Kiel Working Papers, Kiel Institute for World Economics
No 1284:
Firm size and Innovation in European Manufacturing
Mario Pianta and Andrea Vaona
Abstract: The paper investigates the differences between small,
medium-sized and large firms regarding their performance in the
introduction of new products and processes. After a review of the relevant
literature, two models are proposed and tested in search for different
business strategies and innovation inputs connected to product and process
innovations. The empirical analysis uses innovation survey (CIS 2) data at
the industry level for 22 manufacturing sectors, broken down in three firm
size classes, for eight European countries. Special attention is devoted to
tackling the issues of possible endogeneity of the regressors and of
unobserved sectoral heterogeneity. The results - strengthening the findings
of previous studies - show that product and process innovations, though
having some complementarities, are associated to different innovative
inputs and strategies pursued by firms. Systematic differences also emerge
between the behaviour of large firms and SMEs.
Keywords: Product innovation; Process innovation; Firm size; Determinants of innovation; European industries; (follow links to similar papers)
JEL-Codes: L11,; O31,; O33; (follow links to similar papers)
21 pages, July 2006
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