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Persistence in lnnovation and Profitability

Author

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  • Elena CEFiS

    (Department of Economics University of Bergamo)

Abstract

The paper investigates the relationship between the strong inertia of finns profits and the persistence in innovative activities. The empirical analysis implements a non-parametric approach based on modelling the dynamics of the evolving cross-section distributions to analyse firms' intradistribution mobility and persistence. Results suggest that firms which are systematic innovators and earn profits above the average have large probabilities to keep innovating and earning profits above the average, as well as vice versa. Firm's relative position in innovation matters in the long run: the probability to earn profits above the average, is higher if firms start as systematic innovators.

Suggested Citation

  • Elena CEFiS, 2003. "Persistence in lnnovation and Profitability," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 111(1), pages 19-37.
    • Handle: RePEc:vep:journl:y:2003:v:111:i:1:p:19-37
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    More about this item

    Keywords

    innovation; patents; persistence; profitability; Transition Probability Matrices;
    All these keywords.

    JEL classification:

    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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