Economic performance of Brazilian manufacturing firms: a counterfactual analysis of innovation impacts

Abstract

Technological innovation, Average treatment effect, Propensity score matching, O31, O33, C40, L26,

Exploring the link between innovation and growth in Chilean firms

“…Indeed, studies such as Hölzl (2009), Kannebley Jr et al (2010, Hölzl and Friesenbichler (2010) do not find evidence of product innovators necessarily performing better than non-product innovators or they even find a negative relation (Freel and Robson, 2004). In particular, our contribution is in line with those studies which do not show a significant association for product innovation in emerging countries (Kannebley Jr et al, 2010), or those taking into consideration countries which are distant to the technological frontier (Hölzl, 2009;Hölzl and Friesenbichler, 2010;Damijan et al, 2012).…”

“…Indeed, studies such as Hölzl (2009), Kannebley Jr et al (2010, Hölzl and Friesenbichler (2010) do not find evidence of product innovators necessarily performing better than non-product innovators or they even find a negative relation (Freel and Robson, 2004). In particular, our contribution is in line with those studies which do not show a significant association for product innovation in emerging countries (Kannebley Jr et al, 2010), or those taking into consideration countries which are distant to the technological frontier (Hölzl, 2009;Hölzl and Friesenbichler, 2010;Damijan et al, 2012). Indeed, innovation expenditures in less developed countries generally focus on the acquisition of foreign machinery and equipment that embody newer vintage of technology (which relates to process innovation) rather than on strong R&D in-house capabilities (which relate more with product innovation) (Vivarelli, 2014).…”

“…First, as previously highlighted, this might be related with the way we measure this innovation activity: indeed, the ELE does not provide any additional information regarding the 'quality' of product innovation or its share on firm's turnover. In fact, previous studies have highlighted the importance of taking into account the degree of novelty of product innovation when assessing its effect on sales growth (Duguet, 2006;Kannebley Jr et al, 2010;Cucculelli and Ermini, 2012;Bianchini et al, 2016). Therefore, our imperfect measure of product innovation might fail to isolate those 'radical' innovations which might be more beneficial in terms of firm performance since they do not refer to previously existing products and because no competitor produces it (Duguet, 2006).…”

“…Cozza et al (2012), using a sample of medium and high-tech Italian manufacturing firms, find a positive and significant 'innovation premium' in terms of profitability and growth for those firms which introduced innovative products. Kannebley Jr et al (2010) investigate the effects of technological innovation on several measures of firm performance for a sample of manufacturing firms in Brazil. Their findings indicate that product innovation alone does not have a significant impact on performance while process innovation does exert a positive effect.…”

“…In order to do this, we propensity score matching (PSM) and nearest neighbours matching (NNM) estimators following recent contributions analysing innovation and firm performance (Kannebley Jr et al, 2010;Alvarez et al, 2010;Coad et al, 2015). These methods allow to estimate the effect of innovation on sales growth by comparing firms with a similar propensity to introduce innovations.…”