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Innovation and Firm Growth in High-Tech Sectors: A Quantile Regression Approach

  • Alex Coad

    (CES-Matisse, UMR 8174 CNRS et Univ. Paris 1, France)

  • Rekha Rao

    (LEM, Sant'Anna School of Advanced Studies, Pisa, Italy)

We relate innovation to sales growth for incumbent firms in four high-tech sectors. A firm, on average, experiences only modest growth and may grow for a number of reasons that may or may not be related to 'innovativeness'. However, given that firms are heterogeneous and that growth rates distributions are heavy-tailed, it may be misleading to use regression techniques that focus on the 'average firm'. Using a quantile regression approach, we observe that innovativeness is of crucial importance for a handful of 'superstar' fast-growth firms. We also discuss policy implications of our results.

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Paper provided by The Open University, Faculty of Social Sciences, Department of Economics in its series Open Discussion Papers in Economics with number 57.

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Length: 30 pages
Date of creation: Jan 2007
Date of revision:
Handle: RePEc:opn:wpaper:57
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