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How does competition affect the relationship between innovation and productivity? Estimation of a CDM model for Norway

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Listed author(s):
  • Fulvio Castellacci

Abstract

The paper investigates the effects of industry-level competition on firm-level innovation and productivity. We propose a refined version of the CDM (Crepon, Duguet, and Mairesse) model that analyses the impacts of competition on four interrelated stages of the innovation process: the choice of a firm to engage in innovation, its R&D intensity, its innovation output and labour productivity. We test the model on a firm-level panel data set based on the last three waves of the innovation survey for Norway (CIS3, CIS4 and CIS5). The econometric results provide empirical support for the refined version of the CDM model. They show that enterprises in oligopolistic sectors have, on average, a greater propensity to engage in innovative activities and tend to invest a greater amount of resources in R&D. On the other hand, firms in competitive industries are characterized by a stronger impact of innovation input on their technological and economic performance.

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File URL: http://hdl.handle.net/10.1080/10438599.2010.516535
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Article provided by Taylor & Francis Journals in its journal Economics of Innovation and New Technology.

Volume (Year): 20 (2011)
Issue (Month): 7 (August)
Pages: 637-658

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Handle: RePEc:taf:ecinnt:v:20:y:2011:i:7:p:637-658
DOI: 10.1080/10438599.2010.516535
Contact details of provider: Web page: http://www.tandfonline.com/GEIN20

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Find related papers by JEL classification:
  • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
  • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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  1. Philippe Aghion & Nick Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2005. "Competition and Innovation: an Inverted-U Relationship," The Quarterly Journal of Economics, Oxford University Press, vol. 120(2), pages 701-728.
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  7. Philippe Aghion & Richard Blundell & Rachel Griffith & Peter Howitt & Susanne Prantl, 2009. "The Effects of Entry on Incumbent Innovation and Productivity," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 20-32, February.
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  17. Castellacci, Fulvio, 2008. "Innovation and the competitiveness of industries: comparing the mainstream and the evolutionary approaches," MPRA Paper 27523, University Library of Munich, Germany.
  18. Fulvio Castellacci, 2007. "Evolutionary And New Growth Theories. Are They Converging?," Journal of Economic Surveys, Wiley Blackwell, vol. 21(3), pages 585-627, 07.
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Cited by:

  1. Michael Peneder & Martin Woerter, 2014. "Competition, R&D and innovation: testing the inverted-U in a simultaneous system," Journal of Evolutionary Economics, Springer, vol. 24(3), pages 653-687, July.
  2. Marina Rybalka, 2015. "The innovative input mix. Assessing the importance of R&D and ICT investments for firm performance in manufacturing and services," Discussion Papers 801, Statistics Norway, Research Department.
  3. Casey, Eddie & O'Toole, Conor, 2013. "Bank-lending constraints and alternative financing during the financial crisis: Evidence from European SMEs," Papers WP450, Economic and Social Research Institute (ESRI).
  4. 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.
  5. Klaus S. Friesenbichler & Michael Peneder, 2016. "Innovation, Competition and Productivity. Firm Level Evidence for Eastern Europe and Central Asia," WIFO Working Papers 516, WIFO.
  6. Fulvio Castellacci, 2014. "Service innovation and the proximity-concentration trade-off model of trade and FDI," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 23(1), pages 92-108, January.
  7. Amable, Bruno & Ledezma, Ivan & Robin, Stéphane, 2016. "Product market regulation, innovation, and productivity," Research Policy, Elsevier, vol. 45(10), pages 2087-2104.
  8. Castellacci, Fulvio & Lie, Christine Mee, 2015. "Do the effects of R&D tax credits vary across industries? A meta-regression analysis," Research Policy, Elsevier, vol. 44(4), pages 819-832.
  9. Kamleshan Pillay & Jorge E. Viñuales, 2016. "“Monetary” rules for a linked system of offset credits," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 16(6), pages 933-951, December.
  10. Marek Vokoun, 2016. "Innovation behaviour of firms in a small open economy: the case of the Czech manufacturing industry," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 43(1), pages 111-139, February.
  11. Fulvio Castellacci & Arne Fevolden, 2014. "Capable Companies or Changing Markets? Explaining the Export Performance of Firms in the Defence Industry," Defence and Peace Economics, Taylor & Francis Journals, vol. 25(6), pages 549-575, December.
  12. 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.
  13. Fulvio Castellacci & Arne Fevolden, 2015. "Innovation and Liberalization in the European Defence Sector," Books, Edward Elgar Publishing, number 15941.
  14. Marek Vokoun, 2016. "Innovation behaviour of firms in a small open economy: the case of the Czech manufacturing industry," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 43(1), pages 111-139, February.

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