Competition, market concentration and innovation in Ecuador
Main Article Content
Keywords
Business growth, Highgrowth companies, Job creation, Entrepeneurship, Innovation
Abstract
The objective is to determine how market concentration affects firms’ decisions
to innovate. With company-level data l from the 2010 Ecuadorian economic
census , a probabilistic/linear model was calculated with correction for selection
bias. Ecuadorian companies have a limited innovation capability and there is a
persistence in market concentration. The estimates confirm the theory of market
power in the propensity to innovate for both models. Consequently, increased
market share leads to an increase in the likelihood of innovation, thanks to the
ability to exploit the gains from these processes.
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References
Aghion, P., Bloom, N., Blundell, R., Griffith, R., and Howitt, P. (2005) Competition and innovation: an inverted-Urelationship, Quarterly Journal of Economics, 120, 701–28
Aghion, P., Bechtold, S., Cassar, L., & Herz, H. (2018). The causal effects of competition on innovation: Experimental evidence. The Journal of Law, Economics, and Organization, 34(2), 162-195.
Ahmad, N. H., Suseno, Y., Seet, P. S., Susomrith, P., & Rashid, Z. (2018). Entrepreneurial competencies and firm performance in emerging economies: A study of women entrepreneurs in Malaysia. In Knowledge, learning and innovation (pp. 5-26). Springer, Cham.
Arrow, K. J. (1962). Economic welfare and the allocation of resources for invention. In Readings in industrial economics (pp. 219-236). Palgrave, London.
Astudillo, S., & Briozzo, A. (2016). Innovación en las MIPYMES manufactureras de Ecuador y Argentina. Semestre económico, 19(40), 117-144.
Beneito, P., Rochina-Barrachina, M. E., & Sanchis, A. (2017). Competition and innovation with selective exit: an inverted-U shape relationship?. Oxford Economic Papers, 69(4), 1032-1053.
Bento, P. 2014. “Competition as a Discovery Procedure: Schumpeter Meets Hayek in a Model of Innovation.” American Economic Journal: Macroeconomics 6 (3): 124–152.
Blundell, R., R. Griffith, and J. Van Reenen. (1998) Market Share, Market Value and Innovation in a Panel of British Manufacturing Firms. Review of Economic Studies 66 (228): 529–554
Boone, J. (2001) Intensity of Competition and the Incentive to Innovate. International Journal of Industrial Organization 19 (5): 705–726
Darai, D., Sacco, D., & Schmutzler, A. (2010). Competition and innovation: An experimental investigation. Experimental Economics, 13(4), 439-460.
Durán, S. A., & Briozzo, A. (2015). Factores determinantes de la innovación en las MIPYMES manufactureras de la Argentina y el Ecuador. FAEDPYME International Review-FIR, 4(7), 53-65.
Galbraith, J. K. (1952). American Capitalism: The Concept of Countervailing Power. Boston: Hough-ton Mifflin Co, 76.
Gao, D., Xu, Z., Ruan, Y. Z., & Lu, H. (2017). From a systematic literature review to integrated definition for sustainable supply chain innovation (SSCI). Journal of Cleaner Production, 142, 1518-1538.
Hashmi, A. R. (2013) Competition and Innovation: The Inverted-U Relationship Revisited.” The Review of Economics and Statistics 95: 1653–1668.
Heckman, J. J. (1979). Sample selection bias as a specification error. Econometrica: Journal of the econometric society, 153-161.
Hermosilla, M., & Wu, Y. (2018). Market size and innovation: The intermediary role of technology licensing. Research Policy, 47(5), 980-991.
Jiménez, M., Pérez-Pérez, M., Martínez-Sánchez, A., José & de Luis-Carnicer, P. (2009). Innovation and labour flexibility: A Spanish study of differences across industries and type of innovation. International Journal of Manpower, 30(4), 360-376.
Kamien, M. I., & Schwartz, N. L. (1976). On the degree of rivalry for maximum innovative activity. The Quarterly Journal of Economics, 90(2), 245-260.
