This study analyses the causal effect between innovation and performance on a sample of about 5.000 Italian SMEs. Results of studies on the effects of innovation on SMEs performance are controversial: even if several studies find a positive relationship, restricting the analysis to small and medium firms previous literature does not find a clear correlation between patents and SMEs performance. Using patents as a proxy of innovative activity, we aim at providing further evidence on this topic analysing a large sample of firms. We investigate the firms’ dynamics after the filing date taking into consideration return on assets, sales growth and operating profit margin as proxies for firms’ performance. In particular, we combine two econometric methodologies in order to reduce the risk of biased results. We select a control sample through a propensity score matching, and on these two groups we perform a difference-in-differences analysis. We also take into account firm size, ownership, and the effort to co-patent with other firms and university as moderating factors of the link between innovation and performance. Our preliminary results reveal a positive relationship between patents and firm growth, but an insignificant effect on profit margins. The collaborative effort in patenting does not seem related to specific patterns in firm dynamics when compared to other innovative firms.

Do Patents Affect SMEs’ Performance? A Counterfactual Analysis

BARONTINI, Roberto;TAGLIALATELA, Jonathan
2016-01-01

Abstract

This study analyses the causal effect between innovation and performance on a sample of about 5.000 Italian SMEs. Results of studies on the effects of innovation on SMEs performance are controversial: even if several studies find a positive relationship, restricting the analysis to small and medium firms previous literature does not find a clear correlation between patents and SMEs performance. Using patents as a proxy of innovative activity, we aim at providing further evidence on this topic analysing a large sample of firms. We investigate the firms’ dynamics after the filing date taking into consideration return on assets, sales growth and operating profit margin as proxies for firms’ performance. In particular, we combine two econometric methodologies in order to reduce the risk of biased results. We select a control sample through a propensity score matching, and on these two groups we perform a difference-in-differences analysis. We also take into account firm size, ownership, and the effort to co-patent with other firms and university as moderating factors of the link between innovation and performance. Our preliminary results reveal a positive relationship between patents and firm growth, but an insignificant effect on profit margins. The collaborative effort in patenting does not seem related to specific patterns in firm dynamics when compared to other innovative firms.
2016
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11382/512438
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