The document discusses the relationship between innovation and productivity for New Zealand firms, revealing that low investment in knowledge-based capital can account for a significant part of the productivity gap relative to the OECD average. It highlights the importance of various types of innovation, such as product, process, and organizational innovations, in influencing firm performance and productivity. Additionally, the findings indicate trends in how engaging in R&D and other innovative activities impacts employment, value-added output, and overall productivity growth.

1. Innova&on
&
the
performance
of
New
Zealand
firms
Simon
Wakeman
NZAE
conference
1
July
2016
1

2. Low
investment
in
knowledge-­‐based
capital
may
explain
up
to
40%
of
the
produc&vity
gap
rela&ve
to
the
OECD
average
2
Source:
NZPC;
de
Serres
et
al.
(2014)

3. Interna&onal
comparisons
show
NZ
near
top
of
OECD
rankings
in
genera&ng
science
but
lower
ranked
in
commercialising
innova&on
NZ’S
AVERAGE
RANKING
IN
TOP-­‐LEVEL
CATEGORIES
OF
OECD
STATISTICS
3
7
11
12
20
19
26
Science
base
Human
resources
Internet
use
for
innovaCon
Business
R&D
and
innovaCon
Knowledge
flows
and
commercialisaCon
Entrepreneurship
Source:
OECD
(2012).
Compara?ve
performance
of
na?onal
science
and
innova?on
systems

4. Use
Sta&s&cs
NZ’s
Longitudinal
Business
Database
to
study
rela&onship
between
innova&on
and
produc&vity
for
New
Zealand
firms
DATA
SOURCES
Innova&on
ac&vity
- Business
Opera?ons
Survey
(BOS)
- Intellectual
Property
Office
(IPONZ)
Produc&vity
es&mates
(Fabling
&
Mare,
2015)
Financial
data
- Annual
Enterprise
Survey
(AES)
- IR10
tax
returns
Access
to
the
data
presented
was
managed
by
Sta?s?cs
New
Zealand
under
strict
micro-­‐data
access
protocols
and
in
accordance
with
the
security
and
confiden?ality
provisions
of
the
Sta?s?c
Act
1975.
These
findings
are
not
Official
Sta?s?cs.
The
opinions,
findings,
recommenda?ons,
and
conclusions
expressed
are
those
of
the
author/researcher,
not
Sta?s?cs
New
Zealand
or
the
New
Zealand
Produc?vity
Commission.
Longitudinal
Business
Database
R&D
ac&vity
- Business
R&D
Survey
- Business
Opera?ons
Survey
(BOS)
Government
assistance
- Payments
from
government
programmes
(incl.
R&D
grants)

5. LBD
contains
a
range
of
measures
reflec&ng
different
aspects
of
innova&on
MEASURES
OF
INNOVATIVE
ACTIVITY
5
Sample
contains
responses
to
Business
Opera?ons
Survey
(2005-­‐2013).
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Engaged
in
R&D
Product
development
expenditure
(R&D/design/
markeCng/other)
Filed
patent
Registered
trademark
Any
innovaCon
Product
innovaCon
(new
to
world/NZ/firm)
Sales
from
new
products
Process
innovaCon
OrganisaConal
innovaCon
MarkeCng
innovaCon
%
total
expenditure/sales
%
firms
engaged
in
ac&vity

6. R&D
expenditure
is
not
a
good
proxy
for
innova&on
output
in
all
cases
R&D
ACTIVITY
VS
INNOVATION
ACTIVITY
TYPE
OF
INNOVATION
EXPENDITURE
BY
SECTOR
6
Ever
engaged
in
innovaCon
No
Yes
Ever
engaged
in
R&D
No
27.5%
54.7%
Yes
1.5%
16.3%
Sample
contains
firms
responding
to
Business
Opera?ons
Survey
Innova?on
module
in
2007,
2009
&
2011.
Sample
contains
firms
responding
to
Business
Opera?ons
Survey
(2005-­‐2012).
0%
2%
4%
6%
8%
10%
12%
14%
Primary
Manufacturing
Services
R&D
expenditure
Design
expenditure
MarkeCng
expenditure
Other
expenditure

