Do Spillovers Stimulate Incremental or Drastic Product Innovations? Hypotheses and Evidence from German Establishment Data

44 Pages Posted: 25 Apr 2006 Last revised: 1 Jul 2014

See all articles by Kornelius Kraft

Kornelius Kraft

University of Dortmund - Department of Economics; IZA Institute of Labor Economics

Uwe Jirjahn

University of Trier - Faculty of Economics

Date Written: 2006

Abstract

We estimate the determinants of various types of product innovation. Knowledge spillovers from rivals have a positive impact on incremental innovations. This impact is largely independent of the participation in R&D cooperations. Spillovers exert no such independent influence on drastic innovation activities. The results support the hypothesis that establishments face difficulties in using knowledge that comes from areas they are not familiar with. Establishments exploit spillovers for incremental innovations rather than for drastic innovations. To a limited degree R&D cooperations can help to overcome the difficulties in using spillovers for drastic innovations. Furthermore, our estimates provide evidence that a firm's own R&D effort and the use of outside information are substitutive.

Keywords: New Products, Patents, Spillovers, Learning, R&D

JEL Classification: L15, L60, O31, O32

Suggested Citation

Kraft, Kornelius and Jirjahn, Uwe, Do Spillovers Stimulate Incremental or Drastic Product Innovations? Hypotheses and Evidence from German Establishment Data (2006). ZEW - Centre for European Economic Research Discussion Paper No. 06-023, Available at SSRN: https://ssrn.com/abstract=897930 or http://dx.doi.org/10.2139/ssrn.897930

Kornelius Kraft (Contact Author)

University of Dortmund - Department of Economics ( email )

D-44221 Dortmund
Germany
+49 231 755-3152 (Phone)
+49 231 755-3155 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Uwe Jirjahn

University of Trier - Faculty of Economics ( email )

Trier, 54286
Germany

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