Young firms and innovation: a microeconometric analysis

This paper discusses the sources of product innovation in young innovative companies (YICs), here defined as firms engaged in product innovation and with less than 8 years of activity. In particular, we look at in-house and external R&D and at the acquisition of external technology in its embodied and disembodied components. These input–output relationships are tested on a sample of 2713 innovative Italian firms. A sample-selection approach is applied to study both the determinants of product innovation and the factors affecting the intensity of innovation. Results show that in-house R&D is linked to the propensity to introduce product innovation both in mature firms and YICs; however, innovation intensity in the YICs is mainly dependent on embodied technical change from external sources, while in-house R&D does not play a significant role.