Using the second Community Innovation Survey (CIS-2) for the Netherlands, we analyse the input and output stages of the innovation process and the links between the innovation process and overall economic performance. We investigate the existence of feedback links running from past economic performance to the input and the output stage of the innovation process and compare the results of a single-equation approach with the results obtained from a simultaneous-equation model.Innovation, Research, Technological Opportunities, Simultaneous-EQUATION Models, Economic Performance,

We propose a model where both R&D and ICT investment feed into a system of three innovation output equations (product, process and organizational innovation), which ultimately feeds into a productivity equation. We find that ICT investment and usage are important drivers of innovation in both manufacturing and services. Doing more R&D has a positive effect on product innovation in manufacturing. The strongest productivity effects are derived from organizational innovation. We find positive effects of product and process innovation when combined with an organizational innovation. There is evidence that organizational innovation is complementary to process innovation.

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We embed the innovation production function in a model that analyzes the impact of innovation output on manufacturing multi-factor productivity (MFP) growth. We combine a market share model with a gross output production function. This revenue approach enables a 'demand-shift' interpretation of the contribution of innovation to MFP growth. We apply different sets of instrumental variables and different estimation methods to estimate simultaneously the returns from innovation investment to innovation output, the contribution of innovation output to productivity growth and the feedback link running from a firm's overall sales performance to its innovation endeavor. We draw our empirical results from the second Community Innovation Survey (CIS-2) for the Netherlands. The estimation results from our model show that the impact of innovation differs between measures of firm performance, and that, in our data, the revenue function approach yields more sensible results for the contribution of innovation to MFP growth than the value-added production function framework. Furthermore, the results show that the estimation of return on innovation investment benefits from the inclusion of more information on the technological environment of the firm.Innovation, Research, Technological opportunities, Simultaneous-equation models, Economic performance, Productivity,

This note starts with a retrospective view of the CDM model [Crépon, Bruno, Emmanuel Duguet, and Jacques Mairesse. 1998. "Research, Innovation and Productivity: An Econometric Analysis at the Firm Level." Economics of Innovation and New Technology 7 (2): 115-158.] as an econometric framework for studying innovation and growth. A narrative interpretation of CDM describes the chain from innovative activity at firms to increases in welfare and makes links to the policy environment. Filling in missing pieces of the innovation to productivity puzzle has a heavy data burden. The paper makes use of the micro moments database (MMD) that allows observing micro-level behavior and macrolevel impacts of innovation and production in a large selection of European countries. Two examples are given of research using the MMD. First, we estimate a simplified system of innovation and production equations that can be applied to average firm choices and outcomes, as well as to industry or aggregate outcomes. We find that innovative activity contributes to aggregate productivity even while the average effect at the firm level is insignificant. Next, a crosscountry exploration is made that shows heightened productivity effects of combined use by firms of various enterprise-level information and communications technologies.

Die Discussion Papers dienen einer möglichst schnellen Verbreitung von neueren Forschungsarbeiten des ZEW. Die Beiträge liegen in alleiniger Verantwortung der Autoren und stellen nicht notwendigerweise die Meinung des ZEW dar.Discussion Papers are intended to make results of ZEW research promptly available to other economists in order to encourage discussion and suggestions for revisions. The authors are solely responsible for the contents which do not necessarily represent the opinion of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp0406.pdf Non-technical summaryInformation and communication technologies (ICT) have been diffusing rapidly in the industrialised economies during the last decades and are applied for a large variety of purposes. For example, ICT are used to facilitate communication, to easily store and process information, to automate business processes, or to widen the access to information via the Internet. By its rapid diffusion and its various uses, ICT have been compared to other great innovations in the past like the invention of the steam engine or of electricity. These inventions are also designated as general purpose technologies (GPT) since they are suited to be adopted by a wide range of industries and thereby to unfold a sustained impact on the economy.Apart from the ongoing technological progress within the ICT-producing sector, ICTs have opened a variety of innovation potentials also in a variety of applying sectors. For example, the use of ICT enables firms to restructure their organisations (like flattening of hierarchies and delegating responsibilities), to re-engineer business processes (like introducing just-intime management or engaging in E-commerce) and to develop completely new products (e.g. software or online services). These complementary innovations often involve high additional expenses, such as for reorganisations and for training workers.In this paper, we analyse the importance of ICT capital deepening and innovation for productivity empirically using panel data for German and Dutch firms in services. We employ a model that takes into account the conjecture that innovation and ICT use are complementary. The results show that the contribution of ICT capital deepening is raised when firms combine ICT use and technological innovations on a more permanent basis. Moreover, the joint impact of ICT use and permanent technological innovation on productivity appears to be of the same order of magnitude in the two countries. Nevertheless, the results found for a direct impact of innovation on multi-factor productivity seems to be more robust for Germany than for the Netherlands. ICT, Innovation and AbstractUsing panel data for German and Dutch firms from the services sector, this paper analyses the importance of ICT capital deepening and innovation for productivity. We employ a model that takes into account that innovation and ICT use may be complementary. The results show that the contribution of ICT capital deepening is raise...

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