Working Paper Series in Economics and Institutions of Innovation,
Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

Abstract: This paper analyzes the effect of various innovation strategies of firms on their future performance, captured by labour productivity. Using five waves of the Community Innovation Survey in Sweden, we have traced the innovative behaviour of firms over a decade, i.e. from 2002 to 2012. We distinguish between sixteen innovation strategies, which compose of Schumpeterian four types of innovations, i.e. process, product, marketing, and organizational (simple innovation strategies) plus various combinations of these four types (complex innovation strategies). The main findings indicate that those firms that choose and afford to have a complex innovation strategy are better off in terms of their future productivity in compare with both those firms that choose not to innovative (base group) and those firms that choose simple innovation strategies. Moreover, not all types of complex innovation strategies affect the future productivity significantly; rather, there are only few of them. This necessitates a purposeful choice of innovation strategy for firms.

Keywords: Innovation Strategy; firm performance; productivity; firm level; Community Innovation Survey; Panel

JEL-codes: D22; L20; O31; O32

31 pages, March 16, 2015

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