Innovative Sales Research Articles

Effect of R&D subsidies and tax credits on the innovative processes of Chilean firms

PropósitoEste estudio evalúa el impacto de los subsidios e incentivos tributarios para investigación y desarrollo (I&D) sobre los procesos innovativos de las firmas chilenas.Diseño/metodología/enfoqueSe estiman modelos Probit y Tobit con variables instrumentales para pseudo-panel a partir de datos provenientes de diversas versiones de la Encuesta de Innovación que cubren el periodo 2007–2016.ResultadosLos resultados muestran que los subsidios e incentivos tributarios para I&D tienen un efecto positivo y estadísticamente significativo sobre la probabilidad de realizar I&D interna y externa, pero no afectan la intensidad del gasto en I&D lo que refleja un efecto expulsión sobre los fondos privados de ambos instrumentos. Por otro lado, las firmas que reciben simultáneamente subsidios e incentivos tributarios para I&D tienen menor porcentaje de ventas innovativas. Además, no se detecta un impacto significativo de los subsidios y/o incentivos tributarios sobre los derechos de propiedad intelectual solicitados por las firmas.Originalidad/valorAsí, se concluye que ambos instrumentos no han sido efectivos para incentivar los outputs innovativos en las firmas chilenas.

Public funding effects on inputs and outputs from the innovative process in Chilean firms

ABSTRACT The objective of this study is to identify the effect of public funding instruments on the innovation expenditure intensity, percentage of innovative sales, and the number of intellectual property rights (IPRs) applications performed by Chilean firms using pseudo-panel data. Given the lack of panel data to perform this type of evaluation for a long period, repeated cross-sectional data of the different versions of the Innovation Survey are used to generate a pseudo-panel in which the firms are grouped in cohorts according to the economic sector to which they belong. The results estimated using linear and Tobit models of pseudo-panel with instrumental variables show that the use of public funding for innovation has a positive and significant effect on the innovation expenditure intensity and percentage of innovative sales, but that the effects on the number of IPRs applications performed by firms are not robust to different methods.

The formation of Coasean institutions to provide university knowledge for innovation: a case study and econometric evidence for Switzerland

“Coasean” institutions are an alternative institutional form that provides a solution to some market and coordination failures. As such they can weaken considerably the case for public subsidies in a vast range of context. They are “market-based” and an inexpensive way to address the public good issues of R&D. They are, however, a largely overlooked institutional option. Early theoretical notions emphasize the advantages of such an institutional setting, however, broader empirical evidence about their effectiveness is lacking. We apply two different empirical approaches to assess the relationship between “Coasean” institutions and the innovation performance of SMEs. In a case study, we investigate Inspire AG, a successful bottom-up, institutional invention in the spirit of a “Coasean” institution. To assess the general validity of this model, we use representative firm-level data to econometrically investigate the relationship between “Coasean” institutions and the sales share of innovative products. “Coasean” institutions are positively related with innovative sales only if the company has a sufficiently large absorptive capacity for external knowledge. This positive moderating effect of “Coasean” institutions for the innovation performance is larger for SMEs. Our empirical findings provide a strong case for policies aimed at encouraging the operation of this type of institution.

Florida Fruit and Vegetable Growers' Adaptation and Response to COVID-19

While Florida is known for theme parks and beaches, its agricultural sector is the second largest industry in the state and accounts for a substantial proportion of the United States’ annual production of many fruit and vegetable crops. Florida’s farmers have capitalized on the fact that Florida is a top tourism destination, with 70-80% of large producers’ sales targeting the theme-park, hotel, restaurant, and cruise line industries that were decimated by stay-at-home orders. With the exception of citrus, peak harvest for these crops is from March to May, which coincided exactly with the onset of the COVID-19 pandemic in the spring of 2020. Florida producers were left with hundreds of millions of pounds of produce with no available market. Florida farmers utilized innovative sales and market opportunities to sell as much of their highly perishable produce as they could. In addition, despite substantial personal hardship and financial losses, producers paid to harvest and transport produce to food banks and other hunger-relief organizations that were overwhelmed with demand from people who recently lost their jobs or were furloughed due to the closures of restaurants, hotels, theme parks, and cruise lines due to the pandemic. However, with the sheer volume of perishable produce left without buyers, some crops simply had to be tilled under or terminated. The COVID-19 pandemic increased awareness of and demand for Florida agricultural products among Florida residents, leading some grocery stores around the state to commit to buying more produce from Florida growers. A variety of programs and resources to help connect Florida growers to buyers were developed by the University of Florida, Institute of Food and Agricultural Sciences; industry groups; and state and regional organizations. This provides a valuable foundation to support food system resilience for future public health emergencies and natural disasters.

