Heterogeneous Innovation Persistence: Evidence From Uruguayan Firms

This research addresses the persistence in innovation results for Uruguayan firms in the period 2004 –2015. Using panel data from the Survey of Innovation Activities, persistence in products and process innovations is estimated, investigating also heterogeneous effects in size and sectors. The estimations were defined according to the methodology proposed by Wooldridge (2005) to control for firms’ individual heterogeneity. The findings indicate that innovation results are not persistent in Uruguayan firms, showing null and negative effects of previous innovation on future innovation, indicating that the probability of innovating in t is non-affected or reduced for firms that innovated in t-1. Delving into these results, which is not usual in the literature in the field, the effects of the t-2 lag are estimated. Results indicate that innovating in t-2 increases the likelihood of persistence in innovation in t. This fact suggests that the Uruguayan firms innovate intermittently, contrary to what the literature states, arguably following an uneven innovation trajectory. Such results distance from empirical evidence for developed countries; although, they are in line with results for countries in the region and the case of Portugal. The effects may be related to the high costs of innovating continuously and the scarce relation with the environment, factors in which Uruguayan firms are lagging in relation to firms in developed countries.