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Innovation Persistence and Firm Growth: Do They Go Hand in Hand?

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  • Amaia Altuzarra

    (University of the Basque Country UPV/EHU
    Faculty of Economics and Business Administration)

Abstract

This study empirically examines the relationship between persistence in innovation and firm growth in Spanish manufacturing firms during the period 2005–2016. We include a number of input and output indicators for innovation persistence (R&D, product and process innovation, and patent filings) and use the changes in firms’ annual sales as a measure of firm growth. Differences in how innovation persistence affects firm growth are also explored for the subsets of small and large firms. We employ conditioned quantile regression (CQR) models to see how innovation persistence affects firms located at different quantiles of the firm growth distribution and unconditional quantile regression (UQR) which allow us to compare similar firms in terms of their propensity to innovate on a persistent basis. Our findings are sensitive to the choice of econometric approach. Overall, results indicate that the type of innovation persistence does influence growth. Persistence in R&D activities does not play any relevant role whereas persistence in innovation outputs (product, process, and patents) is a driver for growth only in firms with medium-to-low sales growth rates.

Suggested Citation

  • Amaia Altuzarra, 2024. "Innovation Persistence and Firm Growth: Do They Go Hand in Hand?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(4), pages 18590-18616, December.
    • Handle: RePEc:spr:jknowl:v:15:y:2024:i:4:d:10.1007_s13132-024-01809-z
    DOI: 10.1007/s13132-024-01809-z
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    More about this item

    Keywords

    Innovation persistence; Firm growth; Patents; Product innovation; Process innovation; R&D; Quantile regression;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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