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The Impact of Innovation on Firm Performance in Peru

Author

Listed:
  • Alvarez, Lourdes
  • Bullón, Angel

Abstract

Innovation is a fundamental driver of productivity, playing a pivotal role in fostering market dynamism. This study examines firm-level data from Peru, analyzing innovation activities in small and large enterprises across the manufacturing and services sectors. Employing a rigorous methodological framework—including Fligner–Policello tests, matching techniques, and unconditional quantile treatment effects—the analysis reveals that innovation significantly increases sales growth in large manufacturing firms and service-sector SMEs, while no immediate effects on productivity are detected. Regarding firm longevity, significant impacts are observed exclusively among large manufacturers. These findings indicate that, in contrast to sales, productivity gains from innovation may require a longer horizon to emerge.

Suggested Citation

  • Alvarez, Lourdes & Bullón, Angel, 2025. "The Impact of Innovation on Firm Performance in Peru," MPRA Paper 129105, University Library of Munich, Germany, revised 18 Oct 2025.
    • Handle: RePEc:pra:mprapa:129105
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    File URL: https://mpra.ub.uni-muenchen.de/129105/1/MPRA_paper_129105.pdf
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    Keywords

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    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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