Innovation Complementarity and Scale of Production

33 Pages Posted: 12 Aug 2004

See all articles by Eugenio J. Miravete

Eugenio J. Miravete

University of Texas at Austin; Centre for Economic Policy Research (CEPR)

José C. Pernías

Jaume I University - Department of Economics

Multiple version iconThere are 3 versions of this paper

Date Written: July 2004

Abstract

This Paper is an empirical study on the existence of complementarity between product and process innovation. We present an econometrically feasible model that uses the information contained in the innovation profile of each firm to test for the existence of complementarity among production and innovation strategies. We apply the model to analyze the Spanish ceramic tiles industry where the adoption of the single firing furnace in the 1980s facilitated the introduction of new product designs, as well as to opening new ways of organizing production. Our econometric results show that there is significant complementarity between product and process innovation. We are able to separate the nature of complementarity relationships and thus, our results show that both intrinsic - technologically driven - and induced complementarity - due to firms unobserved heterogeneity - are significant. Small firms tend to be more innovative overall.

Keywords: Complementarity, supermodularity, unobserved heterogeneity, product innovation, process innovation

JEL Classification: C52, L20, O32

Suggested Citation

Miravete, Eugenio J. and Pernías, José C., Innovation Complementarity and Scale of Production (July 2004). Available at SSRN: https://ssrn.com/abstract=575521

Eugenio J. Miravete (Contact Author)

University of Texas at Austin ( email )

Department of Economics
1 University Station C3100
Austin, TX 78712-0301
United States
512-232-1718 (Phone)
512-471-3510 (Fax)

HOME PAGE: http://www.eco.utexas.edu/facstaff/Miravete

Centre for Economic Policy Research (CEPR)

London
United Kingdom

José C. Pernías

Jaume I University - Department of Economics ( email )

Campus del Riu Sec.
E-12071 Castellon
Spain
34 96 472 8610 (Phone)
34 96 472 8591 (Fax)

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