Innovation in Firms

A Microeconomic Perspective

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Innovation has become a key factor for economic growth, but how does the process take place at the level of individual firms? This book presents the main results of the OECD Innovation Microdata Project -- the first large-scale effort to exploit firm-level data from innovation surveys across 20 countries in an internationally harmonised way, with a view to addressing common analytical questions. Through the use of common indicators and econometric modeling, this analytical report presents a broad overview of how firms innovate in different countries, highlights some of the limitations of current innovation surveys, and identifies directions for future research.

English Also available in: Spanish

Innovation and Productivity

Estimating the Core Model Across 18 Countries

Innovation is considered one of the main drivers of productivity growth and economists have investigated both its determinants and its contribution to firm performance, measured as productivity; growth and/or market value. There are several reasons for analysing the link between innovation and productivity at the firm level. First, it is firms that innovate, not countries or industries. Second, aggregate analysis hides a lot of heterogeneity. Firms’ performance and characteristics differ both across countries and within industries; countries’ innovation systems are characterised by mixed patterns of innovation strategies which have an impact on firms’ behaviour; and firms may adopt multiple paths to innovation, including non-technological ones. The advantage of micro-level analysis is that it attempts to model the channels through which specific firms’ knowledge assets or specific knowledge channels can have an impact on these firms’ productivity and therefore shed light on the role that innovation inputs, outputs and policies play in economic performance.


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