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Innovation and Firms' Productivity Growth in Slovenia: Sensitivity of Results to Sectoral Heterogeneity and to Estimation Method

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  • Joze P. Damijan
  • Crt Kostevc
  • Matija Rojec

Abstract

The paper examines implications of endogenous growth theory on the relationship between firm productivity, innovation as well as productivity growth by combining information on firm-level innovation (CIS) with accounting data for a large sample of Slovenian firms in the period 1996-2002. We employ several different estimation methods in order to control for the endogeneity of innovation (Crä¿»on-Duguet- Mairesse - CDM - approach) and idiosyncratic firm characteristics (matching and average treatment effects). We find a significant and robust link between productivity levels and firm propensity to innovate, while the results on the link between innovation activity and productivity growth are not robust to different econometric approaches. OLS estimates seem to provide some empirical support to the thesis of positive impact of innovation on productivity growth. More detailed empirical tests, however, reveal that these results are mainly driven by the exceptional performance of a specific group of services firms located in the fourth quintile with respect to size, productivity and R&D propensity measure. Estimates based on the matching techniques do not reveal any significant positive effects of innovation on productivity growth, regardless of the sectors, firm size and type of innovation.

Suggested Citation

  • Joze P. Damijan & Crt Kostevc & Matija Rojec, 2008. "Innovation and Firms' Productivity Growth in Slovenia: Sensitivity of Results to Sectoral Heterogeneity and to Estimation Method," LICOS Discussion Papers 20308, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  • Handle: RePEc:lic:licosd:20308
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    File URL: http://www.econ.kuleuven.be/licos/publications/dp/dp203.pdf
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    References listed on IDEAS

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    Cited by:

    1. Fagerberg, Jan & Srholec, Martin & Verspagen, Bart, 2010. "Innovation and Economic Development," Handbook of the Economics of Innovation, Elsevier.
    2. Joze P. Damijan & Crt Kostevc & Saso Polanec, 2008. "From innovation to exporting or vice versa? Causal link between innovation activity and exporting in Slovenian microdata," LICOS Discussion Papers 20408, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    3. repec:eee:quaeco:v:68:y:2018:i:c:p:46-62 is not listed on IDEAS
    4. Dobdinga Cletus Fonchamnyo & Vukenkeng Andrew Wujung, 2016. "Innovation and Export Performance: An Empirical Insight on the Effect of Innovation on Manufacturing Firms in Cameroon," Applied Economics and Finance, Redfame publishing, vol. 3(4), pages 123-133, November.

    More about this item

    Keywords

    Research and development; innovation; knowledge spillovers; productivity growth;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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