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Firm Size and Innovation in the Service Sector

Author

Listed:
  • David B. Audretsch

    (Indiana University Bloomington)

  • Marian Hafenstein

    (German Institute for Economic Research (DIW Berlin))

  • Alexander S. Kritikos

    (German Institute for Economic Research (DIW Berlin), University of Potsdam, IZA (Bonn), IAB (Nuremberg))

  • Alexander Schiersch

    (German Institute for Economic Research (DIW Berlin))

Abstract
A rich literature links knowledge inputs with innovative outputs. However, most of what is known is restricted to manufacturing. This paper analyzes whether the three aspects involving innovative activity - R&D; innovative output; and productivity - hold for knowledge intensive services. Combining the models of Crepon et al. (1998) and of Ackerberg et al. (2015), allows for causal interpretation of the relationship between innovation output and labor productivity. We find that knowledge intensive services benefit from innovation activities in the sense that these activities causally increase their labor productivity. Moreover, the firm size advantage found for manufacturing in previous studies nearly disappears for knowledge intensive services.

Suggested Citation

  • David B. Audretsch & Marian Hafenstein & Alexander S. Kritikos & Alexander Schiersch, 2019. "Firm Size and Innovation in the Service Sector," CEPA Discussion Papers 04, Center for Economic Policy Analysis.
    • Handle: RePEc:pot:cepadp:04
    DOI: 10.25932/publishup-42767
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    More about this item

    Keywords

    MSMEs; R&D; Service Sector; Innovation; Productivity; Entrepreneurship;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • L80 - Industrial Organization - - Industry Studies: Services - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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