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Openness and innovation--Home and export demand effects on manufacturing innovation: Panel data evidence for Ireland and Switzerland

  • Woerter, Martin
  • Roper, Stephen

Recent studies in the tradition of Schmookler have re-emphasised the potential role of demand in stimulating innovation. Here, we reconsider the role of 'home' and 'export' market demand in stimulating manufacturing innovation using comparable panel data for two small open economies - Ireland and Switzerland. Our analysis is based on the estimation of reduced form innovation production functions using panel data estimators over the sample period 1994-2005. For a range of innovation indicators, however, we find little evidence of any significant market demand effects, with innovation performance instead determined largely by firm-level capability effects and characteristics. In policy and strategy terms this suggests the continued value of measures to improve innovation capability regardless of market demand conditions. In more methodological terms our results suggest the validity of the usual assumption implicit in modelling innovation outputs that supply-side factors predominate.

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Article provided by Elsevier in its journal Research Policy.

Volume (Year): 39 (2010)
Issue (Month): 1 (February)
Pages: 155-164

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Handle: RePEc:eee:respol:v:39:y:2010:i:1:p:155-164
Contact details of provider: Web page: http://www.elsevier.com/locate/respol

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  1. Jacques Mairesse & Pierre Mohnen, 2001. "To Be or Not To Be Innovative: An Exercise in Measurement," NBER Working Papers 8644, National Bureau of Economic Research, Inc.
  2. Roper, Stephen & Du, Jun & Love, James H., 2008. "Modelling the innovation value chain," Research Policy, Elsevier, vol. 37(6-7), pages 961-977, July.
  3. Francesco Daveri, 2002. "The New Economy in Europe, 1992--2001," Oxford Review of Economic Policy, Oxford University Press, vol. 18(3), pages 345-362.
  4. Lachenmaier, Stefan & Wößmann, Ludger, 2006. "Does innovation cause exports? Evidence from exogenous innovation impulses and obstacles using German micro data," Munich Reprints in Economics 19482, University of Munich, Department of Economics.
  5. Janz, Norbert & Lööf, Hans & Peters, Bettina, 2004. "Firm Level Innovation and Productivity - Is there a Common Story Across Countries?," Working Paper Series in Economics and Institutions of Innovation 24, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  6. Kleinknecht, Alfred & Verspagen, Bart, 1990. "Demand and innovation: Schmookler re-examined," Research Policy, Elsevier, vol. 19(4), pages 387-394, August.
  7. Gadi Barlevy, 2007. "On the Cyclicality of Research and Development," American Economic Review, American Economic Association, vol. 97(4), pages 1131-1164, September.
  8. Bronwyn H. Hall & Jacques Mairesse & Benoit Mulkay, 1998. "Does cash flow cause investment and R&D: an exploration using panel data for French, Japanes and United States scientific firms," IFS Working Papers W98/11, Institute for Fiscal Studies.
  9. Raymond Wladimir & Mohnen Pierre & Palm Franz & Schneider Berit, 2004. "An Empirically-Based Taxonomy of Dutch Manufacturing: Innovation Policy Implications," Research Memorandum 011, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
  10. Alessandro STERLACCHINI, 1998. "Do innovative activities matter to small firms in non-R&D-intensive industries? An application to export performances," Working Papers 109, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  11. Bruno Crepon & Emmanuel Duguet & Jacques Mairesse, 1998. "Research, Innovation, and Productivity: An Econometric Analysis at the Firm Level," NBER Working Papers 6696, National Bureau of Economic Research, Inc.
  12. repec:fth:inseep:9833 is not listed on IDEAS
  13. Roper, Stephen & Love, James H., 2002. "Innovation and export performance: evidence from the UK and German manufacturing plants," Research Policy, Elsevier, vol. 31(7), pages 1087-1102, September.
  14. Cassiman, Bruno & Veugelers, Reinhilde, 2002. "Complementarity in the Innovation Strategy: Internal R&D, External Technology Acquisition and Cooperation," CEPR Discussion Papers 3284, C.E.P.R. Discussion Papers.
  15. Crepon, B. & Duguet, E. & Mairesse, J., 1998. "Research Investment, Innovation and Productivity: An Econometric Analysis at the Firm Level," Papiers d'Economie Mathématique et Applications 98.15, Université Panthéon-Sorbonne (Paris 1).
  16. Mariacristina Piva & Marco Vivarelli, 2007. "Is demand-pulled innovation equally important in different groups of firms?," Cambridge Journal of Economics, Oxford University Press, vol. 31(5), pages 691-710, September.
  17. Knut Blind & Andre Jungmittag, 2004. "Foreign Direct Investment, Imports and Innovations in the Service Industry," Review of Industrial Organization, Springer, vol. 25(2), pages 205-227, 06.
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