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Innovation complementarities and firm growth

Author

Listed:
  • Stefano Bianchini
  • Gabriele Pellegrino
  • Federico Tamagni

Abstract

This article explores the relations between firm growth and a set of four innovation indicators (in-house R&D, external sourcing, product innovation, and process innovation) that capture the different sources, modes, and outcomes of the innovative strategies adopted by firms. While existing studies tend to focus on the individual effects on growth of each innovation activity, we stress that firms adopt heterogeneous innovation strategies, choosing to perform different combinations of the basic innovation activities. We directly address the empirical question as to whether jointly performing two basic innovation activities boosts sales growth above and beyond the separate contribution of each innovation activity when performed individually. Exploiting a panel of Spanish manufacturing firms observed between 2004 and 2011, we document instances of super-modularity of the growth function, and reveal the presence of complementarities between internal R&D and product innovation, and between product and process innovations. As such, the combination of these three basic innovation activities appears to be the most effective strategy for sustaining growth and market shares, while external sourcing does not appear to make any systematic contribution.

Suggested Citation

  • Stefano Bianchini & Gabriele Pellegrino & Federico Tamagni, 2018. "Innovation complementarities and firm growth," Industrial and Corporate Change, Oxford University Press, vol. 27(4), pages 657-676.
  • Handle: RePEc:oup:indcch:v:27:y:2018:i:4:p:657-676.
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    File URL: http://hdl.handle.net/10.1093/icc/dty008
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    Cited by:

    1. Pietro Santoleri, 2020. "Innovation and job creation in (high-growth) new firms [An international cohort comparison of size effects on job growth]," Industrial and Corporate Change, Oxford University Press, vol. 29(3), pages 731-756.
    2. David Urbano & Andreu Turro & Sebastian Aparicio, 2020. "Innovation through R&D activities in the European context: antecedents and consequences," The Journal of Technology Transfer, Springer, vol. 45(5), pages 1481-1504, October.
    3. Alfonso Expósito & Juan A. Sanchis-Llopis, 2019. "The relationship between types of innovation and SMEs’ performance: a multi-dimensional empirical assessment," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 9(2), pages 115-135, June.
    4. Falk, Martin & de Lemos, Francisco Figueira, 2019. "Complementarity of R&D and productivity in SME export behavior," Journal of Business Research, Elsevier, vol. 96(C), pages 157-168.
    5. Chei Bukari & Emm anuel Atta Anaman, 2021. "Corruption and firm innovation: a grease or sand in the wheels of commerce? Evidence from lower-middle and upper-middle income economies," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 11(2), pages 267-302, June.
    6. Pietro Santoleri, 2020. "Innovation and job creation in (high-growth) new firms [An international cohort comparison of size effects on job growth]," Industrial and Corporate Change, Oxford University Press, vol. 29(3), pages 731-756.
    7. Rubén Martínez-Alonso & María J. Martínez-Romero & Alfonso A. Rojo-Ramírez, 2019. "Examining the Impact of Innovation Forms on Sustainable Economic Performance: The Influence of Family Management," Sustainability, MDPI, Open Access Journal, vol. 11(21), pages 1-22, November.
    8. Chei Bukari & Emm anuel Atta Anaman, 0. "Corruption and firm innovation: a grease or sand in the wheels of commerce? Evidence from lower-middle and upper-middle income economies," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 0, pages 1-36.
    9. Guarascio, Dario & Tamagni, Federico, 2019. "Persistence of innovation and patterns of firm growth," Research Policy, Elsevier, vol. 48(6), pages 1493-1512.
    10. A. Arrighetti & L. Cattani & F. Landini & A. Lasagni, 2019. "Work Flexibility and Firm Growth," Economics Department Working Papers 2019-EP04, Department of Economics, Parma University (Italy).

    More about this item

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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