Persistent innovation and the complementarities of R&D and Product Innovation

*Cancelled*

In this paper, we revisit the question of persistent innovation focusing explicitly on potential cross-effects along diverse hypotheses proposed by previous literature in supporting the presence of persistence in innovation dynamics. In particular, we combine perspectives looking at persistence in innovation input, reflecting sunk costs and learning effects stemming from continuous R&D engagement, with perspectives on persistence effects from innovation output, reflecting dynamic increasing returns and learning to learn effects from previous innovation.

We employ a longitudinal dataset for over 3,000 manufacturing firms in Spain for the period 2008-2016. The analysis is conducted following a structural panel vector auto-regression (SPVAR) approach where both innovation input and output, respectively in the form of R&D intensity and product innovation, are endogenously determined and connected within a system of equations accounting for unobserved heterogeneity across firms as well as heterogeneity in the response dynamics.

Our results provide evidence in favour of persistence dynamics for both R&D and product innovation, as well as the presence of a mutually causal relationship. We also find evidence of significant synergistic effects between different forms of innovation persistence. Finally, we present initial evidence that these effects may strengthen in the presence of longer spells of continuous innovation efforts.

Biography

Carlo Corradini is Professor of Regional Economics at Henley Business School (University of Reading). Before joining Henley Business School, Carlo worked as Associate Professor in Regional Economics at Birmingham Business School. Carlo is actively engaged in the scholarly debate on topics ranging from regional economics, technological change and industry dynamics, as well as industrial and innovation policy. He also serves as Associate Editor for the journal Regional Studies.