Young firms and innovation: A microeconometric analysis

This paper discusses the sources of product innovation in young innovative companies (YICs), here defined as firms engaged in product innovation and with less than 8 years of activity. In particular, we look at in-house and external R&D and at the acquisition of external technology in its embodied and disembodied components. These input–output relationships are tested on a sample of 2713 innovative Italian firms. A sample-selection approach is applied to study both the determinants of product innovation and the factors affecting the intensity of innovation.Results show that in-house R&D is linked to the propensity to introduce product innovation both in mature firms and YICs; however, innovation intensity in the YICs is mainly dependent on embodied technical change from external sources, while in-house R&D does not play a significant role.

► This paper discusses the sources (R&D and at the acquisition of external technology) of product innovation in young innovative companies (YICs).
► These input–output relationships are tested on a sample of 2713 innovative Italian firms.
► We show that in-house R&D is linked to the propensity to introduce product innovation both in mature firms and YICs.
► We also find that innovation intensity in the YICs is mainly dependent on embodied technical change from external sources, while in-house R&D does not play a significant role.