Cross-sectoral differences in the drivers of innovation: evidence from the Irish Community Innovation Survey

Purpose: The purpose of this paper is to analyse differences in the drivers of firm innovation performance across sectors. The literature often makes the assumption that firms in different sectors differ in their propensity to innovate but not in the drivers of innovation. The authors empirically assess whether this assumption is accurate through a series of econometric estimations and tests. Design/methodology/approach: The data used are derived from the Irish Community Innovation Survey 2004-2006. A series of multivariate probit models are estimated and the resulting coefficients are tested for parameter stability across sectors using likelihood ratio tests. Findings: The results indicate that there is a strong degree of heterogeneity in the drivers of innovation across sectors. The determinants of process, organisational, new to firm and new to market innovation varies across sectors suggesting that the pooling of sectors in an innovation production function may lead to biased inferences. Research limitations/implications: The implications of the results are that innovation policies targeted at stimulating innovation need to be tailored to particular industries. One size fits all policies would seem inappropriate given the large degree of heterogeneity observed across the drivers of innovation in different sectors. Originality/value: The value of this paper is that it provides an empirical test as to whether it is suitable to group sectoral data when estimating innovation production functions. Most papers simply include sectoral dummies, implying that only the propensity to innovate differs across sectors and that the slope of the coefficient estimates are in fact consistent across sectors.

Eco-innovation – does additional engagement lead to additional rewards?

Purpose: Eco-innovation is any form of product, process or organisational innovation that contributes towards sustainable development. Firms can eco-innovate in a variety of ways. The purpose of this paper is to identify nine different eco-innovation activities – including such items as reducing material use per unit of output, reducing energy use per unit of output, reducing carbon dioxide (CO2) “footprint” – and the authors ask whether these act as substitutes or complements to one another. Design/methodology/approach: Eco-innovation is any form of product, process or organisational innovation that contributes towards sustainable development. Firms can eco-innovate in a variety of ways. In this paper the authors identify nine different eco-innovation activities – including such items as reducing material use per unit of output, reducing energy use per unit of output, reducing CO2 “footprint” – and the authors ask whether these act as substitutes or complements to one another. Findings: Introducing only one eco-innovation activity has little payoff (in terms of turnover per worker) with only those firms who reduce their CO2 “footprint” having higher levels of turnover per worker. When introducing more than one eco-innovation activity the authors find that certain eco-innovation activities complement one another (e.g. reducing material use within the firm at the same time as improving the ability to recycle the product after use) others act as substitutes (e.g. reducing material use within the firm at the same time as recycling waste, water or materials within the firm). Practical implications: The results suggest that firms can maximise their productive capacity by considering specific combinations of eco-innovation. This suggests that firms should plan to introduce eco-innovation which act as complements, thereby, boosting productivity. It also suggests that eco-innovation stimuli, introduced by policy makers, should be targeted at complementary eco-innovations. Originality/value: The paper analyses whether eco-innovations act as complements or substitutes. While a number of studies have analysed the importance of eco-innovation for firm performance, few have assessed the extent to which diverse types of eco-innovation interact with each other to complement or substitute for one another.