IDEAS home Printed from https://ideas.repec.org/a/eee/jeborg/v86y2013icp78-91.html
   My bibliography  Save this article

Innovation over the industry life-cycle: Evidence from EU manufacturing

Author

Listed:
  • Bos, Jaap W.B.
  • Economidou, Claire
  • Sanders, Mark W.J.L.

Abstract

Empirical research has revealed some regularities regarding the innovation that takes place over the industry life-cycle. First, innovation is high when an industry is young and low when the industry matures, and second, product innovation decreases with industry maturity, while process innovation increases. The implications of these regularities are profound, but evidence is to date largely case based and it is hard to generalize and draw policy conclusions. We use a flexible measure of maturity and a novel modeling approach to investigate innovation patterns for 21 European manufacturing industries. Our results strongly support both assertions and lend support to life-cycle based R&D-policy.

Suggested Citation

  • Bos, Jaap W.B. & Economidou, Claire & Sanders, Mark W.J.L., 2013. "Innovation over the industry life-cycle: Evidence from EU manufacturing," Journal of Economic Behavior & Organization, Elsevier, vol. 86(C), pages 78-91.
    • Handle: RePEc:eee:jeborg:v:86:y:2013:i:c:p:78-91
    DOI: 10.1016/j.jebo.2012.12.025
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167268112002843
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jebo.2012.12.025?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Darren Filson, 2001. "The Nature and Effects of Technological Change over the Industry Life Cycle," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(2), pages 460-494, July.
    2. Rachel Griffith & Stephen Redding & John Van Reenen, 2004. "Mapping the Two Faces of R&D: Productivity Growth in a Panel of OECD Industries," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 883-895, November.
    3. Diego A. Comin & Thomas Philippon, 2006. "The Rise in Firm-Level Volatility: Causes and Consequences," NBER Chapters, in: NBER Macroeconomics Annual 2005, Volume 20, pages 167-228, National Bureau of Economic Research, Inc.
    4. Doraszelski, Ulrich & Jaumandreu, Jordi, 2006. "R&D and productivity: Estimating production functions when productivity is endogenous," MPRA Paper 1246, University Library of Munich, Germany.
    5. Coe, David T. & Helpman, Elhanan, 1995. "International R&D spillovers," European Economic Review, Elsevier, vol. 39(5), pages 859-887, May.
    6. Winter, Sidney G., 1984. "Schumpeterian competition in alternative technological regimes," Journal of Economic Behavior & Organization, Elsevier, vol. 5(3-4), pages 287-320.
    7. Jones, Charles I., 2005. "Growth and Ideas," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 16, pages 1063-1111, Elsevier.
    8. G. M.P. Swann, 2009. "The Economics of Innovation," Books, Edward Elgar Publishing, number 13211.
    9. Daron Acemoglu & Philippe Aghion & Fabrizio Zilibotti, 2006. "Distance to Frontier, Selection, and Economic Growth," Journal of the European Economic Association, MIT Press, vol. 4(1), pages 37-74, March.
    10. Jovanovic, Boyan & MacDonald, Glenn M, 1994. "The Life Cycle of a Competitive Industry," Journal of Political Economy, University of Chicago Press, vol. 102(2), pages 322-347, April.
    11. David B. Audretsch & Mark Sanders, 2009. "Technological Innovation, Entrepreneurship and Development," WIDER Working Paper Series RP2009-50, World Institute for Development Economic Research (UNU-WIDER).
    12. Michael Fritsch & Monika Meschede, 2001. "Product Innovation, Process Innovation, and Size," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 19(3), pages 335-350, November.
    13. Utterback, James M & Abernathy, William J, 1975. "A dynamic model of process and product innovation," Omega, Elsevier, vol. 3(6), pages 639-656, December.
    14. Francisco L. Rivera-Batiz & Luis A. Rivera-Batiz, 2018. "Economic Integration and Endogenous Growth," World Scientific Book Chapters, in: Francisco L Rivera-Batiz & Luis A Rivera-Batiz (ed.), International Trade, Capital Flows and Economic Development, chapter 1, pages 3-32, World Scientific Publishing Co. Pte. Ltd..
