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Persistence And Ability In The Innovation Decisions

  • José M. Labeaga
  • Ester Martínez Ros

    ()

The main concern of this paper is to analyse the complementarities between the decisions to carry out both product and process innovations. We also try to identify the main determinants of the innovation activity as well as to separate the experience effect of the firm (capacities, routines as organization) from the experience effect of the manager (skills, abilities). It has been common when facing the study of technological change, to consider innovation as a homogeneous activity. The main analyses have focused on the determinants of such activity trying to explain decisions, counts or R&D expenses in the context of a unique activity. Several recent works, however, are worried about the possibility of analysing innovation distinguishing among different types according to the final purpose of this activity. We focus on two different decisions, product and process innovations, using typical discrete choice specifications (univariate and bivariate models) and also binary choice models with heterogeneity. Among the results, we find complementary but asymmetric effects concerning both decisions in static models even controlling heterogeneity. We also test whether the persistence in conducting innovation activities matter. We do so in an extensive database that provides information about manufacturing firms. Our results point towards the importance of both ability of the manager (unobserved heterogeneity) and experience of the firm (dynamics in the equation indicator).

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Paper provided by Universidad Carlos III, Departamento de Economía de la Empresa in its series Business Economics Working Papers with number wb030101.

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Date of creation: Jan 2003
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Handle: RePEc:cte:wbrepe:wb030101
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  1. Griliches, Zvi, 1990. "Patent Statistics as Economic Indicators: A Survey," Journal of Economic Literature, American Economic Association, vol. 28(4), pages 1661-1707, December.
  2. Cohen, Wesley M & Klepper, Steven, 1996. "A Reprise of Size and R&D," Economic Journal, Royal Economic Society, vol. 106(437), pages 925-51, July.
  3. Michael Fritsch & Monika Meschede, 2001. "Product Innovation, Process Innovation, and Size," Review of Industrial Organization, Springer, vol. 19(3), pages 335-350, November.
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  5. Bronwyn H. Hall & Zvi Griliches & Jerry A. Hausman, 1984. "Patents and R&D: Is There A Lag?," NBER Working Papers 1454, National Bureau of Economic Research, Inc.
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  11. Acs, Zoltan J & Audretsch, David B, 1987. "Innovation, Market Structure, and Firm Size," The Review of Economics and Statistics, MIT Press, vol. 69(4), pages 567-74, November.
  12. Chamberlain, Gary, 1984. "Panel data," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 22, pages 1247-1318 Elsevier.
  13. Del Canto, Jesus Galende & Gonzalez, Isabel Suarez, 1999. "A resource-based analysis of the factors determining a firm's R&D activities," Research Policy, Elsevier, vol. 28(8), pages 891-905, November.
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  17. Richard C. Levin & Peter C. Reiss, 1988. "Cost-Reducing and Demand-Creating R&D with Spillovers," RAND Journal of Economics, The RAND Corporation, vol. 19(4), pages 538-556, Winter.
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  24. Cohen, Wesley M & Klepper, Steven, 1996. "Firm Size and the Nature of Innovation within Industries: The Case of Process and Product R&D," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 232-43, May.
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  26. Jerry A. Hausman & Bronwyn H. Hall & Zvi Griliches, 1984. "Econometric Models for Count Data with an Application to the Patents-R&D Relationship," NBER Technical Working Papers 0017, National Bureau of Economic Research, Inc.
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