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Services Innovation and Economic Performance An analysis at the firm level

Author

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  • Luísa Ferreira Lopes
  • Manuel Mira Godinho

Abstract

We present a model that links innovation effort to economic performance, along the lines of the Crépon et al (1998) model. However, in contrast to Crépon et al, that analyze R&D intensive manufacturing sectors, the present application examines the relationship between innovation and performance for services sectors. This is relevant since much effort has been made to explore that relationship for manufacturing but very little is known about it in the case of services sectors. In trying to fulfill this gap the paper uses firm-level data from the Second Community Innovation Survey to estimate a simultaneous equations model for firms in ten services sectors in Portugal. The present model also differs from former approaches by the specific explanatory structure proposed to estimate the complex relationship between innovation and economic performance. Instead of estimating a direct link between innovation and labor productivity, three specific relationships were put forward. The first of them explains the innovation effort intensity (an input in the innovation process). The second one relates service innovation (an output of the innovation process) to effort intensity and to other explanatory variables. Finally, the third relationship links labor productivity to both service innovation and effort intensity considering also some other influences. Sensitivity analysis of the results to alternative estimation techniques was performed.

Suggested Citation

  • Luísa Ferreira Lopes & Manuel Mira Godinho, 2005. "Services Innovation and Economic Performance An analysis at the firm level," DRUID Working Papers 05-08, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
  • Handle: RePEc:aal:abbswp:05-08
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    Cited by:

    1. Sdiri, Hanen & Ayadi, Mohamed, 2011. "Rôle de l'internationalisation des entreprises tunisiennes de service dans la promotion de l'innovation
      [Role of the Tunisian service firms internationalization in promoting innovation]
      ," MPRA Paper 34036, University Library of Munich, Germany.
    2. António B. Moniz, 2008. "The transformation of work? A quantitative evaluation of changes in work in Portugal," IET Working Papers Series 07/2008, Universidade Nova de Lisboa, IET/CICS.NOVA-Interdisciplinary Centre on Social Sciences, Faculty of Science and Technology.
    3. Priit Vahter & Jaan Masso, 2011. "The Link between Innovation and Productivity in Estonia???s Service Sectors," William Davidson Institute Working Papers Series wp1012, William Davidson Institute at the University of Michigan.

    More about this item

    Keywords

    Innovation and performance; Innovation in services; Technology; Service sectors; Labor productivity; CIS;

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • L8 - Industrial Organization - - Industry Studies: Services

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    1. Socio-Economics of Innovation

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