6533b831fe1ef96bd129872b

RESEARCH PRODUCT

Innovation Complementarity and Scale of Production

Eugenio J. MiraveteJosé C. Pernías

subject

Economics and Econometricsbusiness.industryProduct innovationjel:C52Innovation processcomplementarity; supermodularity; non-observed heterogeneity; product innovation; process innovationGeneral Business Management and AccountingComplementarity (physics)jel:L20AccountingManufacturingNew product developmentEconomicsjel:O32MarketingbusinessProcess innovationIndustrial organization

description

We present an econometrically feasible model that uses the information contained in the innovation profile of each firm to test for the existence of complementarity among production and innovation strategies. Our approach is able to distinguish between complementarity and correlation induced by unobserved heterogeneity. We apply the model to analyze the Spanish ceramic tile industry where the adoption of the single firing furnace in the 1980's facilitated the introduction of new product designs as well as opening new ways of organizing production. Our econometric results show that there is significant complementarity between product and process innovation. Small firms tend to be more innovative overall.

yearjournalcountryeditionlanguage
2006-03-01
http://econ.as.nyu.edu/docs/IO/9381/RR98-42.PDF