Exploring the Link between Innovation and Firm Performance

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Abstract

In the context of this paper, we examine the relationship between innovation and firm performance for Greece. We test the hypothesis that there is a U-shaped relationship between innovation and firm performance, in the short-term period. We apply the method for examining nonlinearities, that is, the introduction of squared terms as independent variables. The collected variables are used in a multiple linear model formulation to evaluate the relative performance associated with them. For this reason, a number of variables are used, like the innovation intensity, the squared term of innovation intensity, the R&D personnel, and the productivity, as well as the firm size as control variable. We rely on the final results of a research project on women in innovation, technology, and science, based on 372 questionnaires selected on a 2-year time period (2004–2006).