RandD, firm growth and the role of innovation persistence: an analysis of Finnish SMEs and large firms

RandD investment and growth in SMEs and large firms relate in a complex way. This paper analyses what role persistence of innovation output plays in shaping that relationship. We apply a vector auto-regression model to Finnish firm-level data and summarize the lead-lag relationship and complex co-mo...

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Bibliographic Details
Published in:Small business economics 2014-12, Vol.43 (4), p.767-785
Main Author: Deschryvere, Matthias
Format: Article
Language:English
Subjects:
Finland
Growth rates
Innovation
Product development
Research and development
Sales
Small and medium sized enterprises
Online Access:Get full text
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Summary:RandD investment and growth in SMEs and large firms relate in a complex way. This paper analyses what role persistence of innovation output plays in shaping that relationship. We apply a vector auto-regression model to Finnish firm-level data and summarize the lead-lag relationship and complex co-movements of RandD growth and firm growth series. We found only continuous product and process innovators to have positive associations between RandD growth and sales growth. Also the associations between sales growth and subsequent RandD growth were stronger for continuous innovators than for occasional innovators, but only for product innovators. In the case of process innovators it is the occasional innovators that exhibit a stronger association between sales growth and subsequent RandD growth. In addition, our results vary between large and small firms. We express the need for further research on innovation dynamics and growth of SMEs analysing the interactions between different innovation activities. Reprinted by permission of Springer
ISSN:0921-898X
DOI:10.1007/s11187-014-9559-3