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Bivariate Probit Models for Analysing how “Knowledge” Affects Innovation and Performance in Small and Medium Sized Firms

  • FARACE, Salvatore


    (CELPE - Centre of Labour Economics and Economic Policy, University of Salerno - Italy)

  • MAZZOTTA, Fernanda


    (CELPE - Centre of Labour Economics and Economic Policy, University of Salerno - Italy)

This paper examines the determinants of innovation and its effects on small- and medium-sized firms We use the data from the OPIS databank, which provides a survey on a representative sample of firms from a province of the Southern Italy. We want to study whether small and medium sized firms can have a competitive advantage using their innovative capabilities, regardless of their sectoral and size limits. The main factor influencing the likelihood of innovation is knowledge, which is acquired through different ways. The econometric methodology consists of two bivariate models in order to estimate the probability of increased sales conditioned to the probability of innovation. We found that knowledge positively influences the probability of innovation; at the same time, knowledge has also a positive indirect effect on the increase of sales through innovation.

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Paper provided by CELPE - Centre of Labour Economics and Economic Policy, University of Salerno, Italy in its series CELPE Discussion Papers with number 120.

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Length: 47 pages
Date of creation: 11 Oct 2011
Date of revision:
Handle: RePEc:sal:celpdp:0120
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  1. Abernathy, William J. & Clark, Kim B., 1985. "Innovation: Mapping the winds of creative destruction," Research Policy, Elsevier, vol. 14(1), pages 3-22, February.
  2. Sergio Destefanis, 2001. "Differenziali Territoriali di Produttivita' ed Efficienza negli Anni '90: i Livelli e l'Andamento," CELPE Discussion Papers 59, CELPE - Centre of Labour Economics and Economic Policy, University of Salerno, Italy.
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