IDEAS home Printed from https://ideas.repec.org/p/aal/abbswp/06-30.html
   My bibliography  Save this paper

Persistence of Innovation Stylised Facts and Panel Data Evidence

Author

Listed:
  • Bettina Peters

Abstract

This paper investigates whether firms innovate persistently or discontinuously over time using an innovation panel data set on German manufacturing and service firms for the period 1994–2002. It turns out that innovation behaviour is permanent at the firm–level to a very large extent. Using a dynamic random effects discrete choice model and a new estimator recently proposed by Wooldrigde (2005), I further shed some light on the driving forces for this phenomenon. The econometric results show that past innovation experience is an important determinant for manufacturing as well as for service sector firms, and hence confirm the hypothesis of true state dependence. In addition, the results highlight the important role of knowledge provided by skilled employees and unobserved individual heterogeneity in explaining the persistence of innovation.

Suggested Citation

  • Bettina Peters, 2006. "Persistence of Innovation Stylised Facts and Panel Data Evidence," DRUID Working Papers 06-30, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    • Handle: RePEc:aal:abbswp:06-30
    as

    Download full text from publisher

    File URL: https://wp.druid.dk/wp/20060030.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Malerba, Franco & Orsenigo, Luigi, 1999. "Technological entry, exit and survival: an empirical analysis of patent data," Research Policy, Elsevier, vol. 28(6), pages 643-660, August.
    2. Loof, Hans & Heshmati, Almas, 2002. "Knowledge capital and performance heterogeneity: : A firm-level innovation study," International Journal of Production Economics, Elsevier, vol. 76(1), pages 61-85, March.
    3. Kamien, Morton I & Schwartz, Nancy L, 1975. "Market Structure and Innovation: A Survey," Journal of Economic Literature, American Economic Association, vol. 13(1), pages 1-37, March.
    4. Reinganum, Jennifer F, 1983. "Uncertain Innovation and the Persistence of Monopoly," American Economic Review, American Economic Association, vol. 73(4), pages 741-748, September.
    5. Emmanuel Duguet & Stéphanie Monjon, 2004. "Is innovation persistent at the firm Level . An econometric examination comparing the propensity score and regression methods," Cahiers de la Maison des Sciences Economiques v04075, Université Panthéon-Sorbonne (Paris 1).
    6. Jacques Mairesse & Bronwyn H. Hall & Benoît Mulkay, 1999. "Firm-Level Investment in France and the United States: An Exploration of What We Have Learned in Twenty Years," Annals of Economics and Statistics, GENES, issue 55-56, pages 27-67.
    7. Mark Rogers, 2004. "Networks, Firm Size and Innovation," Small Business Economics, Springer, vol. 22(2), pages 141-153, March.
    8. Zvi Griliches, 1998. "Patent Statistics as Economic Indicators: A Survey," NBER Chapters,in: R&D and Productivity: The Econometric Evidence, pages 287-343 National Bureau of Economic Research, Inc.
    9. Blundell, Richard & Griffith, Rachel & Van Reenen, John, 1995. "Dynamic Count Data Models of Technological Innovation," Economic Journal, Royal Economic Society, vol. 105(429), pages 333-344, March.
    10. König, Heinz & Laisney, François & Lechner, Michael & Pohlmeier, Winfried, 1993. "On the dynamics of process innovative activity: an empirical investigation using panel data," ZEW Discussion Papers 93-08, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    11. Rammer, Christian & Aschhoff, Birgit & Doherr, Thorsten & Peters, Bettina & Schmidt, Tobias, 2005. "Innovation in Germany: Results of the German Innovation Survey 2004," The Annual German Innovation Survey, Key Figures Reports 113889, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    12. Love, James H. & Roper, Stephen, 2001. "Location and network effects on innovation success: evidence for UK, German and Irish manufacturing plants," Research Policy, Elsevier, vol. 30(4), pages 643-661, April.
    13. Bo E. Honoré & Ekaterini Kyriazidou, 2000. "Panel Data Discrete Choice Models with Lagged Dependent Variables," Econometrica, Econometric Society, vol. 68(4), pages 839-874, July.
    14. Jeffrey M. Wooldridge, 2005. "Simple solutions to the initial conditions problem in dynamic, nonlinear panel data models with unobserved heterogeneity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(1), pages 39-54.
    15. Wladimir Raymond & Pierre Mohnen & Franz Palm & Sybrand Schim van der Loeff, 2010. "Persistence of Innovation in Dutch Manufacturing: Is It Spurious?," The Review of Economics and Statistics, MIT Press, vol. 92(3), pages 495-504, August.
    16. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    17. Bruno Crepon & Emmanuel Duguet & Jacques Mairesse, 1998. "Research, Innovation And Productivity: An Econometric Analysis At The Firm Level," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 7(2), pages 115-158.
