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Differences in Innovator and Non-innovator Profiles: Small Establishments in Business Services

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  • Gellatly, Guy

Abstract

This paper explores differences between innovative and non-innovative establishments in business service industries. It focuses on small establishments that supply core technical inputs to other firms: establishments in computer and related services, engineering, and other scientific and technical services. The analysis begins by examining the incidence of innovation within the small firm population. Forty percent of small businesses report introducing new or improved products, processes or organizational forms. Among these businesses, product innovation dominates over process or organizational change. A majority of these establishments reveal an ongoing commitment to innovation programs by introducing innovations on a regular basis. By contrast, businesses that do not introduce new or improved products, processes or organizational methods reveal little supporting evidence of innovation activity. The paper then investigates differences in strategic intensity between innovative and non-innovative businesses. Innovators attach greater importance to financial management and capital acquisition. Innovators also place more emphasis on recruiting skilled labour and on promoting incentive compensation. These distinctions are sensible - among small firms in R&D-intensive industries, financing and human resource competencies play a critical role in the innovation process. A final section examines whether the obstacles to innovation differ between innovators and non-innovators. Innovators are more likely to report difficulties related to market success, imitation, and skill restrictions. Evidence of learning-by-doing is more apparent within a multivariate framework. The probability of encountering risk-related obstacles and input restrictions is higher among establishments that engage in R&D and use intellectual property rights, both key elements of the innovation process. Many obstacles to innovation are also more apparent for businesses that stress financing, marketing, production or human resource strategies.

Suggested Citation

  • Gellatly, Guy, 2000. "Differences in Innovator and Non-innovator Profiles: Small Establishments in Business Services," Analytical Studies Branch Research Paper Series 2000143e, Statistics Canada, Analytical Studies Branch.
  • Handle: RePEc:stc:stcp3e:2000143e
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    File URL: http://www5.statcan.gc.ca/olc-cel/olc.action?ObjId=11F0019M2000143&ObjType=46&lang=en&limit=0
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    References listed on IDEAS

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    1. Crepon, B. & Duguet, E. & Mairesse, J., 1998. "Research Investment, Innovation and Productivity: An Econometric Analysis at the Firm Level," Papiers d'Economie Mathématique et Applications 98.15, Université Panthéon-Sorbonne (Paris 1).
    2. Baldwin, John R. & Gellatly, Guy, 1998. "Are There High-tech Industries or Only High-tech Firms? Evidence from New Technology-based Firms," Analytical Studies Branch Research Paper Series 1998120e, Statistics Canada, Analytical Studies Branch.
    3. Baldwin, John R. & Rafiquzzaman, Mohammed, 1995. "Selection versus evolutionary adaptation: Learning and post-entry performance," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 501-522, December.
    4. Baldwin, John & Lin, Zhengxi, 2002. "Impediments to advanced technology adoption for Canadian manufacturers," Research Policy, Elsevier, vol. 31(1), pages 1-18, January.
    5. Bronwyn H. Hall, 1992. "Investment and Research and Development at the Firm Level: Does the Source of Financing Matter?," NBER Working Papers 4096, National Bureau of Economic Research, Inc.
    6. Baldwin, John R. & Johnson, Joanne, 1995. "Business Strategies in Innovative and Non-innovative Firms in Canada," Analytical Studies Branch Research Paper Series 1995073e, Statistics Canada, Analytical Studies Branch.
    7. Baldwin, John R. & Yates, Janice, 1999. "Innovation, Training and Success," Analytical Studies Branch Research Paper Series 1999137e, Statistics Canada, Analytical Studies Branch.
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    Citations

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    Cited by:

    1. Heinz Hollenstein, "undated". "Innovation Modes in the Swiss Service Sector," WIFO Working Papers 156, WIFO.
    2. Baldwin, John & Lin, Zhengxi, 2002. "Impediments to advanced technology adoption for Canadian manufacturers," Research Policy, Elsevier, vol. 31(1), pages 1-18, January.
    3. Baldwin, John R. & Yates, Janice, 1999. "Innovation, formation et reussite," Direction des etudes analytiques : documents de recherche 1999137f, Statistics Canada, Direction des etudes analytiques.
    4. Baldwin, John R. & Gaudreault, Valerie & Gellatly, Guy, 2002. "Financing Innovation in New Small Firms: New Evidence from Canada," Analytical Studies Branch Research Paper Series 2002190e, Statistics Canada, Analytical Studies Branch.
    5. Baldwin, John R. & Yates, Janice, 1999. "Innovation, Training and Success," Analytical Studies Branch Research Paper Series 1999137e, Statistics Canada, Analytical Studies Branch.
    6. Spyros Arvanitis & Juliette von Arx, 2004. "Bestimmungsfaktoren der Innovationstätigkeit und deren Einfluss auf Arbeitsproduktivität, Beschäftigung und Qualifikationsstruktur," KOF Working papers 04-91, KOF Swiss Economic Institute, ETH Zurich.
    7. Henk L.M. Kox, 2004. "The contribution of business services to aggregate productivity growth," Industrial Organization 0402005, EconWPA.

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