Complementarity in Product, Process, and Organizational Innovation Decisions: Evidence from European Firms

Abstract

This work uses a sample of firm-level data from seven EU countries to explore the possible roles of simultaneity and heterogeneity in determining firms' decisions to engage in three types of innovation. Process, product, and organizational innovations are considered jointly, by applying a multivariate probit specification. The results support the hypothesis that the three innovation decisions are interdependent. This has straightforward implications for the practice of R&D managers. In order to gain advantages from an innovation, innovation managers need to jointly exploit these different types of innovation activities and their potential synergies. Given that the innovative firms in the sample, desire additional credit which actually they do not obtain, R&D managers should also be concerned with the financing sources firms have access to. Finally, from the analysis it also emerges that public support boost all the three forms of innovation.