Innovation and firm growth in high-tech sectors: a quantile regression approach

Reference:

Coad, A. and Rao Nicholson, R., 2008. Innovation and firm growth in high-tech sectors: a quantile regression approach. Research Policy, 37 (4), pp. 633-648.

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Official URL:

http://dx.doi.org/10.1016/j.respol.2008.01.003

Abstract

We relate innovation to sales growth for incumbent firms in high-tech sectors. A firm, on average, experiences only modest growth and may grow for a number of reasons that may or may not be related to innovative activity. However, given that the returns to innovation are highly skewed and that growth rates distributions are heavy-tailed, it may be misleading to use regression techniques that focus on the ‘average effect for the average firm’. Using a quantile regression approach, we observe that innovation is of crucial importance for a handful of ‘superstar’ fast-growth firms.

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