7. Taalbi, Josef, 2017. "What drives innovation? Evidence from economic history," Research Policy, Elsevier, vol. 46(8), pages 1437-1453.
    8. Makridis, Christos A. & McGuire, Erin, 2023. "The quality of innovation “Booms” during “Busts”," Research Policy, Elsevier, vol. 52(1).
    9. Filippetti, Andrea & Archibugi, Daniele, 2010. "Innovation in Times of Crisis: The Uneven Effects of the Economic Downturn across Europe," MPRA Paper 22084, University Library of Munich, Germany.
    10. Bisio, Laura & Ventura, Luigi, 2012. "Growth and volatility reconsidered: reconciling opposite views," MPRA Paper 35937, University Library of Munich, Germany.
    11. Filippetti, Andrea & Archibugi, Daniele, 2011. "Innovation in times of crisis: National Systems of Innovation, structure, and demand," Research Policy, Elsevier, vol. 40(2), pages 179-192, March.
    12. Pellens, Maikel & Peters, Bettina & Hud, Martin & Rammer, Christian & Licht, Georg, 2018. "Public investment in R&D in reaction to economic crises: A longitudinal study for OECD countries," ZEW Discussion Papers 18-005, ZEW - Leibniz Centre for European Economic Research.
    13. Cohen, Wesley M., 2010. "Fifty Years of Empirical Studies of Innovative Activity and Performance," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 129-213, Elsevier.
    14. Aiello, Francesco & Albanese, Giuseppe & Piselli, Paolo, 2019. "Good value for public money? The case of R&D policy," Journal of Policy Modeling, Elsevier, vol. 41(6), pages 1057-1076.
    15. Barge-Gil, Andrés & López, Alberto, 2014. "R&D determinants: Accounting for the differences between research and development," Research Policy, Elsevier, vol. 43(9), pages 1634-1648.
    16. Maliar, Lilia & Maliar, Serguei, 2004. "Endogenous Growth And Endogenous Business Cycles," Macroeconomic Dynamics, Cambridge University Press, vol. 8(5), pages 559-581, November.
    17. Tavassoli, Sam & Karlsson, Charlie, 2015. "Persistence of various types of innovation analyzed and explained," Research Policy, Elsevier, vol. 44(10), pages 1887-1901.
    18. Dario Guarascio & Mario Pianta & Matteo Lucchese & Francesco Bogliacino, 2015. "Business cycles, technology and exports," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 32(2), pages 167-200, August.
    19. António Menezes & José Vieira, 2008. "Training, Job Upgrading, Job Creation and Job Destruction," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 36(3), pages 275-292, September.
    20. Anna Lejpras & Andreas Stephan, 2011. "Locational conditions, cooperation, and innovativeness: evidence from research and company spin-offs," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 46(3), pages 543-575, June.

    More about this item

    Keywords

    Innovation; Business Cycle; Panel Model; Markov Chains;
    All these keywords.

    JEL classification:

    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:zewdip:2889. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/zemande.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.