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Currents and sub-currents in innovation flows: Explaining innovativeness using new-product announcements

Listed author(s):
  • Dolfsma, Wilfred
  • van der Panne, Gerben

The creation of new knowledge is a haphazard process: not every sector in an economy is equally involved. The effect of industry structure on innovativeness has been a focus of attention for a long time by both academics and policymakers. In a much quoted article, using unique data - new-product announcements - Acs and Audretsch [Acs, Z.J., Audretsch, D.B., 1988. Innovation in large and small firms: an empirical analysis. American Economic Review 78(4), 678-690] identified several characteristics of industry structure and their effects on innovativeness. By analyzing a new and more consciously compiled database, we re-examine their original claims. Our results largely support their findings: industry concentration and degree of unionization for instance hamper innovation; skilled labor promotes it. Our findings diverge in one significant respect from theirs: we suggest that the large firms do not contribute more to an industry's innovativeness than small firms. At the industry level, we find strong support for the Schumpeter Mark I perspective of creative destruction by small firms rather than creative accumulation by large firms. In addition, we show that less dedicated innovators prove more susceptible to firm-external industry factors than more committed innovators. An unfavorable competitive environment decreases the likelihood that less successful innovators will announce new products.

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Article provided by Elsevier in its journal Research Policy.

Volume (Year): 37 (2008)
Issue (Month): 10 (December)
Pages: 1706-1716

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Handle: RePEc:eee:respol:v:37:y:2008:i:10:p:1706-1716
Contact details of provider: Web page: http://www.elsevier.com/locate/respol

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