    15. Cohen, Wesley M & Klepper, Steven, 1996. "Firm Size and the Nature of Innovation within Industries: The Case of Process and Product R&D," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 232-243, May.
    16. Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-444, June.
    17. Bos, J.W.B. & Economidou, C. & Koetter, M., 2010. "Technology clubs, R&D and growth patterns: Evidence from EU manufacturing," European Economic Review, Elsevier, vol. 54(1), pages 60-79, January.
    18. Fare, Rolf & Shawna Grosskopf & Mary Norris & Zhongyang Zhang, 1994. "Productivity Growth, Technical Progress, and Efficiency Change in Industrialized Countries," American Economic Review, American Economic Association, vol. 84(1), pages 66-83, March.
    19. Klepper, Steven, 1996. "Entry, Exit, Growth, and Innovation over the Product Life Cycle," American Economic Review, American Economic Association, vol. 86(3), pages 562-583, June.
    20. Coe, David T & Helpman, Elhanan & Hoffmaister, Alexander W, 1997. "North-South R&D Spillovers," Economic Journal, Royal Economic Society, vol. 107(440), pages 134-149, January.
    21. Philippe Aghion & Richard Blundell & Rachel Griffith & Peter Howitt & Susanne Prantl, 2009. "The Effects of Entry on Incumbent Innovation and Productivity," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 20-32, February.
    22. Comin, Diego & Mulani, Sunil, 2009. "A theory of growth and volatility at the aggregate and firm level," Journal of Monetary Economics, Elsevier, vol. 56(8), pages 1023-1042, November.
    23. Klepper, Steven, 1997. "Industry Life Cycles," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 6(1), pages 145-181.
    24. Aghion, Philippe & Howitt, Peter, 2005. "Growth with Quality-Improving Innovations: An Integrated Framework," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 2, pages 67-110, Elsevier.
    25. Raymond Vernon, 1966. "International Investment and International Trade in the Product Cycle," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 80(2), pages 190-207.
    26. Zhu Wang, 2008. "Income Distribution, Market Size and the Evolution of Industry," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(3), pages 542-565, July.
    27. 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, President and Fellows of Harvard College, vol. 114(1), pages 83-116.
    28. Nyström, Kristina, 2005. "Firm Maturity and Product Processes R&D in Swedish Manufacturing Firms," Working Paper Series in Economics and Institutions of Innovation 39, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    29. Grossman, Gene M & Helpman, Elhanan, 1990. "Trade, Innovation, and Growth," American Economic Review, American Economic Association, vol. 80(2), pages 86-91, May.
    30. Doms, Mark & Dunne, Timothy & Roberts, Mark J., 1995. "The role of technology use in the survival and growth of manufacturing plants," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 523-542, December.
    31. Rajshree Agarwal & David B. Audretsch, 2001. "Does Entry Size Matter? The Impact of the Life Cycle and Technology on Firm Survival," Journal of Industrial Economics, Wiley Blackwell, vol. 49(1), pages 21-43, March.
    32. Agarwal, Rajshree, 1998. "Evolutionary trends of industry variables," International Journal of Industrial Organization, Elsevier, vol. 16(4), pages 511-525, July.
    33. Greene, William, 2005. "Reconsidering heterogeneity in panel data estimators of the stochastic frontier model," Journal of Econometrics, Elsevier, vol. 126(2), pages 269-303, June.
    34. Gort, Michael & Klepper, Steven, 1982. "Time Paths in the Diffusion of Product Innovations," Economic Journal, Royal Economic Society, vol. 92(367), pages 630-653, September.
    35. Utterback, James M. & Suarez, Fernando F., 1993. "Innovation, competition, and industry structure," Research Policy, Elsevier, vol. 22(1), pages 1-21, February.
