Firm size, small business presence and sales of innovative products: A micro-econometric analysis

In our generalized TOBIT analysis we identify a number of variables which have an impact on a firm's innovation ''output''. Among others we find that larger firms generally have a higher probability of selling some innovative products, although this probability increases less than proportionately with firm size. Given that a firm has some sales of innovative products, the share of such products in a firm's total sales tends to be higher in smaller firms. Moreover, a strong small business presence in a sector seems to enhance imitative innovation but has no influence on ''true'' innovations, whereas market concentration has no influence on innovation ''output'' in whatever definition. We also find evidence of regional knowledge spill-overs. Furthermore, our results are consistent with Schmookler's hypothesis that the growth of demand enhances innovation. The outcomes about the impact of R&D collaboration and technology transfer on innovation remain ambiguous.