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Innovation and firm-level persistent profitability: a Schumpeterian framework

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  • Peter W Roberts

    (Columbia Business School, Columbia University, New York, NY, USA)

Abstract

Studies of firm-level profit dynamics tend to attribute the variance in profit persistence to variability in the extent to which imitative pressures are resisted. This monopoly-based explanation of persistent profitability implicitly assumes a one-to-one correspondence between firm-level and product-level profit dynamics. Following Schumpeter, this paper begins to develop a framework for firm-level profit persistence that embraces product innovation, competitor imitation, and, more importantly, the prospect that several product innovations may be embodied within a single firm. Such an approach opens the door for an innovation-based explanation of profit persistence to accompany the monopoly-based arguments that are typically offered. Copyright © 2001 John Wiley & Sons, Ltd.

Suggested Citation

  • Peter W Roberts, 2001. "Innovation and firm-level persistent profitability: a Schumpeterian framework," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 22(4-5), pages 239-250.
  • Handle: RePEc:wly:mgtdec:v:22:y:2001:i:4-5:p:239-250
    DOI: 10.1002/mde.1018
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    References listed on IDEAS

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    1. Cubbin, John & Geroski, Paul A, 1987. "The Convergence of Profits in the Long Run: Inter-firm and Inter-industry Comparisons," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 427-442, June.
    2. Schohl, Frank, 1990. "Persistence of profits in the long run: A critical extension of some recent findings," International Journal of Industrial Organization, Elsevier, vol. 8(3), pages 385-404, September.
    3. Mansfield, Edwin & Schwartz, Mark & Wagner, Samuel, 1981. "Imitation Costs and Patents: An Empirical Study," Economic Journal, Royal Economic Society, vol. 91(364), pages 907-918, December.
    4. Scherer, F M, 1992. "Schumpeter and Plausible Capitalism," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1416-1433, September.
    5. Richard C. Levin & Alvin K. Klevorick & Richard R. Nelson & Sidney G. Winter, 1987. "Appropriating the Returns from Industrial Research and Development," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(3, Specia), pages 783-832.
    6. Comanor, William S, 1986. "The Political Economy of the Pharmaceutical Industry," Journal of Economic Literature, American Economic Association, vol. 24(3), pages 1178-1217, September.
    7. Mueller, Dennis C, 1977. "The Persistence of Profits above the Norm," Economica, London School of Economics and Political Science, vol. 44(176), pages 369-380, November.
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    Cited by:

    1. Juan Carlos Bou & Albert Satorra, 2003. "The persistence of abnormal returns at industry and firm levels," Economics Working Papers 729, Department of Economics and Business, Universitat Pompeu Fabra.
    2. Stoneman, Paul, 2011. "Soft Innovation: Economics, Product Aesthetics, and the Creative Industries," OUP Catalogue, Oxford University Press, number 9780199697021.
    3. repec:kap:jtecht:v:42:y:2017:i:6:d:10.1007_s10961-016-9515-2 is not listed on IDEAS
    4. Tammy L. Madsen & Michael J. Leiblein, 2015. "What Factors Affect the Persistence of an Innovation Advantage?," Journal of Management Studies, Wiley Blackwell, vol. 52(8), pages 1097-1127, December.
    5. repec:bla:stratm:v:38:y:2017:i:1:p:17-41 is not listed on IDEAS
    6. Tarziján, Jorge & Brahm, Francisco & Daiber, Luis Felipe, 2008. "Entrepreneurial profitability and persistence: Chile versus the U.S.A," Journal of Business Research, Elsevier, vol. 61(6), pages 599-608, June.
    7. Stefano Brusoni & Elena Cefis & Luigi Orsenigo, 2006. "Innovate or Die? A critical review of the literature on innovation and performance," KITeS Working Papers 179, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Sep 2006.
    8. Ali Murad Syed & Zahid Riaz & Abdul Waheed, 2016. "Innovation, Firm Performance And Riskiness: Evidence From The Leading Worldwide Innovative Firms," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 20(07), pages 1-19, October.
    9. Paul M. Vaaler & Gerry McNamara, 2010. "Are Technology-Intensive Industries More Dynamically Competitive? No and Yes," Organization Science, INFORMS, vol. 21(1), pages 271-289, February.
    10. Ljiljana Božić & Valerija Botrić, 2011. "Innovation Propensity in the EU Candidate Countries," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 18(2), pages 405-417, December.
    11. Bernd Görzig & Martin Gornig, 2013. "Intangibles, Can They Explain the Dispersion in Return Rates?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 59(4), pages 648-664, December.

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