7. Use
approach
developed
by
Fabling
&
Mare
(2015)
to
es&mate
firm
produc&vity
MEASURING
FIRM
PERFORMANCE
7
Labour
(L)
Raw
materials/
inputs
(M)
Capital
(K)
ProducCon
Output
(GO)
( ) ( ) ( ) ( )ln
ln ln ln
where
, { , , }
r r s
it j r it rs it i
r s r
t i
r
G O X X X
r s L K M
α β δ γ ε
≠
+= + + +
∈
∑ ∑∑
( )∑
( ) ( ) ( )MFP:
Empl
ln(
oyment:
Valued
added:
Labour
productivity
ln ln ln ln
where
, { , , }
:
)
it
it it
it it
it
r r s
it it r it rs it it
rr s r
GO
GO
MFP GO X X X
r s L K M
L
M
M
L
β δ
≠
−
∈
−
−
−
= ∑∑ ∑

8. 0
20
40
60
80
% dif
Employment Value-added output Labour productivity MFP
output type
R&D
activity
Product
innovation
new to world
Product
innovation
Process
innovation
Organisational
innovation
Marketing
innovation
RELATIVE
OUTPUT
LEVEL
INNOVATORS
VS.
NON-­‐INNOVATORS
BY
INNOVATION
MEASURE
On
average
innova&ng
firms
larger
but
less
produc&ve
than
non-­‐innova&ng
firms
in
year
in
which
innova&on
occurs
8
Chart
shows
difference
in
performance
measure
predicted
from
series
of
OLS
regressions
of
output
level
in
year
0
on
innova?on
in
year
0
with
controls
for
year
and
industry.
Bars
show
95%
confidence
intervals.
Sample
contains
firms
in
BOS
2005-­‐2011
with
performance
measures
up
to
2012.
Observa?ons
weighted
by
BOS
sampling
weights.

9. 0
10
20
30
%
1 2 3 4 5 6 7 8 9 10
decile of mfp
Product innovation
(new to world)
1 2 3 4 5 6 7 8 9 10
decile of mfp
Product innovation
(new to NZ)
1 2 3 4 5 6 7 8 9 10
decile of mfp
Product innovation
(new to the firm)
1 2 3 4 5 6 7 8 9 10
decile of mfp
Process innovation
1 2 3 4 5 6 7 8 9 10
decile of mfp
Organisational innovation
1 2 3 4 5 6 7 8 9 10
decile of mfp
Marketing innovation
PROPORTION
OF
FIRMS
ENGAGED
IN
INNOVATION
BY
DECILE
OF
PRODUCTIVITY
IN
YEAR
0
Most
produc&ve
firms
least
likely
to
innovate
9
Chart
shows
likelihood
of
firm
innova?on
predicted
from
probit
regression
of
innova?on
ac?vity
in
year
0
on
produc?vity
decile
in
year
0.
Bars
show
95%
confidence
intervals.
Sample
contains
firms
in
BOS
2005-­‐2011.
Observa?ons
weighted
by
BOS
sampling
weights

10. Use
difference-­‐in-­‐differences
approach
to
measure
impact
of
innova&on
on
produc&vity
EMPIRICAL
APPROACH
• Regress
change
in
firm
output/producCvity
(lnYin
-­‐
lnYi0)
on
innovaCon
in
year
0
(I0)
10
0 0 0ln –ln
in i I i X iY Y I X tα β β ε= + + + +
• Compare
within-­‐firm
differences
in
output
! controls
for
unobserved
firm
characterisCcs
affecCng
output
levels
• Control
for
observed
firm
characterisCcs
(age,
size,
industry,
etc.)
! controls
for
observed
firm
characterisCcs
affecCng
changes
in
output
• For
MFP,
use
2-­‐year
moving
average
! accounts
for
measurement
error
• Weight
observaCons
by
BOS
sampling
weights
Cmes
predicted
gross
output
! quanCCes
corresponds
to
aggregate
economic
output/producCvity
• Do
not
instrument
for
innovaCon
(cf
Crepon,
Duguet
&
Mairesse,
1998)

