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Innovation capabilities and firm labor productivity

  • Carine Peeters
  • Bruno Van Pottelsberghe

This study relies on a Cobb-Douglas production function to assess the relationship between the development of innovation capabilities by firms and their labor productivity. Intra-organizational capabilities relate to firms’ corporate culture and work organization, generation of innovative ideas and selection of projects, and innovation funding sources. Inter-organizational capabilities relate to the use of external information from vertical partners, competitors, and consultants, and to R&D partnerships with scientific institutions. In addition to the traditional effect of a growth in the ratio of physical capital per employee, both types of innovation capabilities are found to significantly increase labor productivity.

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Paper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers CEB with number 04-030.RS.

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Length: 17 p.
Date of creation: 2004
Date of revision:
Publication status: Published by: Solvay Business School, Centre Emile Bernheim
Handle: RePEc:sol:wpaper:04-030
Contact details of provider: Postal: CP114/03, 42 avenue F.D. Roosevelt, 1050 Bruxelles
Phone: +32 (0)2 650.48.64
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Web page: http://difusion.ulb.ac.be
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  1. Peeters, Carine & Pottelsberghe de la Potterie, Bruno van, 2003. "Measuring Innovation Competencies and Performances: A Survey of Large Firms in Belgium," IIR Working Paper 03-16, Institute of Innovation Research, Hitotsubashi University.
  2. Peeters, Carine & Pottelsberghe de la Potterie, Bruno van, 2003. "Organizational Competencies and Innovation Performances: The Case of Large Firms in Belgium," IIR Working Paper 03-19, Institute of Innovation Research, Hitotsubashi University.
  3. Malerba, Franco, 1992. "Learning by Firms and Incremental Technical Change," Economic Journal, Royal Economic Society, vol. 102(413), pages 845-59, July.
  4. 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.
  5. Elisabeth Kremp & Jacques Mairesse, 2004. "Knowledge Management, Innovation, and Productivity: A Firm Level Exploration Based on French Manufacturing CIS3 Data," NBER Working Papers 10237, National Bureau of Economic Research, Inc.
  6. Hall, Bronwyn H. & Mairesse, Jacques, 1995. "Exploring the relationship between R&D and productivity in French manufacturing firms," Journal of Econometrics, Elsevier, vol. 65(1), pages 263-293, January.
  7. Christopher D. Ittner & David F. Larcker, 1997. "The Performance Effects of Process Management Techniques," Management Science, INFORMS, vol. 43(4), pages 522-534, April.
  8. Baldwin, John R. & Johnson, Joanne, 1996. "Business strategies in more- and less-innovative firms in Canada," Research Policy, Elsevier, vol. 25(5), pages 785-804, August.
  9. Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, vol. 99(397), pages 569-96, September.
  10. Pari Patel & Keith Pavitt, 1991. "Large Firms in the Production of the World’s Technology: An Important Case of “Non-Globalisation”," Journal of International Business Studies, Palgrave Macmillan, vol. 22(1), pages 1-21, March.
  11. Ichniowski, Casey & Shaw, Kathryn & Prennushi, Giovanna, 1997. "The Effects of Human Resource Management Practices on Productivity: A Study of Steel Finishing Lines," American Economic Review, American Economic Association, vol. 87(3), pages 291-313, June.
  12. Loof, Hans & Heshmati, Almas, 2002. "Knowledge capital and performance heterogeneity: : A firm-level innovation study," International Journal of Production Economics, Elsevier, vol. 76(1), pages 61-85, March.
  13. Knott, Anne Marie & McKelvey, Bill, 1999. "Nirvana efficiency: a comparative test of residual claims and routines," Journal of Economic Behavior & Organization, Elsevier, vol. 38(4), pages 365-383, April.
  14. Carine Peeters & Bruno Van Pottelsberghe, 2005. "Innovation capabilities and returns to scale," Working Papers CEB 05-002.RS, ULB -- Universite Libre de Bruxelles.
  15. Ritter, Thomas & Gemunden, Hans Georg, 2003. "Network competence: Its impact on innovation success and its antecedents," Journal of Business Research, Elsevier, vol. 56(9), pages 745-755, September.
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