On the contribution of innovation to multi-factor productivity growth

Abstract

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,

Innovation, R&D Investment and Productivity: Uruguayan Manufacturing Firms

“…3 Some of the recent European studies that have used firm level data to analyze innovation behavior within the CDM framework are Llorca-Vivero (2002); Lööf and Heshmati (2002); Griffith at al. (2004;; Janz et al (2004); Van Leeuwen and Klomp (2006); Mohnen et al (2006); Castellani and Zanfei (2007); Czarnitzki and O'Byrnes (2007);and Cainelli (2008). Further, Stoevsky (2005); Roud (2007); and Masso and Vahter (2008) use the Community Innovation Surveys to analyze the applicability of the CDM framework in Eastern European countries -Bulgaria, Russia and Estonia, respectively.…”

Does history matter for the relationship between R&D, innovation, and productivity?

“…With this aim, we adapt the CDM model to analyze this relationship for a panel of Spanish manufacturing firms between 1990 and 2005. Our econometric results suggest the existence of true state dependence both in the decision of 1 See, for example, Mohnen (2002, 2005) and Mohnen et al (2006) using French CIS1 and CIS3 data, Parisi et al (2006) for Italian manufacturing firms, Lööf and Heshmati (2006) using Swedish manufacturing data, Van Leeuwen and Klomp (2006) and Van Leeuven et al (2009) for Dutch manufacturing firms, and Griffith et al (2006) using firm-level data from the internationally harmonized CIS3 for France, Germany, Spain and the UK. Two examples for non-European countries are Benavente (2006) for Chile and Jefferson et al (2006) about China.…”

Innovation and Labour Productivity in the Swiss Manufacturing Sector: An Analysis Based on Firm Panel Data

“…Finally, Lööf and Heshmati (2006) and Van Leeuwen and Klomp (2006) discuss and apply alternative econometric approaches and model specifications. The former study examines using Swedish cross-section firm data the sensitivity of the estimated relationship between innovation and firm performance by carrying out comparisons in a number of ways (assuming different error structure for the same data source, estimating the same model with different data bases, using different classifications of firms' performance and/or innovation, etc.).…”