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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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  • 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
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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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Cited by:

  1. Castellacci, Fulvio & Lie, Christine, 2013. "Do the effects of R&D tax credits vary across industries? A meta-regression analysis," MPRA Paper 47937, University Library of Munich, Germany.
  2. Bruno Amable & Ivan Ledezma & Stéphane Robin, 2014. "Product market regulation, innovation and productivity," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00973947, HAL.
  3. Castellacci, Fulvio & Fevolden, Arne, 2012. "Capable companies or changing markets? Explaining the export performance of firms in the defence industry," MPRA Paper 36026, University Library of Munich, Germany.
  4. 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.
  5. Marek Vokoun, 2016. "Innovation behaviour of firms in a small open economy: the case of the Czech manufacturing industry," Empirica, Springer, vol. 43(1), pages 111-139, February.
  6. Fulvio, Castellacci, 2011. "Service innovation and the proximity-concentration trade-off model of trade and FDI," MPRA Paper 31002, University Library of Munich, Germany.
  7. 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.
  8. 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.
  9. 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).

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