Cross Sectoral Differences in Drivers of Innovation

Abstract

This paper analyses differences across sectors in firms’ propensity to innovate and the relative importance of inputs to innovation classifying firms into four broad sectors. The propensity and drivers of four types of innovation (new to firm, new to market, process and organisational) within these sectors are then analysed. The results indicate that, for new to firm and new to market innovation, there is a strong degree of heterogeneity in the drivers of innovation across sectors. The propensity to introduce process or organisational innovations varies slightly across sectors but that there is no evidence of differences across sectors in the drivers of innovation. These results have important implications for policy instruments to meet the needs of targeted firms.