Elsevier

Research Policy

Volume 39, Issue 10, December 2010, Pages 1253-1263
Research Policy

The economic impact of technological and organizational innovations. A firm-level analysis

https://doi.org/10.1016/j.respol.2010.08.004Get rights and content

Abstract

By using firm-level data provided by the last round of the (Italian) Community Innovation Survey (CIS4) this paper explores (in a manufacturing-services comparative framework) the relationship between technological and non-technological innovations and their impact on firms’ performances. The empirical evidence presented shows that including the organizational dimension of innovation provides a much more comprehensive picture of the variegated universe of innovation in both macro-sectors. Four distinct innovation modes have been identified on the basis of the ways firms combine technological and non-technological innovations. These different modes of innovation are present and relevant in both manufacturing and service sectors and have been found to have a differentiated impact on firms’ performances. Strategies characterized by the joint introduction of product, process and organizational innovations have been found to give to both manufacturing and service firms a clear competitive advantage vis à vis both non-innovating firms and firms with a narrow approach to innovation. A few significant differences between services and manufacturing firms in the relevance and economic impact of different types of innovation strategies have also been found.

Introduction

It is a well known fact that most of the literature which has investigated the economic impact of technological change over the last few decades has been characterized by a sort of manufacturing focus/bias. In fact, services have for a long time been considered as technologically backward, with innovation playing only a marginal (or even negative) role in explaining the aggregate performance of this sector and the competitive strategies of firms. Over the last decade a new stream of contributions has started to challenge this view (Miles, 1995, Miles et al., 1995, Gadrey and Gallouj, 1998, Andersen et al., 2000, Metcalfe and Miles, 2000, Tether, 2003). Although more is known about the relevance of innovation in services, its economic impact has been investigated to a very limited extent, particularly at the firm level. This gap in the literature can to some extent be explained by the difficulty of accessing micro-data, which in the case of services is even greater. There are also data constraints and methodological problems related to the availability of appropriate indicators to measure innovation in services, which should be extended beyond a pure technological domain. Organizational change is perhaps not only the most important form of non-technological innovation, but also the most difficult to be grasped both on a conceptual and on an empirical ground. In fact, despite the existence of a large amount of (mostly qualitative and anecdotic) literature emphasising the role that non-technological types of innovation play in services, very little is known about the extent to which these types of innovations are complements or substitutes of technological innovations, the relative importance of technological and organizational changes as drivers of firms’ economic performances and whether there are differences in the relevance and economic impact of these two different forms of innovations. This article tries precisely to investigate these points using firm-level data provided by the last round of the Community Innovation Survey (CIS4).

The article is structured as follows: the next section highlights some problematic issues emerging once the analysis of the innovation-performance relationship is extended to services and organizational innovations, while Section 3 contains some methodological notes along with a discussion on the strengths and weaknesses of CIS data with reference to the research issues addressed in this article. The empirical section is composed of two main parts. In Section 4, the existence, relevance and internal consistency of distinct innovation modes, made of different combinations of technological (product/process) and non-technological innovations, is investigated. In the following section the impact of these different innovation modes on firm's economic performances in both manufacturing and service industries is empirically assessed through an econometric firm-level analysis. Section 6 summarizes the main findings and draws some methodological implications for future research.

Section snippets

Extending the analysis of the innovation-performance relationship to services: open issues

Over the last decade there have been increasing efforts to investigate the economic impact of innovation, especially at a firm level. The widespread interest in micro-level studies in this research field is justified by several reasons, the most important being the diffused dissatisfaction towards aggregated analyses which are perceived to be unable to grasp the heterogeneity of firms’ innovative behaviours as well as the different technological sources of firms’ competitiveness. An attempt has

Data and methodology

In this paper data drawn from the fourth round of the Italian CIS (CIS4) – referring to the period 2002–2004 – are used. CIS collects data on a wide range of aspects related to firms’ innovation activities and performances. Firms are in fact asked about the type of innovation introduced over the three years period covered by the survey, the specific innovation activities carried out in the same period, the expenditures and human resources dedicated to such activities plus a set of more

Looking for “innovation modes” in manufacturing and service industries

The term “innovation modes” broadly refers to the possibility of synthesising (in an effective way) the highly heterogeneous nature of firms’ innovative behaviours into a manageable and interpretable set of typologies of innovation practices, strategies and performances. Different methodologies, indicators and datasets have been used to identify such innovation modes (see for instance Hollenstein, 2003, Arundel and Hollanders, 2005, EUROSTAT, 2008). The most common practice consists of starting

The impact of technological and organizational innovations on economic performances

In the previous section we have identified four different innovation modes and checked their relevance and consistency across sectors. The next and final step consists of assessing the impact that these different innovation modes have on firms performances and checking if, also in this respect, significant differences between manufacturing and service industries emerge. Following the conceptual framework and linkages sketched in Fig. 1 the following equation is estimated:ΔY=α+j=14ϕjclusterj+β1h

Conclusions

The evidence presented in this paper is the result of a rather exploratory exercise aiming at shedding some empirical light on a very complex and under-investigated topic. The main results of this empirical exercise can be synthesised as follows:

  • Enlarging the analysis of innovation beyond the technological domain provides a much richer and complex picture of firm's innovation strategies and performances. The traditional distinction (or dichotomy) between product and process innovation is not

References (39)

  • G. Cainelli et al.

    Innovation and economic performance in services. A firm level analysis

    Cambridge Journal of Economics

    (2006)
  • F. Castellacci et al.

    Technological Regimes, Schumpeterian Patterns of Innovation and Firm Level Productivity Growth. NUPI working paper No 730/42

    (2008)
  • B. Crepon et al.

    Research, innovation, and productivity: an econometric analysis at the firm level

    Economics of Innovation and New Technology

    (1998)
  • F. Crespi et al.

    Demand and innovation in productivity growth

    International Review of Applied Economics

    (2008)
  • F. Djellal et al.

    Measuring and Improving Productivity in Services: Issues, Strategies and Challenges

    (2007)
  • G. Dosi

    Sources, procedures and microeconomic effects of innovation

    Journal of Economic Literature

    (1988)
  • G. Dosi et al.

    An introduction to evolutionary theories in economics

    Journal of Evolutionary Economics

    (1994)
  • C. Edquist et al.

    Innovation and Employment: Process Versus Product Innovation

    (2001)
  • EUROSTAT

    Science, Technology and Innovation in Europe

    (2008)
  • Cited by (292)

    View all citing articles on Scopus

    The authors are grateful to three anonymous referees for their valuable remarks and suggestions.

    View full text