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

Author

Listed:
  • Claudio Cozza

    (European Commission, Joint Research Centre (JRC), Institute for Prospective Technological Studies (IPTS))

  • Franco Malerba

    (Department of Economics, Bocconi University, Milan, Italy and KiTES Bocconi University, Milan, Italy)

  • Maria Luisa Mancusi

    (Department of Economics, Bocconi University, Milan, Italy and KiTES Bocconi University, Milan, Italy)

  • Giulio Perani

    (ISTAT - SSI/D (Italian National Institute of Statistics), Rome, Italy)

  • Andrea Vezzulli

    (Department of Management, University of Bologna, Bologna, Italy and KiTES Bocconi University, Milan, Italy)

Abstract

The main goal of this paper is to assess the impact of product innovation on the economic performance of firms operating in medium and high-tech industries in general and of SMEs in particular. Using information from a large and unique dataset on Italian firms we estimate, by means of propensity scores 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, 2009. "Innovation, profitability and growth in medium and high-tech manufacturing industries: Evidence from Italy," KITeS Working Papers 028, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised 2009.
    • Handle: RePEc:cri:cespri:kites28_wp
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    Cited by:

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    3. 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.
    4. 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.
    5. 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.
    6. Adah-Kole Emmanuel Onjewu & Sundas Hussain & Mohamed Yacine Haddoud, 2022. "The Interplay of E-commerce, Resilience and Exports in the Context of COVID-19," Information Systems Frontiers, Springer, vol. 24(4), pages 1209-1221, August.
    7. 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).
    8. 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.
    9. 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.
    10. 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.
    11. 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).
    12. 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.
    13. 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.
    14. 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.
    15. 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.
    16. 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.
    17. 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.
    18. 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).

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    More about this item

    Keywords

    innovation; profitability; growth; propensity score estimation;
    All these keywords.

    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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