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Innovation and Firms’ Productivity Growth in Slovenia: Sensitivity of Results to Sectoral Heterogeneity and to Estimation Method

In: Innovation, Growth and Competitiveness

Author

Listed:
  • Jože P. Damijan

    (University of Ljubljana)

  • Črt Kostevc

    (University of Ljubljana)

  • Matija Rojec

    (University of Ljubljana
    Institute for Macroeconomic Analysis and Development)

Abstract

The paper examines implications of endogenous growth theory on the relationship between innovation and firm productivity (productivity growth) by combining information on firm-level innovation (CIS) with accounting data for a large sample of Slovenian firms in the period 1996–2002. We employ several different estimation methods in order to control for the endogeneity of innovation and idiosyncratic firm characteristics. We find a significant and robust link between productivity levels and firm propensity to innovate, while the results on the link between innovation activity and productivity growth are not robust to different econometric approaches. Although OLS estimates indicate that successful innovation positively impacts productivity growth, further analysis reveals that these results are mainly driven by the exceptional performance of a specific group of services firms located in the fourth quintile with respect to size, productivity and R&D propensity measure. Estimates based on matching techniques, on the other hand, do not reveal any significant positive effects of innovation on productivity growth, regardless of the sectors, firm size and type of innovation.

Suggested Citation

  • Jože P. Damijan & Črt Kostevc & Matija Rojec, 2011. "Innovation and Firms’ Productivity Growth in Slovenia: Sensitivity of Results to Sectoral Heterogeneity and to Estimation Method," Advances in Spatial Science, in: Peter Nijkamp & Iulia Siedschlag (ed.), Innovation, Growth and Competitiveness, chapter 0, pages 165-193, Springer.
    • Handle: RePEc:spr:adspcp:978-3-642-14965-8_8
    DOI: 10.1007/978-3-642-14965-8_8
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    2. Ugur, Mehment & Vivarelli, Marco, 2020. "The role of innovation in industrial dynamics and productivity growth: a survey of the literature," GLO Discussion Paper Series 648, Global Labor Organization (GLO).
    3. László Halpern & Balázs Muraközy, 2012. "Innovation, productivity and exports: the case of Hungary," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 21(2), pages 151-173, January.
    4. Mehmet Ugur & Marco Vivarelli, 2021. "Innovation, firm survival and productivity: the state of the art," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 30(5), pages 433-467, July.
    5. Fagerberg, Jan & Srholec, Martin & Verspagen, Bart, 2010. "Innovation and Economic Development," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 833-872, Elsevier.
    6. Dobdinga Cletus Fonchamnyo & Vukenkeng Andrew Wujung, 2016. "Innovation and Export Performance: An Empirical Insight on the Effect of Innovation on Manufacturing Firms in Cameroon," Applied Economics and Finance, Redfame publishing, vol. 3(4), pages 123-133, November.
    7. Victoria Golikova & Ksenia Gonchar & Boris Kuznetsov, 2011. "Entry into Export Markets as an Incentive to Innovate. Evidence from the Russian Manufacturing Industry Survey," HSE Working papers WP BRP 11/EC/2011, National Research University Higher School of Economics.
    8. Joze P. Damijan & Crt Kostevc & Saso Polanec, 2008. "From innovation to exporting or vice versa? Causal link between innovation activity and exporting in Slovenian microdata," LICOS Discussion Papers 20408, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    9. Mehmet Ugur & Marco Vivarelli, 2020. "Technology, industrial dynamics and productivity: a critical survey," DISCE - Quaderni del Dipartimento di Politica Economica dipe0011, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    10. Sharma, Chandan, 2018. "Exporting, access of foreign technology, and firms’ performance: Searching the link in Indian manufacturing," The Quarterly Review of Economics and Finance, Elsevier, vol. 68(C), pages 46-62.

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    More about this item

    Keywords

    Ordinary Little Square; Firm Performance; Productivity Growth; Total Factor Productivity; Process Innovation;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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