Innovations’ Success and Failure in the Business Cycle

Abstract

This paper examines three channels of influence of the business cycle in the propensity of firms to introduce technological innovations: Aggregate demand (firms initiate more innovation projects in expansion than in recession; risk (the probability that initiated projects fail is higher in contraction than in expansion); and obstacles to innovate (more firms perceive the obstacles to innovate as high in recessions than in expansions and the high obstacles implies lower propensity to initiate innovation projects). With Spanish CIS data we find evidence that the three channels contributed to the fall in the proportion of firms that introduce technological innovations during the Great Recession, compared with the proportion of innovators in the years of expansion. The research methodology consists on estimating a multiprobit model with the probability that firms introduce technological innovations, the probability that firms abandon ongoing innovation projects, and the probability that firms perceive the obstacles to innovate as high.

Conditions Driving Eco-Innovation in a Catching-Up Country—ICT vs. Industry in Poland

“…Nowadays, it is assumed that the business cycle in the market significantly determines the implementation of not only eco-innovation but also other innovative solutions. Companies during a recession are less likely to initiate innovation projects, more easily abandon projects already underway, and are reluctant to undertake new innovation projects [34]. Despite this, performance related to eco-innovation is improving in the European Union even in times of stagnation.…”

“…Company size [24][25][26][27][28][29][30][31][32] Business cycle [2,34,35] Internal resources of the company (R&D activities, internal knowledge) [25,[36][37][38]41,42] Level of novelty of the created innovations [71,84,85] Innovation cooperation [25,26,42,49,58,59,64,[67][68][69][70][71][72][73][74][75][76][77][78][79][80][81][82][83] Institutional support for innovation [86][87][88][89][90][91]…”