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Innovation, Ownership and Profitability

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  • James H. Love
  • Stephen Roper
  • Jun Du

Abstract

This paper considers the relationship between innovation, ownership and profitability for a panel of manufacturing plants in Ireland and Northern Ireland. Previous literature suggests that innovators are persistently more profitable than non-innovators, but little is known about how this link is moderated by external versus domestic ownership. We consider the link between innovation and profits separately for innovators and non-innovators, and for indigenous innovators and non-innovators and externally-owned plants. We also consider the determinants of innovation over the distribution of plant-level profitability, and find that the determinants of profitability – including innovation and external ownership – vary over the distribution from low to high profitability plants. We find support for the view that innovators and non-innovators have different profitability determinants, and that the profitability of externally-owned plants depends on very different factors to that of indigenously-owned enterprises.

Suggested Citation

  • James H. Love & Stephen Roper & Jun Du, 2007. "Innovation, Ownership and Profitability," DRUID Working Papers 07-10, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
  • Handle: RePEc:aal:abbswp:07-10
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    Citations

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    Cited by:

    1. Stiebale, Joel & Reize, Frank, 2011. "The impact of FDI through mergers and acquisitions on innovation in target firms," International Journal of Industrial Organization, Elsevier, vol. 29(2), pages 155-167, March.
    2. Christian Helmers & Mark Rogers, 2010. "Innovation and the Survival of New Firms in the UK," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 36(3), pages 227-248, May.
    3. Coad, Alex & Segarra, Agustí & Teruel, Mercedes, 2016. "Innovation and firm growth: Does firm age play a role?," Research Policy, Elsevier, vol. 45(2), pages 387-400.
    4. Barrett, Alan & Kearney, Ide & O'Brien, Martin, 2008. "Quarterly Economic Commentary, Summer 2008," Forecasting Report, Economic and Social Research Institute (ESRI), number QEC20082, April.
    5. Pablo A. Garcia-Fuentes & Gustavo F. C. Ferreira & P. Lynn Kennedy & Felipe Perez, 2017. "Economic Performance of U.S. Multinational Manufacturing Firms: The Linkages between Foreign Direct Investment and Firm Strategy," International Business Research, Canadian Center of Science and Education, vol. 10(1), pages 240-252, January.
    6. Graciela Corral De Zubielqui & Janice Jones & Laurence Lester, 2016. "KNOWLEDGE INFLOWS FROM MARKET- AND SCIENCE-BASED ACTORS, ABSORPTIVE CAPACITY, INNOVATION AND PERFORMANCE — A STUDY OF SMEs," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 20(06), pages 1-31, August.
    7. Stiebale, Joel, 2012. "Cross-Border M&A and Innovative Activity: Firm-Level Evidence," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 62027, Verein für Socialpolitik / German Economic Association.
    8. Rosenbusch, Nina & Brinckmann, Jan & Bausch, Andreas, 2011. "Is innovation always beneficial? A meta-analysis of the relationship between innovation and performance in SMEs," Journal of Business Venturing, Elsevier, vol. 26(4), pages 441-457, July.
    9. Vergara, Sebastián, 2013. "The performance of transnational corporations: Evidence for the manufacturing industry in Chile," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    10. Liu, Rebecca & Rammer, Christian, 2016. "The contribution of different public innovation funding programs to SMEs' export performance," ZEW Discussion Papers 16-078, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    11. repec:kap:jtecht:v:42:y:2017:i:5:d:10.1007_s10961-016-9475-6 is not listed on IDEAS
    12. repec:kap:sbusec:v:48:y:2017:i:3:d:10.1007_s11187-016-9802-1 is not listed on IDEAS
    13. repec:aes:amfeco:v:45:y:2017:i:19:p:509 is not listed on IDEAS
    14. Mary Beth Rousseau & Blake D. Mathias & Laura T. Madden & T. Russell Crook, 2016. "Innovation, Firm Performance, And Appropriation: A Meta-Analysis," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 20(03), pages 1-29, April.
    15. Mata, José & Woerter, Martin, 2013. "Risky innovation: The impact of internal and external R&D strategies upon the distribution of returns," Research Policy, Elsevier, vol. 42(2), pages 495-501.
    16. repec:ove:journl:aid:11244 is not listed on IDEAS
    17. Roper, Stephen & Love, James H. & Bonner, Karen, 2017. "Firms’ knowledge search and local knowledge externalities in innovation performance," Research Policy, Elsevier, vol. 46(1), pages 43-56.
    18. repec:bla:econpa:v:36:y:2017:i:2:p:223-248 is not listed on IDEAS
    19. repec:eee:respol:v:46:y:2017:i:8:p:1505-1518 is not listed on IDEAS
    20. Bourke, Jane & Roper, Stephen, 2016. "AMT adoption and innovation: An investigation of dynamic and complementary effects," Technovation, Elsevier, vol. 55, pages 42-55.
    21. Huang C. & Wu Y. & Mohnen P. & Zhao Y., 2013. "Government support, innovation and productivity in the Haidian (Beijing) District," MERIT Working Papers 058, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    22. Huang, Mu-Hsuan & Dong, Huei-Ru & Chen, Dar-Zen, 2012. "Globalization of collaborative creativity through cross-border patent activities," Journal of Informetrics, Elsevier, vol. 6(2), pages 226-236.

    More about this item

    Keywords

    Innovation; Ownership; Profitability; Ireland; Northern Ireland;

    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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