Intensity of competition and firm innovative behavior

Autores/as

  • Daragh O'Leary University College Cork
  • Justin Doran Spatial and Regional Economics Research Centre, Department of Economics, Cork University Business School, University College Cork, Ireland
  • Bernadette Power Department of Economics, Cork University Business School, University College Cork, Ireland

DOI:

https://doi.org/10.17811/ebl.11.2.2022.53-69

Palabras clave:

Innovation, Competition, Europe, Flash Eurobarometer

Resumen

Using a novel self-reported measure competitive intensity and four distinct forms of innovation (product, process, marketing and organisational) from the European Commission Flash Eurobarometer 433 dataset, this paper comprehensively identifies the impact of competitive pressure on firm innovation for four broad sectors of the economy. A logit model by innovation type is used to estimate the impact of the intensity of competition on the firm’s decision to innovate. Firm reported intensity of competition is found to have a positive impact on product and market innovation. Significant heterogeneities exist in the impact of minor and major degrees of competition across innovation types and sectors supporting both Arrow’s (1962), and to a lesser degree Schumpeter’s (1943), perspectives on this relationship.

Citas

Aghion P, Bloom N, Blundell R, et al. (2005) Competition and innovation: An inverted-U relationship. The Quarterly Journal of Economics 120: 701-728.

Aghion P and Howitt P. (1990) A model of growth through creative destruction. National Bureau of Economic Research.

Ai C and Norton EC. (2003) Interaction terms in logit and probit models. Economics Letters 80: 123-129.

Arrow K. (1962) Economic Welfare and the Allocation of Resources for Invention." in The Rate and Direction of Econonic Activity. Princeton: Princeton University Press,(())-25.

Aslan H and Kumar P. (2016) The product market effects of hedge fund activism. Journal of Financial Economics 119: 226-248.

Bain JS. (1956) Barriers to new competition: their character and consequences in manufacturing industries: Harvard University Press Cambridge, MA.

Beneito P, Rochina-Barrachina ME and Sanchis A. (2017) Competition and innovation with selective exit: an inverted-U shape relationship? Oxford Economic Papers 69: 1032-1053.

Bhattacharya M and Bloch H. (2004) Determinants of Innovation. Small Business Economics 22: 155-162.

Bourke J and Crowley F. (2016) Which organisational changes are most beneficial for firm innovation? Economics and Business Letters 5: 152-158.

Bozic L and Botric V. (2017) Innovation investment decisions: are post (transition) economies different from the rest of the EU? Eastern Journal of European Studies 8: 25-43.

Camisón C and Villar-López A. (2014) Organizational innovation as an enabler of technological innovation capabilities and firm performance. Journal of Business Research 67: 2891-2902.

Cheng C and Yang M. (2017) Enhancing performance of cross-border mergers and acquisitions in developed markets: The role of business ties and technological innovation capability. Journal of Business Research 81: 107-117.

Cornett MM, Erhemjamts O and Tehranian HJGFJ. (2019) Competitive environment and innovation intensity. Global Finance Journal 41: 44-59.

Crowley F and Jordan D. (2017) Does more competition increase business-level innovation? Evidence from domestically focused firms in emerging economies. Economics of Innovation and New Technology 26: 477-488.

Crowley F and McCann P. (2018) Firm innovation and productivity in Europe: evidence from innovation-driven and transition-driven economies. Applied Economics 50: 1203-1221.

De Jong JP and Vermeulen PA. (2006) Determinants of product innovation in small firms: A comparison across industries. International small business journal 24: 587-609.

Dixit AK and Stiglitz JE. (1977) Monopolistic competition and optimum product diversity. The American economic review 67: 297-308.

Doran J and Jordan D. (2016) Cross-sectoral differences in the drivers of innovation. Journal of Economic Studies.

Doran J and Ryan G. (2014) Firms' skills as drivers of radical and incremental innovation. Economics Letters 125: 107-109.

Grigorescu A, Maer-Matei MM, Mocanu C, et al. (2020) Key drivers and skills needed for innovative companies focused on sustainability. Sustainability 12: 102.

Gu L. (2016) Product market competition, R&D investment, and stock returns. Journal of Financial Economics 119: 441-455.

Gunday G, Ulusoy G, Kilic K, et al. (2011) Effects of innovation types on firm performance. International Journal of Production Economics 133: 662-676.

Hashmi ARJRoE and Statistics. (2013) Competition and innovation: The inverted-U relationship revisited. 95: 1653-1668.

Hombert J and Matray A. (2018) Can innovation help US manufacturing firms escape import competition from China? The Journal of Finance 73: 2003-2039.

Horbach J, Rammer C and Rennings K. (2012) Determinants of eco-innovations by type of environmental impact—The role of regulatory push/pull, technology push and market pull. Ecological economics 78: 112-122.

Im HJ, Park YJ and Shon JJEL. (2015) Product market competition and the value of innovation: Evidence from US patent data. Economics Letters 137: 78-82.

Karaca‐Mandic P, Norton EC and Dowd B. (2012) Interaction terms in nonlinear models. Health services research 47: 255-274.

Lee R, Lee J-H and Garrett TC. (2019) Synergy effects of innovation on firm performance. Journal of Business Research 99: 507-515.

Lefouili Y. (2015) Does competition spur innovation? The case of yardstick competition. Economics Letters 137: 135-139.

Negassi S, Lhuillery S, Sattin J-F, et al. (2019) Does the relationship between innovation and competition vary across industries? Comparison of public and private research enterprises. Economics of Innovation and New Technology 28: 465-482.

Nylund PA, Arimany-Serrat N, Ferras-Hernandez X, et al. (2019) Internal and external financing of innovation: Sectoral differences in a longitudinal study of European firms. European Journal of Innovation Management.

Porter ME. (1991) Towards a dynamic theory of strategy. Strategic management journal 12: 95-117.

Porter ME. (2008) The five competitive forces that shape strategy. Harvard business review 86: 25-40.

Romer PM. (1990) Endogenous technological change. Journal of political Economy 98: S71-S102.

Roper S, Du J and Love JH. (2008) Modelling the innovation value chain. Research Policy 37: 961-977.

Salop S. (1977) The noisy monopolist: Imperfect information, price dispersion and price discrimination. The Review of Economic Studies 44: 393-406.

Schumpeter JAJGA. (1943) Capitalism, Socialism and Democracy, London.

Scuotto V, Santoro G, Bresciani S, et al. (2017) Shifting intra‐and inter‐organizational innovation processes towards digital business: an empirical analysis of SMEs. Creativity and Innovation Management 26: 247-255.

Tabacco GA. (2015) Does competition spur innovation? Evidence from labor productivity data for the banking industry. Economics Letters 132: 45-47.

Tang J. (2006) Competition and innovation behaviour. Research Policy 35: 68-82.

Theeke M. (2016) The effects of internal and external competition on innovation breadth. Journal of Business Research 69: 3324-3331.

Wang C, Yi J, Kafouros M, et al. (2015) Under what institutional conditions do business groups enhance innovation performance? Journal of Business Research 68: 694-702.

Descargas

Publicado

2022-04-18

Cómo citar

O’Leary, D., Doran, J. ., & Power, B. (2022). Intensity of competition and firm innovative behavior. Economics and Business Letters, 11(2), 53–69. https://doi.org/10.17811/ebl.11.2.2022.53-69

Número

Sección

Artículos