11. -6
-4
-2
0
2
4%
0 1 2 3 4
years
change in employment
-6
-4
-2
0
2
4%
0 1 2 3 4
years
change in value-added output
-6
-4
-2
0
2
4%
0 1 2 3 4
years
change in labour productivity
-6
-4
-2
0
2
4%
0 1 2 3 4
years
change in MFP
Yes No
-10
0
10
20%
0 1 2 3 4
years
-10
0
10
20%
0 1 2 3 4
years
-10
0
10
20%
0 1 2 3 4
years
-10
0
10
20%
0 1 2 3 4
years
RELATIVE
GROWTH
BY
OUTPUT
TYPE
OF
R&D
ACTIVE
VS
NON-­‐ACTIVE
FIRMS
Firms
engaged
in
R&D
ac&vity
have
faster
employment
and
output
growth
than
non-­‐R&D-­‐ac&ve
firms
but
produc&vity
growth
not
different
Charts
show
difference
in
predic?ve
margins
from
series
of
OLS
regressions
of
change
in
output
from
year
0
to
year
t
on
innova?on
in
year
0.
Regressions
include
controls
for
base
year
and
firm
characteris?cs.
Bars
show
95%
confidence
intervals.
Sample
contains
firms
in
BOS
2005-­‐2011
with
output
measures
un?l
2012.
Observa?ons
weighted
by
BOS
sampling
weights
?mes
predicted
output.
11

12. -4
-2
0
2
4%
0 1 2 3 4
years
change in employment
-4
-2
0
2
4%
0 1 2 3 4
years
change in value-added output
-4
-2
0
2
4%
0 1 2 3 4
years
change in labour productivity
-4
-2
0
2
4%
0 1 2 3 4
years
change in MFP
Yes No
-10
-5
0
5
10
%
0 1 2 3 4
years
-10
-5
0
5
10
%
0 1 2 3 4
years
-10
-5
0
5
10
%
0 1 2 3 4
years
-10
-5
0
5
10
%
0 1 2 3 4
years
RELATIVE
GROWTH
BY
INNOVATION
ACTIVITY
OF
INNOVATORS
VS
NON-­‐INNOVATORS
Similarly
firms
engaged
in
innova&on
grow
faster
in
size
but
not
produc&vity
Charts
show
difference
in
predic?ve
margins
from
series
of
OLS
regressions
of
change
in
output
from
year
0
to
year
t
on
innova?on
in
year
0.
Regressions
include
controls
for
base
year
and
firm
characteris?cs.
Bars
show
95%
confidence
intervals.
Sample
contains
firms
in
BOS
2005-­‐2011
with
output
measures
un?l
2012.
Observa?ons
weighted
by
BOS
sampling
weights
?mes
predicted
output.
12

13. -6
-4
-2
0
2%
0 1 2 3 4
years
Product innovation
-6
-4
-2
0
2%
0 1 2 3 4
years
Process innovation
-6
-4
-2
0
2%
0 1 2 3 4
years
Organisational innovation
-6
-4
-2
0
2%
0 1 2 3 4
years
Marketing innovation
Yes No
-4
-2
0
2
4
%
0 1 2 3 4
years
-4
-2
0
2
4
%
0 1 2 3 4
years
-4
-2
0
2
4
%
0 1 2 3 4
years
-4
-2
0
2
4
%
0 1 2 3 4
years
RELATIVE
MFP
GROWTH
BY
INNOVATION
TYPE
OF
INNOVATORS
VS
NON-­‐INNOVATORS
Only
firms
engaged
in
marke&ng
innova&on
experience
significantly
higher
produc&vity
growth
Charts
show
coefficients
from
OLS
regressions
of
change
in
2-­‐yr-­‐MA
of
MFP
from
year
0
to
t
on
innova?on
in
year
0.
Regressions
include
controls
for
base
year
and
firm
characteris?cs.
Bars
show
95%
confidence
intervals.
Sample
contains
firms
in
BOS
2005-­‐2011
with
output
measures
un?l
2012.
Observa?ons
weighted
by
BOS
sampling
weights
?mes
predicted
output.
13

