Service-sector competition, innovation and R&D

Arbeitspapier

The central prediction of the Aghion et al. (2005) model is an inverted U-shaped relation between innovation and competition. The model is built on the assumption of a product market and has not yet been empirically tested on service-sector firms. Using detailed firm-level data, we find the inverse U-shaped relation to hold for both small and large service-sector firms. However, non-exporting service firms deviate from the overall pattern. A more detailed breakdown of innovation expenditures shows that the inverse U-shaped pattern holds for both intramural R&D and training, but not for extramural R&D. Finally, as competition increases, small firms tend to seek more strategic alliances with competitors while large firms tend to decrease their collaboration with competitors. To some extent, the behavior of large firms can be due to their greater capacity to handle innovation projects internally and as competition increases, so does the payoff of an edge to competitors.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SSE/EFI Working Paper Series in Economics and Finance ; No. 702

Classification and Topics

• Classification: Wirtschaft ; Market Structure, Pricing, and Design: General ; Market Structure, Firm Strategy, and Market Performance: General ; Industry Studies: Manufacturing: General ; Innovation; Research and Development; Technological Change; Intellectual Property Rights: General
• Subject: R&D ; innovation ; competition ; service sector ; Dienstleistungssektor ; Betriebliche Forschung ; Innovation ; Wettbewerb ; Schweden

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Tinqvall, Patrik Gustavsson ; Karpaty, Patrik
• Event: Veröffentlichung
• (who): Stockholm School of Economics, The Economic Research Institute (EFI)
• (where): Stockholm
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/56370
• Last update: 10.03.2025, 11:41 AM CET