Research, Innovation And Productivi[Ty: An Econometric Analysis At The Firm Level

Abstract

This paper studies the links between productivity, innovation and research at the firm level. We introduce three new features: (i) A structural model that explains productivity by innovation output, and innovation output by research investment: (ii) New data on French manufacturing firms, including the number of European patents and the percentage share of innovative sales, as well as firm-level demand pull and technology push indicators; (iii) Econometric methods which correct for selectivity and simultaneity biases and take into account the statistical features of the available data: only a small proportion of firms engage in research activities and/or apply for patents; productivity, innovation and research are endogenously determined; research investment and capital are truncated variables, patents are count data and innovative sales are interval data. We find that using the more widespread methods, and the more usual data and model specification, may lead to sensibly different estimates. We find in particular that simultaneity tends to interact with selectivity, and that both sources of biases must be taken into account together. However our main results are consistent with many of the stylized facts of the empirical literature. The probability of engaging in research (R&D) for a firm increases with its size (number of employees), its market share and diversification, and with the demand pull and technology push indicators. The research effort (R&D capital intensity) of a firm engaged in research increases with the same variables, except for size (its research capital being strictly proportional to size). The firm innovation output, as measured by patent numbers or innovative sales, rises with its research effort and with the demand pull and technology indicators, either directly or indirectly through their effects on research. Finally, firm productivity correlates positively with a higher innovation output, even when controlling for the skill composition of labor as well as for physical capital intensity.Research, Innovation, Patent, Productivity, Demand conditions, Technological opportunities, System of limited dependent and qualitative variables, Asymptotic least squares JEL Classification: C31, C34, L60, O31, O33,

Firms’ skills as drivers of radical and incremental innovation

“…We also include the expenditure of the firm on intramural and extramural R&D performance ( (Crépon et al, 1998;Roper et al, 2008). …”

“…When considering the impact of innovation inputs on innovation outputs the standard approach in the literature is to use an innovation production function (Crépon et al, 1998).…”

Assessment of the Impact of Innovations on Labor Productivity in Domestic Enterprises

“…The most wide-spread methodic of studying of influence of innovations on labor productivity that the majority of the foreign studies are based upon is a CDM-model developed by Crépon, Duguet and Mairesse (Crepon et al, 1998). In bare outlines the CDM-model is built as a three-stage econometric model which establishes the relationship between labor productivity and innovations and includes a system of three equations: the equations of the innovation input and output and the equation of productivity which are being modeled in sequential order.…”

Knowledge Spillovers and Their Impact on Innovation Success - A New Approach Using Patent Backward Citations

“…The usual framework to study the impact of technological knowledge and knowledge spillovers on innovation performance at the firm level is the knowledge production function which models the relationship between innovation input and innovation output (see for a standard model Crépon et al (1998) and Cohen (2010) for a survey of this literature). We formulate this relationship as a function between the sales of innovative products (LINNS) (that includes sales with new and significantly modified products), i.e.…”