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Competition effect on innovation and productivity - The Portuguese case

Author

Listed:
  • Anabela Santos

    (Université Libre de Bruxelles, iCite)

  • Michele Cincera

    (Université Libre de Bruxelles, iCite and ECARES)

  • Paulo Neto

    (Universidade de Évora – Departamento de Economia, UMPP, CEFAGE-UÉ and CIEO-UALG)

  • Maria Manuel Serrano

    (Universidade de Évora – Departamento de Sociologia, UMPP and SOCIUS-CSG/ISEG-UL)

Abstract

The aim of the present paper is to assess the effect of competition on innovation (patent applications) and on productivity (Total Factor Productivity and Labour Productivity), using data from 654 Portuguese firms, according to 208 NACE 4-digits sectors, and over the period 2007 to 2015. For this purpose, two different methodological approaches were used, a Poisson regression model for the patent function and a log-log fixed effect model for the productivity function. The results reveal that, on average, competition has a negative, U-shaped form effect on innovation in the short term, and a positive effect in the medium-long term. Nevertheless, the model focusing only on manufacturing sectors shows some differences from the model considering all economic activities, namely a linear positive effect of competition on innovation. Concerning the effect of competition on productivity, a positive effect on Total Factor Productivity emerged from the analysis, while for labour productivity a negative one prevails.

Suggested Citation

  • Anabela Santos & Michele Cincera & Paulo Neto & Maria Manuel Serrano, 2018. "Competition effect on innovation and productivity - The Portuguese case," GEE Papers 0102, Gabinete de Estratégia e Estudos, Ministério da Economia, revised May 2018.
    • Handle: RePEc:mde:wpaper:0102
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    File URL: https://www.gee.gov.pt//RePEc/WorkingPapers/GEE_PAPERS_102.pdf
    File Function: First version, 2018
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    Citations

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    Cited by:

    1. Benavente, Jose Miguel & Zuniga, Pluvia, 2021. "How does market competition affect firm innovation incentives in emerging countries? Evidence from Latin American firms," MERIT Working Papers 2021-024, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    2. Rut Atayde & Rafael Garduño & Eduardo Robles & Pluvia Zúñiga, 2021. "Market competition and firm productivity and innovation: Responses in Mexican manufacturing industries," Regional Science Policy & Practice, Wiley Blackwell, vol. 13(4), pages 1185-1214, August.
    3. Cincera, Michele & Ince, Ela & Santos, Anabela, 2024. "Revisiting the innovation-competition nexus: Evidence from worldwide manufacturing and service industries," Structural Change and Economic Dynamics, Elsevier, vol. 69(C), pages 586-603.
    4. Benavente, José Miguel & Zuñiga, Pluvia, 2022. "How Does Market Competition Affect Firm Innovation Incentives in Emerging Countries? Evidence from Chile and Colombia," IDB Publications (Working Papers) 12198, Inter-American Development Bank.
    5. Anabela Marques Santos & Francesco Molica & Carlos Torrecilla Salinas, 2024. "EU-funded investment in Artificial Intelligence and regional specialization," GEE Papers 181, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Jul 2024.

    More about this item

    Keywords

    Competition; Innovation; Productivity.;
    All these keywords.

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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