Exploring the Relationship of Innovation Intensity, Knowledge Production and Productivity in Greek SMEs Before the Eruption of Debt Crisis

Abstract

In the context of this paper, we examine the relationship of innovation density, labour productivity and knowledge production in terms of new to the market products for Greece, before the eruption of debt crisis. This paper extends prior research (Hatzikian 2013a, b) and the main question of this study is, “What was the most effective innovation intensity that a firm needs to have for its firm performance before the Greek debt Crisis?” To this end, we use productivity and knowledge production or growth as metrics of firm performance and we explore their behaviour with regard to a firm’s innovation intensity. We test the hypotheses that there is a U-shaped relationship between innovation intensity and productivity, and there is an inverted U-shaped relationship between innovation intensity and knowledge production in the short-term period. We apply the method for examining nonlinearities, that is, the introduction of squared terms as independent variables. The collected variables are used in a multivariate multiple regression model formulation to evaluate the relative performance associated with them. For this reason, a number of variables are used, like the innovation intensity, the squared term of innovation intensity, the research and development (R&D) personnel, as well as the firm size. We rely on the final results of a research project on women in innovation, technology and science, based on 372 questionnaires selected on a 2-year time period (2004–2006) before the eruption of the debt crisis in Greece.