Innovation Strategies and Technical Efficiency

In the innovation literature, little attention has been paid to technical efficiency as a measure of performance, despite the fact that technical efficiency is key to explaining firm productivity. In this study we analyze the influence of internal R&D, external R&D and R&D cooperation on the technical efficiency of the firm. The data used come from the Panel de Innovaci<acute accent>on Tecnol<acute accent>ogica 2016 for Spanish companies, from whose database we have selected the set of innovative manufacturing firms. To estimate the coefficients of interest we have constructed a knowledge production function, estimated using Stochastic Frontier Analysis (SFA) and the Heckman correction. The results indicate that both internal R&D and R&D cooperation have a positive and significant influence on technical efficiency, while external R&D has a significant negative relationship. Knowing this type of information in advance is very important for business managers and policy makers, since it facilitates decision-making on innovation strategies, as well as the formulation of public policies to support innovation leading to an efficient allocation of public resources.