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Innovation and firm growth in "complex technology" sectors : a quantile regression approach

  • Alex Coad

    ()

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS, Max Planck Institute of Economics - Evolutionary Economics Group)

  • Rekha Rao

    (Max Planck Institute of Economics - Evolutionary Economics Group)

Innovation is commonly seen as the principal engine of economic development. In this paper, we investigate the microfoundations of economic growth by relating innovation to sales growth at the firm-level, for incumbent firms in four «complex technology» sectors. The average firm, which experiences only modest growth, may grow for a number of reasons that may or may not be related to «innovativeness». However, given that firms are heterogeneous and that growth rates distributions are typically heavy-tailed, it may be misleading to use regression techniques that focus on the average firm. Using a quantile regression approach, we observe that innovativeness is of crucial importance for a handful of «superstar» fast-growth firms.

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Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00118797.

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Date of creation: Jun 2006
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Handle: RePEc:hal:cesptp:halshs-00118797
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