Does external R&D matter for family firm innovation? Evidence from the Italian manufacturing industry

This article focuses on the relationship between external R&D and firm innovation output. Using a sample of Italian manufacturing firms over the period 2007–2009, we estimate the effect of R&D collaboration with the aim to detect differences between family and non-family firms. The study shows that the R&D acquired from external sources has a positive impact on innovative sales, especially for family firms. This result holds when using either the extensive or the intensive margins of R&D collaboration, thereby suggesting that family companies have a greater capacity to translate external R&D into tangible economic benefits. We also find that family firms benefit from the diversity of R&D collaboration.

Product innovation and informal market competition in sub-Saharan Africa

The interaction between formal and informal businesses continues to grow in African countries. Yet, competition from informal enterprises remains one of the top three obstacles formal businesses face in sub-Saharan Africa. This paper investigates the effect of informal competition on the performance of innovative products introduced by formal firms. We combine the World Bank’s Enterprise Survey with the Innovation Follow-up Survey for five sub-Saharan African countries, and construct two indicators of informal competition, one regional (local)-specific and the other one industry-specific. We find that local informal competition has a robust negative effect on product innovation intensity of formal firms, while within industry informal competition enhances innovative sales. However, larger firms are less affected by local informal competition and actually get a boost in innovative sales from informal competition. We argue that local informal competition harms the performance of product innovation, but only for formal firms that lack strategic collaborative ‘footholds’ in the informal economy.

Research and development as an initiator of fixed capital investment

This paper investigates the causal relationship between firms’ R&D expenditures and their investments in fixed capital. It argues that a firm’s R&D expenditures lead to inventions that in turn trigger investments in fixed capital, as the manufacturing of newly invented goods or services requires the creation of additional production capacities. Using firm-level panel data ranging from 1990 to 2014, the paper applies a 2SLS approach to uncover the direction of causality between R&D expenditures and fixed capital investment. To obtain exogenous instruments, the paper exploits shocks to i) technological opportunities and ii) innovative sales of capital goods industries. The results reveal that firms’ R&D expenditures cause subsequent investments in fixed capital, while there is no evidence of the reverse effect. An increase in R&D expenditures of 1% leads to an increase in fixed capital investments between 0.4% and 0.6%. Therefore, increasing R&D expenditures may not only be valuable for long-term economic growth but also, via fixed capital investment, provide the economy with positive stimuli in times of prolonged stagnation.

The Knowledge to Western Wine Sales Models among Georgian Wineries

Do certain common sales principles guide uncommonly diversified companies doing heritage wines from their birthplace – Georgia? As many sources confirm and recognize the birth of Wine in Caucasus – Georgia, this place is becoming very popular among fans of wine who visit Georgia to see its oldest way of wine making. Heritage wine was historically produced in Georgia in special clay potter vessels. This vessel is called Qvevri. The aim of the article is to study how Georgian winemakers know modern wine sales models. In addition, we want to know the role of different models for Georgian wine sales to international markets. Wine trade usually is the process in which wine distributors and different wineries sell wine and it is a great stage of wine marketing. Suppliers, buyers, associations, exhibitions, hospitality and retail networks participating in this process make final consumers buy wine. Wine sales staff understands the competition, people’s needs, wants, motivations and drivers. The aim of this article is to analyze whether wine makers in Georgia know innovative sales approaches and what sales models are appreciated by Georgian Qvevri wineries. Research method: The study was conducted in two steps and literature analysis was made. A quantitative online survey was used to measure how wine makers know modern wine sales models. The survey, originally developed at International Black Sea University, was modified to include questions on wine sales. The resulting survey included 6 questions using simple rating questions and short answer replies. In order to measure the knowledge of Models of Wine Sales, respondents, who were wine makers and some business people, were invited to participate in the quantitative and qualitative study. Findings: the study made it obvious that Georgian wineries know less about modern ways of wine sales in target markets. This can serve as a guideline to future sales.

