2016/09 | LEM Working Paper Series | ||||||||||||||||
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Exploring the link between Innovation and Growth in Chilean firms |
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Caterina Santi and Pietro Santoleri |
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Keywords | |||||||||||||||||
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innovation, firm growth, Chile, quantile regression, quantile treatment effects
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JEL Classifications | |||||||||||||||||
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C14, C21, C22, D22, O31
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Abstract | |||||||||||||||||
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We employ a balanced panel dataset representative of the entire
Chilean productive structure in order to investigate the relation
between the introduction of innovation and subsequent firm growth in
terms of sales. Recent contributions examining the returns to
innovation on firm performance have stressed the need of going beyond
the analysis of the `average effect for the average firm'. However,
previous studies in the case of Latin American economies have often
overlooked the importance of analyzing which firms benefit more from the
introduction of innovations. Our analysis consists of a series of
parametric and non-parametric exercises which take into account the
properties of the firm growth distribution. In particular, we adopt
quantile treatment effects (QTE) which allow to estimate the effect of the
introduction of innovation by comparing firms with a similar propensity
to innovate for different quantiles of the firm growth distribution. On
one hand, our results indicate that process innovation shows a
positive and significant relation with firm growth for those firms located
at the 75th and 90th percentiles. On the other, product innovation
shows a negative association only for high-growth firms.
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