Small Business Economics

, Volume 33, Issue 1, pp 13–33 | Cite as

Innovation and productivity in SMEs: empirical evidence for Italy

  • Bronwyn H. Hall
  • Francesca Lotti
  • Jacques Mairesse
Article

Abstract

Innovation in SMEs exhibits some peculiar features that most traditional indicators of innovation activity do not capture. Therefore, in this paper, we develop a structural model of innovation that incorporates information on innovation success from firm surveys along with the usual R&D expenditures and productivity measures. We then apply the model to data on Italian SMEs from the “Survey on Manufacturing Firms” conducted by Mediocredito-Capitalia covering the period 1995–2003. The model is estimated in steps, following the logic of firms’ decisions and outcomes. We find that international competition fosters R&D intensity, especially for high-tech firms. Firm size and R&D intensity, along with investment in equipment, enhances the likelihood of having both process and product innovation. Both these kinds of innovation have a positive impact on firm’s productivity, especially process innovation. Among SMEs, larger and older firms seem to be less productive.

Keywords

R&D Innovation Productivity SMEs Italy 

JEL Classifications

L26 L60 O31 O33 

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Copyright information

© Springer Science+Business Media, LLC. 2009

Authors and Affiliations

  • Bronwyn H. Hall
    • 1
    • 2
    • 3
    • 4
  • Francesca Lotti
    • 5
  • Jacques Mairesse
    • 2
    • 3
    • 6
  1. 1.Department of EconomicsUniversity of California at BerkeleyBerkeleyUSA
  2. 2.UNU-MERITMaastricht UniversityMaastrichtThe Netherlands
  3. 3.NBERCambridgeUSA
  4. 4.IFSLondonUK
  5. 5.Economic Research DepartmentBank of ItalyRomeItaly
  6. 6.CREST (ENSAE, Paris)Malakoff CedexFrance

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