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Why Size Maters: Investigating the Drivers of Innovation and Economic Performance in New Zealand using the Business Operation Survey

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  • Les Oxley

    (University of Waikato)

  • Shangqin Hong

    (University of Canterbury)

  • Philip McCann

    (University of Groningen)

Abstract

The economic performance of the New Zealand economy is something of an enigma. Although ranked number one (of 144 countries) for four important 'growth fundamentals' New Zealand is 'middle of the pack' when it comes to economic growth, productivity and innovation. So what is missing in this story of New Zealand performance? Using three iterations (2005, 2007 and 2009) of the Business Operations Survey, the paper seeks to answer the question using a bivariate probit regression (biprobit) approach applied to samples in excess of 2,000 unit record observations of New Zealand firms. The results suggest that factors such as firm size, high perceived quality product, investment/R&D capability, major technology change, application of formal IP protection and new export markets are systematically and positively related to innovation; while many external issues such as those related to geography, market structure, business environment, appear to have little influence. At the firm level, innovations in New Zealand are highly dependent on the firms’ internal ability to develop new technologies and market demand. (Small) size does matter in New Zealand where ultimately government may need to be involved to maintain a viable (minimum) scale for domestic R&D.

Suggested Citation

  • Les Oxley & Shangqin Hong & Philip McCann, 2013. "Why Size Maters: Investigating the Drivers of Innovation and Economic Performance in New Zealand using the Business Operation Survey," Working Papers in Economics 13/13, University of Waikato.
    • Handle: RePEc:wai:econwp:13/13
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    Cited by:

    1. Adam Jaffe & Trinh Le, 2015. "The impact of R&D subsidy on innovation: a study of New Zealand firms," Working Papers 15_08, Motu Economic and Public Policy Research.
    2. Simon Wakeman & Trinh Le, 2015. "Measuring the innovative activity of New Zealand firms," Working Papers 2015/02, New Zealand Productivity Commission.

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    Keywords

    innovation; New Zealand Business Operations Survey (BOS); new economic geography (NEG).;
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