Innovation and Firm Performance: A Longitudinal Study of the Innovation Survey in Denmark

Abstrakt

Enterprises in all sectors face extensive competitive and changing environments, and as a consequence, ought to have a modern and innovative mindset to compete. Research has shown that investments in specific innovation activities, depending on the objective, has a substantial effect on firm performance. This study aims to determine what the relationship between innovation input, innovation output and firm performance for Danish enterprises is, namely, which factors are vital given the different objectives. This relationship has been studied mainly by looking at expenditures to innovation activities and cooperation, implemented innovation types, and firm performance. Building on existing literature concerning R&D and innovation studies, it was found appropriate to conduct a quantitative analysis utilizing longitudinal estimation techniques, including both linear and quasi-likelihood methods to adapt the different characteristics of the variables. The econometric models will be estimated on a balanced data panel covering nine industries from 2009 to 2016, mostly based on data from the Innovation Survey by Statistics Denmark. The results of the regression analyses indicate several strong and meaningful relationships. Of the innovation activities, that is R&D and non-R&D activities, only expenditures to intramural and consultancy services provided a significant effect on sales given a two years delay, and all innovation activities except acquisition of external rights suggest a substantial influence on the implementation of either one of the different types of innovation. Out of these innovation types, the findings suggest that marketing innovations play a key role in generating income short-term.