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Exploring the link between Innovation and Growth in Chilean firms

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  • Caterina Santi
  • Pietro Santoleri

Abstract

We employ a balanced panel dataset representative of the entire Chilean productive structure in order to investigate the relation between the introduction of innovation and subsequent firm growth in terms of sales. Recent contributions examining the returns to innovation on firm performance have stressed the need of going beyond the analysis of the `average effect for the average firm'. However, previous studies in the case of Latin American economies have often overlooked the importance of analyzing which firms benefit more from the introduction of innovations. Our analysis consists of a series of parametric and non-parametric exercises which take into account the properties of the firm growth distribution. In particular, we adopt quantile treatment effects (QTE) which allow to estimate the effect of the introduction of innovation by comparing firms with a similar propensity to innovate for different quantiles of the firm growth distribution. On one hand, our results indicate that process innovation shows a positive and significant relation with firm growth for those firms located at the 75th and 90th percentiles. On the other, product innovation shows a negative association only for high-growth firms.

Suggested Citation

  • Caterina Santi & Pietro Santoleri, 2016. "Exploring the link between Innovation and Growth in Chilean firms," LEM Papers Series 2016/09, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  • Handle: RePEc:ssa:lemwps:2016/09
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    1. repec:eee:respol:v:47:y:2018:i:7:p:1321-1333 is not listed on IDEAS
    2. Armand, Alex & Mendi, Pedro, 2018. "Demand drops and innovation investments: Evidence from the Great Recession in Spain," Research Policy, Elsevier, vol. 47(7), pages 1321-1333.
    3. Alex Coad & Nanditha Mathew & Emanuele Pugliese, 2017. "What's good for the goose ain't good for the gander: cock-eyed counterfactuals and the performance effects of R&D," LEM Papers Series 2017/21, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.

    More about this item

    Keywords

    innovation; firm growth; Chile; quantile regression; quantile treatment effects;

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • 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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