Firm heterogeneity and innovation strategy decision

Abstract

Research on innovation strategy has focused on dichotomic (yes or no) options and the determinants of technological (product and process) innovations. This paper includes a variety of innovation strategies to extend the Crepon–Duguet–Mairesse model suggested by Crépon et al. (1998). We extend the study of innovation strategy to nontechnological innovations (organizational and marketing), encompassing all possible combinations of innovative alternatives for the firm (16 strategies). Furthermore, we use a panel of four waves (2009–2010, 2011–2012, 2013–2014, and 2015–2016) of the Chilean innovation survey, which allows us to consider endogeneity using a fixed-effect multinomial logit model. Our results show the relevance of R&D spending per employee in all innovation strategies. Skilled employees positively affect organizational innovation strategies, and medium and large firms are more likely to choose strategies involving process and organizational innovation. The choice of innovation strategy is relevant to a firm’s productivity. The coefficient increases monotonically from simple to semi-complex to complex strategies, all of which are positive and statistically significant. This study’s results seem more plausible than those found in previous literature.