Competitive pressure determinants and innovation at the firm level
This paper provides empirical evidence on the relationship between indicators of competitive pressure and innovation incentives using panel data of Spanish manufacturing firms for the period 1990-2006. Instead of using standard indicators of competition, such as market concentration measures or firms’ price costs margins, we analyze a number of indicators of competitive pressure directly related to the demand and cost conditions faced by firms. We consider the likely different incentives faced by firms to undertake product innovation versus process innovation efforts, and estimate a multivariate probit model for the probability of firms to introduce product innovations, process innovations or both. Our results are consistent with the theoretical predictions of Vives (2008) for free entry. We obtain that product market substitutability, entry costs and market size significantly affect the probability to introduce product and process innovations but that the effect of these variables differs among the type of innovation. We also find different effects of competitive pressure on innovation when taking into account the efficiency level of the firm relative to the efficiency distribution within its industry.
|Date of creation:||Apr 2011|
|Publication status:||Published by Ivie|
|Contact details of provider:|| Postal: C/ Guardia Civil, 22, Esc 2a, 1o, E-46020 VALENCIA|
Phone: +34 96 319 00 50
Fax: +34 96 319 00 55
Web page: http://www.ivie.es/
More information through EDIRC
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.:
- Martin Woerter & Christian Rammer & Spyros Arvanitis, 2010.
"Innovation, Competition and Incentives for R&D,"
KOF Working papers
10-259, KOF Swiss Economic Institute, ETH Zurich.
- Juan A. Máñez-Castillejo & María E. Rochina-Barrachina & Juan A. Sanchis-Llopis, 2010. "Does Firm Size Affect Self-selection and Learning-by-Exporting?," The World Economy, Wiley Blackwell, vol. 33(3), pages 315-346, 03.
- María Rochina-Barrachina & Juan Mañez & Juan Sanchis-Llopis, 2010. "Process innovations and firm productivity growth," Small Business Economics, Springer, vol. 34(2), pages 147-166, February.
When requesting a correction, please mention this item's handle: RePEc:ivi:wpasec:2011-02. 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: (Departamento de Edición)
If references are entirely missing, you can add them using this form.