    36. John R. Baldwin & Paul K. Gorecki, 1991. "Firm Entry and Exit in the Canadian Manufacturing Sector, 1970-1982," Canadian Journal of Economics, Canadian Economics Association, vol. 24(2), pages 300-323, May.
    37. Kamal Saggi, 2002. "Trade, Foreign Direct Investment, and International Technology Transfer: A Survey," The World Bank Research Observer, World Bank, vol. 17(2), pages 191-235, September.
    38. Huergo, Elena & Jaumandreu, Jordi, 2004. "Firms' age, process innovation and productivity growth," International Journal of Industrial Organization, Elsevier, vol. 22(4), pages 541-559, April.
    39. Keller, Wolfgang, 2002. "Trade and the Transmission of Technology," Journal of Economic Growth, Springer, vol. 7(1), pages 5-24, March.
    40. Jondrow, James & Knox Lovell, C. A. & Materov, Ivan S. & Schmidt, Peter, 1982. "On the estimation of technical inefficiency in the stochastic frontier production function model," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 233-238, August.
    41. Mark Doms & Eric J. Bartelsman, 2000. "Understanding Productivity: Lessons from Longitudinal Microdata," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 569-594, September.
    42. Philippe Aghion & Steven Durlauf (ed.), 2005. "Handbook of Economic Growth," Handbook of Economic Growth, Elsevier, edition 1, volume 1, number 1.
    43. Holger Gorg & Eric Strobl, 2005. "Employment dynamics in foreign and domestic plants: Evidence from Irish manufacturing," International Review of Applied Economics, Taylor & Francis Journals, vol. 19(2), pages 163-178.
    44. McGahan, Anita M. & Silverman, Brian S., 2001. "How does innovative activity change as industries mature?," International Journal of Industrial Organization, Elsevier, vol. 19(7), pages 1141-1160, July.
    45. Brambor, Thomas & Clark, William Roberts & Golder, Matt, 2006. "Understanding Interaction Models: Improving Empirical Analyses," Political Analysis, Cambridge University Press, vol. 14(1), pages 63-82, January.
    46. Stefano Scarpetta & Thierry Tressel, 2002. "Productivity and Convergence in a Panel of OECD Industries: Do Regulations and Institutions Matter?," OECD Economics Department Working Papers 342, OECD Publishing.
    47. George E. Battese & Greg S. Corra, 1977. "Estimation Of A Production Frontier Model: With Application To The Pastoral Zone Of Eastern Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 21(3), pages 169-179, December.
    48. Cameron, Gavin & Proudman, James & Redding, Stephen, 2005. "Technological convergence, R&D, trade and productivity growth," European Economic Review, Elsevier, vol. 49(3), pages 775-807, April.
    49. Elena Huergo & Jordi Jaumandreu, 2004. "How Does Probability of Innovation Change with Firm Age?," Small Business Economics, Springer, vol. 22(3_4), pages 193-207, April.
    50. Filson, Darren, 2002. "Product and process innovations in the life cycle of an industry," Journal of Economic Behavior & Organization, Elsevier, vol. 49(1), pages 97-112, September.
    51. Zoltan Acs & David Audretsch, 1990. "Innovation and Small Firms," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011131, December.
    52. Richard Kneller & Philip Andrew Stevens, 2006. "Frontier Technology and Absorptive Capacity: Evidence from OECD Manufacturing Industries," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 68(1), pages 1-21, February.
    53. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
    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. Bondarev, Anton & Greiner, Alfred, 2018. "Catching-up and falling behind: Effects of learning in an R&D differential game with spillovers," Journal of Economic Dynamics and Control, Elsevier, vol. 91(C), pages 134-156.
    2. Emmanuel Mamatzakis & Panagiotis Pegkas & Christos Staikouras & Constantinos Tsamadias, 2023. "R&D contribution in TFP growth of Greek industry: A limited information likelihood approach," Bulletin of Economic Research, Wiley Blackwell, vol. 75(4), pages 1086-1111, October.
