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Competitive pressure : The effects on investments in product and process innovation

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  • Boone, J.

    (Tilburg University, School of Economics and Management)

Abstract

I analyze the effects of competitive pressure on a firm's incentives to invest in product and process innovations. I present a framework incorporating the selection and adaptation effects of product market competition on efficiency and the Schumpeterian argument for monopoly power. The effects of competition on a firm's innovations depend on whether a firm is complacent, eager, struggling, or faint, which is determined by the firm's efficiency level relative to that of its opponents. Finally, the following tradeoff is pointed out: a rise in competitive pressure cannot raise both product and process innovations at the industry level.
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Suggested Citation

  • Boone, J., 2000. "Competitive pressure : The effects on investments in product and process innovation," Other publications TiSEM 88418185-7603-4c36-92fd-3, Tilburg University, School of Economics and Management.
    • Handle: RePEc:tiu:tiutis:88418185-7603-4c36-92fd-3dafae41b9e7
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