Innovation persistence in times of crisis: an analysis of Italian firms

We investigate the extent to which firms' innovation persists in "times of crisis." Following an eclectic theoretical background, we expect that innovation persistence limitedly emerges in these times and that SMEs persist to a different extent than large firms. We argue that innovation persistence is affected by the kind of public support firms receive and by the type of business strategy they follow. Merging three waves of the MET survey on Italian firms over the period 2005-2013, we find that the persistence of those having survived the crisis is limited to process innovations, and to radical ones in particular, being lower for SMEs. The detected persistence is reinforced by the public support firms receive for their ICT, but it is attenuated by the support directed to their employment. In terms of business strategies, intensifying research and innovation efforts attenuates innovation persistence, while diversification appears a conditional strategy for its unfolding.