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Internal and external factors in innovation persistence

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This paper contributes the analysis of the persistence of innovation activities, as measured by total factor productivity (TFP) and explores its internal and external determinants stressing its path dependent characteristics. The external conditions, namely the quality of local knowledge pools and the strength of the Schumpeterian rivalry, together with the internal conditions, that is the actual levels of dynamic capabilities, as proxied by the levels of wages and the size of firms, exert a specific and localized effect upon the persistent introduction of innovations. A Multiple Transition Probability Matrixes (MTPMs) approach has been implemented to grasp the contingent effects of external effects on the long-term innovation persistence. The empirical analysis of the dynamics of firm level TFP for a sample of about 7000 Italian manufacturing companies observed during the years1996-2005 is based on both the comparison of different transition probability matrixes and on dynamic discrete choice panel data models. The evidence provided by the test of MTPMs in sub-periods suggests that innovation persistence is path dependent, as opposed to past dependent.

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  • Antonelli, Cristiano & Crespi, Francesco & Scellato, Giuseppe, 2012. "Internal and external factors in innovation persistence," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 201211, University of Turin.
  • Handle: RePEc:uto:labeco:201211
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