14. -6
-4
-2
0
2
4
%
0 1 2 3 4
years
2005
-6
-4
-2
0
2
4
%
0 1 2 3 4
years
2007
-6
-4
-2
0
2
4
%
0 1 2 3
years
2009
-6
-4
-2
0
2
4
%
0 .2 .4 .6 .8 1
years
2011
Yes No
-5
0
5
10%
0 1 2 3 4
years
-5
0
5
10%
0 1 2 3 4
years
-5
0
5
10%
0 1 2 3
years
-5
0
5
10%
0 1
years
RELATIVE
MFP
GROWTH
BY
YEAR
OF
PRODUCT
INNOVATORS
VS
NON-­‐INNOVATORS
Returns
to
innova&on
vary
drama&cally
by
year
Charts
show
coefficients
from
OLS
regressions
of
change
in
2-­‐yr-­‐MA
of
MFP
from
year
0
to
t
on
innova?on
in
year
0.
Regressions
include
controls
for
base
year
and
firm
characteris?cs.
Bars
show
95%
confidence
intervals.
Sample
contains
firms
in
BOS
2005-­‐2011
with
output
measures
un?l
2012.
Observa?ons
weighted
by
BOS
sampling
weights
?mes
predicted
output.
14

15. -6
-4
-2
0
2
4
%
2005 2006 2007 2008 2009 2010 2011 2012
year
all No Yes
RELATIVE
MFP
GROWTH
OVER
TIME
OF
PRODUCT
INNOVATORS
VS
NON-­‐INNOVATORS
Product
innovators
experience
higher
MFP
growth
during
economic
recovery
but
possibly
lower
growth
during
economic
downtown
Charts
show
coefficients
from
OLS
regressions
of
change
in
2-­‐yr-­‐MA
of
MFP
from
year
0
to
t
on
innova?on
in
year
0.
Regressions
include
controls
for
base
year
and
firm
characteris?cs.
Bars
show
95%
confidence
intervals.
Sample
contains
firms
in
BOS
2005-­‐2011
with
output
measures
un?l
2012.
Observa?ons
weighted
by
BOS
sampling
weights
?mes
predicted
output.
15

16. RELATIVE
MFP
GROWTH
BY
YEAR
OF
PROCESS
INNOVATORS
VS
NON-­‐INNOVATORS
Process
innovators
appear
not
to
do
significantly
becer
or
worse
than
non-­‐innovators
Charts
show
coefficients
from
OLS
regressions
of
change
in
2-­‐yr-­‐MA
of
MFP
from
year
0
to
t
on
innova?on
in
year
0.
Regressions
include
controls
for
base
year
and
firm
characteris?cs.
Bars
show
95%
confidence
intervals.
Sample
contains
firms
in
BOS
2005-­‐2011
with
output
measures
un?l
2012.
Observa?ons
weighted
by
BOS
sampling
weights
?mes
predicted
output.
16
-6
-4
-2
0
2
4%
0 1 2 3 4
years
2005
-6
-4
-2
0
2
4%
0 1 2 3 4
years
2007
-6
-4
-2
0
2
4%
0 1 2 3
years
2009
-6
-4
-2
0
2
4%
0 .2 .4 .6 .8 1
years
2011
Yes No
-10
-5
0
5%
0 1 2 3 4
years
-10
-5
0
5%
0 1 2 3 4
years
-10
-5
0
5%
0 1 2 3
years
-10
-5
0
5%
0 1
years

