| Abstract: |
We present a model that links innovation effort to economic performance, along
the lines of the Crépon et al (1998) model. However, in contrast to Crépon et
al, that analyze R&D intensive manufacturing sectors, the present application
examines the relationship between innovation and performance for services
sectors. This is relevant since much effort has been made to explore that
relationship for manufacturing but very little is known about it in the case
of services sectors. In trying to fulfill this gap the paper uses firm-level
data from the Second Community Innovation Survey to estimate a simultaneous
equations model for firms in ten services sectors in Portugal. The present
model also differs from former approaches by the specific explanatory
structure proposed to estimate the complex relationship between innovation and
economic performance. Instead of estimating a direct link between innovation
and labor productivity, three specific relationships were put forward. The
first of them explains the innovation effort intensity (an input in the
innovation process). The second one relates service innovation (an output of
the innovation process) to effort intensity and to other explanatory
variables. Finally, the third relationship links labor productivity to both
service innovation and effort intensity considering also some other
influences. Sensitivity analysis of the results to alternative estimation
techniques was performed. |