INNOVATION COMPLEMENTARITY AND SCALE OF PRODUCTION*

Eugenio J. Miravete · José C. Pernías

181 citations0/0 files storedJournal of Industrial Economics

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Firm Innovation and Growth Merger and Competition Analysis Innovation and Knowledge Management

Abstract

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.

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References

1978Patterns of Industrial Innovation 1990The Economics of Modern Manufacturing: Technology, Strategy, and Organization 1995Complementarities and fit strategy, structure, and organizational change in manufacturing 1997The Effects of Human Resource Management Practices on Productivity: A Study of Steel Finishing Lines 1996Entry, Exit, Growth, and Innovation over the Product Life Cycle 2011Supermodularity and Complementarity 1989A Method of Simulated Moments for Estimation of Discrete Response Models Without Numerical Integration 1989Simulation and the Asymptotics of Optimization Estimators

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