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Innovation, investment and productivity: evidence from Spanish firms

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  • Omar LICANDRO
  • Reyes MAROTO
  • Luis A. PUCH

Abstract

In this paper we analyze the role of replacement and innovation activity in shaping investment behavior and labor productivity in a panel of Spanish manufacturing firms from 1990 to 2001. Investment is concentrated about large investment episodes, or investment spikes, whose nature varies by observable firm characteristics. We find evidence of replacement activity as a determinant of investment spikes for those firms that are not involved in process innovation nor plant expansion. Then we explore how large investment episodes transmit into the evolution of labor productivity under different innovative strategies. We find that expansionary and innovative firms increase their productivity after an investment spike. However, long learning curves seems to be associated with innovative investments.

Suggested Citation

  • Omar LICANDRO & Reyes MAROTO & Luis A. PUCH, 2004. "Innovation, investment and productivity: evidence from Spanish firms," Economics Working Papers ECO2004/07, European University Institute.
    • Handle: RePEc:eui:euiwps:eco2004/07
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    References listed on IDEAS

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    1. Øivind Anti Nilsen & Fabio Schiantarelli, 2003. "Zeros and Lumps in Investment: Empirical Evidence on Irreversibilities and Nonconvexities," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 1021-1037, November.
    2. Mark E. Doms & Timothy Dunne, 1998. "Capital Adjustment Patterns in Manufacturing Plants," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(2), pages 409-429, April.
    3. John Haltiwanger & Russell Cooper & Laura Power, 1999. "Machine Replacement and the Business Cycle: Lumps and Bumps," American Economic Review, American Economic Association, vol. 89(4), pages 921-946, September.
    4. Sakellaris, Plutarchos, 2004. "Patterns of plant adjustment," Journal of Monetary Economics, Elsevier, vol. 51(2), pages 425-450, March.
    5. J. Bradford Jensen & Robert H. McGuckin & Kevin J. Stiroh, 2001. "The Impact Of Vintage And Survival On Productivity: Evidence From Cohorts Of U.S. Manufacturing Plants," The Review of Economics and Statistics, MIT Press, vol. 83(2), pages 323-332, May.
    6. Laura Power, 1998. "The Missing Link: Technology, Investment, And Productivity," The Review of Economics and Statistics, MIT Press, vol. 80(2), pages 300-313, May.
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    Citations

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    Cited by:

    1. Laia Castany & Enrique López-Bazo & Rosina Moreno, 2007. "Decomposing differences in total factor productivity across firm size," Working Papers XREAP2007-01, Xarxa de Referència en Economia Aplicada (XREAP), revised Mar 2007.
    2. Bruno de Oliveira Cruz & Raouf Boucekkine, 2006. "Technological Progress and Investment Microeconomic Foundations and Macroeconomic Implications," Discussion Papers 1170, Instituto de Pesquisa Econômica Aplicada - IPEA.
    3. Laia Castany, 2008. "The Role of Firm Size in Training Provision Decisions: evidence from Spain," Economics of Education Working Paper Series 0028, University of Zurich, Department of Business Administration (IBW).
    4. Marco Grazzi & Nadia Jacoby & Tania Treibich, 2013. "Dynamics of Investment and Firm Performance: Comparative Evidence from Manufacturing Industries," GREDEG Working Papers 2013-09, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    5. Vanja Grozdić & Branislav Marić & Mladen Radišić & Jarmila Šebestová & Marcin Lis, 2020. "Capital Investments and Manufacturing Firms’ Performance: Panel-Data Analysis," Sustainability, MDPI, vol. 12(4), pages 1-18, February.
    6. Laia Castany & Enrique Lopez-Bazo & Rosina Moreno, 2007. "Do innovation and human capital explain the productivity gap between small and large firms?," IREA Working Papers 200716, University of Barcelona, Research Institute of Applied Economics, revised Nov 2007.
    7. Laia Castany, 2010. "The role of size in firms' training: evidence from Spain," International Journal of Manpower, Emerald Group Publishing Limited, vol. 31(5), pages 563-584, August.
    8. Loic Levi & Obafemi Philippe Koutchade & Laure Latruffe & Aude Ridier, 2018. "Spatial effects in investment decisions: Evidence from French dairy farms," Post-Print hal-02024077, HAL.
    9. Laia Castany, 2008. "The Role of Firm Size in Training Provision Decisions: evidence from Spain," IREA Working Papers 200808, University of Barcelona, Research Institute of Applied Economics, revised Jun 2008.
    10. Kapelko, Magdalena & Oude Lansink, Alfons & Stefanou, Spiro E., 2015. "Analyzing the impact of investment spikes on dynamic productivity growth," Omega, Elsevier, vol. 54(C), pages 116-124.
    11. Omar Licandro & Reyes Maroto & Luis A. Puch, "undated". "Patterns of Investment in Spanish Manufacturing Firms," Studies on the Spanish Economy 185, FEDEA.
    12. José A. Herce, "undated". "Could this ever happen in Spain? Economic and policy aspects of a SARS-like episode," Working Papers 2004-09, FEDEA.
    13. Yu, Xiaodan & Dosi, Giovanni & Grazzi, Marco & Lei, Jiasu, 2017. "Inside the virtuous circle between productivity, profitability, investment and corporate growth: An anatomy of Chinese industrialization," Research Policy, Elsevier, vol. 46(5), pages 1020-1038.

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    More about this item

    Keywords

    investment spikes; machine replacement; technological innovation; labor productivity; learning effects;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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