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Innovation, profitability and growth in medium and high-tech manufacturing industries: evidence from Italy

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  • Claudio Cozza
  • Franco Malerba
  • Maria Luisa Mancusi
  • Giulio Perani
  • Andrea Vezzulli

Abstract

The main goal of this article is to assess the impact of product innovation on the economic performance of firms operating in Medium and High-Tech (M&HT) industries. Using information from a large and unique dataset on Italian firms we estimate, by means of Propensity Score (PS) matching methods, a positive and significant ‘innovation premium’ both in terms of profitability and growth (in the short-run) for those firms who introduced new innovative products. We also find that this innovation premium is particularly large for small firms and even more so when considering new established firms.

Suggested Citation

  • Claudio Cozza & Franco Malerba & Maria Luisa Mancusi & Giulio Perani & Andrea Vezzulli, 2012. "Innovation, profitability and growth in medium and high-tech manufacturing industries: evidence from Italy," Applied Economics, Taylor & Francis Journals, vol. 44(15), pages 1963-1976, May.
    • Handle: RePEc:taf:applec:44:y:2012:i:15:p:1963-1976
    DOI: 10.1080/00036846.2011.556594
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    2. Huang, Chia-Hui & Hou, Tony Chieh-Tse, 2019. "Innovation, research and development, and firm profitability in Taiwan: Causality and determinants," International Review of Economics & Finance, Elsevier, vol. 59(C), pages 385-394.
    3. Giuseppe Medda & Claudio Piga, 2014. "Technological spillovers and productivity in Italian manufacturing firms," Journal of Productivity Analysis, Springer, vol. 41(3), pages 419-434, June.
    4. Basit Shoaib Abdul & Kuhn Thomas & Ahmed Mumtaz, 2018. "The Effect of Government Subsidy on Non-Technological Innovation and Firm Performance in the Service Sector: Evidence from Germany," Business Systems Research, Sciendo, vol. 9(1), pages 118-137, March.
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    6. Jiawen Bai & Tianyu Bai & Chengyun Zhang, 2024. "Digitalization, new business Startups, information and Communication Technologies and product innovation: Evidence From China in the lens of sustainability," Evaluation Review, , vol. 48(1), pages 90-118, February.
    7. Yang, Xuehui & Zhang, Huirong & Lin, Shanlang & Zhang, Jiaping & Zeng, Jianlong, 2021. "Does high-speed railway promote regional innovation growth or innovation convergence?," Technology in Society, Elsevier, vol. 64(C).
    8. Caterina Santi & Pietro Santoleri, 2017. "Exploring the link between innovation and growth in Chilean firms," Small Business Economics, Springer, vol. 49(2), pages 445-467, August.
    9. Kalyvas, Antonios Nikolaos & Mamatzakis, Emmanuel, 2014. "Does business regulation matter for banks in the European Union?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 32(C), pages 278-324.
    10. Dirk Czarnitzki & Julie Delanote, 2015. "R&D policies for young SMEs: input and output effects," Small Business Economics, Springer, vol. 45(3), pages 465-485, October.
    11. D Hugh Whittaker & Benjamin Fath & Antje Fiedler, 2020. "Open to competition? Competitive density and the growth of young New Zealand ventures," Australian Journal of Management, Australian School of Business, vol. 45(2), pages 343-358, May.
    12. Duan, Yunlong & Wang, Wannan & Zhou, Wei, 2020. "The multiple mediation effect of absorptive capacity on the organizational slack and innovation performance of high-tech manufacturing firms: Evidence from Chinese firms," International Journal of Production Economics, Elsevier, vol. 229(C).
    13. Doran, Justin & Ryan, Geraldine, 2019. "Does nanotechnology research generate an innovation premium over other types of research? Evidence from Ireland," Technology in Society, Elsevier, vol. 59(C).
    14. Ebrahim Endris & Andualem Kassegn, 2023. "Profitability of Agricultural Micro and Small-Scale Enterprise in North Wollo Zone, Amhara Regional State, Ethiopia," SAGE Open, , vol. 13(2), pages 21582440231, May.
    15. Wambua, Peter Maingi & Stephen M. A. Muathe, 2021. "Effect of Innovation Strategies on Performance of Real Estates Firms in Mavoko Sub-County, Kenya," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 5(6), pages 198-206, June.
    16. Eggert, Andreas & Thiesbrummel, Christoph & Deutscher, Christian, 2014. "Differential effects of product and service innovations on the financial performance of industrial firms," jbm - Journal of Business Market Management, Free University Berlin, Marketing Department, vol. 7(3), pages 380-405.
    17. Le Thuy Ngoc An & Yoshiyuki Matsuura & Mohammad Ali Tareq & Nurhayati Md Issa & Norliza Che-Yahya, 2023. "Impact of Patent Signal on Firm’s Performance at IPO: An Empirical Analysis of Japanese Firms," Economies, MDPI, vol. 11(4), pages 1-22, March.
    18. Luca Ferrucci & Antonio Picciotti, 2013. "Il gruppo Margaritelli: dai sentieri della crescita a quelli della ristrutturazione e del Turnaround," MERCATI & COMPETITIVIT?, FrancoAngeli Editore, vol. 2013(4), pages 15-35.

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    More about this item

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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