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Complementarities Affecting the Returns to Innovation


  • Jennifer Percival
  • Brian Cozzarin


The purpose of this paper is to determine which firm strategies, perceived benefits of innovation and objectives for innovating in various manufacturing industries are indeed complementary with innovation. The test for complementarity is performed by proving that the data satisfies a set of supermodularity parametric equation restrictions. Our estimation results, from Canada's national innovation survey, show a wide variation in complements affecting the perception of the value of innovation to a firm. In terms of profit, complementary variable pairs for world-first innovators exceed those of firms who report a Canada-first or firm-first innovation. With labour productivity, complementary variable pairs for the Canada-first innovators exceed those of the world- and firm-first innovators. It is readily apparent though, that a high-technology industry does not necessarily equate to a high degree of complementarity.

Suggested Citation

  • Jennifer Percival & Brian Cozzarin, 2008. "Complementarities Affecting the Returns to Innovation," Industry and Innovation, Taylor & Francis Journals, vol. 15(4), pages 371-392.
  • Handle: RePEc:taf:indinn:v:15:y:2008:i:4:p:371-392 DOI: 10.1080/13662710802273249

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    References listed on IDEAS

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    Cited by:

    1. Justin Doran & Geraldine Ryan, 2014. "Eco-Innovation – does additional engagement lead to additional rewards?," International Journal of Social Economics, Emerald Group Publishing, vol. 41(11), pages 1110-1130, November.
    2. Giovanni Cerulli & Bianca Potì, 2013. "Managerial capacity in the innovation process and firm profitability," CERIS Working Paper 201301, Institute for Economic Research on Firms and Growth - Moncalieri (TO) ITALY -NOW- Research Institute on Sustainable Economic Growth - Moncalieri (TO) ITALY.
    3. Lewandowska, Małgorzata Stefania & Szymura-Tyc, Maja & Gołębiowski, Tomasz, 2016. "Innovation complementarity, cooperation partners, and new product export: Evidence from Poland," Journal of Business Research, Elsevier, vol. 69(9), pages 3673-3681.
    4. Gilli, Marianna & Mancinelli, Susanna & Mazzanti, Massimiliano, 2014. "Innovation complementarity and environmental productivity effects: Reality or delusion? Evidence from the EU," Ecological Economics, Elsevier, vol. 103(C), pages 56-67.
    5. Antonioli, Davide & Mancinelli, Susanna & Mazzanti, Massimiliano, 2013. "Is environmental innovation embedded within high-performance organisational changes? The role of human resource management and complementarity in green business strategies," Research Policy, Elsevier, vol. 42(4), pages 975-988.
    6. Berulava, George & Gogokhia, Teimuraz, 2016. "Studying Complementarities between Modes of Innovation Strategies in Transition Economies," MPRA Paper 71277, University Library of Munich, Germany.
    7. repec:sgh:gosnar:y:2017:i:1:p:95-117 is not listed on IDEAS
    8. Doran, Justin, 2012. "Are different forms of innovation complements or substitutes?," MPRA Paper 44580, University Library of Munich, Germany.
    9. Ballot, Gérard & Fakhfakh, Fathi & Galia, Fabrice & Salter, Ammon, 2015. "The fateful triangle: Complementarities in performance between product, process and organizational innovation in France and the UK," Research Policy, Elsevier, vol. 44(1), pages 217-232.

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    Complementarity; strategy; innovation; objectives; impact;


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