2016/31 LEM Working Paper Series

Persistence of innovation and patterns of firm growth

Dario Guarascio and Federico Tamagni
firm growth, innovation persistence, product and process innovation, R&D, patents, quantile regressions

  JEL Classifications
D22, O30, C21

It is often argued that persistent innovators are in a better position to outperform competitors, due to superior ability to sustain comparative advantages over time. In this work we exploit a long-in-time panel of Spanish manufacturing firms over the period 1990- 2012 to examine the long-run contribution of innovation persistence to sales market shares growth and dynamics. We examine two main research questions. First, do persistent innovators grow more than other firms? Second, do persistent innovators show more persistence than other firms in their growth patterns over time? We find a negative answer to both questions: firms that persistently innovate over the first decade, do not grow more and do not display more persistent market share dynamics over the following years. The results are robust across different definitions of persistent innovators, according to persistence in R&D, product or process innovation, and patenting behaviour.

download pdf