Alles F&E? Performance-Effekte phasenspezifischer externer Kooperation in KMU

Zusammenfassung Kleine und mittlere Unternehmen (KMU) sind stark auf externes Wissen angewiesen. Gleichzeitig weisen KMU einen geringen Strukturierungsgrad in der unternehmensinternen Forschung und Entwicklung (F&E) auf, wodurch der Zugriff auf externes Wissen auch über kooperative F&E hinaus erfolgen muss. Basierend auf Argumenten aus der ressourcenbasierten Sicht auf das Unternehmen (RBV) und aus der Forschung zu organisationaler Absorptionsfähigkeit wird argumentiert, dass KMU in verschiedenen Phasen des Innovationsprozesses von der Kooperation mit unternehmensexternen Partnern profitieren. Die aufgestellten Hypothesen werden anhand von Daten aus dem Mannheimer Innovation Panel (MIP) getestet. Der Datensatz umfasst 1.475 KMU. Der Einfluss von phasenspezifischer Kooperation auf den innovativen Umsatz geht weit über F&E hinaus und ist vom gewählten Partner abhängig. Abstract Small and medium sized enterprises (SMEs) strongly depend on external knowledge. At the same time, SMEs face several resource constraints. Especially the marginally structured internal research and development (R&D) function leads to knowledge sourcing beyond cooperative R&D. Using arguments from the Resource-Based View of the firm (RBV) and Absorptive Capacity (AC), this study hypothesizes on external collaboration and innovative sales taking partner- and stage-specificity into account. Data originates from the Mannheim Innovation Panel (MIP) comprising 1.475 SMEs Results suggest a broad impact of stage-specific collaboration on innovative sales, which depends on the type of partner.

Innovative activities and investment decision: evidence from European firms

This paper investigates the role of innovative activity and other micro determinants, on firms’ investment behaviour. The empirical analysis is based on a large representative and cross-country comparative sample of manufacturing firms across seven European countries during the global financial crisis 2007–2009. It is argued that innovative activities, measured either by an input variable (R&D) or by an output variable (innovative products sales), may boost additional investment in equipment and machinery. Given the significant share of firms which did not carry out any investment, a tobit procedure is adopted. Successively, in order to account for the potential simultaneity between investment decision and innovation activity variables, a seemingly unrelated regression equation methodology is applied. The results reveal that both R&D and innovative sales positively affect investment decisions, with the former having a stronger impact on investments, compared to the latter. The analysis also suggests that, after checking for a firm’s characteristics, firms in Germany and Spain are more likely to invest than those in France, Italy, and the UK.

Improving access to finance for young innovative enterprises with growth potential: Evidence of impact of R&D grant schemes on firms' outputs

AbstractResponding to the lack of in-depth research into the effects of R&D grants for scale-ups, this article examines how they impact upon firms' employment, firm economic and innovative performance, and firm innovative activities. Drawing on both policy evaluations and empirical literature relating to R&D programmes and firms' outputs, it contributes by discussing and comparing different types of R&D programmes and analyzing the wider policy implications. Overall, positive outcomes are found on employment, total sales and share of innovative sales (effects which can persist for several years), and companies' innovation capacities. Moreover, the effects for R&D grants for scale-ups are larger than the effects of both generic R&D grants and R&D subsidies. In terms of policy implications, R&D grants stimulate and prepare companies for growth and targeted funding (technology focused) delivers better results for disruptive innovations, whereas generic grants for small and medium-sized enterprises are better suited for knowledge diffusion. Despite the positive effects of milestone-based selection mechanisms and phased funding, they are still under-used. Competitive R&D grants help companies to attract follow up (especially equity) funding. When coupled with complementary services (e.g. networking, advice), there is a longer lasting effect. Lastly, tax incentives and grants are complementary as regards to their impact on firm growth and innovation activities.

Why the Concept of Private Demand for Innovations Should Be Understand: The case of ex-YU countries

This paper aims to provide a comparative analysis of private demand for innovation in the context of the ex-YU countries such as Slovenia, Croatia, Serbia and Macedonia from 2011 to 2016. One key variable for the importance of demand for innovation is the buyer sophistication. This signals the ability of buyers to select products and services based on performance rather than price and to bear the cost of products at the beginning of the life cycle. The companies that face a sophisticated domestic market are likely to sell high quality products and a close proximity to such consumers should to enables the company to better understand the needs and desires of the customers and how they perceive the value of the product. For cultural or historical reasons, buyers may be more demanding in some countries than in others. Hence, оur start point is that “higher degrees of buyer sophistication can to explain higher shares of innovative sales” (Hollanders and Es-Sadki, 2017, p. 42) and opposite “lower shares of innovative sales could to explain lower degrees of buyer sophistication” in the above countries. Thus, our analysis relies on two key indicators, the “buyer sophistication” and the “sales of new-to-market and new-to-firm product innovations”, which are including, the first in the Global Competitiveness Report and the second, in the European Innovation Scoreboard. Looking at the results, it can be noted that Serbia has a big gap between the two indicators, so the extent of buyer sophistication is lower from the extent of innovative sales. Аs business leaders make a subjective assessment of the GCR’s indicator Buyer sophistication, it can be assumed that Serbian business leaders assess the sophistication of domestic customers much lower than it is. This example is somewhat similar to the Slovenian business leaders. These two countries achieve the same level of sales of innovative products, while Macedonia and Croatia are in the same group and have lower sales of innovative products. This finding calls for demand-oriented policies which would have to influence the innovation culture in the market, making buyers more risk taking, aware of innovations and empower them to buy and use them.

