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Cross-sectoral differences in the drivers of innovation

Author

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  • Justin Doran
  • Declan Jordan

Abstract

Purpose - The purpose of this paper is to analyse differences in the drivers of firm innovation performance across sectors. The literature often makes the assumption that firms in different sectors differ in their propensity to innovate but not in the drivers of innovation. The authors empirically assess whether this assumption is accurate through a series of econometric estimations and tests. Design/methodology/approach - The data used are derived from the Irish Community Innovation Survey 2004-2006. A series of multivariate probit models are estimated and the resulting coefficients are tested for parameter stability across sectors using likelihood ratio tests. Findings - The results indicate that there is a strong degree of heterogeneity in the drivers of innovation across sectors. The determinants of process, organisational, new to firm and new to market innovation varies across sectors suggesting that the pooling of sectors in an innovation production function may lead to biased inferences. Research limitations/implications - The implications of the results are that innovation policies targeted at stimulating innovation need to be tailored to particular industries. One size fits all policies would seem inappropriate given the large degree of heterogeneity observed across the drivers of innovation in different sectors. Originality/value - The value of this paper is that it provides an empirical test as to whether it is suitable to group sectoral data when estimating innovation production functions. Most papers simply include sectoral dummies, implying that only the propensity to innovate differs across sectors and that the slope of the coefficient estimates are in fact consistent across sectors.

Suggested Citation

  • Justin Doran & Declan Jordan, 2016. "Cross-sectoral differences in the drivers of innovation," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 43(5), pages 719-748, October.
  • Handle: RePEc:eme:jespps:v:43:y:2016:i:5:p:719-748
    DOI: 10.1108/JES-10-2014-0171
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    Cited by:

    1. Doran, Justin & Jordan, Declan & O'Leary, Eoin, 2013. "Effects of R&D spending on Innovation by Irish and Foreign-owned Businesses," MPRA Paper 44579, University Library of Munich, Germany.
    2. Declan Jordan & Peter Fako, 2018. "RIO Country Report 2017: Ireland," JRC Research Reports JRC111329, Joint Research Centre (Seville site).
    3. Mulligan, Kevin & Lenihan, Helena & Doran, Justin & Roper, Stephen, 2022. "Harnessing the science base: Results from a national programme using publicly-funded research centres to reshape firms’ R&D," Research Policy, Elsevier, vol. 51(4).
    4. J Doran & G Ryan, 2016. "The effectiveness of R&D and external interaction for innovation: Insights from quantile regression," Economic Issues Journal Articles, Economic Issues, vol. 21(1), pages 47-65, March.

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    More about this item

    Keywords

    Innovation; Community Innovation Survey; Sector;
    All these keywords.

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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