Innovation, Industry and Firm Age: Are There New Knowledge Production Functions?

In this paper we investigate how the knowledge production function is at work in different industrial sectors comparing mature and young companies in Italy. We estimate a two-step model using community innovation survey data. We provide evidence that young firms are particularly effective in translating R&D into product innovation in ‘entrepreneurial sectors’ (especially in services where it is likely that capital requirements and experience are negligible), while mature companies turn out to be more effective in translating technological acquisitions (TAs) into process innovation in ‘routinized sectors’ (especially in low-tech manufacturing industries where the main strategy is cost reduction).