    3. Cucculelli, Marco & Peruzzi, Valentina, 2020. "Innovation over the industry life-cycle. Does ownership matter?," Research Policy, Elsevier, vol. 49(1).
    4. He, Wenjian & Cheng, Yu & Lin, Ying & Zhang, Hongxiao, 2022. "Microeconomic effects of designating National Forest Cities: Evidence from China's publicly traded manufacturing companies," Forest Policy and Economics, Elsevier, vol. 136(C).
    5. Keeran Kowlaser & Helena Barnard, 2016. "Tie Breadth, Tie Strength And The Location Of Ties: The Value Of Ties Inside An Emerging Mnc To Team Innovation," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 20(01), pages 1-31, January.
    6. Anton Bondarev, 2016. "Intensity of R&D competition and the generation of innovations in heterogeneous setting," Journal of Evolutionary Economics, Springer, vol. 26(3), pages 621-653, July.
    7. Na Yu & Chunfeng Zhao, 2021. "Chain Innovation Mechanism of the Manufacturing Industry in the Yangtze River Delta of China Based on Evolutionary Game," Sustainability, MDPI, vol. 13(17), pages 1-20, August.
    8. Isabel Diez-Vial & Marta Fernández-Olmos, 2017. "The effect of science and technology parks on a firm’s performance: a dynamic approach over time," Journal of Evolutionary Economics, Springer, vol. 27(3), pages 413-434, July.
    9. Nnaemeka Vincent Emodi & Girish Panchakshara Murthy & Chinenye Comfort Emodi & Adaeze Saratu Augusta Emodi, 2017. "Factors Influencing Innovation and Industrial Performance in Chinese Manufacturing Industry," International Journal of Innovation and Technology Management (IJITM), World Scientific Publishing Co. Pte. Ltd., vol. 14(06), pages 1-32, December.
    10. Siobhan McQuaid & Esmee D. Kooijman & Mary-Lee Rhodes & Sheila M. Cannon, 2021. "Innovating with Nature: Factors Influencing the Success of Nature-Based Enterprises," Sustainability, MDPI, vol. 13(22), pages 1-25, November.
    11. Pieri, Fabio & Vecchi, Michela & Venturini, Francesco, 2018. "Modelling the joint impact of R&D and ICT on productivity: A frontier analysis approach," Research Policy, Elsevier, vol. 47(9), pages 1842-1852.
    12. Dendi Ramdani & Arjen Witteloostuijn & Johanna Vanderstraeten & Julie Hermans & Marcus Dejardin, 2019. "The perceived benefits of the European Union standardization. An exploration according to firm size and firm capabilities," International Economics and Economic Policy, Springer, vol. 16(2), pages 379-396, April.
    13. Fabio Pieri & Michela Vecchi & Francesco Venturini, 2017. "Modelling the joint impact of R and D and ICT on productivity: A frontier analysis approach," DEM Working Papers 2017/13, Department of Economics and Management.
    14. Fontana, Roberto & Vezzulli, Andrea, 2016. "Technological leadership and persistence in product innovation in the Local Area Network industry 1990–1999," Research Policy, Elsevier, vol. 45(8), pages 1604-1619.
    15. David Audretsch & Mark Sanders & Lu Zhang, 2021. "International product life cycles, trade and development stages," The Journal of Technology Transfer, Springer, vol. 46(5), pages 1630-1673, October.
    16. Fernández-Olmos, Marta & Ramírez-Alesón, Marisa, 2017. "How internal and external factors influence the dynamics of SME technology collaboration networks over time," Technovation, Elsevier, vol. 64, pages 16-27.
    17. Lutao Ning & Dylan Sutherland & Xiaolan Fu, 2017. "Local context and innovation in China," Asian Business & Management, Palgrave Macmillan, vol. 16(3), pages 117-129, July.
    18. Silviano Esteve-Pérez & Fabio Pieri & Diego Rodriguez, 2018. "Age and productivity as determinants of firm survival over the industry life cycle," Industry and Innovation, Taylor & Francis Journals, vol. 25(2), pages 167-198, February.
    19. Wang, Huiqi & Yuan, Wei & Yuan, George, 2022. "The mechanism for SMEs growth by applying stochastic dynamical approach," Finance Research Letters, Elsevier, vol. 48(C).
    20. Thomas Brenner & Matthias Dorner, 2017. "Is there a life cycle in all industries? First evidence from industry size dynamics in West Germany," Applied Economics Letters, Taylor & Francis Journals, vol. 24(5), pages 289-297, March.

