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Innovation and firm growth over the business cycle

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  • Andrin Spescha
  • Martin Woerter

Abstract

This paper investigates how the macroeconomic business cycle impacts the empirical relation between innovation and firm growth. Based on representative panel data of Swiss firms ranging from 1996 to 2014, the paper finds that firms with innovations based on R&D activities show higher sales growth rates than non-innovative firms in periods dominated by economic recessions. This finding is in line with the idea that recessions play an important role in the adaptation process of the economy towards the innovative. In contrast, the paper finds that firms with innovations based on other, non-R&D innovation activities show higher sales growth rates than non-innovative firms in periods dominated by economic booms. Hence, while firms with innovations based on R&D activities are more resilient to business cycle fluctuations than non-innovative firms, firms with innovations based on other, non-R&D innovations activities are more sensitive to business cycle fluctuations than non-innovative firms.

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  • Andrin Spescha & Martin Woerter, 2019. "Innovation and firm growth over the business cycle," Industry and Innovation, Taylor & Francis Journals, vol. 26(3), pages 321-347, March.
    • Handle: RePEc:taf:indinn:v:26:y:2019:i:3:p:321-347
    DOI: 10.1080/13662716.2018.1431523
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    Cited by:

    1. Max Nathan & Anna Rosso, 2017. "Innovative events," Development Working Papers 429, Centro Studi Luca d'Agliano, University of Milano, revised 08 Apr 2019.
    2. Chei Bukari & Emm anuel Atta Anaman, 2021. "Corruption and firm innovation: a grease or sand in the wheels of commerce? Evidence from lower-middle and upper-middle income economies," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 11(2), pages 267-302, June.
    3. Qu, Yingge & Kumar, V. & Zhao, Yi, 2023. "A dynamic model of the contract length and early termination: The roles of technology evolution and pricing strategy," Journal of Business Research, Elsevier, vol. 167(C).
    4. Nathan, Max & Rosso, Anna, 2022. "Innovative events: product launches, innovation and firm performance," Research Policy, Elsevier, vol. 51(1).
    5. Thompson, Mark James & Woerter, Martin, 2020. "Competition and invention quality: Evidence from Swiss firms," Technological Forecasting and Social Change, Elsevier, vol. 156(C).
    6. Arkadiusz Świadek & Jadwiga Gorączkowska & Karolina Godzisz, 2022. "Conditions Driving Eco-Innovation in a Catching-Up Country—ICT vs. Industry in Poland," Energies, MDPI, vol. 15(15), pages 1-21, July.
    7. Ying Chen & Yabin Zhang, 2023. "Services Development, Technological Innovation, and the Embedded Location of the Agricultural Global Value Chain," Sustainability, MDPI, vol. 15(3), pages 1-14, February.
    8. Skare, Marinko & Gavurova, Beata & Rigelsky, Martin, 2023. "Innovation activity and the outcomes of B2C, B2B, and B2G E-Commerce in EU countries," Journal of Business Research, Elsevier, vol. 163(C).
    9. Ganotakis, Panagiotis & Angelidou, Sofia & Saridakis, Charalampos & Piperopoulos, Panagiotis & Dindial, Miguel, 2023. "Innovation, digital technologies, and sales growth during exogenous shocks," Technological Forecasting and Social Change, Elsevier, vol. 193(C).

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