Innovation and growth potential: managing investment in middle market companies

The search for levers to sustain economic growth, which is a key and topical challenge for public policy and private actors, has turned into an intensive research topic in both economy and management. Sustaining growth through investments remains at the heart of public policies insofar as growth is assumed to be correlated to economic drive notably through increased firms' profit and employment rate. Therefore, search for a better understanding of growth determinants has been extensively discussed in numerous theoretical and empirical studies (Coad 2007). Throughout the continuous refinement in the economic models investigating the dynamics of investment for sustained growth, technological progress and, further, innovation have taken an increasing role. Overall, innovation stands out as one of the main growth driver (Ahlstrom 2010), a result that is thought to help steering the investment choices. Yet, the underlining processes linking investment to innovation on the one side, and innovation to growth on the other remain ill-understood. On the one hand, despite voluminous and diverse literature (Cameron 1998) produced by the study of innovation impact on economic growth, a precise relationship has yet to be unequivocally established (Demirel and Mazzucato 2009). Characterizing the relationship between firm innovativeness and growth raises the stake of identifying accurate and appropriate measurements for both growth and innovative activities. On the other hand, the classical thought that R&D spending is statistically linked to innovation, thus far roughly correlating the issue with the right amount of resources invested, has been repeatedly proven false over large sets of data. The absence of a mechanical impact of investment on innovative output, known as "the R&D paradox" (Le Masson, Weil et al. 2010), shows that beyond the initial financial inputs, appropriate design management and governance models seem necessary to support sustainable innovative activities. A wide range of researches in the field of innovation management has built on this perspective to offer refined patterns of innovative activities process. However, their impact on firms' growth dynamics has not been pinpointed. Because of this failure in understanding growth drivers, investors lack of managing strategies allowing them to guide their investing policies. Thus, my researches aim at describing new growth dynamics in order to shape investment guiding tools.