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

  • Joze P. Damijan
  • Crt Kostevc
  • Matija Rojec

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.

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Paper provided by LICOS - Centre for Institutions and Economic Performance, KU Leuven in its series LICOS Discussion Papers with number 20308.

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Date of creation: 2008
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Handle: RePEc:lic:licosd:20308
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  11. José Miguel Benavente, 2002. "The Role of Research and Innovation in Promoting Productivity in Chile," Working Papers wp200, University of Chile, Department of Economics.
  12. Parisi, Maria Laura & Schiantarelli, Fabio & Sembenelli, Alessandro, 2006. "Productivity, innovation and R&D: Micro evidence for Italy," European Economic Review, Elsevier, vol. 50(8), pages 2037-2061, November.
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  17. Joze P. Damijan & Andreja Jaklic & Matija Rojec, 2005. "Do External Knowledge Spillovers Induce Firms'Innovations? Evidence from Slovenia," LICOS Discussion Papers 15605, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  18. Raymond Wladimir & Mohnen Pierre & Palm Franz & Schim van der Loeff Sybrand, 2006. "Persistence of Innovation in Dutch Manufacturing: Is it Spurious?," Research Memorandum 009, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
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  24. Rachel Griffith & Elena Huergo & Jacques Mairesse & Bettina Peters, 2006. "Innovation and Productivity Across Four European Countries," Oxford Review of Economic Policy, Oxford University Press, vol. 22(4), pages 483-498, Winter.
  25. Malerba, Franco & Orsenigo, Luigi, 1996. "The Dynamics and Evolution of Industries," Industrial and Corporate Change, Oxford University Press, vol. 5(1), pages 51-87.
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  27. Peters, Bettina & Lööf, Hans & Janz, Norbert, 2003. "Firm Level Innovation and Productivity: Is there a Common Story Across Countries?," ZEW Discussion Papers 03-26, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  28. Schankerman, Mark, 1981. "The Effects of Double-Counting and Expensing on the Measured Returns to R&D," The Review of Economics and Statistics, MIT Press, vol. 63(3), pages 454-58, August.
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