Firm size relationship with persistent innovation and employment growth: evidence from an emerging economy
Abstract
Purpose
Previous evidence has shown a generally positive relationship between continuously developed innovation, known as innovation persistence and employment growth in firms. This study investigates whether firm size moderates this relationship and how, considering persistent product and process innovation.
Design/methodology/approach
The authors studied the influence of firm size on the relationship between innovation persistence and employment using a 10-year panel database of firms based on national innovation surveys. The authors consider firm size as sales and measure innovation persistence through the hazard rate of innovation spells. To assess the main model, they use a system generalized method of moments (GMM) estimator.
Findings
The authors' main findings indicate that firm size negatively moderates the relationship between persistent innovation and employment growth. These results suggest that the positive effects of product and process persistent innovation on employment growth decrease as firm size increases. The authors also find evidence indicating that the moderator role of firm size is greater when firms innovate more persistently. Robustness tests with different specifications confirm the results.
Originality/value
The authors show that firm size negatively affects the strength of the relationship between innovation persistence and employment growth in product and process innovations. The authors also show that the moderator role of firm size is greater when firms are more persistent in generating product and process innovation. Additionally, using a panel dataset, they provide evidence from a sample of firms in a developing country where no studies on this matter have previously been conducted.
Keywords
Acknowledgements
This work was funded by Fondecyt (No: 1211367 and No: 1221824), Laboratorio de Finanzas Itaú of the Pontificia Universidad Catolica de Chile and National Agency for Research and Development (ANID)/Beca de Doctorado Nacional (No: 21200034). The authors are also grateful for the insightful comments offered by Roberto Vassolo, Gustavo Crespi and the three anonymous referees.
Citation
Parrao, A., Reyes, T., Cruz, A. and Molina, K.S. (2024), "Firm size relationship with persistent innovation and employment growth: evidence from an emerging economy", International Journal of Emerging Markets, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJOEM-11-2022-1698
Publisher
:Emerald Publishing Limited
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