Product-Marketing Innovation, Skills, and Firm Productivity Growth

The role of product and marketing innovation for productivity growth is addressed using survey and register data for the Danish economy. It is hypothesized that product and marketing innovation are complementary inputs and that innovation activities are skill-intensive. It is established that product and marketing innovation in skill-intensive firms results in significantly faster productivity growth. Moreover, product and marketing innovation have independent roles in productivity growth, which cannot be attributed to organizational changes. Finally, we apply an instrument variable approach for firms, innovation choices to study endogeneity. The results strongly support the idea that product–marketing innovation leads to faster productivity growth in skill-intensive firms.