Industry structure, R&D intensity, and performance in New Zealand

Abstract

PurposeThe purpose of this paper is to test the Porter hypothesis using the Structure–Conduct–Performance (SCP) framework for a panel data set of industries in New Zealand.Design/methodology/approachThe authors developed a mutually exclusive classification of the process-led and product-led innovation strategies and examined their impact on SCP in the high (low) carbon emission industries.FindingsThe findings show that the high-level concentration provides more beneficial opportunities for product and geographical diversification that require a high level of R&D intensity. The authors find that in high-carbon emission industries, the product-led innovation strategies have a significant positive impact on the industry structure and performance which provide support for the Porter hypothesis.Practical implicationsThe findings imply that competition effects firm-level investments, in particular, capital expenditure to address carbon emissions, as such investments give firms a head start over rivals, and increase their profit margin compared to other firms over time. Overall, the empirical results lend support to the Porter hypothesis and suggest that understanding of industries’ unique R&D attributes is critical to developing regulations to support industries in smaller economies.Originality/valueIt is the first study that examines the industry structure, R&D intensity and performance in a small developed economy of New Zealand.