COOPERATION FOR INNOVATION AND ITS IMPACT ON TECHNOLOGICAL AND NON-TECHNOLOGICAL INNOVATIONS: EMPIRICAL EVIDENCE FOR EUROPEAN SMES IN TRADITIONAL MANUFACTURING INDUSTRIES

Drawing on a sample of small and medium-sized enterprises (SMEs) in traditional manufacturing industries from seven EU regions, this study investigates how cooperation with external organisations affects technological (product and process) innovations and non-technological (organisational and marketing) innovations as well as the commercial success of product and process innovations (i.e., innovative sales). Our empirical strategy takes into account that all four types of innovation are potentially complementary. Empirical results suggest that cooperation increases firms’ innovativeness and yields substantial commercial benefits. In particular, increasing the number of cooperation partnerships has a positive impact on all measures of innovation performance. We conclude that a portfolio approach to cooperation enhances innovation performance and that innovation support programs should be demand-led.

THE ROLE OF TRANSPORT LOGISTICS IN THE ACTIVITIES OF INDUSTRIAL ENTERPRISES

Purpose. Transport logistics is a very important area of activity for an industrial enterprise. Therefore, the purpose of the article is to determine the role of transport logistics at the current stage of operation of an industrial enterprise for the production of upholstered furniture, as well as to consider the basic logistics principles and their scope. Methodology. In the course of the study, the methods of scientific search, statistical analysis, synthesis, elements of the theory of system modeling were used to study the role of transport logistics in the operation of the enterprise. Findings. As an object of consideration the authors selected an industrial enterprise, whose main activity is the production of upholstered furniture. The structure of the enterprise’s logistics system was developed and analyzed; the impact of transport logistics on the operation of the logistics chain was assessed. The option of using an innovative sales system based on the efficient use of transport logistics is proposed. The role, place and relevance of transport logistics as a subsystem of the logistics chain of this industrial enterprise were determined. The existing problems in the transport logistics of enterprises in this sector in the country require solutions due to the constant need to supply the channels with raw materials and semi-finished products, as well as distribution of manufactured products. The most important issue is the decision to determine the way of goods movement (produced upholstered furniture). This is the most acute problem faced in the delivery of products to the market. Originality. At the me-thodological level the role of transport logistics in the creation and functioning of the macrologistical system of enterprises of this type is formulated. The holistic approach to supplier relationship control, which allows you to link the supply strategy with its implementation, and enhances the participation of suppliers in the enterprise operation was developed. Practical value. The detailed study and analysis of possible ways to improve the transport and logistics activity opens up ways for the company to increase the overall efficiency of its production and business activities, since almost half of all costs incurred in logistics are transportation costs. And it is the proper use of transport logistics that allows for an enterprise to rationally manage its resources.

Moderating effects of legitimacy on the liability- and R&D investment-innovation relationships in manufacturing SMEs

ABSTRACTThis study investigates the moderating effects of legitimacy on the liability- and R&D investment-innovation relationships in manufacturing small and medium-sized enterprises (SMEs). Examining 2659 firms in South Korea, this study demonstrates that organizational legitimacy has not only the direct effect on innovation performance but also moderating effects on the relationship between liability and R&D expenditure and innovation performance. The present research provides evidence that normative legitimacy alleviates the adverse effects of liability on new product launches and the innovative sales revenue. Further, normative legitimacy weakens the relationship between R&D investment and innovation, whereas cognitive legitimacy can aggravate the adverse effects of liability but enhance the positive effects of R&D expenditure on the innovative sales revenue. The analysis presented in this study also demonstrates that the anti-synergistic interactions between regulatory, normative, and cognitive legitimacy can hinder the overall positive effects on innovation performance. This study extends the literature on legitimacy in the context of innovation by exhibiting that the strategic dilemma of SMEs regarding innovation can be a serious concern because of the conflicting roles of legitimacy on the liability-innovation and R&D invest-innovation relationship.

