Persistence of Innovation and Patterns of Firm Growth

Posted: 3 Nov 2021

See all articles by Dario Guarascio

Dario Guarascio

Istituto Nazionale per l’Analisi delle Politiche Pubbliche (INAPP)

Federico Tamagni

Scuola Superiore Sant'Anna di Pisa

Date Written: April 1, 2019

Abstract

In this work we exploit a long-in-time panel of Spanish manufacturing firms observed during the period 1990–2012 to examine the long-run contribution of innovation persistence to sales growth and market share dynamics. We examine two main research questions. First, do persistent innovators grow more than other firms? Second, do persistent innovators show more persistent growth patterns over time compared to other firms? We find negative answers to both questions: firms that persistently innovate over the first decade, do not grow more and do not display more persistent growth dynamics in the succeeding years, regardless of whether innovation persistence is defined in terms of R&D, patenting activity, or product or process innovation. These findings lend support to luck and random theories of firm growth, in turn challenging innovation persistence theories commonly suggesting that persistent innovators enjoy large and sustained comparative advantages.

Keywords: Innovation persistence, Firm growth and market success, Innovation inputs and outputs, Product and process innovation, R&D, Patents

JEL Classification: D22, O30, C21

Suggested Citation

Guarascio, Dario and Tamagni, Federico, Persistence of Innovation and Patterns of Firm Growth (April 1, 2019). Research Policy, Vol. 48, No. 6, 2019, Available at SSRN: https://ssrn.com/abstract=3948356

Dario Guarascio

Istituto Nazionale per l’Analisi delle Politiche Pubbliche (INAPP) ( email )

Corso d’Italia, 33
Roma, 00198
Italy

Federico Tamagni (Contact Author)

Scuola Superiore Sant'Anna di Pisa ( email )

Institute of Economics
Piazza Martiri della Liberta, n. 33
Pisa, Pisa 56127
Italy

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