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Innovation and business performance - a provisional multi-regional analysis


  • Roper, Stephen


  • Smallbone, David


  • Vickers, Ian


  • North, David


  • Hewitt-Dundas, Nola



Although much attention has focussed on the determinants of firms' innovation performance, the relationship between innovation and business performance is less well defined. In this paper we use data from identical plant level surveys conducted in six regions of the UK, Germany and Ireland to examine this relationship and identify some of the implications for regional innovation initiatives. The survey data used was collected by postal survey during 1999 and 2000. In all over 2000 plants responded to the surveys which provide regionally representative information about innovation activity, IT adoption and a number of indicators of business performance. Four main indicators of business performance are examined here: sales and employment growth, export performance, profitability and productivity (value added per employee). The analysis is based on a simultaneous econometric model explaining plants' innovation activity and business performance. Discussion focuses on a number of key themes. First, core-periphery differences are explored by contrasting analytical results for peripheral (Northern Ireland, Scotland) and 'core' regions (Bavaria, Baden-Wurttemberg) within the sample. Second, attention is focussed on the performance effects of firms, different innovation profiles relating to product and process development but also radical and more incremental innovation activity. Thirdly, contrasts between small and larger businesses are considered and the sensitivity of firms, innovation and performance to their operating environment is explored. The paper concludes with an assessment of the implications of the analysis for regional innovation initiatives and their potential impact on business development.

Suggested Citation

  • Roper, Stephen & Smallbone, David & Vickers, Ian & North, David & Hewitt-Dundas, Nola, 2002. "Innovation and business performance - a provisional multi-regional analysis," ERSA conference papers ersa02p365, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa02p365

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    References listed on IDEAS

    1. Mike Crone & Stephen Roper, 2001. "Local Learning from Multinational Plants: Knowledge Transfers in the Supply Chain," Regional Studies, Taylor & Francis Journals, vol. 35(6), pages 535-548.
    2. Hans Loof & Almas Heshmati, 2006. "On the relationship between innovation and performance: A sensitivity analysis," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 15(4-5), pages 317-344.
    3. Loof, Hans & Heshmati, Almas, 2002. "Knowledge capital and performance heterogeneity: : A firm-level innovation study," International Journal of Production Economics, Elsevier, vol. 76(1), pages 61-85, March.
    4. Bruno Crepon & Emmanuel Duguet & Jacques Mairesse, 1998. "Research, Innovation And Productivity: An Econometric Analysis At The Firm Level," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 7(2), pages 115-158.
    5. Holger Görg & Frances Ruane, 1997. "Reflections on Irish Industrial Policy towards Foreign Direct Investment," Economics Policy Papers 973, Trinity College Dublin, Department of Economics.
    6. Blind, Knut & Grupp, Hariolf, 1999. "Interdependencies between the science and technology infrastructure and innovation activities in German regions: empirical findings and policy consequences," Research Policy, Elsevier, vol. 28(5), pages 451-468, June.
    7. Oerlemans, L.A.G. & Meeus, M.T.H. & Boekema, F.W.M., 1998. "Do networks matter for innovation? The usefulness of the network approach in analysing innovation," Other publications TiSEM b5b01e96-86f7-4fdf-95c0-4, Tilburg University, School of Economics and Management.
    8. Zvi Griliches, 1998. "The Search for R&D Spillovers," NBER Chapters,in: R&D and Productivity: The Econometric Evidence, pages 251-268 National Bureau of Economic Research, Inc.
    9. Geroski, P A, 1990. "Innovation, Technological Opportunity, and Market Structure," Oxford Economic Papers, Oxford University Press, vol. 42(3), pages 586-602, July.
    10. Leon A.G. Oerlemans & Marius T.H. Meeus & Frans W.M. Boekema, 1998. "Do Networks Matter for Innovation? The usefulness of the economic network approach in analysing innovation," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 89(3), pages 298-309, August.
    11. Rolf Sternberg, 1999. "Innovative Linkages and Proximity: Empirical Results from Recent Surveys of Small and Medium Sized Firms in German Regions," Regional Studies, Taylor & Francis Journals, vol. 33(6), pages 529-540.
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