Small Business Economics

, Volume 13, Issue 2, pp 97–109 | Cite as

Market versus Corporate Structure in Plant-Level Innovation Performance

  • James H. Love
  • Brian Ashcroft
Article

Abstract

This paper examines the effect which market and corporate structure have on the extent of innovation for a sample of circa 300 manufacturing plants located in Scotland. Innovation is defined as the introduction of a commercially significant new product at the establishment level. The theoretical model of Geroski (1990) is extended to incorporate plant- level variables such as size, multiplant operation, the presence of R&D facilities and external/indigenous ownership. A distinction is made between the direct and indirect effects of these variables. Negative binomial estimations indicate that corporate structure influences are more important in determining the number of innovations than market structure and barrier to entry variables. Plant size, foreign ownership and the presence of R&D are all positively associated with innovation. Direct effects greatly outweigh indirect effects. Tobit estimations on the number of innovations per employee support the findings of Acs and Audretsch (1988) that smaller enterprises are more innovation intensive than larger enterprises, at least up to a limit of around 1200 employees. The positive effect of R&D arises principally from increasing the probability of a plant becoming an innovator, rather than from making a plant more innovation intensive. By contrast, the importance of size lies principally in encouraging further innovations among plants which are already innovators, but less than proportionately with the increase in employment size.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Acs, Z. J. and D. B. Audretsch, 1988, 'Innovation in Large and Small Firms: An Empirical Analysis', American Economic Review 78, 678–690.Google Scholar
  2. Amemiya, T., 1973, 'Regression Analysis When the Dependent Variable is Truncated Normal', Econometrica 41, 997–1016.Google Scholar
  3. Ashcroft, B., S. Dunlop and J. H. Love, 1995, 'U.K. Innovation Policy: A Critique', Regional Studies 29, 307–311.Google Scholar
  4. Audretsch, D. B., 1995, Innovation and Industry Evolution, Cambridge, MA: MIT Press.Google Scholar
  5. Baptista, R. and P. Swann, 1995, t'Do Firms in Clusters Innovate More? An Exploratory Study', Working Paper 155, Centre for Business Strategy, London Business School, London.Google Scholar
  6. Blundell, R., R. Griffith and J. Van Reenen, 1995, 'Dynamic Count Data Models of Technological Innovation', Economic Journal 105, 333–344.Google Scholar
  7. Brouwer, E. and A. Kleinknecht, 1996, 'Firm Size, Small Business Presence and Sales of Innovative Products: A Micro-econometric Analysis', Small Business Economics 8, 189–201.Google Scholar
  8. Brugger, E. A. and B. Stuckey, 1987, 'Regional Economic Structure and Innovative Behaviour in Switzerland', Regional Studies 21, 241–254.Google Scholar
  9. Cameron, A. and P. Trivedi, 1986, 'Econometric Models Based on Count Data: Comparisons and Applications of Some Estimators', Journal of Applied Econometrics 1, 25–53.Google Scholar
  10. Cameron, A. and P. Trivedi, 1990, 'Regression Based Tests for Overdispersion in the Poisson Model', Journal of Econometrics 46, 347–364.Google Scholar
  11. Davelaar, E. J., 1991, Regional Economic Analysis of Innovation and Incubation, Aldershot: Avebury.Google Scholar
  12. Davies, S. and B. Lyons, 1991, Economics of Industrial Organisation, Harlow: Longman.Google Scholar
  13. Department of Trade and Industry, 1992, Innovation, Technology and Change: Help for Business, London: HMSO.Google Scholar
  14. Freeman, C., 1982, The Economics of Industrial Innovation, 2nd Ed., London: Frances Pinter.Google Scholar
