CDM FRAMEWORK FOR R&D–INNOVATION–PRODUCTIVITY RELATIONSHIP: THEORETICAL AND EMPIRICAL PERSPECTIVES
Abstract
This research uses the CDM framework to examine the relationship between R&D investment, innovation activity, and firm-level productivity. The study provides clear insights into the mechanisms that link innovation and economic performance by addressing methodological challenges such as selectivity bias and simultaneity. The findings show that innovative firms experience higher productivity growth, with the impact varying across regions and industries. The research also defines five stylized facts: the positive influence of firm size and age on innovation, the role of competition in driving innovation, the importance of workforce qualifications and professional development, the complementary role of IT investments, and the significant effect of innovation on productivity growth. These insights form a foundation for policymaking that foster innovation and boost productivity growth.
References
Lööf, H., Mairesse, J., Mohnen, P. (2017). CDM 20 years after. Economics of Innovation and New Technology, 26(1–2), 1–5. https://doi.org/10.1080/10438599.2016.1202522
OECD/Eurostat (2018). Oslo Manual 2018: Guidelines for Collecting, Reporting and Using Data on Innovation, 4th Edition, OECD Publishing. https://doi.org/10.1787/9789264304604-en.
Hall, B., Mairesse, J. (2006). Empirical studies of innovation in the knowledge-driven economy. Economics of Innovation and New Technology, 15(4–5), 289–299. https://doi.org/10.1080/10438590500512760
Bartz-Zuccala, W., Mohnen, P., Schweiger, H. (2018). The Role of Innovation and Management Practices in Determining Firm Productivity. Comparative Economic Studies, 60, 502–530. https://doi.org/10.1057/s41294-018-0075-3
Ryzhkova Yu., Zhukovych I., Yehorov I. (2013). Metodolohiia ta praktyka provedennia obstezhennia innovatsiinoi diialnosti pidpryiemstv u krainakh Yevropy [Methodology and practice of conducting surveys of innovative activity of enterprises in European countries]. Statystyka Ukrainy – Statistics of Ukraine, 3, 50–54. (in Ukrainian)
Cohen, W. M. (2010). Fifty years of empirical studies of innovative activity and performance. In Handbook of the economics of innovation (pp. 129–213). https://doi.org/10.1016/s0169-7218(10)01004-x
Mairesse, J, Robin, S. (2012). The Importance of Process and Product Innovation for Productivity in French Manufacturing and Service Industries. In Innovation and Growth: From R&D Strategies of Innovating Firms to Economy-wide Technological Change (pp. 128–159). https://doi.org/10.1093/acprof:oso/9780199646685.003.0007
Aghion, P., Akcigit U., Howitt, P. (2014). Chapter 1 - What Do We Learn From Schumpeterian Growth Theory?. In Handbook of Economic Growth (pp. 515-563). https://doi.org/10.1016/B978-0-444-53540-5.00001-X
Aghion, P., Akcigit U., Howitt, P. (2015). The Schumpeterian Growth Paradigm. Annual Review of Economics. 7, 557–575. https://doi.org/10.1146/annurev-economics-080614-115412
Aghion, P., Bloom, N., Blundell, R., Griffith, R., Howitt, P. (2005). Competition and Innovation: an Inverted-U Relationship. The Quarterly Journal of Economics, 120(2), 701–728. https://doi.org/10.1093/qje/120.2.701
Hashmi, A. (2013). Competition and Innovation: The Inverted-U Relationship Revisited. Review of Economics and Statistics, 95(5), 1653–1668. http://dx.doi.org/10.2139/ssrn.2012918
Peneder, M., Woerter, M. (2014). Competition, R&D and innovation: testing the inverted-U in a simultaneous system. Journal of Evolutionary Economics, 24, 653–687. https://doi.org/10.1007/s00191-013-0310-z
McGuirk, H., Lenihan, H., Hart, M. (2015). Measuring the impact of innovative human capital on small firms’ propensity to innovate. Research Policy, 44(4), 965–976. https://doi.org/10.1016/j.respol.2014.11.008
Morikawa, M. (2004). Information Technology and the Performance of Japanese SMEs. Small Business Economics, 23(3), 171–177. https://doi.org/10.1023/B:SBEJ.0000032023.11566.4b
Koellinger, P. (2008). The relationship between technology, innovation, and firm performance – Empirical evidence from e-business in Europe. Research Policy, 37(8), 1317–1328. https://doi.org/10.1016/j.respol.2008.04.024
Hempell, T., Zwick, T. (2008). New technology, work organisation, and innovation. Economics of Innovation and New Technology, 17(4), 331–354. https://doi.org/10.1080/10438590701279649
Higón, D. A. (2012). The impact of ICT on innovation activities: Evidence for UK SMEs. International Small Business Journal, 30(6), 684-699. https://doi.org/10.1177/0266242610374484
Gërguri-Rashiti, S., Ramadani, V., Abazi-Alili, H., Dana, L.-P., Ratten, V. (2017). ICT, Innovation and Firm Performance: The Transition Economies Context. Thunderbird International Business Review, 59(1), 93–102. https://doi.org/10.1002/tie.21772
Raymond, W., Mairesse, J., Mohnen, P., Palm, F. (2015). Dynamic models of R & D, innovation and productivity: Panel data evidence for Dutch and French manufacturing. European Economic Review, 78, 285–306. https://doi.org/10.1016/j.euroecorev.2015.06.002
Hall, B. (2011). Innovation and Productivity. Nordic Economic Policy Review, 2, 167–203.
