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Are different forms of innovation complements or substitutes?

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  • Doran, Justin

Abstract

Purpose – The purpose of this article is to provide an empirical analysis of whether differing forms of innovation act as complements or substitutes in Irish firms’ production functions. Design-Methodology/Approach – The approach adopted by this paper is empirical in nature. Data is obtained for approximately 582 firms from the Irish Community Innovation Survey 2004-06. Four forms of innovation activity are identified; new to firm product, new to market product, process and organisational innovation. Formal tests for complementarity and substitutability are applied to these types of innovation to assess whether they have a complementary effect on firms’ turnover. Findings – The results suggest that there is a substantial degree of complementarity among different forms of innovation. Out of six possible innovation combinations, three are complementary while none exhibit signs of substitutability. Social Implications – From a business perspective, the importance of organisational change to facilitate technological innovation is highlighted while from a policy perspective the importance of the incentivisation of organisation and process innovation is also highlighted. Originality/Value – To date most research has focused on the impact of various forms of innovation, in isolation, on firms’ productivity. They do not consider whether these forms of innovation may in fact be linked, and that by implementing two or more innovations simultaneously, the combined benefits may be greater than the sum of the parts.

Suggested Citation

  • Doran, Justin, 2012. "Are different forms of innovation complements or substitutes?," MPRA Paper 44580, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:44580
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    File URL: https://mpra.ub.uni-muenchen.de/44580/1/JD_AreAV2012.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Resende, Marcelo & Strube, Eduardo & Zeidan, Rodrigo, 2014. "Complementarity of innovation policies in Brazilian industry: An econometric study," International Journal of Production Economics, Elsevier, vol. 158(C), pages 9-17.
    2. Lewandowska, Małgorzata Stefania & Szymura-Tyc, Maja & Gołębiowski, Tomasz, 2016. "Innovation complementarity, cooperation partners, and new product export: Evidence from Poland," Journal of Business Research, Elsevier, vol. 69(9), pages 3673-3681.
    3. Berulava, George & Gogokhia, Teimuraz, 2016. "Studying Complementarities between Modes of Innovation Strategies in Transition Economies," MPRA Paper 71277, University Library of Munich, Germany.
    4. repec:sgh:gosnar:y:2017:i:1:p:95-117 is not listed on IDEAS
    5. Alfonso Expósito & Juan A. Sanchis-Llopis, 2018. "The effects of innovation on the decisions of exporting and/or importing in SMEs: empirical evidence in the case of Spain," Working Papers 1814, Department of Applied Economics II, Universidad de Valencia.
    6. repec:wsi:ijimxx:v:22:y:2018:i:03:n:s1363919618500287 is not listed on IDEAS
    7. repec:sgh:gosnar:y:2019:i:3:p:5-30 is not listed on IDEAS
    8. repec:wsi:ijitmx:v:15:y:2018:i:01:n:s0219877018500037 is not listed on IDEAS
    9. Fazlıoğlu, Burcu & Dalgıç, Başak & Yereli, Ahmet Burçin, 2016. "The Effect of Innovation on Productivity: Evidence from Turkish Manufacturing Firms," MPRA Paper 75773, University Library of Munich, Germany.
    10. repec:eee:jbrese:v:99:y:2019:i:c:p:507-515 is not listed on IDEAS
    11. Ciliberti, Stefano & Carraresi, Laura & Broering, Stefanie, 2016. "External Knowledge Sources as Drivers for Cross-Industry Innovation in the Italian Food Sector: Does Company Size Matter?," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 19(3), pages 1-22, August.
    12. Resende, Marcelo & Strube, Eduardo & Zeidan, Rodrigo, 2014. "Complementarity of innovation policies in Brazilian industry: An econometric study," International Journal of Production Economics, Elsevier, vol. 158(C), pages 9-17.
    13. Rosa Jordá-Borrell & Francisca Ruiz-Rodríguez & Reyes González-Relaño, 2015. "Factors and taxonomy of technology purchase (TP) by internationalized innovative companies in peripheral European regions," Papers in Regional Science, Wiley Blackwell, vol. 94, pages 139-174, November.
    14. Ballot, Gérard & Fakhfakh, Fathi & Galia, Fabrice & Salter, Ammon, 2015. "The fateful triangle: Complementarities in performance between product, process and organizational innovation in France and the UK," Research Policy, Elsevier, vol. 44(1), pages 217-232.

    More about this item

    Keywords

    Innovation; Productivity; Complementarity; Substitutability;

    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

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