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Concentration of Innovation Investments Along the Business Cycle

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  • Pedro Mendi

    (Universidad de Navarra)

Abstract

This paper addresses the question of the impact of demand reductions on firms’ concentration of innovation investments. Evidence is drawn from the PITEC database, which includes a stable panel of firms yearly surveyed in the 2006–2013 period. Controlling for selection, firms in the sample are found, following a demand decrease, to reduce the number of innovation investment categories. The effect of demand decreases is stronger for small firms. No evidence is found of exporting being a moderator of the relationship between demand fluctuations and the concentration of innovation investments. These findings suggest that downturns reduce the diversity in the innovation of firms, which could potentially have long-lasting effects on their innovation activities, and, ultimately, on their competitiveness.

Suggested Citation

  • Pedro Mendi, 2024. "Concentration of Innovation Investments Along the Business Cycle," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 2856-2873, March.
    • Handle: RePEc:spr:jknowl:v:15:y:2024:i:1:d:10.1007_s13132-023-01267-z
    DOI: 10.1007/s13132-023-01267-z
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    More about this item

    Keywords

    Innovation; Concentration; Firm size; Exports; Great Recession; Spain;
    All these keywords.

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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