Persistence and ability in the innovation decisions
This paper explores the effect of persistence and manager ability in the decision to conduct product and process innovations. Managers make strategic decisions about the implementation of a better innovation activity in order to improve their firm’s performance in the market. Many empirical studies have analysed the determinants of the innovation process, but few have considered the effect of experience (the firm’s capacities and routines of organization) and the manager’s ability (skills and capability) as relevant elements. Our aim is to demonstrate the importance of these elements using typical discrete-choice specifications and binary choice models with heterogeneity. We do so in an extensive database that provides information about Spanish manufacturing firms. Our message is that persistence, however measured, is the main determinant of any innovation activity. The experience effect is important in both product and process innovation decisions but the results differ in degree: The experience gained from engaging in process innovations appears to increase the probability of process innovation success, whereas the experience gained from product innovation activity, although important, leaves place to other factors determining product innovation success. Once a firm has a commitment to innovation activity, develops some innovation routines, and learns about the innovation process, it reaches a turning point at which other factors play a less prominent role.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Crepon, B. & Duguet, E., 1995.
"Research and Development, Competition and Innovation; Pseudo Maximum Likelihood and Simulated Maximum Likelihood Methods Applied to Count Data Models with Heterogeneity,"
Papiers d'Economie MathÃ©matique et Applications
95.08, UniversitÃ© PanthÃ©on-Sorbonne (Paris 1).
- Crepon, Bruno & Duguet, Emmanuel, 1997. "Research and development, competition and innovation pseudo-maximum likelihood and simulated maximum likelihood methods applied to count data models with heterogeneity," Journal of Econometrics, Elsevier, vol. 79(2), pages 355-378, August.
- Zvi Griliches, 1990.
"Patent Statistics as Economic Indicators: A Survey,"
NBER Working Papers
3301, National Bureau of Economic Research, Inc.
- Griliches, Zvi, 1990. "Patent Statistics as Economic Indicators: A Survey," Journal of Economic Literature, American Economic Association, vol. 28(4), pages 1661-1707, December.
- 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.
- Namkee Ahn, . "Economic Consequences of Widowhood in Europe: Cross-country and Gender Differences," Working Papers 2004-27, FEDEA.
- Soete, Luc L. G., 1979. "Firm size and inventive activity : The evidence reconsidered," European Economic Review, Elsevier, vol. 12(4), pages 319-340, October.
- J. Ignacio Conde-Ruiz & Vincenzo Galasso & Paola Profeta, 2005.
"The Evolution of Retirement,"
278, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Hall, Bronwyn H., 1989.
"TheImpact of Corporate Restructuring On Industrial Research and Development,"
Department of Economics, Working Paper Series
qt7dw7p5dq, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Bronwyn H. Hall, 1989. "The Impact of Corporate Restructuring on Industrial Research and Development," NBER Working Papers 3216, National Bureau of Economic Research, Inc.
- Bronwyn H. Hall., 1989. "The Impact of Corporate Restructuring on Industrial Research and Development," Economics Working Papers 89-129, University of California at Berkeley.
- Namkee Ahn & Juan Ramón García & José A. Herce, . "Demographic Uncertainty and Health Care Expenditure in Spain," Working Papers 2005-07, FEDEA.
- Miravete, Eugenio J & Pernías, Jose C, 2004.
"Innovation Complimentarity and Scale of Production,"
CEPR Discussion Papers
4483, C.E.P.R. Discussion Papers.
- Miravete, Eugenio J. & Pernias, Jose C., 1998. "Innovation Complementarity and Scale of Production," Working Papers 98-42, C.V. Starr Center for Applied Economics, New York University.
- 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.
- Bonanno, Giacomo & Haworth, Barry, 1998. "Intensity of competition and the choice between product and process innovation," International Journal of Industrial Organization, Elsevier, vol. 16(4), pages 495-510, July.
- 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.
- Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc.
- Amelia Bilbao & Celia Bilbao & José M. Labeaga, . "The excess burden associated to characteristics of the goods: Application to housing demand," Working Papers 2005-09, FEDEA.
- Ester Martinez-Ros & Jose Labeaga, 2002. "The Relationship Between Firm Size and Innovation Activity: A Double Decision Approach," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 11(1), pages 35-50.
- Salvador Gil-Pareja & Rafael Llorca-Vivero & José A. Martínez-Serrano & Josep Oliver-Alonso, 2005. "The Border Effect in Spain," The World Economy, Wiley Blackwell, vol. 28(11), pages 1617-1631, November.
- 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.
- Hausman, Jerry & Hall, Bronwyn H & Griliches, Zvi, 1984. "Econometric Models for Count Data with an Application to the Patents-R&D Relationship," Econometrica, Econometric Society, vol. 52(4), pages 909-38, July.
- 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.
- Salvador Gil-Pareja & Rafael Llorca-Vivero & José A. Martínez-Serrano & Josep Oliver-Alonso, . "The Border Effect in Spain," Working Papers 2004-28, FEDEA.
