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Does history matter for the relationship between R&D, innovation, and productivity?

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  • Elena Huergo
  • Lourdes Moreno

Abstract

This article analyzes the relationship between R&D expenditures, innovation, and productivity growth, taking into account the possibility of persistence in firms' behavior. We study this relationship for a sample of Spanish manufacturing firms between 1990 and 2005, estimating a model with four equations: participation in technological activities, R&D intensity, the generation of innovations and the impact of these technological outputs on total factor productivity growth. Our results reflect the existence of true state dependence both in the decision of R&D investment and in the production of innovations. The omission of this persistence leads to an overestimation of the current impact of innovations on productivity growth. However, the presence of persistence in technological inputs and outputs entails current R&D activities having long-run effects on a firm's productivity. Copyright 2011 The Author 2011. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.

Suggested Citation

  • Elena Huergo & Lourdes Moreno, 2011. "Does history matter for the relationship between R&D, innovation, and productivity?," Industrial and Corporate Change, Oxford University Press, vol. 20(5), pages 1335-1368, October.
  • Handle: RePEc:oup:indcch:v:20:y:2011:i:5:p:1335-1368
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    File URL: http://hdl.handle.net/10.1093/icc/dtr019
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    Citations

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    Cited by:

    1. Raymond, Wladimir & Mairesse, Jacques & Mohnen, Pierre & Palm, Franz, 2015. "Dynamic models of R & D, innovation and productivity: Panel data evidence for Dutch and French manufacturing," European Economic Review, Elsevier, vol. 78(C), pages 285-306.
    2. Ana Paula Faria & Natália Barbosa & Vasco Eiriz, 2013. "Firms’ innovation across regions: an exploratory study," NIPE Working Papers 12/2013, NIPE - Universidade do Minho.
    3. BENEKI, Christina & GIANNIAS, Dimitrios & MOUSTAKAS, George, 2012. "INNOVATION AND ECONOMIC PERFORMANCE: the case of Greek SMEs," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 12(1), pages 43-54.
    4. Justin Doran & Eoin O'Leary, 2016. "The Innovation Performance of Irish and Foreign-owned Firms: The Roles of R&D and Networking," The World Economy, Wiley Blackwell, vol. 39(9), pages 1384-1398, September.
    5. Huergo, Elena & Moreno, Lourdes, 2017. "Subsidies or loans? Evaluating the impact of R&D support programmes," Research Policy, Elsevier, pages 1198-1214.
    6. Xulia González & Daniel Miles-Touya & Consuelo Pazó, 2012. "R&D, Worker Training, and Innovation: Firm-level evidence," Working Papers 1203, Universidade de Vigo, Departamento de Economía Aplicada.
    7. Di Ubaldo, Mattia & Siedschlag, Iulia, 2017. "The impact of investment in innovation on productivity: firm-level evidence from Ireland," Papers WP571, Economic and Social Research Institute (ESRI).
    8. repec:elg:eechap:14395_24 is not listed on IDEAS
    9. Isabel Busom & Beatriz Corchuelo & Ester Martínez-Ros, 2017. "Participation inertia in R&D tax incentive and subsidy programs," Small Business Economics, Springer, pages 153-177.
    10. repec:taf:indinn:v:23:y:2016:i:8:p:694-712 is not listed on IDEAS
    11. Suárez, Diana, 2014. "Persistence of innovation in unstable environments: Continuity and change in the firm's innovative behavior," Research Policy, Elsevier, pages 726-736.
    12. Acosta, Manuel & Coronado, Daniel & Romero, Carlos, 2015. "Linking public support, R&D, innovation and productivity: New evidence from the Spanish food industry," Food Policy, Elsevier, vol. 57(C), pages 50-61.
    13. Manuel Toselli, 2017. "Knowledge sources and integration ties toward innovation. A food sector perspective," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 7(1), pages 43-65, April.
    14. Esther Goya & Esther Vayá & Jordi Suriñach, 2012. "“Do intra- and inter-industry spillovers matter? CDM model estimates for Spain”," AQR Working Papers 201207, University of Barcelona, Regional Quantitative Analysis Group, revised Sep 2012.
    15. Ana Hidalgo-Cabrillana & Cristina Lopez-Mayan, 2015. "Teaching Styles and Achievement: Student and Teacher Perspectives," Working Papers 869, Barcelona Graduate School of Economics.
    16. Matthias Deschryvere, 2014. "R&D, firm growth and the role of innovation persistence: an analysis of Finnish SMEs and large firms," Small Business Economics, Springer, pages 767-785.
    17. Michel Dumont, 2015. "Working Paper 05-15 - Evaluation of federal tax incentives for private R&D in Belgium: An update," Working Papers 1505, Federal Planning Bureau, Belgium.
    18. Stefano Bianchini & Gabriele Pellegrino, 2017. "Innovation persistence and employment dynamics," Working Papers 2017/03, Institut d'Economia de Barcelona (IEB).

    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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