nep-tid 2010-06-26 papers

on Technology and Industrial Dynamics

Issue of 2010‒06‒26
two papers chosen by
Rui Baptista
Technical University of Lisbon

Innovation strategies as a source of persistent innovation By Tommy Clausen; Mikko Pohjola; Koson Sapprasert; Bart Verspagen
Product Innovation and Adoption in Market Equilibrium: The Case of Digital Cameras By Juan Esteban Carranza

Innovation strategies as a source of persistent innovation

By:	Tommy Clausen (Centre for Technology, Innovation and Culture, University of Oslo); Mikko Pohjola (Turku School of Economics, Finland); Koson Sapprasert (Centre for Technology, Innovation and Culture, University of Oslo); Bart Verspagen (Centre for Technology, Innovation and Culture, University of Oslo)
Abstract:	An important topic in the recent literature on firms’ innovation is the question of whether, and to what extent, firms which innovate once have a higher probability of innovating again in subsequent periods. This phenomenon is called the ‘persistence of innovation’. Although the literature has established that innovation persistence is indeed important from an empirical point of view, relatively little attention has been paid to identifying the reasons why this is the case. This study proposes that the differences in innovation strategies across firms are an important driving force behind innovation persistence, and analyses this issue using a panel database constructed from R&D and Community Innovation Surveys in Norway. Empirical measures of various innovation strategies are identified by means of a factor analysis. A cluster analysis is used in addition to a dynamic random effects probit model to extend the methodology adopted by prior studies, for the purpose to not only examine innovation persistence, but also determine how this persistence is influenced by innovation strategies. The results support the idea that the differences in innovation strategies across firms are an important determinant of the firms’ probability to repeatedly innovate. The study also distinguishes the effects of strategy differences on the persistence of product and process innovation in all firms, and within high-tech versus low-tech firms.
Keywords:	Persistence of innovation, Firm heterogeneity, Innovation strategy, Panel data
Date:	2010–06
URL:	http://d.repec.org/n?u=RePEc:tik:inowpp:20100617&r=tid

Product Innovation and Adoption in Market Equilibrium: The Case of Digital Cameras

By:	Juan Esteban Carranza
Abstract:	This paper contains an empirical dynamic model of supply and demand in the market for digital cameras with endogenous product innovation. On the demand side, heterogeneous consumers time optimally the purchase of goods depending on the expected evolution of prices and characteristics of available cameras. On the supply side, firms introduce new camera models accounting for the dynamic value of new products and the optimal behavior of consumers. The model is estimated using data from the market for digital cameras and the estimated model replicates rich dynamic features of the data. The estimated model is used to perform counterfactual computations, which suggest that more competition or lower product introduction costs generate more product variety but lower average product quality.
Date:	2010–06–16
URL:	http://d.repec.org/n?u=RePEc:col:000130:007127&r=tid

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