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Persistence of innovation and firm’s growth: evidence from a panel of SME and large Spanish manufacturing firms

Abstract

This paper estimates the effect of persistence of innovation on employment in Spanish manufacturing firms during the period 1990–2008. Using GMM-system estimations, we study the importance of persistence of product and process innovation on employment growth according to the size of the firms. The results support that process innovation shows a positive effect on employment, especially for SMEs, while the effect of product innovation is not significant. The study also distinguishes that this effect appears in the contemporaneous year but it increases with the number of lags. This result confirms that compensation effects of process innovation may appear with a certain delay justifying the importance for SMEs of being persistent in innovation strategies to make them compatible with employment growth.

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Fig. 1

Notes

  1. 1.

    García et al. (2004) is the only study that assesses the employment effects of the innovative activities in Spanish manufacturing firms using this dataset but only for the period 1990–1998.

  2. 2.

    The only difference is that lagged dependent variable is not significant in the conditional labor-models treating capital as a fully flexible factor. Including the capital stock has the advantage of avoiding the risk of confounding changes in the slope of the labor demand with changes in the demand schedule. The conditional model A is the selected model to carry the robustness checks.

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Acknowledgments

We gratefully acknowledge the suggestions of the Editors and two anonymous reviewers for help in improving this paper. We also thank participants at the 2012 Workshop on Firm Growth and Innovation placed in Tarragona (Spain) and especially to Agustí Segarra and Mercedes Teruel for their invitation to this event. Finally, we thank to Isabel Sánchez-Seco for the provision of the ESEE dataset.

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Correspondence to Angela Triguero.

Appendix

Appendix

See Tables 4, 5, 6, 7.

Table 4 Summary of more recent empirical studies on effects of innovation on employment growth
Table 5 Descriptive statistics
Table 6 GMM system estimation results (unconditional model A)
Table 7 GMM system estimation results by firm size (conditional and unconditional model A and B with product–process interactions)

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Triguero, A., Córcoles, D. & Cuerva, M.C. Persistence of innovation and firm’s growth: evidence from a panel of SME and large Spanish manufacturing firms. Small Bus Econ 43, 787–804 (2014). https://doi.org/10.1007/s11187-014-9562-8

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Keywords

  • Innovation
  • Persistence
  • Employment
  • SMEs
  • Manufacturing
  • GMM-system
  • JEL classifications