The Impact of Innovation on Firm Performance in Peru

Alvarez, Lourdes and Bullón, Angel (2025): The Impact of Innovation on Firm Performance in Peru. Published in: Working papers at International American Bank , Vol. 32, No. 1 (16 January 2026): pp. 25-32.

Abstract

Innovation is a fundamental driver of productivity, playing a pivotal role in fostering market dynamism. This study examines firm-level data from Peru, analyzing innovation activities in small and large enterprises across the manufacturing and services sectors. Employing a rigorous methodological framework—including Fligner–Policello tests, matching techniques, and unconditional quantile treatment effects—the analysis reveals that innovation significantly increases sales growth in large manufacturing firms and service-sector SMEs, while no immediate effects on productivity are detected. Regarding firm longevity, significant impacts are observed exclusively among large manufacturers. These findings indicate that, in contrast to sales, productivity gains from innovation may require a longer horizon to emerge.

• Item Type: MPRA Paper
• Language: English
• Keywords: Business innovation, Sales growth, Labor productivity, Firm longevity, SMEs, Manufacturing and Services.
• Subjects: L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O31 - Innovation and Invention: Processes and Incentives

References

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