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Innovation and firm-level persistent profitability: a Schumpeterian framework

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  • Peter W Roberts

    (Columbia Business School, Columbia University, New York, NY, USA)

Abstract

Studies of firm-level profit dynamics tend to attribute the variance in profit persistence to variability in the extent to which imitative pressures are resisted. This monopoly-based explanation of persistent profitability implicitly assumes a one-to-one correspondence between firm-level and product-level profit dynamics. Following Schumpeter, this paper begins to develop a framework for firm-level profit persistence that embraces product innovation, competitor imitation, and, more importantly, the prospect that several product innovations may be embodied within a single firm. Such an approach opens the door for an innovation-based explanation of profit persistence to accompany the monopoly-based arguments that are typically offered. Copyright © 2001 John Wiley & Sons, Ltd.

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  • Peter W Roberts, 2001. "Innovation and firm-level persistent profitability: a Schumpeterian framework," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 22(4-5), pages 239-250.
    • Handle: RePEc:wly:mgtdec:v:22:y:2001:i:4-5:p:239-250
    DOI: 10.1002/mde.1018
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    References listed on IDEAS

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    Cited by:

    1. Wladimir Raymond & Pierre Mohnen & Franz Palm & Sybrand Schim van der Loeff, 2010. "Persistence of Innovation in Dutch Manufacturing: Is It Spurious?," The Review of Economics and Statistics, MIT Press, vol. 92(3), pages 495-504, August.
    2. Stoneman, Paul, 2011. "Soft Innovation: Economics, Product Aesthetics, and the Creative Industries," OUP Catalogue, Oxford University Press, number 9780199697021.
    3. Barra Novoa, Rodrigo, 2022. "Appreciative theorization of gazelle companies assisted by the Sercotec Arica Business Center," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 4(1), pages 1-19.
    4. Tammy L. Madsen & Michael J. Leiblein, 2015. "What Factors Affect the Persistence of an Innovation Advantage?," Journal of Management Studies, Wiley Blackwell, vol. 52(8), pages 1097-1127, December.
    5. Rodolphe Durand & Robert M. Grant & Tammy L. Madsen & Joshua Gans & Michael D. Ryall, 2017. "Value capture theory: A strategic management review," Strategic Management Journal, Wiley Blackwell, vol. 38(1), pages 17-41, January.
    6. Tarziján, Jorge & Brahm, Francisco & Daiber, Luis Felipe, 2008. "Entrepreneurial profitability and persistence: Chile versus the U.S.A," Journal of Business Research, Elsevier, vol. 61(6), pages 599-608, June.
    7. Paul M. Vaaler & Gerry McNamara, 2010. "Are Technology-Intensive Industries More Dynamically Competitive? No and Yes," Organization Science, INFORMS, vol. 21(1), pages 271-289, February.
    8. Rodrigo Rodrigo Barra Novoa Barra Novoa, 2022. "An appreciative theorizing approach to gazelle enterprises assisted by the Arica Business Center," Post-Print hal-03916747, HAL.
    9. Boris Durisin & Riccardo Lizzola, 2009. "Same as it ever was, really? An empirical study on the sustainability of superior performance of public companies in the US and in Europe from 1987 to 2007," KITeS Working Papers 011, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised 2009.
    10. Bernd Görzig & Martin Gornig, 2013. "Intangibles, Can They Explain the Dispersion in Return Rates?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 59(4), pages 648-664, December.
    11. Luiz Andrade & Catherine Sermet & Sylvain Pichetti, 2016. "Entry time effects and follow-on drug competition," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 17(1), pages 45-60, January.
    12. Juan Carlos Bou & Albert Satorra, 2003. "The persistence of abnormal returns at industry and firm levels," Economics Working Papers 729, Department of Economics and Business, Universitat Pompeu Fabra.
    13. Kathryn Rudie Harrigan & Maria Chiara DiGuardo, 2017. "Sustainability of patent-based competitive advantage in the U.S. communications services industry," The Journal of Technology Transfer, Springer, vol. 42(6), pages 1334-1361, December.
    14. Ha, Kyoungnam Catherine & Song, Reo & Erickson, Gary, 2021. "Multidimensional brand equity and asymmetric risk," International Journal of Research in Marketing, Elsevier, vol. 38(3), pages 593-614.
    15. Stefano Brusoni & Elena Cefis & Luigi Orsenigo, 2006. "Innovate or Die? A critical review of the literature on innovation and performance," KITeS Working Papers 179, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Sep 2006.
    16. Ali Murad Syed & Zahid Riaz & Abdul Waheed, 2016. "Innovation, Firm Performance And Riskiness: Evidence From The Leading Worldwide Innovative Firms," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 20(07), pages 1-19, October.
    17. David Ratigan & Peter A. Zaleski, 2024. "The Drucker indexes and profitability: a first look," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 59(2), pages 78-85, April.
    18. Luis Enrique Valdez Juarez, 2017. "Corporate Social Responsibility: Its Effect on SMEs," Journal of Management and Sustainability, Canadian Center of Science and Education, vol. 7(3), pages 75-89, September.
    19. Ljiljana Božić & Valerija Botrić, 2011. "Innovation Propensity in the EU Candidate Countries," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 18(2), pages 405-417, December.
    20. Qin Yang & Crystal Jiang, 2007. "Location advantages and subsidiaries’ R&D activities in emerging economies: Exploring the effect of employee mobility," Asia Pacific Journal of Management, Springer, vol. 24(3), pages 341-358, September.

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