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The Relationship Between Firm Size and Innovation Activity: A Double Decision Approach

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  • Ester Martinez-Ros
  • Jose Labeaga

Abstract

The main purpose of this paper is to analyse the relationship between firm size and innovation activity using Spanish data at firm level corresponding to the manufacturing sector for the period 1990-93. This exercise is different to previous applications because we allow for different size effects in the decision to innovate and the innovation count equation, in the context of a double-hurdle approach. Several tests confirm the hurdle negbin model. We find that firm size is a relevant factor, although size effects are different in both decisions. A robust result from the different specifications estimated is the rejection of the Gilbert and Newbery hypotheses. We find out that the behaviour of firm size is neither linear in the decision nor in thc count equation. We also provide additional, and sometimes different, evidence to previous Spanish studies on R&D.

Suggested Citation

  • Ester Martinez-Ros & Jose Labeaga, 2002. "The Relationship Between Firm Size and Innovation Activity: A Double Decision Approach," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 11(1), pages 35-50.
    • Handle: RePEc:taf:ecinnt:v:11:y:2002:i:1:p:35-50
    DOI: 10.1080/10438590210894
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    Cited by:

    1. José M. Labeaga & Ester Martínez Ros, "undated". "Persistence and ability in the innovation decisions," Working Papers 2005-16, FEDEA.
    2. Patrik Karpaty & Patrik Gustavsson Tingvall, 2015. "Offshoring and Home Country R&D," The World Economy, Wiley Blackwell, vol. 38(4), pages 655-676, April.
    3. Ana Slavec, 2022. "Underrated Innovativeness of Micro-Enterprises Compared to Small to Medium Enterprises in the Slovenian Forest-Wood Sector," Sustainability, MDPI, vol. 14(4), pages 1-17, February.
    4. Kuntner, Tobias & Teichert, Thorsten, 2017. "Price Promotions: Enablers or Obstacles for Brand-Led Innovation Adoption – A Double-Hurdle Approach," EconStor Preprints 157297, ZBW - Leibniz Information Centre for Economics.
    5. Koski, Heli & Marengo, Luigi & Mäkinen, Iiro, 2009. "Managerial Practices, Performance and Innovativeness: Some Evidence from Finnish Manufacturing," Discussion Papers 1176, The Research Institute of the Finnish Economy.
    6. Koski, Heli, 2013. "ICT outsourcing, user-driven and open innovation strategies in the generation of new data-based solution," ETLA Working Papers 7, The Research Institute of the Finnish Economy.
    7. Koski, Heli, 2012. "The Role of Data and Knowledge in Firms Service and Product Innovation," Discussion Papers 1272, The Research Institute of the Finnish Economy.
    8. Rajeev K. Goel & Michael A. Nelson, 2022. "Employment effects of R&D and process innovation: evidence from small and medium-sized firms in emerging markets," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(1), pages 97-123, March.
    9. Heli Koski & Luigi Marengo & Iiro Mäkinen, 2009. "Firm size, managerial practices and innovativeness: some evidence from Finnish manufacturing," LEM Papers Series 2009/01, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    10. Ester Martínez Ros & Vicente Salas Fumás, "undated". "The effect of innovation activity on innovating quasi-rents: an empirical application," Studies on the Spanish Economy 03, FEDEA.
    11. Germán Daniel Lambardi & Jhon James Mora, 2014. "Determinantes de la innovación en productos o procesos: el caso colombiano," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 16(31), pages 251-262, July-Dece.
    12. Megersa Debela Daksa & Molla Alemayehu Yismaw & Sisay Diriba Lemessa & Shemelis Kebede Hundie, 2018. "Enterprise innovation in developing countries: an evidence from Ethiopia," Journal of Innovation and Entrepreneurship, Springer, vol. 7(1), pages 1-19, December.

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