- Carlos Vidal-Meliá & Ana Lejárraga-García, .
"Demand for life annuities from married couples with a bequest motive,"
- Carlos Vidal-Melia & Ana Lejárraga-García, 2004. "Demand For Life Annuities From Married Couples With A Bequest Motive," Public Economics 0409009, EconWPA.
- Simón Sosvilla-Rivero & Sonia Pangusión, . "The real picture: Industry specific exchange rates for the euro area," Working Papers 2005-05, FEDEA.
- Michael Fritsch & Monika Meschede, 2001.
"Product Innovation, Process Innovation, and Size,"
Review of Industrial Organization,
Springer, vol. 19(3), pages 335-350, November.
- Fritsch, M. & Meschede, M., 1998. "Product Innovation, Process Innovation, and Size," Papers 98/13, Bergakademie Freiberg, Faculty of Economics and Business Administration.
- Fritsch, Michael & Meschede, Monika, 1998. "Product Innovation, Process Innovation, and Size," Freiberg Working Papers 1998,13, TU Bergakademie Freiberg, Faculty of Economics and Business Administration.
- Sabourin, David & Baldwin, John R. & Hanel, Peter, 2000. "Determinants of Innovative Activity in Canadian Manufacturing Firms: The Role of Intellectual Property Rights," Analytical Studies Branch Research Paper Series 2000122e, Statistics Canada, Analytical Studies Branch.
- 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.
- Levin, Richard C & Cohen, Wesley M & Mowery, David C, 1985. "R&D Appropriability, Opportunity, and Market Structure: New Evidence on Some Schumpeterian Hypotheses," American Economic Review, American Economic Association, vol. 75(2), pages 20-24, May.
- A. Michael Spence, 1975. "Monopoly, Quality, and Regulation," Bell Journal of Economics, The RAND Corporation, vol. 6(2), pages 417-429, Autumn.
- Ana Carolina Ortega Masagué, . "La Antigüedad en el Empleo y los Efectos del Ciclo Económico en los Salarios. El Caso Argentino," Working Papers 2004-25, FEDEA.
- Arellano, M & Carrasco, R, 1996.
"Binary Choice Panel Data Models with Predetermined Variables,"
9618, Centro de Estudios Monetarios Y Financieros-.
- Arellano, Manuel & Carrasco, Raquel, 2003. "Binary choice panel data models with predetermined variables," Journal of Econometrics, Elsevier, vol. 115(1), pages 125-157, July.
- Zvi Griliches & Jacques Mairesse, 1981. "Productivity and R and D at the Firm Level," NBER Working Papers 0826, National Bureau of Economic Research, Inc.
- Simon Sosvilla-Rivero & Pedro Rodriguez, 2010.
"Linkages in international stock markets: evidence from a classification procedure,"
Taylor & Francis Journals, vol. 42(16), pages 2081-2089.
- Simon Sosvilla-Rivero & Pedro N. Rodríguez, . "Linkages in international stock markets: Evidence from a classification procedure," Working Papers 2004-23, FEDEA.
- Kamien, Morton I & Schwartz, Nancy L, 1970. "Market Structure, Elasticity of Demand and Incentive to Invent," Journal of Law and Economics, University of Chicago Press, vol. 13(1), pages 241-52, April.
- Bughin, J. & Jacques, J. M., 1994. "Managerial efficiency and the Schumpeterian link between size, market structure and innovation revisited," Research Policy, Elsevier, vol. 23(6), pages 653-659, November.
- Rosenkranz, Stephanie, 1996. "Simultaneous Choice of Process and Product Innovation," CEPR Discussion Papers 1321, C.E.P.R. Discussion Papers.
- Blundell, Richard & Griffith, Rachel & Van Reenen, John, 1995.
"Dynamic Count Data Models of Technological Innovation,"
Royal Economic Society, vol. 105(429), pages 333-44, March.
- Richard Blundell & Rachel Griffith & John Van Reenen, 1994. "Dynamic count data models of technological innovation," IFS Working Papers W94/10, Institute for Fiscal Studies.
- 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.
- repec:crs:wpaper:9326 is not listed on IDEAS
- 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.
- repec:fth:harver:1473 is not listed on IDEAS
- 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.
- Milgrom, Paul & Roberts, John, 1990. "The Economics of Modern Manufacturing: Technology, Strategy, and Organization," American Economic Review, American Economic Association, vol. 80(3), pages 511-28, June.
- Lunn, John E, 1986. "An Empirical Analysis of Process and Product Patenting: A Simultaneous Equation Framework," Journal of Industrial Economics, Wiley Blackwell, vol. 34(3), pages 319-30, March.
When requesting a correction, please mention this item's handle: RePEc:fda:fdaddt:2005-16. 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: (Carmen Arias)
If references are entirely missing, you can add them using this form.