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Innovation and Competitive Advantage


  • Paul Geroski


This paper examines the effects of the production of major innovations and patents on various measures of corporate performance. The analysis draws on panel data for 440 UK firms over the period 1972-1982. The observed direct effects of innovations on performance are relatively small. The paper also shows that little evidence can be found on innovation spillovers, associated with the production of either innovations or patents elsewhere in each firm's two-digit industry, raising performance. The benefits from innovation are more likely to be indirect, namely for user industries. However, innovative firms seem to be less susceptible to cyclical pressures than non-innovative firms. Firms in a competitive environment also seem more likely to engage in innovative activities than other firms ... Cette étude examine les effets des activités d'innovation sur des différentes mesures de performance des firmes. L'analyse s'appuie sur un panel de 440 firms du Royaume-Uni et concerne la période 1972-82. Les effets observés des innovations sur les indicateurs de performance sont relativement faibles. En outre, les résultats de l'étude ne permettent pas de conclure que les innovations produisent des effets sur les performances des autres firms à l'intérieur de la même industrie (au niveau de la classification à deux chiffres de la nomenclature). Les bénéfices de l'innovation sont plutôt indirects, notamment pour les industries utilisatrices. Cependent, les firmes innovatrices semblent moins susceptibles d'être affectées par les fluctuations conjoncturelles que les firms qui n'innovent pas. Un environnement compétitif semble aussi favoriser l'activité innovatrice des firmes ...

Suggested Citation

  • Paul Geroski, 1995. "Innovation and Competitive Advantage," OECD Economics Department Working Papers 159, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:159-en

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    Cited by:

    1. Cucculelli, Marco & Ermini, Barbara, 2012. "New product introduction and product tenure: What effects on firm growth?," Research Policy, Elsevier, vol. 41(5), pages 808-821.
    2. Han, Junghee & Heshmati, Almas, 2015. "Innovation and SMEs Patent Propensity in Korea," Working Paper Series in Economics and Institutions of Innovation 395, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    3. Syed Shah Alam & Vijayesvaran Arumugam & Noor Gani Mohd Nor & Pushpa Kaliappan & Lee Sze Fang, 2013. "Relationships between Innovation Capabilities, Business Performance, Marketing Performance and Financial Performance: A Literature Review," Business and Management Horizons, Macrothink Institute, vol. 1(1), pages 59-73, June.
    4. Henry, Michael & Kneller, Richard & Milner, Chris, 2009. "Trade, technology transfer and national efficiency in developing countries," European Economic Review, Elsevier, vol. 53(2), pages 237-254, February.
    5. Kilinc, U., 2010. "Measuring competition in a frictional economy," Serie Research Memoranda 0012, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    6. Smolny, Werner, 1997. "Endogenous innovations in a model of the firm: Theory and empirical application for West-German manufacturing firms," Discussion Papers 39, University of Konstanz, Center for International Labor Economics (CILE).
    7. Gunday, Gurhan & Ulusoy, Gunduz & Kilic, Kemal & Alpkan, Lutfihak, 2011. "Effects of innovation types on firm performance," International Journal of Production Economics, Elsevier, vol. 133(2), pages 662-676, October.
    8. Erixon, Lennart, 1998. "The Theory of Transformation Pressure - a New Perspective on Growth and Economic Policy," Research Papers in Economics 1998:3, Stockholm University, Department of Economics.
    9. Andrei Barbos, 2015. "Information Acquisition and Innovation under Competitive Pressure," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 24(2), pages 325-347, June.
    10. Svein Olav Nås & Ari Leppãlahti, "undated". "Innovation, firm profitability and growth," STEP Report series 199701, The STEP Group, Studies in technology, innovation and economic policy.
    11. Erixon, Lennart, 2001. "Transformation Pressure and Growth - a Missing Link in Macroeconomics," Research Papers in Economics 2001:3, Stockholm University, Department of Economics.
    12. Del Monte, Alfredo & Papagni, Erasmo, 2003. "R&D and the growth of firms: empirical analysis of a panel of Italian firms," Research Policy, Elsevier, vol. 32(6), pages 1003-1014, June.
    13. Werner Smolny, 2003. "Determinants of innovation behaviour and investment estimates for west-german manufacturing firms," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 12(5), pages 449-463.

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