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Journal cover: European Journal of Innovation Management

European Journal of Innovation Management

ISSN: 1460-1060

Online from: 1998

Subject Area: Enterprise and Innovation

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Are differing forms of innovation complements or substitutes?

Document Information:
Title:Are differing forms of innovation complements or substitutes?
Author(s):Justin Doran, (Department of Economics, University College Cork, Cork, Ireland)
Citation:Justin Doran, (2012) "Are differing forms of innovation complements or substitutes?", European Journal of Innovation Management, Vol. 15 Iss: 3, pp.351 - 371
Keywords:Complementarity, Ireland, Organizational innovation, Organizational processes, Productivity rate, Substitutability
Article type:Research paper
DOI:10.1108/14601061211243675 (Permanent URL)
Publisher:Emerald Group Publishing Limited
Acknowledgements:The author would like to thank Carol-Anne Hennessy in the Irish Central Statistics Office for facilitating access to the Irish Community Innovation Survey data.

Purpose – The purpose of this paper is to provide an empirical analysis of whether differing forms of innovation act as complements or substitutes in Irish firms’ production functions.

Design/methodology/approach – The approach adopted by this paper is empirical in nature. Data are obtained for approximately 582 firms from the Irish Community Innovation Survey 2004-2006. In total, four forms of innovation activity are identified: new to firm product, new to market product, process and organisational innovation. Formal tests for complementarity and substitutability are applied to these types of innovation to assess whether they have a complementary effect on firms’ turnover.

Findings – The results suggest that there is a substantial degree of complementarity among different forms of innovation. Out of six possible innovation combinations, three are complementary while none exhibits signs of substitutability.

Social implications – From a business perspective, the importance of organisational change to facilitate technological innovation is highlighted, while from a policy perspective the importance of the incentivisation of organisation and process innovation is also highlighted.

Originality/value – To date, most research has focused on the impact of various forms of innovation, in isolation, on firms’ productivity. They do not consider whether these forms of innovation may in fact be linked, and that by implementing two or more innovations simultaneously, the combined benefits may be greater than the sum of the parts.

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