    18. Cefis, Elena & Orsenigo, Luigi, 2001. "The persistence of innovative activities: A cross-countries and cross-sectors comparative analysis," Research Policy, Elsevier, vol. 30(7), pages 1139-1158, August.
    19. Martin Kukuk & Manfred Stadler, 2001. "Financing Constraints and the Timing of Innovations in the German Services Sector," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 28(3), pages 277-292, September.
    20. Janz, Norbert & Ebling, Günther & Gottschalk, Sandra & Peters, Bettina & Schmidt, Tobias, 2002. "Innovation Activities in the German Economy: Report on Indicators from the Innovation Survey 2001," The Annual German Innovation Survey, Key Figures Reports 113888, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    21. Ulrich Kaiser & Hans Christian Kongsted, 2004. "True versus spurious state dependence in firm performance: the case of West German exports," CAM Working Papers 2004-04, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
    22. Gary Chamberlain, 1980. "Analysis of Covariance with Qualitative Data," Review of Economic Studies, Oxford University Press, vol. 47(1), pages 225-238.
    23. Steen Winther Blindum, 2003. "Relaxing the Strict Exogeneity Assumption in a Dynamic Random Probit Model," CAM Working Papers 2003-04, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
    24. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    25. Mark Doms & Eric J. Bartelsman, 2000. "Understanding Productivity: Lessons from Longitudinal Microdata," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 569-594, September.
    26. repec:fth:harver:1473 is not listed on IDEAS
    27. Biewen, Martin, 2004. "Measuring State Dependence in Individual Poverty Status: Are There Feedback Effects to Employment Decisions and Household Composition?," IZA Discussion Papers 1138, Institute for the Study of Labor (IZA).
    28. Geroski, P. A. & Van Reenen, J. & Walters, C. F., 1997. "How persistently do firms innovate?," Research Policy, Elsevier, vol. 26(1), pages 33-48, March.
    29. Kleinknecht, Alfred, 1990. "Are There Schumpeterian Waves of Innovations?," Cambridge Journal of Economics, Oxford University Press, vol. 14(1), pages 81-92, March.
    30. Judd, Kenneth L, 1985. "On the Performance of Patents," Econometrica, Econometric Society, vol. 53(3), pages 567-585, May.
    31. Kamien,Morton I. & Schwartz,Nancy L., 1982. "Market Structure and Innovation," Cambridge Books, Cambridge University Press, number 9780521293853.
    32. repec:crs:wpaper:9833 is not listed on IDEAS
    33. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    34. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    35. repec:cup:macdyn:v:2:y:1998:i:3:p:322-44 is not listed on IDEAS
    36. Richard Blundell & Rachel Griffith & John Van Reenen, 1993. "Knowledge stocks, persistent innovation and market dominance: evidence from a panel of British manufacturing firms," IFS Working Papers W93/19, Institute for Fiscal Studies.
    37. Cefis, Elena, 2003. "Is there persistence in innovative activities?," International Journal of Industrial Organization, Elsevier, vol. 21(4), pages 489-515, April.
    38. Flaig, Gebhard & Stadler, Manfred, 1994. "Success Breeds Success. The Dynamics of the Innovation Process," Empirical Economics, Springer, vol. 19(1), pages 55-68.
    39. Peters, Bettina & Lööf, Hans & Janz, Norbert, 2003. "Firm Level Innovation and Productivity: Is there a Common Story Across Countries?," ZEW Discussion Papers 03-26, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    40. Carro, Jesus M., 2007. "Estimating dynamic panel data discrete choice models with fixed effects," Journal of Econometrics, Elsevier, vol. 140(2), pages 503-528, October.
    41. Arthur Lewbel, 2005. "Simple Endogenous Binary Choice and Selection Panel Model Estimators," Boston College Working Papers in Economics 613, Boston College Department of Economics, revised 04 Sep 2006.
    42. Aghion, Philippe & Saint-Paul, Gilles, 1998. "VIRTUES OF BAD TIMES Interaction Between Productivity Growth and Economic Fluctuations," Macroeconomic Dynamics, Cambridge University Press, vol. 2(03), pages 322-344, September.
    43. Paul Bishop & Nick Wiseman, 1999. "External ownership and innovation in the United Kingdom," Applied Economics, Taylor & Francis Journals, vol. 31(4), pages 443-450.
    44. Geroski, P. A., 1995. "What do we know about entry?," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 421-440, December.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Innovation; persistence; state dependence; unobserved heterogeneity; dynamic random effects panel probit model;

    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
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aal:abbswp:06-30. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Keld Laursen). General contact details of provider: https://www.druid.dk/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.