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The persistence of innovation: a panel data investigation on manufacturing firms

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  • Eleonora Bartoloni

Abstract

This paper represents a contribution to empirical debate on the persistence of innovation in the firm, by exploiting an innovative panel database that, for the first time, links three waves of the Italian Community Innovation Survey with an administrative data source providing economic and financial information for firms in the Italian manufacturing sector, 1996--2003. By using both a dynamic logistic model and a Granger causality approach, we show that in order to innovate successfully it is much more important to have an adequate flow of profits during an appropriate time span rather than high profits only during one period before innovation. Our causality tests prove the existence of a dynamic interaction between innovation and profitability: successful innovation can, in the short run, generate the profitability conditions that can then enhance the financial resources needed to reinvest in new technological opportunities, thus causing the firm to persist in its innovative behaviour. We have also shown that another important source of persistence is represented by past innovative experience. A firm with consolidated innovative behaviour would have a higher probability of future successful innovation with respect to a firm that occasionally (or accidentally) innovates. Persistence in innovation enables a firm to take advantage of substantial technological and organizational learning effects, which improve with time.

Suggested Citation

  • Eleonora Bartoloni, 2012. "The persistence of innovation: a panel data investigation on manufacturing firms," International Review of Applied Economics, Taylor & Francis Journals, vol. 26(6), pages 787-810, April.
    • Handle: RePEc:taf:irapec:v:26:y:2012:i:6:p:787-810
    DOI: 10.1080/02692171.2012.686486
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    References listed on IDEAS

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    1. Teece, David J., 2010. "Technological Innovation and the Theory of the Firm," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 679-730, Elsevier.
    2. Eleonora Bartoloni, 2013. "Capital structure and innovation: causality and determinants," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 40(1), pages 111-151, February.
    3. Antonelli, Cristiano & Scellato, Giuseppe, 2009. "The persistence of innovation: the italian evidence," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 200903, University of Turin.
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    1. Juan Jesus Arenas & Juan Erasmo Gómez & Efraín Ortiz & Freddy Paz & Carlos Parra, 2020. "Elements of the Persistence in Innovation: Systematic Literature Review," Administrative Sciences, MDPI, vol. 10(4), pages 1-14, October.
    2. Francesco Bogliacino & Matteo Lucchese & Leopoldo Nascia & Mario Pianta, 2015. "The virtuous circle of innovation in italian firms," Econógrafos, Escuela de Economía 022950, Universidad Nacional de Colombia, FCE, CID.
    3. Reade, Carol & Lee, Hyun-Jung, 2016. "Does ethnic conflict impede or enable employee innovation behavior? The alchemic role of collaborative conflict management," LSE Research Online Documents on Economics 65613, London School of Economics and Political Science, LSE Library.
    4. Eleonora Bartoloni & Maurizio Baussola, 2018. "Driving business performance: innovation complementarities and persistence patterns," Industry and Innovation, Taylor & Francis Journals, vol. 25(5), pages 505-525, May.
    5. Julien Cusin & Juliette Ducros-Passebois, 2015. "Appropriate persistence in a project: The case of the Wine Culture and Tourism Centre in Bordeaux," Post-Print hal-03240447, HAL.
    6. Rituparna Kaushik & Sourabh Bikas Paul, 2022. "Do Competition Improve Persistence in Innovation Effort? Sectoral Patterns and Evidence from India," Journal of Industry, Competition and Trade, Springer, vol. 22(2), pages 259-296, June.
    7. Maximiliano Machado, 2021. "Heterogeneous Innovation Persistence: Evidence From Uruguayan Firms," Documentos de Trabajo (working papers) 21-04, Instituto de Economía - IECON.
    8. Cusin, Julien & Passebois-Ducros, Juliette, 2015. "Appropriate persistence in a project: The case of the Wine Culture and Tourism Centre in Bordeaux," European Management Journal, Elsevier, vol. 33(5), pages 341-353.

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