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Is the demand-pull driver equally crucial for product vs process innovation?

Author

Listed:
  • Dawid, Herbert

    (Bielefeld University)

  • Pellegrino, Gabriele

    (Ecole polytechnique federale de Lausanne)

  • Vivarelli, Marco

    (UNU-MERIT, Maastricht University, IZA, Bonn, and Universita Cattolica del Sacro Cuore, Institute of Economic Policy, Milano)

Abstract

While the extant innovation literature has provided extensive evidence of the so-called "demand-pull" effect, the possible diverse impact of demand evolution on product vs process innovation activities has not been yet investigated. This paper develops a formal model predicting a larger inducing impact of past sales in fostering product rather than process innovation. This prediction is then tested through a dynamic microeconometric model, controlling for R&D persistence, sample selection, observed and unobservable individual firm effects and time and sectoral peculiarities. Results are consistent with the model and suggest that an expansionary economic policy may benefit the diffusion of new products or even the emergence of entire new sectors.

Suggested Citation

  • Dawid, Herbert & Pellegrino, Gabriele & Vivarelli, Marco, 2017. "Is the demand-pull driver equally crucial for product vs process innovation?," MERIT Working Papers 2017-035, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    • Handle: RePEc:unm:unumer:2017035
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    References listed on IDEAS

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    More about this item

    Keywords

    technological change; R&D; demand-pull innovation; dynamic two tobit;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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