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The link between firm-level innovation and aggregate productivity growth: a cross-country examination

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  • Heshmati, Almas
  • Lööf, Hans

Abstract

This paper investigates whether failure in innovation at the firm level can account for cross-country heterogeneity in manufacturing productivity growth. There is no strong evidence in the literature on the existence of such link. Our work, however, differs in a number of ways from much of the previous cross-country comparisons on the relationship between innovation and productivity using firm-level data. First, a broader definition of innovation input is used in which research and development is one of several sources of innovation. Second, a quantitative innovation output measure is used in the analysis. Third, the analysis is based on larger and more representative samples of firms including small firms. Finally, an econometric framework based on the knowledge production function accounting for both selectivity and simultaneity bias is employed. The results from Nordic countries show that given difficulties in pooling the data, it is important to specify country-specific models accounting for country-specific effects and differences in the countries national innovation systems. --

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Bibliographic Info

Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 03-07.

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Date of creation: 2003
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Handle: RePEc:zbw:zewdip:907

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Keywords: community innovation; cross-country comparisons; manufacturing; productivity;

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References

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  1. Lööf, Hans & Heshmati, Almas, 2001. "On the Relationship between Innovation and Performance: A sensitivity Analysis," Working Paper Series in Economics and Finance 0446, Stockholm School of Economics, revised 01 Oct 2001.
  2. C.J. Krizan & John Haltiwanger & Lucia Foster, 2002. "The Link Between Aggregate and Micro Productivity Growth: Evidence from Retail Trade," Working Papers 02-18, Center for Economic Studies, U.S. Census Bureau.
  3. Mohnen, Pierre & Mairesse, Jacques & Dagenais, Marcel, 2006. "Innovativity: A comparison across seven European countries," MERIT Working Papers 027, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  4. John F. Helliwell, 1996. "Economic Growth and Social Capital in Asia," NBER Working Papers 5470, National Bureau of Economic Research, Inc.
  5. Zvi Griliches & Jacques Mairesse, 1995. "Production Functions: The Search for Identification," NBER Working Papers 5067, National Bureau of Economic Research, Inc.
  6. repec:fth:harver:1487 is not listed on IDEAS
  7. Bruno Crepon & Emmanuel Duguet & Jacques Mairessec, 1998. "Research, Innovation And Productivi[Ty: An Econometric Analysis At The Firm Level," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 7(2), pages 115-158.
  8. Jakob Klette & Samuel Kortum, 2002. "Innovating firms and aggregate innovation," Staff Report 300, Federal Reserve Bank of Minneapolis.
  9. Zvi Griliches & Jacques Mairesse, 1982. "Comparing Productivity Growth: An Exploration of French and U.S. Industrial and Firm Data," NBER Working Papers 0961, National Bureau of Economic Research, Inc.
  10. Keefer, Philip & Knack, Stephen, 1997. "Why Don't Poor Countries Catch Up? A Cross-National Test of Institutional Explanation," Economic Inquiry, Western Economic Association International, vol. 35(3), pages 590-602, July.
  11. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output Per Worker Than Others?," The Quarterly Journal of Economics, MIT Press, vol. 114(1), pages 83-116, February.
  12. Ariel Pakes & Zvi Griliches, 1980. "Patents and R and D at the Firm Level: A First Look," NBER Working Papers 0561, National Bureau of Economic Research, Inc.
  13. Bronwyn H. Hall & Jacques Mairesse, 1995. "Exploring the Relationship Between R&D and Productivity in French Manufacturing Firms," NBER Working Papers 3956, National Bureau of Economic Research, Inc.
  14. Lööf, Hans & Heshmati, Almas, 2000. "Knowledge Capital and Performance Heterogeneity: A Firm Level Innovation Study," Working Paper Series in Economics and Finance 387, Stockholm School of Economics, revised 14 Aug 2000.
  15. Hulten, Charles R, 1992. "Growth Accounting When Technical Change Is Embodied in Capital," American Economic Review, American Economic Association, vol. 82(4), pages 964-80, September.
  16. repec:fth:inseep:9730 is not listed on IDEAS
  17. Charles R. Hulten, 1992. "Growth Accounting When Technical Change is Embodied in Capital," NBER Working Papers 3971, National Bureau of Economic Research, Inc.
  18. John Haltiwanger, 2000. "Aggregate Growth: What Have We Learned from Microeconomic Evidence?," OECD Economics Department Working Papers 267, OECD Publishing.
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Citations

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Cited by:
  1. Subal C. Kumbhakar & Raquel Ortega-Argilés & Lesley Potters & Marco Vivarelli & Peter Voigt, 2010. "Corporate R&D and firm efficiency: Evidence from Europe’s top R&D investors," JRC-IPTS Working Papers on Corporate R&D and Innovation 2010-11, Institute of Prospective Technological Studies, Joint Research Centre.
  2. Potters, Lesley & Ortega-Argilés, Raquel & Vivarelli, Marco, 2008. "R&D and Productivity: Testing Sectoral Peculiarities Using Micro Data," IZA Discussion Papers 3338, Institute for the Study of Labor (IZA).
  3. repec:tep:teppwp:wp11-05 is not listed on IDEAS
  4. repec:prg:jnlpep:v:2013:y:2013:i:4:id:436:p:487-503 is not listed on IDEAS
  5. Gérard Ballot & Fathi Fakhfakh & Fabrice Galia & Ammon Salter, 2011. "The Fateful Triangle Complementarities between product, process and organizational innovation in the UK and France," Working Papers halshs-00812141, HAL.
  6. Alena Zemplinerová & Eva Hromádková, 2012. "Determinants of Firm´s Innovation," Prague Economic Papers, University of Economics, Prague, vol. 2012(4), pages 487-503.

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