Piekkola, H., & Rahko, J. (2019). Innovative growth: the role of market power and negative selection. Economics of Innovation and New Technology, 1-22.

Successful innovation can depend on firms’ ability to gather and utilize external knowledge, and the ability to translate knowledge and competences into profitable products and processes.

The paper, “Innovative growth: the role of market power and negative Selection” by  Hannu Piekkola and Jaana Rahko, analyses the role of market share for innovation and productivity. Firms with low market share may be at a disadvantage both in obtaining external information and in being able to effectively utilize it in their innovation activities. The authors examine the case of Finland during the period 1995-2013.

They find that:

  • High-market-share firms dominate innovation activity, and their profitability from innovations is higher.
  • Low-market-share firms have high productivity growth but low profitability with negative selection, as implied by their low initial productivity

 

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