  15. Geroski, P., 1990, 'Innovation, Technological Opportunity, and Market Structure', Oxford Economic Papers 42, 586–602.Google Scholar
  16. Goddard, J., A. T. Thwaites and D. Gibbs, 1986, 'The Regional Dimension to Technological Change in Great Britain', in Amin, A. and J. B. Goddard (eds.), Technological Change, Industrial Restructuring and Regional Development, London: Allen and Unwin.Google Scholar
  17. Harris, R. I. D., 1991, 'Technology and Regional Policy: A Case Study of Northern Ireland', Applied Economics 23, 685–696.Google Scholar
  18. Harris, R. I. D. and M. Trainor,1995, 'Innovations and R & D in Northern Ireland Manufacturing: A Schumpeterian Approach', Regional Studies 29, 593–604.Google Scholar
  19. Hausman, J., B. Hall and Z. Griliches, 1984, 'Econometric Models for Count Data with an Application to the Patents-R & D Relationship', Econometrica 52, 909–938.Google Scholar
  20. Howells, J., 1984, 'The Location of Research and Development: Some Observations and Evidence from Britain', Regional Studies 18, 13–29.Google Scholar
  21. Kamien, M. and N. Schwartz, 1982, Market Structure and Innovation, Cambridge: Cambridge University Press.Google Scholar
  22. Kleinknecht, A., 1987, 'Measuring R & D in Small Firms: How 108 James H.Love and Brian Ashcroft Much are We Missing?', Journal of Industrial Economics 34, 253–256.Google Scholar
  23. Levin, R., W. Cohen and D. Mowery, 1985, 'R & D Appropriability, Opportunity, and Market Structure: New Evidence on the Schumpeterian Hypothesis', American Economic Review 75, 20–24.Google Scholar
  24. Love, J. H., B. Ashcroft and S. Dunlop, 1996, 'Corporate Structure, Ownership and the Likelihood of Innovation', Applied Economics 28, 737–746.Google Scholar
  25. Love, J. H. and S. Roper, 1999, 'The Determinants of Innovation: R & D, Technology Transfer and Networking Effects', Review of Industrial Organization 15, forthcoming.Google Scholar
  26. McDonald, J. F. and R. A. Moffitt, 1980, 'The Uses of Tobit Analysis', Review of Economics and Statistics 62, 318–321.Google Scholar
  27. Malecki, E. J., 1980, 'Corporate Organisation of R & D and the Location of Technological Activities', Regional Studies 14, 219–234.Google Scholar
  28. Mansfield, E., 1984, 'Comment on Using Linked Patent and R & D Data to Measure Interindustry Technology Flows', in Z. Griliches (ed.), R & D, Patents, and Productivity, Chicago: University of Chicago Press.Google Scholar
  29. Oakey, R. P., 1979, 'Technological Change and Regional Development: A Note on Policy Implications', Area 11, 340–344.Google Scholar
  30. Oakey, R. P., A. T. Thwaites and P. A. Nash, 1980, 'The Regional Distribution of Innovative Manufacturing Establishments in Britain', Regional Studies 14, 235–253.Google Scholar
  31. Oakey, R. P., R. Rothwell and S. Cooper, 1988, Management of Innovation in High Technology Small Firms, London: Frances Pinter.Google Scholar
  32. Roper, S., B. Ashcroft, J. H. Love, S. Dunlop, H. Hofmann and K. Vogler-Ludwig, 1996, Product Innovation and Development in U.K., German and Irish Manufacturing, Belfast: Queen's University of Belfast/University of Strathclyde.Google Scholar
  33. Small Business Research Centre, 1992, The State of British Enterprise, Cambridge: University of Cambridge.Google Scholar
  34. Thwaites, A. T., 1978, 'Technological Change, Mobile Plants and Regional Development', Regional Studies 12, 445–461.Google Scholar
  35. Veugelers, R. and B. Cassiman, 1999, 'Make and Buy in Innovation Strategies: Evidence From Belgian Manufacturing Firms', Research Policy 28, 63–80.Google Scholar

Copyright information

© Kluwer Academic Publishers 1999

Authors and Affiliations

  • James H. Love
    • 1
  • Brian Ashcroft
    • 2
  1. 1.Aston Business SchoolAston UniversityBirminghamU.K
  2. 2.Fraser of Allander InstituteUniversity of StrathclydeU.K

Personalised recommendations