Essays on innovation, productivity and knowledge flows: evidence for Spanish firms

Abstract

This dissertation aims to further understand the relationship between innovation and productivity in Spain taking into account the impact of knowledge flows. To this end, Spanish firms from both manufacturing and services sectors are considered.

This thesis consists of three empirical studies. The first study analyses the impact that R&D expenditures and intra- and inter-industry externalities have on Spanish firms’ performance considering the firm’s technology level. A Cobb-Douglas production function is employed using the Olley and Pakes (1996) estimator in order to deal with possible selection and simultaneity problems. The results obtained suggest that, unlike previous studies, there is no direct impact of R&D investment on firm performance. However, once the innovation is measured from the output side, a positive effect is found. This finding is in line with Crépon, Duguet and Mairesse (1998) approach which hold that there is a sequential process which drives from R&D to innovation outputs and from these outputs to productivity. As for spillovers, the results point out that Spanish firms are able to benefit from external innovation. In most technology levels, firms increase their sales if the rest of the firms in their sector increase their R&D expenditure, especially low-tech sectors, while in knowledge-intensive services a competitive effect would dominate. Inter-industry externalities, however, present a more ambiguous effect and there appears to be no specific behaviour pattern as for technology level.

The second empirical study aims at improving and extending the previous one by analysing the impact of innovation activities and externalities on firms’ productivity using a structural model. The main goal is to determine the extent to which external knowledge may affect both firm behaviour and firm performance. The results from a structural model with three stages show that the greater the number of firms undertaking R&D activities in the same sector the more likely to engage in R&D projects the firm is. Therefore, an external pool of knowledge would encourage firms to carry out R&D activities suggesting the existence of “an incentive effect”. In addition, R&D expenditures incurred by others firms have a positive impact on a firm’s productivity. However, this is only true for manufacturing firms. Finally, regarding the technology level, no clear pattern has been found.

All in all, it seems that external knowledge flows play a role along the process of engaging innovation activities and their translation into economic performance. Internal knowledge flows, on the other hand, have faded into the background. Nevertheless, transmission of information and experience within the company can improve its technological performance impacting positively on their innovativeness and leading to higher innovative sales. For that reason, the objective of the final empirical study is to examine the importance of internal knowledge flows on firm’s innovative performance as well as to assess the role of absorptive capacity. In order to deal with selection bias, as only innovative firm are considered in the analysis, the estimator proposed by Wooldridge (1995) is used. The findings point out that internal knowledge flows have a clearly positive impact on innovation performance. In particular, firms increase more innovative sales with voluntary knowledge transfers than with involuntary. More interestingly, the effect of internal knowledge flows is greater than the impact of external knowledge transfers highlighting the importance of internal knowledge flows. Last of all, the effect of absorptive capacity depends on its definition.

Crepon, B., Duguet, E., and Mairesse, J. (1998). Research, Innovation and Productivity: An Econometric Analysis at the firm level. Economics of Innovation and New Technology, 7(2), 115–158.

Olley, G. S., and Pakes, A. (1996). The dynamics of productivity in the telecommunications equipment industry. Econometrica, 64(6), 1263–1297.

Wooldridge, J. M. (1995). Selection correction for panel data models under conditional mean independece assumptions. Journal of Econometrics, 68, 115–132.

Aquesta tesi consisteix en tres estudis empírics sobre l’impacte dels fluxos de coneixement en la relació entre innovació i productivitat a Espanya.

En concret, el primer article estudia l’impacte que la despesa en I+D i les externalitats intra- i inter- sectorials tenen sobre la productivitat de les empreses espanyoles. El segon estudi amplia i millora l’anterior utilitzant un model estructural amb tres etapes, analitzant no només l’impacte de les externalitats en la productivitat sinó també en la decisió a dur a terme activitats en I+D. Finalment, el darrer article explora com els fluxos de coneixement interns afecten al rendiment innovador de les empreses.

Utilitzant la base de dades PITEC i diferents tècniques economètriques, els principals resultats són: 1) quan major sigui el nombre d’empreses duent a terme activitats en I+D en un sector més gran és la probabilitat que una empresa d’aquest sector iniciï aquest tipus de projectes suggerint l’existència d’un “efecte incentiu”, 2) les empreses manufactureres es beneficien de la I+D feta per altres empreses (del seu mateix sector i d’altres sectors) mentre que les empreses de serveis no obtenen aquest benefici, 3) els fluxos de coneixement interns incrementen les vendes innovadores de l’empresa i el que és més interessant, ho fan en major mesura que els fluxos de coneixement externs.