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Innovation and Firm Growth in High-Tech Sectors: A Quantile Regression Approach

  • Alex Coad
  • Rekha Rao

We relate innovation to sales growth for incumbent firms in four high-tech sectors. A firm, on average, experiences only modest growth and may grow for a number of reasons that may or may not be related to ‘innovativeness’. However, given that firms are heterogeneous and that growth rates distributions are heavy-tailed, it may be misleading to use regression techniques that focus on the ‘average firm’. Using a quantile regression approach, we observe that innovativeness is of crucial importance for a handful of ‘superstar’ fast-growth firms. We also discuss policy implications of our results.

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Paper provided by Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy in its series LEM Papers Series with number 2006/18.

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Date of creation: 23 Aug 2006
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Handle: RePEc:ssa:lemwps:2006/18
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