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On the dynamics of process innovative activity: an empirical investigation using panel data

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  • König, Heinz
  • Laisney, François
  • Lechner, Michael
  • Pohlmeier, Winfried

Abstract

This paper addresses three major aspects of firms' process innovative activity: forward- looking behaviour, uncertainty w.r.t. returns of R&D investments, and oligopolistic competition on the product market. Assuming that R&D expenditures are cost-reducing investments, we derive an Euler equation for process innovations and discuss alternative panel econometric approaches suitable to the case where only qualitative information is available. Empirical results are based on an unbalanced panel of German manufacturing firms for 1984-1989 and suggest that the Schumpeterian causality from firm size to innovation activity might in fact be attributed, at least partly, to heterogeneity in the perception of process innovative success.

Suggested Citation

  • König, Heinz & Laisney, François & Lechner, Michael & Pohlmeier, Winfried, 1993. "On the dynamics of process innovative activity: an empirical investigation using panel data," ZEW Discussion Papers 93-08, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  • Handle: RePEc:zbw:zewdip:9308
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    References listed on IDEAS

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    1. Cohen, Wesley M. & Levin, Richard C., 1989. "Empirical studies of innovation and market structure," Handbook of Industrial Organization,in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 18, pages 1059-1107 Elsevier.
    2. Jacques Mairesse & Zvi Griliches, 1988. "Heterogeneity in Panel Data: Are There Stable Production Functions?," NBER Working Papers 2619, National Bureau of Economic Research, Inc.
    3. Chamberlain, Gary, 1984. "Panel data," Handbook of Econometrics,in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 22, pages 1247-1318 Elsevier.
    4. Pohlmeier, Winfried, 1992. "On the Simultaneity of Innovations and Market Structure," Empirical Economics, Springer, vol. 17(2), pages 253-272.
    5. Hall, Bronwyn H. & Hayashi, Fumio, 1989. "Research and Development as an Investment," Department of Economics, Working Paper Series qt8br8d266, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    6. Laisney, François & Lechner, Michael & van Soest, Arthur & Wagenhals, Gerhard, 1993. "A Life Cycle Labour Supply Model with Taxes Estimated on German Panel Data: The Case of Parallel Preferences," ZEW Discussion Papers 93-01, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    7. Schmalensee, Richard, 1989. "Inter-industry studies of structure and performance," Handbook of Industrial Organization,in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 16, pages 951-1009 Elsevier.
    8. Flaherty, M Therese, 1980. "Industry Structure and Cost-Reducing Investment," Econometrica, Econometric Society, vol. 48(5), pages 1187-1209, July.
    9. Laisney, Francois & Lechner, Michael & Pohlmeier, Winfried, 1992. "Innovation activity and firm heterogeneity: Empirical evidence from West Germany," Structural Change and Economic Dynamics, Elsevier, vol. 3(2), pages 301-320, December.
    10. Flaig, Gebhard & Stadler, Manfred, 1994. "Success Breeds Success. The Dynamics of the Innovation Process," Empirical Economics, Springer, vol. 19(1), pages 55-68.
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    Cited by:

    1. Bettina Peters, 2009. "Persistence of innovation: stylised facts and panel data evidence," The Journal of Technology Transfer, Springer, vol. 34(2), pages 226-243, April.
    2. Inkmann, Joachim, 2000. "Misspecified heteroskedasticity in the panel probit model: A small sample comparison of GMM and SML estimators," Journal of Econometrics, Elsevier, vol. 97(2), pages 227-259, August.
    3. Smolny, Werner & Schneeweis, Thomas, 1996. "Innovation, Wachstum und Beschäftigung: Eine empirische Untersuchung auf der Basis des Ifo-Unternehmenspanels," Discussion Papers 33, University of Konstanz, Center for International Labor Economics (CILE).
    4. Smolny, Werner, 1997. "Endogenous innovations in a model of the firm: Theory and empirical application for West-German manufacturing firms," Discussion Papers 39, University of Konstanz, Center for International Labor Economics (CILE).
    5. Smolny, Wernerr, 1996. "Innovations, prices, and employment: A theoretical model and an empirical application for West-German manufacturing firms," Discussion Papers 37, University of Konstanz, Center for International Labor Economics (CILE).
    6. Dietmar Harhoff, 1997. "Incentives to Innovate: A Structural Model of Oligopoly (available only in German!)," CIG Working Papers FS IV 97-09, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
    7. Sascha O. Becker & Klaus Wohlrabe, 2008. "European Data Watch: Micro Data at the Ifo Institute for Economic Research – The “Ifo Business Survey”, Usage and Access," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 128(2), pages 307-319.
    8. Flaig, Gebhard & Stadler, Manfred, 1996. "On the dynamics of product and process innovations: A bivariate random effects probit model," Tübinger Diskussionsbeiträge 64, University of Tübingen, School of Business and Economics.
    9. Klaus Abberger & Sascha Becker & Barbara Hofmann & Klaus Wohlrabe, 2007. "Mikrodaten im ifo Institut für Wirtschaftsforschung – Bestand, Verwendung und Zugang," AStA Wirtschafts- und Sozialstatistisches Archiv, Springer;Deutsche Statistische Gesellschaft - German Statistical Society, vol. 1(1), pages 27-42, June.
    10. Stefan Kipar, 2012. "Determinants of Firm Innovation - Evidence from German Panel Data," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 45, January.

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