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How does competition affect the relationship between innovation and productivity? Estimation of a CDM model for Norway

  • Castellacci, Fulvio

The paper investigates the effects of industry-level competition on firm-level innovation and productivity. We propose a refined version of the CDM model that analyses the impacts of competition on four interrelated stages of the innovation process: the choice of a firm to engage in innovation, its R&D intensity, its innovation output and labour productivity. We test the model on a firm-level panel dataset based on the last three waves of the innovation survey for Norway (CIS3, CIS4 and CIS5). The econometric results provide empirical support for the refined version of the CDM model. They show that enterprises in oligopolistic sectors have on average a greater propensity to engage in innovative activities and tend to invest a greater amount of resources in R&D. On the other hand, firms in competitive industries are characterised by a stronger impact of innovation input on their technological and economic performance.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 27591.

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Date of creation: 2009
Date of revision:
Handle: RePEc:pra:mprapa:27591
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  1. Bruno Crepon & Emmanuel Duguet & Jacques Mairesse, 1998. "Research, Innovation, and Productivity: An Econometric Analysis at the Firm Level," NBER Working Papers 6696, National Bureau of Economic Research, Inc.
  2. Zvi Griliches, 1998. "Issues in Assessing the Contribution of Research and Development to Productivity Growth," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 17-45 National Bureau of Economic Research, Inc.
  3. repec:oup:qjecon:v:120:y:2005:i:2:p:701-728 is not listed on IDEAS
  4. Aghion, Philippe & Blundell, Richard & Griffith, Rachel & Howitt, Peter & Prantl, Susanne, 2006. "The effects of entry on incumbent innovation and productivity," Discussion Papers, Research Unit: Competition and Innovation SP II 2006-18, Social Science Research Center Berlin (WZB).
  5. Tang, Jianmin, 2006. "Competition and innovation behaviour," Research Policy, Elsevier, vol. 35(1), pages 68-82, February.
  6. Fulvio Castellacci, 2007. "Evolutionary And New Growth Theories. Are They Converging?," Journal of Economic Surveys, Wiley Blackwell, vol. 21(3), pages 585-627, 07.
  7. Klepper, Steven, 1997. "Industry Life Cycles," Industrial and Corporate Change, Oxford University Press, vol. 6(1), pages 145-81.
  8. Aghion, Philippe & Harris, Christopher & Vickers, John, 1997. "Competition and growth with step-by-step innovation: An example," European Economic Review, Elsevier, vol. 41(3-5), pages 771-782, April.
  9. Lööf, Hans & Heshmati, Almas, 2001. "On the Relationship between Innovation and Performance: A sensitivity Analysis," SSE/EFI Working Paper Series in Economics and Finance 0446, Stockholm School of Economics, revised 01 Oct 2001.
  10. Fulvio Castellacci & Jinghai Zheng, 2010. "Technological regimes, Schumpeterian patterns of innovation and firm-level productivity growth," Industrial and Corporate Change, Oxford University Press, vol. 19(6), pages 1829-1865, December.
  11. Cohen, Wesley M. & Levin, Richard C., 1989. "Empirical studies of innovation and market structure," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 18, pages 1059-1107 Elsevier.
  12. Nickell, S.J., 1993. "Competition and Crporate Performance," Economics Series Working Papers 99155, University of Oxford, Department of Economics.
  13. Mark Doms & Eric J. Bartelsman, 2000. "Understanding Productivity: Lessons from Longitudinal Microdata," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 569-594, September.
  14. Rachel Griffith & Rupert Harrison & Helen Simpson, 2006. "Product market reform and innovation in the EU," IFS Working Papers W06/17, Institute for Fiscal Studies.
  15. Geroski, P A, 1990. "Innovation, Technological Opportunity, and Market Structure," Oxford Economic Papers, Oxford University Press, vol. 42(3), pages 586-602, July.
  16. Giuseppe Nicoletti & Stefano Scarpetta, 2003. "Regulation, productivity and growth: OECD evidence," Economic Policy, CEPR;CES;MSH, vol. 18(36), pages 9-72, 04.
  17. 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.
  18. Hall, Bronwyn & Mairesse, Jacques, 2006. "Empirical studies of innovation in the knowledge driven economy," MERIT Working Papers 028, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  19. Robert Wieser, 2005. "Research And Development Productivity And Spillovers: Empirical Evidence At The Firm Level," Journal of Economic Surveys, Wiley Blackwell, vol. 19(4), pages 587-621, 09.
  20. Cristiano Antonelli, 2009. "The economics of innovation: from the classical legacies to the economics of complexity," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 18(7), pages 611-646.
  21. Malerba, Franco & Orsenigo, Luigi, 1996. "Schumpeterian patterns of innovation are technology-specific," Research Policy, Elsevier, vol. 25(3), pages 451-478, May.
  22. Castellacci, Fulvio, 2008. "Innovation and the competitiveness of industries: comparing the mainstream and the evolutionary approaches," MPRA Paper 27523, University Library of Munich, Germany.
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