Competition and Innovation: ICT- and non-ICT-enabled Product and Process Innovations

Nepelski, Daniel (2010): Competition and Innovation: ICT- and non-ICT-enabled Product and Process Innovations.

Abstract

The reason for contradictory predictions of the models studying the impact of competi¬tion on innovation is the varying assumptions with respect to competition or innovation type. Thus, we study how the impact of competition changes with different types of innova¬tive Output. In particular, we distinguish between non-ICT - and ICT-enabled product and process innovations. To allow for such flexibility, we apply Bayesian inference techniques and use direct measures of innovative that control for the heterogeneity of innovation Output. Our analysis provides evidence that supports the hypothesis that the effect of market com¬petition on innovation is not alike for all types of innovation. We observe an inverse U-shape relationship between competition and non-ICT-enabled and a clear U-shape dependency for ICT-enabled innovations. However, the results become considerably weaker, once industry effects are taken into account. Thus, although the impact of competition on innovation varies with the type of innovation, other factors seem to have a stronger impact on the incentives to innovate.

• Item Type: MPRA Paper
• Language: English
• Keywords: Competition, innovation, Information and communication technologies
• Subjects: L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L20 - General; L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L22 - Firm Organization and Market Structure; 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

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