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Producing Innovations: Determinants of Innovativity and Efficiency

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  • Jaap W.B. Bos
  • Ryan C.R. van Lamoen
  • Mark W.J.L. Sanders

Abstract

In this paper we estimate, using stochastic frontier estimation techniques, the relationship between R&D inputs a innovative output in a sample of Dutch firms. We find that over 63% of between firm variation in observed "innovativeness" can be attributed to inefficiency in the innovation process. The remainder is due to differences in the innovation production process itself. We derive our results including the usual controls and find in addition that large firms tend to look more innovative. But when considered more carefully large firms turn out to be less efficient. With standard estimation techniques this inefficiency is masked by a more productive innovation technology. We thus find evidence of economies of scale in line with the Schumpeter mark II hypothesis (large firms are more innovative), but also show that large firms tend to operate at lower levels of efficiency.

Suggested Citation

  • Jaap W.B. Bos & Ryan C.R. van Lamoen & Mark W.J.L. Sanders, 2011. "Producing Innovations: Determinants of Innovativity and Efficiency," DEGIT Conference Papers c016_060, DEGIT, Dynamics, Economic Growth, and International Trade.
    • Handle: RePEc:deg:conpap:c016_060
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    References listed on IDEAS

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    Cited by:

    1. Daria Ciriaci & Pietro Moncada-Paterno-Castello & Peter Voigt, 2012. "Does size or age of innovative firms affect their growth persistence? Evidence from a panel of innovative Spanish firms," JRC Research Reports JRC74052, Joint Research Centre.
    2. Cullmann, Astrid & Zloczysti, Petra, 2013. "Towards an Efficient Use of R&D ? Accounting for Heterogeneity in the OECD," CEPR Discussion Papers 9345, C.E.P.R. Discussion Papers.
    3. Munshi Naser Ibne Afzal, 2014. "An empirical investigation of the National Innovation System (NIS) using Data Envelopment Analysis (DEA) and the TOBIT model," International Review of Applied Economics, Taylor & Francis Journals, vol. 28(4), pages 507-523, July.
    4. Bucci, Alberto, 2013. "Returns to specialization, competition, population, and growth," Journal of Economic Dynamics and Control, Elsevier, vol. 37(10), pages 2023-2040.

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    Keywords

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    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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