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While the extant innovation literature has provided extensive evidence of the so-called “demand-pull” effect, the possible diverse impact of demand evolution on product vs process innovation activities has not been yet investigated. This paper develops a formal model predicting a larger inducing impact of past sales in fostering product rather than process innovation. This prediction is then tested through a dynamic microeconometric model, controlling for R&D persistence, sample selection, observed and unobservable individual firm effects and time and sectoral peculiarities. Results are consistent with the model and suggest that an expansionary economic policy may benefit the diffusion of new products or even the emergence of entire new sectors.

In this work, we test the employment impact of distinct types of innovative investments using a representative sample of Spanish manufacturing firms over the period 2002-2013. Our GMM-SYS estimates generate various results, which are partially in contrast with the extant literature. Indeed, estimations carried out on the entire sample do not provide statistically significant evidence of the expected labor-friendly nature of innovation. More in detail, neither R&D nor investment in innovative machineries and equipment (the so-called embodied technological change, ETC) turn out to have any significant employment effect. However, the job-creation impact of R&D expenditures becomes highly significant when the focus is limited to the high-tech firms. On the other hand - and interestingly - ETC exhibits its labor-saving nature when SMEs are singled out.

The paper adds to the literature on the barriers to innovation in two ways. First, we assess comparatively what mostly constrains firms' ability to translate investment in innovation activity into new products and processes, whether it is mainly finance, as most of the literature would suggest, or whether it is mostly knowledge and market-related aspects. Second, we suggest a method to correct for the sample selection bias that often affects empirical contributions to this scholarship. By filtering out firms that are not interested in innovation from those that struggle to engage in it, we obtain a relevant sample of potential innovators, which allows us to analyse the comparative effect of financial and non-financial barriers on innovation success. We find that demand-side factors, particularly concentrated market structure and lack of demand, are as important as financial constraints in determining firms' innovation failures. This evidence redirects attention from financial to non-financial barriers by considering traditional demand, market structure and regulation factors involved in reduced firm innovation performance. The empirical analysis is based on an unbalanced panel of firm-level data from four waves of the UK Community Innovation Survey (CIS) between 2002 and 2010 merged with data from the UK Business Structure Database. (C) 2017 Elsevier B.V. All rights reserved.

This paper builds upon Pellegrino et al. (Struct Chang Econ Dyn 23:329–340, 2012) further analysing the determinants of product innovation in Italian young innovative companies (YICs) by looking at in-house and external RD however, YICs turn out to be less in-house R&D-based and, unlike their mature counterparts, more dependent on external sources of knowledge. While this outcome corroborates and further reinforce what found—using a different methodology—in Pellegrino et al. (Struct Chang Econ Dyn 23:329–340, 2012), in this study, other entrepreneurial attitudes such as the ability to cooperate with other firms in producing innovation or the capacity to develop significant organizational changes are also investigated. The results of the econometric estimations show that these attitudes turn out to be key innovative strategies in the incumbent firms but, in some specific cases (such as for the ability to cooperate), appear to be far less important in the YICs. These results are somehow worrying, since they show that Italian innovative entrepreneurs are mostly driven by routinized rather than creative strategies.