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Explaining Growth Differences across Firms: The Interplay between Innovation and Management Practices

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  • Livio Romano

    () (Centro Studi Confindustria, Italy)

Abstract

This paper provides first empirical evidence of the joint effects that innovation strategies and human resource management practices exert on firm growth. By exploiting unique information from a large sample of Italian manufacturing companies in the very recent years, it shows that investing in technology and implementing performance-based pay policies are both positively associated with a significant turnover, employment and labor productivity growth premium. However, their joint adoption does not necessarily sum the two effects. In particular, performance-based rewards boost growth of non-innovators and of firms pursuing relatively simple innovation strategies, centered around the acquisition of embodied technology. For firms strongly relying on R&D as an additional lever for product and process upgrading, the estimated effect of having in place monetary incentive mechanisms is null or even negative.

Suggested Citation

  • Livio Romano, 2018. "Explaining Growth Differences across Firms: The Interplay between Innovation and Management Practices," JRC Working Papers on Corporate R&D and Innovation 2018-03, Joint Research Centre (Seville site).
  • Handle: RePEc:ipt:wpaper:201803
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    References listed on IDEAS

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    Cited by:

    1. Coad, Alex & Grassano, Nicola & Hall, Bronwyn H. & Moncada-Paternò-Castello, Pietro & Vezzani, Antonio, 2019. "Innovation and industrial dynamics," Structural Change and Economic Dynamics, Elsevier, vol. 50(C), pages 126-131.

    More about this item

    Keywords

    Heterogeneity; Innovation; Management Practices; Firm Growth;

    JEL classification:

    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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