Kelly, T. M., 1970, The Influence of Firm Size and Market Structure on the Research Efforts of Large Multiple- product Firms, Ph.D. dissertation, Okalahoma State University.
Kyläheiko, K., Puumalainen, K., Pätäri, S., & Jantunen, A. (2017). How do firm-and industry-specific factors affect innovation and financial performance?. International Journal of Technology Intelligence and Planning, 11(3), 230-251.
Levin, R. C., Cohen, W. M., & Mowery, D. C. (1985). R & D appropriability, opportunity, and market structure: new evidence on some Schumpeterian hypotheses. The American Economic Review, 75(2), 20-24.
Levin, S. G., Levin, S. L., & Meisel, J. B. (1987). A dynamic analysis of the adoption of a new technology: the case of optical scanners. The Review of Economics and Statistics, 12-17.
Mohr, L. B. (1969). Determinants of innovation in organizations. American political science review, 63(1), 111-126.
Morales, M. E., Ortíz Riaga, C., & Arias Cante, M. A. (2012). Factores determinantes de los procesos de innovación: una mirada a la situación en Latinoamérica. Revista EAN, (72), 148-163.
Sánchez, A., & Alejandro, N. (2017) Determinantes de la innovación y su efecto en el desempeño económico de las empresas ecuatorianas (Master’s thesis, Quito, Ecuador: Flacso Ecuador).
Scherer, F. M. (1967a) Market Structure and the Employment of Scientists and Engineers.” American Economic Review 57: 524–531.
Scherer, F. M. (1967b) “Research and Development Resource Allocation Under Rivalry.” The Quarterly Journalof Economics 81: 359–394.
Scherer, F. M., 1970, Industrial Market Structure and Economic Performance, Chicago: Rand McNally.
Scott, J. T., 1984, ‘Firm Versus Industry Variability in R&;D Intensity’, in Z. Griliches (ed.), R&;D Patents and Productivity, Chicago: University of Chicago Press for the NBER
Tavassoli, S. (2015). Innovation determinants over industry life cycle. Technological Forecasting and Social Change, 91, 18-32.
Torres, V. E., & Celton, D. E. (2009). Discriminación salarial en Argentina entre nativos y paraguayos. Cuadernos Geográficos, (45), 263-285.
Vives, X. (2008). Innovation and competitive pressure. The Journal of Industrial Economics, 56(3), 419-469.
Aghion, P., Bechtold, S., Cassar, L., & Herz, H. (2018). The causal effects of competition on innovation: Experimental evidence. The Journal of Law, Economics, and Organization, 34(2), 162-195.
Ahmad, N. H., Suseno, Y., Seet, P. S., Susomrith, P., & Rashid, Z. (2018). Entrepreneurial competencies and firm performance in emerging economies: A study of women entrepreneurs in Malaysia. In Knowledge, learning and innovation (pp. 5-26). Springer, Cham.
Arrow, K. J. (1962). Economic welfare and the allocation of resources for invention. In Readings in industrial economics (pp. 219-236). Palgrave, London.
Astudillo, S., & Briozzo, A. (2016). Innovación en las MIPYMES manufactureras de Ecuador y Argentina. Semestre económico, 19(40), 117-144.
Beneito, P., Rochina-Barrachina, M. E., & Sanchis, A. (2017). Competition and innovation with selective exit: an inverted-U shape relationship?. Oxford Economic Papers, 69(4), 1032-1053.
Bento, P. 2014. “Competition as a Discovery Procedure: Schumpeter Meets Hayek in a Model of Innovation.” American Economic Journal: Macroeconomics 6 (3): 124–152.
Blundell, R., R. Griffith, and J. Van Reenen. (1998) Market Share, Market Value and Innovation in a Panel of British Manufacturing Firms. Review of Economic Studies 66 (228): 529–554
Boone, J. (2001) Intensity of Competition and the Incentive to Innovate. International Journal of Industrial Organization 19 (5): 705–726
Darai, D., Sacco, D., & Schmutzler, A. (2010). Competition and innovation: An experimental investigation. Experimental Economics, 13(4), 439-460.
