Interaction Between Innovation and Firm Dynamics and Its Impact on Industry Structure and Economic Growth
Starting point of our research are two empirical observations. First, over the past decade aggregate productivity performance was much lower in European countries than in the US which has raised concerns both in academic circles and among policy makers. Second, at a more disaggregate level, however, it turns out that the productivity distribution is highly skewed across industries and even across firms within industries and that this heterogeneity is quite persistent over time. Against this background, our research is aimed at addressing the question of how productivity can be stimulated in a knowledge-based economy. Is it the skill of its workforce, competitive pressure or innovation? Can a single driver be identified that boost productivity on its own or do these drivers reinforce each other? Do the productivity effects depend on the technological position of firms, industries or countries?
In contrast to previous research, this project takes a novel, integrated micro-meso approach. We aim to bridge firm- and industry-level approaches in order to gain a better understanding of policies that affect aggregate productivity outcomes in European knowledge-based economies either by directly influencing firm-level innovative activities, or indirectly by changing the dynamics of firm-level interaction in the market. Using Community Innovation Survey data for Germany and the Netherlands, we will first investigate the interrelations between R&D input, innovation output, and productivity at the firm level, mainly using the approach developed by Crépon, Duguet and Mairesse (1998).
We aim to extend the traditional CDM model and embed specific elements of the endogenous growth model of Vandenbussche et al. (2006) and the R&D-driven growth model of Amable et al. (2009) and Etro et al. (2008). This allows us to test for two complementarity hypotheses recently put forward in these models: i) the R&D-enhancing and innovation-enhancing effect of a marginal increase in the stock of skilled human capital stronger the closer the firm is to the technology frontier and ii) there is an innovation-enhancing impact of technological leaders under competitive pressure. Furthermore, the econometric analysis will allow the parameters of interest to differ between industries at different stages of the model. In the second step, we then aim at using the firm-level results as a tool for understanding different dimensions of the productivity distribution across industries.
Duration: October 2010 - March 2012
- Dr. Bettina Peters, ZEW – Leibniz Centre for European Economic Research, Department of Industrial Economics and International Management
- Prof. Dr. Eric J. Bartelsman, PhD, VU University Amsterdam, Faculty of Economics and Business Administration, Department of Economics
- Assistant Prof. Dr. Sabien Dobbelaere, VU University Amsterdam, Faculty of Economics and Business Administration, Department of Economics