Innovation in the Financial Sector: Persistence and Schumpeterian Hypotheses

Abstract

The paper analyses innovation features in the German financial sector. The first topic is persistence of innovation. Our research question is: Do innovators plan further innovation for the subsequent year? In addition, since the sector is so far poorly researched, very basic questions are investigated in the paper: the relationship between firm size and innovation (both linear and quadratic), as well as the impact of market structure on innovation (i.e. Schumpeterian and neo-Schumpeterian hypotheses). Finally, Suttons argument of R & D sunk costs is investigated as a possible explanation for persistence. Basing on the CIS IV survey, our empirical evidence is consistent with the results of similar researches carried out in different sectors

The Influence of Financial Innovations on the Development of the Financial Services Market

“…У свою чергу А. Аль-Дмур, Р. Аль-Дмур та Н. Рабабех фінансові інновації трактують, як "створення та просування нового інструменту чи технології, які можуть бути продуктом або процесом" . Проте, Ф. Аллен, С. Гу, Д. Джагтіані, зазначають, що ототожнювати фінансові інновації лише з впровадженням нових фінансових продуктів не коректно, адже, це набагато ширший термін, який поєдную значну кількість продуктів, починаючи від просто інноваційної системи звітності і закінчуючи кредитним рейтингом учасника фінансового ринку (Allen, 2021).…”

Technological Innovation Persistence: Literature Survey and Exploration of the Role of Organizational Innovation

“…Antonelli et al (2010) explain that smaller firms face stronger entry barriers than exit barriers. However, Napoli (2008) adds that while the linear relationship shows that firm size is important in determining innovation, the negative quadratic relationship suggests that this is only true up to a certain level: a large firm size can be detrimental to innovation. Moreover, Peters (2009) finds that firm size is only important in the manufacturing sector and Clausen et al (2010) conclude that the effect of this variable is higher for product innovations.…”

“…Máñez Castillejo et al (2004) use a panel of 383 manufacturing firms in Spain and conclude that R&D activities are subject to dynamic economies of scale and confirm the successbreeds-success hypothesis. Moreover, according to Napoli (2008), the commitment to innovation can be further reinforced by past R&D expenditure. As for Duflos (2006), he finds that present success depends on the technological importance of past innovation.…”