Durán, S. A., & Briozzo, A. (2015). Factores determinantes de la innovación en las MIPYMES manufactureras de la Argentina y el Ecuador. FAEDPYME International Review-FIR, 4(7), 53-65.
Galbraith, J. K. (1952). American Capitalism: The Concept of Countervailing Power. Boston: Hough-ton Mifflin Co, 76.
Gao, D., Xu, Z., Ruan, Y. Z., & Lu, H. (2017). From a systematic literature review to integrated definition for sustainable supply chain innovation (SSCI). Journal of Cleaner Production, 142, 1518-1538.
Hashmi, A. R. (2013) Competition and Innovation: The Inverted-U Relationship Revisited.” The Review of Economics and Statistics 95: 1653–1668.
Heckman, J. J. (1979). Sample selection bias as a specification error. Econometrica: Journal of the econometric society, 153-161.
Hermosilla, M., & Wu, Y. (2018). Market size and innovation: The intermediary role of technology licensing. Research Policy, 47(5), 980-991.
Jiménez, M., Pérez-Pérez, M., Martínez-Sánchez, A., José & de Luis-Carnicer, P. (2009). Innovation and labour flexibility: A Spanish study of differences across industries and type of innovation. International Journal of Manpower, 30(4), 360-376.
Kamien, M. I., & Schwartz, N. L. (1976). On the degree of rivalry for maximum innovative activity. The Quarterly Journal of Economics, 90(2), 245-260.
Kelly, T. M., 1970, The Influence of Firm Size and Market Structure on the Research Efforts of Large Multiple- product Firms, Ph.D. dissertation, Okalahoma State University.
Kyläheiko, K., Puumalainen, K., Pätäri, S., & Jantunen, A. (2017). How do firm-and industry-specific factors affect innovation and financial performance?. International Journal of Technology Intelligence and Planning, 11(3), 230-251.
Levin, R. C., Cohen, W. M., & Mowery, D. C. (1985). R & D appropriability, opportunity, and market structure: new evidence on some Schumpeterian hypotheses. The American Economic Review, 75(2), 20-24.
Levin, S. G., Levin, S. L., & Meisel, J. B. (1987). A dynamic analysis of the adoption of a new technology: the case of optical scanners. The Review of Economics and Statistics, 12-17.
Mohr, L. B. (1969). Determinants of innovation in organizations. American political science review, 63(1), 111-126.
Morales, M. E., Ortíz Riaga, C., & Arias Cante, M. A. (2012). Factores determinantes de los procesos de innovación: una mirada a la situación en Latinoamérica. Revista EAN, (72), 148-163.
Sánchez, A., & Alejandro, N. (2017) Determinantes de la innovación y su efecto en el desempeño económico de las empresas ecuatorianas (Master’s thesis, Quito, Ecuador: Flacso Ecuador).
Scherer, F. M. (1967a) Market Structure and the Employment of Scientists and Engineers.” American Economic Review 57: 524–531.
Scherer, F. M. (1967b) “Research and Development Resource Allocation Under Rivalry.” The Quarterly Journalof Economics 81: 359–394.
Scherer, F. M., 1970, Industrial Market Structure and Economic Performance, Chicago: Rand McNally.
Scott, J. T., 1984, ‘Firm Versus Industry Variability in R&;D Intensity’, in Z. Griliches (ed.), R&;D Patents and Productivity, Chicago: University of Chicago Press for the NBER
Tavassoli, S. (2015). Innovation determinants over industry life cycle. Technological Forecasting and Social Change, 91, 18-32.
Torres, V. E., & Celton, D. E. (2009). Discriminación salarial en Argentina entre nativos y paraguayos. Cuadernos Geográficos, (45), 263-285.
Vives, X. (2008). Innovation and competitive pressure. The Journal of Industrial Economics, 56(3), 419-469.