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

Author

Listed:
  • Alex Coad

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

  • Rekha Rao

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

Abstract

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.

Suggested Citation

  • Alex Coad & Rekha Rao, 2007. "Innovation and Firm Growth in High-Tech Sectors: A Quantile Regression Approach," Open Discussion Papers in Economics 57, The Open University, Faculty of Social Sciences, Department of Economics.
    • Handle: RePEc:opn:wpaper:57
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    More about this item

    Keywords

    Innovation; Firm Growth; Quantile Regression; Innovation Policy; Patents;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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