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The Profitability of Innovating Firms
Abstract
This article seeks to evaluate the effects on corporate profitability of producing a major innovation. We examine two types of effect: innovations can have a direct but transitory effect on profitability associated with the production of a new product or the use of a new process, and innovations can have an indirect effect on how firms generate profits because they signal the transformation of a firm's internal capabilities associated with the process of innovating. Positive direct effects on the order of [[sterling]]2.1 million spread over seven years are observed for a sample of 721 large, quoted U.K. firms. More fundamentally, large indirect effects are also observed, not least because innovating firms seem to be more able to benefit from spillovers and are relatively insensitive to adverse macroeconomic shocks. These indirect effects associated with the transformation of a firm's internal capabilities may be as much as three times larger than the direct effects of innovation.
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Innovation and Learning: The Two Faces of R & D
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Estimating Vector Autoregressions with Panel Data
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Formulation and estimation of dynamic models using panel data
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Empirical studies of innovation and market structurePreprint
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The Effects of Slack Resources and Environmentalthreat on Product Exploration and Exploitation
Voss, G. B., Sirdeshmukh, D., & Voss, Z. G. (2008) · Academy of Management Journal · doi:10.5465/amj.2008.30767373 · Cited by 890
Firm Innovativeness and Its Performance Outcomes: A Meta-Analytic Review and Theoretical Integration
Rubera, G., & Kirca, A. H. (2012) · Journal of Marketing · doi:10.1509/jm.10.0494 · Cited by 835
Do subsidies to commercial R&D reduce market failures? Microeconometric evaluation studies
Klette, T. J., Møen, J., & Griliches, Z. (2000) · Research Policy · doi:10.1016/s0048-7333(99)00086-4 · Cited by 678
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Metadata
- Authors
- Geroski, P., Machin, S., & Reenen, J. V.
- Venue
- The RAND Journal of Economics
- Publisher
- Wiley
- Published
- 1993
- Volume
- 24
- Issue
- 2
- Pages
- 198
- ISSN
- 0741-6261 (ISSN-L)
- OpenAlex
- W2000963794
- Cited by
- 801
- References
- 25
- FWCI
- 16.50
- Type
- journal article
- Language
- en
- Open access
- closed
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Bibliographic data: Semantic Scholar, OpenAlex, Crossref.
Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
