Abstract
In this study, we examine the association between firms’ innovation process and their product quality improvement and new product introduction strategies. Our focus is on the distinction between firms’ product quality improvement and variety extension objectives. We use data from Turkish Statistical Institute (TURKSTAT) Innovation Survey between the years 2014 and 2016. According to the descriptive results, firms report that product quality is more important than product variety. Additionally, high technology sectors such as computer and pharmaceuticals have market concentration ratios. Estimations results show that there is a positive relationship between patent applications by firms and probability of product innovation for small and medium sized firms. Moreover, most of the product variety objectives indicators and technology level are significant and positively related with probability of product innovation for type of firms. Probability of innovation increases with variety objective whereas indicators related with quality objective are insignificant.
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