2006/18 | LEM Working Paper Series | |
Innovation and Firm Growth in High-Tech Sectors: A Quantile Regression Approach | ||
Alex Coad, Rekha Rao |
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Keywords | ||
Innovation, Firm Growth, Quantile Regression, Innovation Policy
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JEL Classifications | ||
O31, L25
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Abstract | ||
We relate innovation to sales growth for incumbent firms in four high-tech sectors. A
firm, on average, experiences only modest growth and may grow for a number of reasons
that may or may not be related to "innovativeness". However, given that firms are heterogeneous
and that growth rates distributions are heavy-tailed, it may be misleading
to use regression techniques that focus on the "average firm". Using a quantile regression
approach, we observe that innovativeness is of crucial importance for a handful of
"superstar" fast-growth firms. We also discuss policy implications of our results.
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