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Persistence of Innovation: Stylised Facts and Panel Data Evidence

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Author Info
Peters, Bettina

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Abstract

This paper investigates whether firms innovate persistently or discontinuously over time using an innovation panel data set on German manufacturing and service firms for the period 1994?2002. We find that innovation behaviour is permanent at the firm?level to a very large extent. Using a dynamic random effects discrete choice model and a new estimator recently proposed by Wooldrigde (2005), we further shed some light on the driving forces for this phenomenon. The econometric results confirm the hypothesis of true state dependence for manufacturing as well as for service sector firms. In addition to past innovation experience, the results further highlight the important role of knowledge provided by skilled employees and unobserved individual heterogeneity in explaining the persistence of innovation. --

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Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 05-81.

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Date of creation: 2005
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Handle: RePEc:zbw:zewdip:4564

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Related research
Keywords: innovation; persistence; state dependence; unobserved heterogeneity; dynamic random effects panel probit model;

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Find related papers by JEL classification:
L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives
C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models

This item is featured on the following reading lists:

  1. Socio-Economics of Innovation
References listed on IDEAS
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  30. Jeffrey M. Wooldridge, 2005. "Simple solutions to the initial conditions problem in dynamic, nonlinear panel data models with unobserved heterogeneity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(1), pages 39-54. [Downloadable!]
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Cited by:
(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. Ådne Cappelen, Arvid Raknerud and Marina Rybalka, 2008. "The effects of R&D tax credits on patenting and innovations," Discussion Papers 565, Research Department of Statistics Norway. [Downloadable!]
  2. Joze P. Damijan & Crt Kostevc & Matija Rojec, 2008. "Innovation and Firms' Productivity Growth in Slovenia: Sensitivity of Results to Sectoral Heterogeneity and to Estimation Method," LICOS Discussion Papers 20308, LICOS - Centre for Institutions and Economic Performance, K.U.Leuven. [Downloadable!]
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