Research, Innovation and Productivity: An Econometric Analysis at the Firm Level

Posted: 11 May 2004

See all articles by Bruno Crepon

Bruno Crepon

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE); IZA Institute of Labor Economics

Emmanuel Duguet

ERUDITE

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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Abstract

This paper studies the link between productivity, innovation and research at the firm level. We introduce three new features: (i) A structural model that explains productivity by innovation output, and innovation output by research investments; (ii) New data on French manufacturing firms, including the number of European patents and the percentage share of innovative sales, a well as firm-level demand pull and technology push indicators; (iii) Econometric methods which correct for selectivity and simultaneity biases and take into account the statistical features of the available data: only a small proportion of firms engage in research activities and/or apply for patents; productivity, innovation and research and endogenously determined; research investment and capital are truncated variables, patents are count data and innovative sales are interval data. We find that using more widespread methods, and the more usual data and model specification, may lead to sensibly different estimates. We find in particular that simultaneity tends to interact with selectivity, and that both sources of biases must be taken into account together. However, our main results are consistent with many of the stylized facts of the empirical literature. The probability of engaging research (R&D) for a firm increases with its size (number of employees), its market share and diversification, and with the demand pull and technology push indicators. The research effort (R&D capital intensity) of a firm engaged in research increases with the same variables, except for size (its research capital being strictly proprotional to size). The firm innovation output, as measured by patent numbers or innovative sales, rises with its research effort and with the demand pull and technology indicators, either directly or indirectly through their effects on research. Finally, firms productivity correlates positively with a higher innovation output, even when controlling for the skill composition of labor as well as for physical capital intensity.

Keywords: Research, innovation, patent, productivity, demand conditions, technological opportunities, system of limited dependent and qualitative variables, asymptotic least squares

JEL Classification: C31, C34, L60, O31, O33

Suggested Citation

Crepon, Bruno and Duguet, Emmanuel and Mairesse, Jacques, Research, Innovation and Productivity: An Econometric Analysis at the Firm Level. Economics of Innovation and New Technology, Vol. 7, No. 2, pp. 115-158, 1998. Available at SSRN: https://ssrn.com/abstract=544884

Bruno Crepon

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE) ( email )

92245 Malakoff Cedex
France

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Emmanuel Duguet (Contact Author)

ERUDITE ( email )

Mail des Mèches
61 avenue du Général de Gaulle
Créteil Cedex, 94010
France

Jacques Mairesse

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

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

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

Keizer Karelplein 19
6211 TC Maastricht
Netherlands

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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