    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. repec:use:tkiwps:1818 is not listed on IDEAS
    2. Bos, J.W.B. & Economidou, C. & Koetter, M., 2010. "Technology clubs, R&D and growth patterns: Evidence from EU manufacturing," European Economic Review, Elsevier, vol. 54(1), pages 60-79, January.
    3. M. Sanders & J.W.B. Bos & C. Economidou, 2007. "R&D over the Life Cycle," Working Papers 07-18, Utrecht School of Economics.
    4. Cucculelli, Marco & Peruzzi, Valentina, 2020. "Innovation over the industry life-cycle. Does ownership matter?," Research Policy, Elsevier, vol. 49(1).
    5. Tavassoli, Sam, 2015. "Innovation determinants over industry life cycle," Technological Forecasting and Social Change, Elsevier, vol. 91(C), pages 18-32.
    6. repec:use:tkiwps:3232 is not listed on IDEAS
    7. Henry, Michael & Kneller, Richard & Milner, Chris, 2009. "Trade, technology transfer and national efficiency in developing countries," European Economic Review, Elsevier, vol. 53(2), pages 237-254, February.
    8. Natália Barbosa & Ana Paula Faria & Vasco Eiriz, 2014. "Industry- and firm-specific factors of innovation novelty," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 23(3), pages 865-902.
    9. Silviano Esteve-Pérez & Fabio Pieri & Diego Rodriguez, 2018. "Age and productivity as determinants of firm survival over the industry life cycle," Industry and Innovation, Taylor & Francis Journals, vol. 25(2), pages 167-198, February.
    10. Bos, J.W.B. & Economidou, C. & Koetter, M. & Kolari, J.W., 2010. "Do all countries grow alike?," Journal of Development Economics, Elsevier, vol. 91(1), pages 113-127, January.
    11. Massimo Del Gatto & Adriana Di Liberto & Carmelo Petraglia, 2011. "Measuring Productivity," Journal of Economic Surveys, Wiley Blackwell, vol. 25(5), pages 952-1008, December.
    12. James Bessen, 2010. "Communicating Technical Knowledge," Working Papers 1001, Research on Innovation.
    13. Schön, Benjamin & Pyka, Andreas, 2012. "A taxonomy of innovation networks," FZID Discussion Papers 42-2012, University of Hohenheim, Center for Research on Innovation and Services (FZID).
    14. Elena Cefis & Franco Malerba & Orietta Marsili & Luigi Orsenigo, 2021. "Time to exit: “revolving door effect” or “Schumpeterian gale of creative destruction”?," Journal of Evolutionary Economics, Springer, vol. 31(5), pages 1465-1494, November.
    15. Cefis, Elena & Marsili, Orietta, 2012. "Going, going, gone. Exit forms and the innovative capabilities of firms," Research Policy, Elsevier, vol. 41(5), pages 795-807.
    16. Hyytinen, Ari & Maliranta, Mika, 2013. "Firm lifecycles and evolution of industry productivity," Research Policy, Elsevier, vol. 42(5), pages 1080-1098.
    17. Kyriakos Drivas & Claire Economidou & Efthymios G. Tsionas, 2018. "Production of output and ideas: efficiency and growth patterns in the United States," Regional Studies, Taylor & Francis Journals, vol. 52(1), pages 105-118, January.
    18. Drivas, Kyriakos & Economidou, Claire & Tsionas, Efthymios G., 2014. "A Poisson Stochastic Frontier Model with Finite Mixture Structure," MPRA Paper 57485, University Library of Munich, Germany.
    19. Jakob B. Madsen & Md. Rabiul Islam & James B. Ang, 2010. "Catching up to the technology frontier: the dichotomy between innovation and imitation," Canadian Journal of Economics, Canadian Economics Association, vol. 43(4), pages 1389-1411, November.
    20. van der Boor, Paul & Oliveira, Pedro & Veloso, Francisco, 2014. "Users as innovators in developing countries: The global sources of innovation and diffusion in mobile banking services," Research Policy, Elsevier, vol. 43(9), pages 1594-1607.
    21. Jaap W. B. Bos & Bertrand Candelon & Claire Economidou, 2016. "Does knowledge spill over across borders and technology regimes?," Journal of Productivity Analysis, Springer, vol. 46(1), pages 63-82, August.
    22. Bettina Becker, 2013. "The Determinants of R&D Investment: A Survey of the Empirical Research," Discussion Paper Series 2013_09, Department of Economics, Loughborough University, revised Sep 2013.

    More about this item

    Keywords

    Growth; Life-cycle; Innovation; Stochastic frontier analysis; Manufacturing industries;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

    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:eee:jeborg:v:86:y:2013:i:c:p:78-91. 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jebo .

    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.