The External Knowledge Utilization and Radical Innovation in Korea Electronic Industry

Purpose - This study investigates the moderation effect of internal factor, a firms size, on the external knowledge sourcing strategy and its effectiveness in generating radical innovation. We incorporate concepts of breadth and depth as two measures to gauge the degree of openness in firms external search Research design and methodology - The dependent variable in the regression model is the percentage of innovative sales and therefore, Tobit regression is employed for estimating significant factors affecting on the ratio of first-to-market by breadth and depth in external knowledge, internationalization, and size. Results - The results show that the external knowledge, in terms of both breadth and depth, has a positive relationship with radical innovation. However internationalization as external knowledge resources is not statistically accepted. Firm size has moderating effect on innovation negatively only in case of using external knowledge resources to a high degree. Conclusions - Firms obtain external information mostly from customers, competitors, and suppliers etc. empirical knowledge in terms of scope and intensity is an important contributor to innovation. And intensity use of external knowledge and information resources can work in favor of smaller firms rather than larger ones. Internationalization seems to have little effect on innovation but it requires further researches with clear criteria and more data.

DIMINISHING RETURNS TO R&D INVESTMENT ON INNOVATION IN MANUFACTURING SMEs: DO THE TECHNOLOGICAL INTENSITY OF INDUSTRY MATTER?

This paper examined the nonlinear R&D-innovation relationships of SMEs (small and medium-sized enterprises) and the differences in the strength and productivity of R&D investment between low-, medium-, and high-tech industry sectors. Using 2740 firm data in South Korea, this study found that R&D investment has an inverted U-shaped relationship with registered patents such that patents increase at a decreasing rate as R&D investment increases. The relationship between R&D investment and innovative sales resulting from R&D investment in manufacturing SMEs also exhibits an inverted U-shaped form. The R&D-innovation relationship of SMEs in high-tech sectors is more strengthened such that the optimal level of R&D investment in high-tech sectors is higher than those for SMEs in low-tech sectors. This study also demonstrated that the R&D-innovation relationship for high-tech sectors is more flattened so that the diminishing returns to R&D investment is weakened with the increase of technological intensity of industry sectors.

Venture Capital and the Invention to Innovation Transition

Entrepreneurial innovation involves turning embryonic inventions into marketable innovations through costly technology development. Do venture capitalists (VCs) target their funding and managerial efforts to technology development or do they support later stages of the innovation cycle involving mostly commercialization? To answer this question we merge a list of first-round venture capital (VC) investments with an innovation survey of Spanish companies. We document changes in the innovative activity of VC-backed firms around first round VC investments which suggest that VCs fund technology development. First, the composition of R&D shifts from basic research to technology development. Second, the financing structure of R&D shows a greater reliance of external funds. Third, improved access to external funds reduces the intensity of financial constraints as an obstacle to innovation. Fourth, there is a slowdown in patenting and invention. Fifth, there is a substantial increase in the share of innovative sales.

Innovation and firm performance in developing countries: The case of Pakistani textile and apparel manufacturers

Using unique innovation survey data collected from a homogenous sample of firms in Pakistan, this paper presents an analysis of the firm level determinants of product innovation and its impact on firm performance. We employ a multi-stage structural model linking the decision of a firm to innovate, its innovation investment, product innovation, and firm performance using primary data from the textile and wearing apparel sector, which is the largest export sector of Pakistan. We find that product innovation leads to increased labor productivity as well as higher labor productivity growth. A 10 percent increase in innovative sales per worker is associated with a greater than 10 percent increase in labor productivity and labor productivity growth. On the determinants of innovation, we find that vertical knowledge flows from foreign clients and suppliers are important determinants of a firm's decision to innovate. Larger firms are more likely to engage in innovation, however, there is no significant evidence that they invest more in innovation. Exporting is positively associated with innovation performance and firms exporting to Europe and America are more likely to engage in innovation. There is mixed evidence on the impact of competition: foreign competition adversely affects a firm’s decision to innovate, whereas, local competition increases investment in innovation. Subsidies seem to have a crowding out effect since firms receiving national subsides invest less in innovation. Furthermore, firms that have higher investment in innovation, that are more productive, and that introduce organizational innovations have higher innovative sales per worker.

Family firms, sustainable innovation and financing cost: Evidence from Chinese hi-tech small and medium-sized enterprises

Using a large sample of hi-tech Chinese small and medium-size enterprises (SMEs), we examine whether family-owned businesses (FBs) can display more efficient use of innovation resources than non-FBs. We find that though family firms invest less in innovation input i.e. R&D expenditure, they outperform the non-FBs in terms of innovation output i.e. sales of new products or technology. We also find that the higher conversion rate of innovation input into output is closely related to financial constraints on innovation. The results suggest that the interaction between family ownership and financing cost has a significant negative effect on innovation, measured by R&D intensity and innovative sales. In addition, knowledge derived from competitors, universities and industry associations can effectively enhance innovative sales.