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Innovation and economic performance in services: a firm-level analysis


  • Giulio Cainelli
  • Rinaldo Evangelista
  • Maria Savona


This paper explores the two-way relationship between innovation and economic performance in services using a longitudinal firm-level dataset which matches data from the second Community Innovation Survey, CIS II (1993--95), against a set of economic variables provided by the System of Enterprise Accounts (1993--98). The results presented show that innovation is positively affected by past economic performance and that innovation activities (especially investments in ICTs) have a positive impact on both growth and productivity. Furthermore, productivity and innovation act as a self-reinforcing mechanism, which further boosts economic performance. These findings provide empirical support for the endogenous nature of innovation in services and the presence in this sector of competition models and selection mechanisms based on innovation. Copyright 2006, Oxford University Press.

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  • Giulio Cainelli & Rinaldo Evangelista & Maria Savona, 2006. "Innovation and economic performance in services: a firm-level analysis," Cambridge Journal of Economics, Oxford University Press, vol. 30(3), pages 435-458, May.
  • Handle: RePEc:oup:cambje:v:30:y:2006:i:3:p:435-458

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    References listed on IDEAS

    1. Thomas R. Michl, 1988. "The Two-Stage Decline in U.S. Nonfinancial Corporate Profitability, 1948-1986," Review of Radical Political Economics, Union for Radical Political Economics, vol. 20(4), pages 1-22, December.
    2. James Crotty, 2009. "Structural causes of the global financial crisis: a critical assessment of the 'new financial architecture'," Cambridge Journal of Economics, Oxford University Press, vol. 33(4), pages 563-580, July.
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