Lööf, H., Heshmati, A. (2006). On the relationship between innovation and performance: A sensitivity analysis. Economics of Innovation and New Technology, 15(4–5), 317–344. https://doi.org/10.1080/10438590500512810
Cainelli, G., Evangelista, R., Savona, M. (2006). Innovation and economic performance in services: a firm-level analysis. Cambridge Journal of Economics, 30(3), 435–458. https://doi.org/10.1093/cje/bei067
Van Leeuwen, G., Klomp, L. (2006). On the contribution of innovation to multi-factor productivity growth. Economics of Innovation and New Technology, 15(4–5), 367–390. https://doi.org/10.1080/10438590500512927
Mansury, M., Love, J. (2008). Innovation, productivity and growth in US business services: A firm-level analysis. Technovation, 28(1–2), 52-62. https://doi.org/10.1016/j.technovation.2007.06.002
Lin, L. (2012). The impact of service innovation on firm performance. The Service Industries Journal, 33(15–16), 1599–1632. https://doi.org/10.1080/02642069.2011.638712
Lööf H., Mairesse J., Mohnen P. CDM 20 years after. Economics of Innovation and New Technology. 2017. Vol. 26, no. 1-2. P. 1–5.
OECD/Eurostat. Oslo manual 2018: guidelines for collecting, reporting and using data on innovation. 4th ed. OECD Publishing, 2018.
Hall B., Mairesse J. Empirical studies of innovation in the knowledge-driven economy. Economics of Innovation and New Technology. 2006. Vol. 15, no. 4-5. P. 289–299.
Bartz-Zuccala W., Mohnen P., Schweiger H. The role of innovation and management practices in determining firm productivity. Comparative Economic Studies. 2018. Vol. 60. P. 502–530.
Рижкова Ю., Жукович І., Єгоров І. Методологія та практика проведення обстеження інноваційної діяльності підприємств у країнах Європи. Статистика України. 2013. № 3. С. 50–54.
Cohen W. Fifty years of empirical studies of innovative activity and performance. Handbook of the Economics of Innovation / ed. by B. Hall, N. Rosenberg. 2010. P. 129–213.
Mairesse J., Robin S. The Importance of Process and Product Innovation for Productivity in French Manufacturing and Service Industries. Innovation and Growth: From R&D Strategies of Innovating Firms to Economy-wide Technological Change / ed. by M. Andersson et al. 2012. P. 128–159.
Aghion P., Akcigit U., Howitt P. Chapter 1 - What Do We Learn From Schumpeterian Growth Theory?. Handbook of Economic Growth. 2014. P. 515–563.
Aghion P., Akcigit U., Howitt P. The Schumpeterian Growth Paradigm. Annual Review of Economics. 2015. No. 7. P. 557–575.
Competition and Innovation: an Inverted-U Relationship / P. Aghion et al. The Quarterly Journal of Economics. 2005. Vol. 120, no. 2. P. 701–728.
Hashmi A. Competition and Innovation: The Inverted-U Relationship Revisited. Review of Economics and Statistics. 2013. Vol. 95, no. 5. P. 1653–1668.
Peneder M., Woerter M. Competition, R&D and innovation: testing the inverted-U in a simultaneous system. Journal of Evolutionary Economics. 2013. No. 24. P. 653–687.
McGuirk H., Lenihan H., Hart M. Measuring the impact of innovative human capital on small firms’ propensity to innovate. Research Policy. 2015. Vol. 44, no. 4. P. 965–976.
Morikawa M. Information Technology and the Performance of Japanese SMEs. Small Business Economics. 2004. Vol. 23, no. 3. P. 171–177.
Koellinger P. The relationship between technology, innovation, and firm performance – Empirical evidence from e-business in Europe. Research Policy. 2008. Vol. 37, no. 8. P. 1317–1328.
Hempell T., Zwick T. New technology, work organisation, and innovation. Economics of Innovation and New Technology. 2008. Vol. 17, no. 4. P. 331–354.
Higón D. The impact of ICT on innovation activities: Evidence for UK SMEs. International Small Business Journal. 2012. Vol. 30, no. 6. P. 684–699.
ICT, Innovation and Firm Performance: The Transition Economies Context / S. Gërguri-Rashiti et al. Thunderbird International Business Review. 2017. Vol. 59, no. 1. P. 93–102.
Dynamic models of R & D, innovation and productivity: Panel data evidence for Dutch and French manufacturing / W. Raymond et al. European Economic Review. 2015. Vol. 78. P. 285–306.
Hall B. Innovation and Productivity. Nordic Economic Policy Review. 2011. No. 2. P. 167–203.
Lööf H., Heshmati A. On the relationship between innovation and performance: A sensitivity analysis. Economics of Innovation and New Technology. 2006. Vol. 15, no. 4-5. P. 317–344.
Cainelli G., Evangelista R., Savona M. Innovation and economic performance in services: a firm-level analysis. Cambridge Journal of Economics. 2006. Vol. 30, no. 3. P. 435–458.
Van Leeuwen G., Klomp L. On the contribution of innovation to multi-factor productivity growth. Economics of Innovation and New Technology. 2006. Vol. 15, no. 4-5. P. 367–390.
Mansury M., Love J. Innovation, productivity and growth in US business services: A firm-level analysis. Technovation. 2008. Vol. 28, no. 1-2. P. 52–62.
Lin L. The impact of service innovation on firm performance. The Service Industries Journal. 2012. Vol. 33, no. 15-16. P. 1599–1632.
This work is licensed under a Creative Commons Attribution 4.0 International License.
