Success breeds success. The dynamics of the innovation process

Flaig, Gebhard; Stadler, Manfred

doi:10.1007/bf01205728

Cited by 123 publications

(64 citation statements)

References 12 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…2 Mansfield (1968) and Stoneman (1983), however, emphasised that a firm's innovation success broadens its technological opportunities which make subsequent innovation success more likely. Based on this idea of dynamic intra-firm spill-overs, Flaig and Stadler (1994) developed a stochastic optimisation model in which firms maximise their expected present value of profits over an infinite time horizon by simultaneously choosing optimal sequences of both product and process innovations. Both were shown to be dynamically interrelated in this model.…”

Section: Theoretical Explanationsmentioning

confidence: 99%

Persistence of innovation: stylised facts and panel data evidence

2007

View full text Add to dashboard Cite

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/dp0581.pdf Non-technical SummaryInnovation is widely considered to be a key long-term driving force for economic growth. In 1993, the Community Innovation Surveys (CIS) were initiated in the European countries to investigate firms' innovation activities. However, there is still very little empirical evidence on the dynamics in firms' innovation behaviour. Looking at innovation indicators at the aggregate or industry level, we can identify a high and quite stable share of innovators in Germany over the last ten years. One interesting question, however, cannot be answered by such macroeconomic numbers: Is it the same group of firms that always set themselves at the cutting edge by introducing new products and processes or is there a steady entry into and exit from innovation activities at the firm level, with the aggregate level remaining more or less stable over time?This paper analyses the dynamics in firms' innovation behaviour. In particular, it focuses on the following two questions: First of all, is innovation persistent at the firm-level? And secondly, if persistence is prevalent, what drives this phenomenon? In principle, there are various potential sources for persistent behaviour: First, it might be caused by true state dependence. This means that a causal effect exists in the sense that the decision to innovate in one period itself enhances the probability of innovating in the subsequent period. The theoretical literature delivers several potential explanations for state dependent behaviour: success breeds success, dynamic increasing returns (learning effects) or sunk costs in R&D investments. On the other hand, firms may possess certain characteristics which make them more likely to innovate. To the extent that these characteristics themselves show persistence over time, they will induce persistence in innovation behaviour. Such firm-specific attributes can be classified into observable characteristics, like firm size, competitive environment, skills or financial resources, and unobservable ones. For instance, technological opportunities, managerial abilities or risk attitudes are important for the firms' decision to innovate, but are typically not observed (unobserved heterogeneity).The answers to both questions are important from a theoretical as well as a policy point of view. From a theoretical point of view they are interesting because endogenous growth models differ in their underlying assumptions about the innovation...

show abstract

Section: Theoretical Explanationsmentioning

confidence: 99%

Persistence of innovation: stylised facts and panel data evidence

2007

View full text Add to dashboard Cite

show abstract

“…3 A dummy variable indicating whether or not a firm exports its products and services controls for international competitive pressure. Previous innovation success is included to account for the persistence of innovation activity (see for instance Flaig and Stadler (1994) and Peters (2009)). Finally, two-digit sector dummies and a regional dummy (East/West Germany) are included in order to control for sector-specific and regional effects.…”

Section: Econometric Implementationmentioning

confidence: 99%

IT Outsourcing—A Source of Innovation? Microeconometric Evidence for Germany

2016

View full text Add to dashboard Cite

Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. Non-technical summaryIn 2006, on average 43% of the firms in the EU-15 practiced IT outsourcing (ITO).The determinants of ITO as well as firms' incentives to source out non-core activities have been examined extensively. As summarised by Lacity et al. (2010), the most important motive for ITO is "the desire to reduce cost on a non-core IT activity better provided by suppliers with superior skills, expertise, and technical capabilities".Less research focused on the impact of ITO on firm performance.In this study, we analyse whether ITO increases a firm's probability of realising product or process innovations due to setting free resources that can be redirected to core competencies such as innovation activity. For our empirical analysis, we use two waves of the ZEW ICT survey, 2007 and 2010, comprising 1453 firms from the manufacturing and the services sector in Germany. The data set allows to employ different measures of ITO taking into account that the degree of outsourcing might matter and that there might be nonlinear relationships between ITO and innovation activity. By splitting our estimation sample in manufacturing and services firms we furthermore explore whether the impact of ITO on innovation activity differs between manufacturing and services firms given the fact that business processes are generally more IT intensive in services firms.The econometric probit analysis shows a significant and U-shaped relationship between ITO and the product innovation activity of manufacturing firms. In the service sector, by contrast, we find a significant and hump-shaped relationship between ITO and the realisation of process innovation. Applying a propensity score matching approach takes account of potential reverse causality between ITO and innovation; the results underpin the importance of ITO for services firms' realisation of process innovation. Using different measures of IT outsourcing (ITO), the econometric estimations reveal a significant and U-shaped relationship between ITO and product innovation activity of manufacturing firms, and a significant and hump-shaped relationship between ITO and process innovation activity of services firms. Das Wichtigste in KürzeA propensity score matching analysis takes account of reverse causality; the results underpin the relevance of ITO for services firms' realisation of process innovation.. JEL codes: D22, L23, O31

show abstract

“…Thus, a firm's past experience in innovation has a positive effect on current innovation. There are plenty of empirical studies on measuring the degree of persistence in innovation using the number of patents, the R&D effort or innovation output indicators as proxy variables (Flaig and Stadler, 1994;Malerba and Orsenigo, 1999;Cefis and Orsenigo, 2001;Cefis, 2003;Rogers, 2004;Duguet and Manjon, 2004;Cabagnols, 2006;Mañez-Castillejo et al, 2009;Peters, 2009;Triguero and Córcoles, 2013). But, as far as we know, only a few studies measure the degree of persistence in innovation considering innovative spells, i.e., periods of time during which the firm innovates year after year without gaps in its activity (Geroski et al, 1997;Le Bas et al, 2003;Cabagnols, 2003;Jang and Chen, 2011).…”

Section: Introductionmentioning

confidence: 99%

“…This explanation is based on two arguments. First, knowledge accumulation enhances the probability of future innovation, the so-called "success breeds success" principle (Flaig and Stadler, 1994;Geroski et al, 1997). Second, the "learning by doing" effect must be taken into account in the persistence of innovative activities (Peters, 2009).…”

mentioning

confidence: 99%

Comparing Persistence of Product and Process Innovation: A Discrete-Time Duration Analysis of Innovation Spells

2016

View full text Add to dashboard Cite

The main purpose of this paper is to analyse the influence of previous experience and learning capabilities on survival in product and process innovation for Spanish manufacturing firms in the period 1990-2010. The authors find past and path dependence and confirm the important effect of R&D effort in both types of innovation. Nevertheless, for product innovation, the level of appropriability and the fact of operating in a high-tech sector are more crucial for persistence in comparison with process innovation.

show abstract

Success breeds success. The dynamics of the innovation process

Cited by 123 publications

References 12 publications

Persistence of innovation: stylised facts and panel data evidence

Persistence of innovation: stylised facts and panel data evidence

IT Outsourcing—A Source of Innovation? Microeconometric Evidence for Germany

Comparing Persistence of Product and Process Innovation: A Discrete-Time Duration Analysis of Innovation Spells

Contact Info

Product

Resources

About