Cross-sectoral differences in the drivers of innovation

Cross-sectoral differences in the drivers of innovation PurposeThe purpose of this paper is to analyse differences in the drivers of firm innovation performance across sectors. The literature often makes the assumption that firms in different sectors differ in their propensity to innovate but not in the drivers of innovation. The authors empirically assess whether this assumption is accurate through a series of econometric estimations and tests.Design/methodology/approachThe data used are derived from the Irish Community Innovation Survey 2004-2006. A series of multivariate probit models are estimated and the resulting coefficients are tested for parameter stability across sectors using likelihood ratio tests.FindingsThe results indicate that there is a strong degree of heterogeneity in the drivers of innovation across sectors. The determinants of process, organisational, new to firm and new to market innovation varies across sectors suggesting that the pooling of sectors in an innovation production function may lead to biased inferences.Research limitations/implicationsThe implications of the results are that innovation policies targeted at stimulating innovation need to be tailored to particular industries. One size fits all policies would seem inappropriate given the large degree of heterogeneity observed across the drivers of innovation in different sectors.Originality/valueThe value of this paper is that it provides an empirical test as to whether it is suitable to group sectoral data when estimating innovation production functions. Most papers simply include sectoral dummies, implying that only the propensity to innovate differs across sectors and that the slope of the coefficient estimates are in fact consistent across sectors. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Economic Studies Emerald Publishing

Cross-sectoral differences in the drivers of innovation

Journal of Economic Studies, Volume 43 (5): 30 – Oct 10, 2016

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0144-3585
DOI
10.1108/JES-10-2014-0171
Publisher site
See Article on Publisher Site

Abstract

PurposeThe purpose of this paper is to analyse differences in the drivers of firm innovation performance across sectors. The literature often makes the assumption that firms in different sectors differ in their propensity to innovate but not in the drivers of innovation. The authors empirically assess whether this assumption is accurate through a series of econometric estimations and tests.Design/methodology/approachThe data used are derived from the Irish Community Innovation Survey 2004-2006. A series of multivariate probit models are estimated and the resulting coefficients are tested for parameter stability across sectors using likelihood ratio tests.FindingsThe results indicate that there is a strong degree of heterogeneity in the drivers of innovation across sectors. The determinants of process, organisational, new to firm and new to market innovation varies across sectors suggesting that the pooling of sectors in an innovation production function may lead to biased inferences.Research limitations/implicationsThe implications of the results are that innovation policies targeted at stimulating innovation need to be tailored to particular industries. One size fits all policies would seem inappropriate given the large degree of heterogeneity observed across the drivers of innovation in different sectors.Originality/valueThe value of this paper is that it provides an empirical test as to whether it is suitable to group sectoral data when estimating innovation production functions. Most papers simply include sectoral dummies, implying that only the propensity to innovate differs across sectors and that the slope of the coefficient estimates are in fact consistent across sectors.

Journal

Journal of Economic StudiesEmerald Publishing

Published: Oct 10, 2016

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