Innovation and Productivity in SMEs - Empirical Evidence for Italy

49 Pages Posted: 17 Dec 2009

See all articles by Bronwyn H. Hall

Bronwyn H. Hall

University of California at Berkeley; National Bureau of Economic Research (NBER); Institute for Fiscal Studies (IFS); Max Planck Institute for Innovation and Competition

Francesca Lotti

Bank of Italy

Jacques Mairesse

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST); Maastricht University - United Nations and Maastricht Economic Research Institute on Innovation and Technology (UNU-MERIT); National Bureau of Economic Research (NBER)

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Date Written: June 10, 2009

Abstract

Innovation in SMEs exhibits some peculiar features that most traditional indicators of innovation activity do not capture. Therefore, in this paper, we develop a structural model of innovation which incorporates information on innovation success from firm surveys along with the usual R&D expenditures and productivity measures. We then apply the model to data on Italian SMEs from the “Survey on Manufacturing Firms” conducted by Mediocredito-Capitalia covering the period 1995-2003. The model is estimated in steps, following the logic of firms’ decisions and outcomes. We find that international competition fosters R&D intensity, especially for high-tech firms. Firm size, R&D intensity, along with investment in equipment enhances the likelihood of having both process and product innovation. Both these kinds of innovation have a positive impact on firm’s productivity, especially process innovation. Among SMEs, larger and older firms seem to be less productive.

Keywords: R&D, innovation, productivity, SMEs, Italy

JEL Classification: L6, O31, O33

Suggested Citation

Hall, Bronwyn H. and Lotti, Francesca and Mairesse, Jacques, Innovation and Productivity in SMEs - Empirical Evidence for Italy (June 10, 2009). Bank of Italy Temi di Discussione (Working Paper) No. 718. Available at SSRN: https://ssrn.com/abstract=1523220 or http://dx.doi.org/10.2139/ssrn.1523220

Bronwyn H. Hall (Contact Author)

University of California at Berkeley ( email )

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States

HOME PAGE: http://emlab.berkeley.edu/users/bhhall/index.html

National Bureau of Economic Research (NBER)

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Institute for Fiscal Studies (IFS)

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Max Planck Institute for Innovation and Competition

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Francesca Lotti

Bank of Italy ( email )

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00184 Roma
Italy

Jacques Mairesse

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST) ( email )

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France

Maastricht University - United Nations and Maastricht Economic Research Institute on Innovation and Technology (UNU-MERIT)

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Netherlands

National Bureau of Economic Research (NBER)

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United States

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