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Innovation complementarities and firm growth

Author

Listed:
  • Stefano Bianchini

    (IAC - istituto per le applicazioni del calculo - CNR - National Research Council of Italy | Consiglio Nazionale delle Ricerche)

  • Gabriele Pellegrino
  • Federico Tamagni

    (LEM - Laboratory of Economics and Management - SSSUP - Scuola Universitaria Superiore Sant'Anna = Sant'Anna School of Advanced Studies [Pisa])

Abstract

This article explores the relations between firm growth and a set of four innovation indicators (in-house R&D, external sourcing, product innovation, and process innovation) that capture the different sources, modes, and outcomes of the innovative strategies adopted by firms. While existing studies tend to focus on the individual effects on growth of each innovation activity, we stress that firms adopt heterogeneous innovation strategies, choosing to perform different combinations of the basic innovation activities. We directly address the empirical question as to whether jointly performing two basic innovation activities boosts sales growth above and beyond the separate contribution of each innovation activity when performed individually. Exploiting a panel of Spanish manufacturing firms observed between 2004 and 2011, we document instances of super-modularity of the growth function, and reveal the presence of complementarities between internal R&D and product innovation, and between product and process innovations. As such, the combination of these three basic innovation activities appears to be the most effective strategy for sustaining growth and market shares, while external sourcing does not appear to make any systematic contribution.

Suggested Citation

  • Stefano Bianchini & Gabriele Pellegrino & Federico Tamagni, 2018. "Innovation complementarities and firm growth," Post-Print hal-02531549, HAL.
  • Handle: RePEc:hal:journl:hal-02531549
    DOI: 10.1093/icc/dty008
    as

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    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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