A discussed in the introduction of this section, our dependent variable in this second stage has three possible, non- exclusive discrete outcomes, the introduction of:
• a process innovation, 𝑦𝑦𝑖𝑖,0,
• a product innovation, 𝑦𝑦𝑖𝑖,1 ,and
• an organisational innovation, 𝑦𝑦𝑖𝑖,2.
Below, we discuss the estimates of this second stage by looking at the most significant associations based on the pooled observations across the different innovation surveys.
Our estimates report the results of two models: both using as independent variables the predicted levels of training, advertising and R&D intensities (this last variable obtained by merging predicted internal and external R&D intensities) resulting from the first stage of the estimation and further considering, in one of these models, a covariate for sectorial training spillovers and in the other model one capturing sectorial R&D spillovers.
The first clear result emerging from our estimates is about the role played by the predicted total R&D expenditure intensity. This variable shows a positive and significant association with the probability of introducing all three forms of innovations. This finding confirms the expectation that the sum of the predicted internal and external R&D intensities, as
estimated from the intangible innovation activities in the first stage of our model, increases the probability of a firm introducing any one of the three types of innovations.
Moreover, by comparing the effect of this intangible with those of the other predicted ones we can see that predicted R&D is more significant towards the introduction of product and process innovations, while predicted training is more significant for the introduction of organisational innovations. Predicted advertising expenditure has mainly significant negative associations, both with process and product innovations.
The role of subsidies is positive, for both process and product innovations, but this policy instrument loses its statistical significance in relation to organisational innovations. The positive and significant role played by the (Log of) employment shows that a firm’s size is positively related to the probability of introducing all different types of innovations. These findings are interesting when read in conjunction with the estimates obtained in the first stage, as we saw that employment had a negative relation with them.
Moving to the role of sectorial spillovers, our estimates show that the total amount of R&D expenditure, performed by other firms in the economy produces significant positive
spillover effects on the probability that a firm introduces a process innovation. These spillovers were weighted according to the proximity in production of the different economic sectors, measured through their input-output relations and capturing the circulation of production-specific knowledge along the value chains, based on the trade relations each sector has with the others. The highest weight is therefore given to the R&D performed by firms belonging to the same sector while weights were progressively reduced for R&D
performed in sectors with less intense trade exchanges with the sector of the innovating firm.
It is important to recall that at this second stage of the estimation procedure we do not consider the geographic spillovers, the impact of which was instead included in the first stage when estimating the predicted intangibles.
Training expenditure performed in the economy, again weighted in relation to input/output trade intensities with the sector a firm belongs to, also generates positive sectorial
spillovers that are positively associated with the introduction of process innovations, but these appear to be less significant than the spillovers associated with R&D expenses.
Table 13: Intangibles, sector spillovers and the introduction of product and
Spillover 0.0187*** 0.00673 0.00749*
(-3.32) (-1.34) (-1.65)
Moving to the motivations for introducing innovations, our estimates show that these are among the most relevant drivers in predicting the introduction of different types of
innovations.
Our estimates show that the incentives to improve products and to increase profits both provide a significant and positive contribution to the introduction of both process and product innovations, while the motivation to improve the production process is a significant predictor for process and organisational innovations.
The regulatory environment also has a significant impact on innovations, our estimates show very clearly, that the motive to meet regulatory requirements reduces both process and product innovations while increasing organisational ones. This factor captures some aspects of the potentially reactive nature of organisational innovations, whose probability of being introduced seems to be closely linked to the need of meeting regulatory
requirements. These innovations however, also have a significant relation with the expansion motivations of a firm. This should not be surprising as expansion often
necessitates introducing organisational changes in the structure of a firm. To expand, firms also introduce product innovation as these are often pivotal in penetrating into a new market.
Table 14: Motivation and the introduction of product and organisational innovations
Second Stage
The last set of relevant covariates relates to the role the partners with whom a firm cooperates in introducing innovations.
Our estimates show that, in the pooled data, cooperation with both customers and
suppliers is significant in its positive relation with the introduction of all types of innovations.
This implies that all these three different types of innovation are not just the results of the individual intangible efforts of individual firms, but they are an essential component of an integrated value chain whereby cooperation with customers and suppliers plays a
significant and positive role. Internal cooperation within the firm’s group plays instead a marginal role and mainly for the introduction of organisational innovations, for which a positive and significant role is also played by cooperation with consultants.
Table 15: Cooperation and the introduction of product and organisational