What Drives Innovation and Productivity? A Case Study Using Data for German Firms

Mansour, Mazen (2017) What Drives Innovation and Productivity? A Case Study Using Data for German Firms. DBA thesis, University of Goucestershire.

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Abstract

This work attempts to explain the relationship between innovation expenditure, innovation outputs, and firm productivity. It investigates the key factors that drive these relationships using unbalanced German manufacturing panel data at firm level captured by the Mannheim Innovation Panel (MIP) between 2003 and 2013. A structural equation model is employed to test the data consisting of three stages proposed by the Crepon, Duguet, and Mairesse econometric model (CDM) framework. The first stage is a Heckman model to control for selection bias and to explain the firm’s decision if participating in innovation activities or not, and the level of expenditure on innovation in relation to its previous labour productivity. The second stage is the knowledge production function in which innovation expenditure generates economically valuable knowledge in the form of different types of innovation. The third stage is the production function, which describes the relationship between generating innovation and labour productivity. This work focuses on testing the CDM and the expansions on process innovation and organisational innovation in the production function using the Principal Component Analysis (PCA) approach. The results imply that the firm’s decision to involve itself in innovation activities is positively associated with its previous labour productivity. However, for those firms which participate in innovation activities, the previous labour productivity affects the level of expenditure on innovation negatively. The estimation results of the knowledge production function suggest that product innovation in the form of new to the firm of clearly improved products rises with innovation expenditure. The estimation results of the production function promote the role of presenting market novelties, process innovation targeted at the reduction of average costs, and organisational innovation as sources for labour productivity. A set of determinants that might affect innovation and productivity were investigated. The empirical results suggest that market novelties are driven by qualified personnel, however, this study was unable to find drivers for process and organisational innovations.

Item Type: Thesis (DBA)
Thesis Advisors:
Thesis AdvisorEmailURL
Hu, Xiaolingxhu@glos.ac.ukUNSPECIFIED
Zhu, Nongs2109407@glos.ac.ukUNSPECIFIED
Uncontrolled Keywords: Productivity; Innovation; CIS; MIP; CDM; German Manufacturing; Structural Equation Model; Selection bias; Principal Component Analysis; Panel Data
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Divisions: Schools and Research Institutes > School of Business and Technology > Business & Enterprise Management
Depositing User: Susan Turner
Date Deposited: 26 Apr 2018 15:44
Last Modified: 27 Apr 2018 16:26
URI: http://eprints.glos.ac.uk/id/eprint/5593

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