17. -6
-4
-2
0
2
4%
2005 2006 2007 2008 2009 2010 2011 2012
year
all No Yes
RELATIVE
MFP
GROWTH
OVER
TIME
OF
PROCESS
INNOVATORS
VS
NON-­‐INNOVATORS
Returns
to
process
innova&on
do
not
vary
significantly
by
year
Charts
show
coefficients
from
OLS
regressions
of
change
in
2-­‐yr-­‐MA
of
MFP
from
year
0
to
t
on
innova?on
in
year
0.
Regressions
include
controls
for
base
year
and
firm
characteris?cs.
Bars
show
95%
confidence
intervals.
Sample
contains
firms
in
BOS
2005-­‐2011
with
output
measures
un?l
2012.
Observa?ons
weighted
by
BOS
sampling
weights
?mes
predicted
output.
17

18. RELATIVE
MFP
GROWTH
BY
YEAR
OF
ORGANISATIONAL
INNOVATORS
VS
NON-­‐INNOVATORS
Similarly
returns
to
organisa&onal
innova&on
in
2009
significantly
higher
but
not
in
other
years
Charts
show
coefficients
from
OLS
regressions
of
change
in
2-­‐yr-­‐MA
of
MFP
from
year
0
to
t
on
innova?on
in
year
0.
Regressions
include
controls
for
base
year
and
firm
characteris?cs.
Bars
show
95%
confidence
intervals.
Sample
contains
firms
in
BOS
2005-­‐2011
with
output
measures
un?l
2012.
Observa?ons
weighted
by
BOS
sampling
weights
?mes
predicted
output.
18
-6
-4
-2
0
2
4%
0 1 2 3 4
years
2005
-6
-4
-2
0
2
4%
0 1 2 3 4
years
2007
-6
-4
-2
0
2
4%
0 1 2 3
years
2009
-6
-4
-2
0
2
4%
0 .2 .4 .6 .8 1
years
2011
Yes No
-4
-2
0
2
4
6
%
0 1 2 3 4
years
-4
-2
0
2
4
6
%
0 1 2 3 4
years
-4
-2
0
2
4
6
%
0 1 2 3
years
-4
-2
0
2
4
6
%
0 1
years

19. -6
-4
-2
0
2
4%
2005 2006 2007 2008 2009 2010 2011 2012
year
all No Yes
RELATIVE
MFP
GROWTH
OVER
TIME
OF
ORGANISATIONAL
INNOVATORS
VS
NON-­‐INNOVATORS
Firms
doing
organisa&onal
innova&on
during
economic
downturn
experience
significantly
higher
returns
during
economic
recovery
Charts
show
coefficients
from
OLS
regressions
of
change
in
2-­‐yr-­‐MA
of
MFP
from
year
0
to
t
on
innova?on
in
year
0.
Regressions
include
controls
for
base
year
and
firm
characteris?cs.
Bars
show
95%
confidence
intervals.
Sample
contains
firms
in
BOS
2005-­‐2011
with
output
measures
un?l
2012.
Observa?ons
weighted
by
BOS
sampling
weights
?mes
predicted
output.
19

20. RELATIVE
MFP
GROWTH
BY
YEAR
OF
MARKETING
INNOVATORS
VS
NON-­‐INNOVATORS
By
contrast,
marke&ng
innovators
in
2005
experienced
lower
produc&vity
growth
but
in
2007
experienced
higher
growth
Charts
show
coefficients
from
OLS
regressions
of
change
in
2-­‐yr-­‐MA
of
MFP
from
year
0
to
t
on
innova?on
in
year
0.
Regressions
include
controls
for
base
year
and
firm
characteris?cs.
Bars
show
95%
confidence
intervals.
Sample
contains
firms
in
BOS
2005-­‐2011
with
output
measures
un?l
2012.
Observa?ons
weighted
by
BOS
sampling
weights
?mes
predicted
output.
20
-10
-5
0
5%
0 1 2 3 4
years
2005
-10
-5
0
5%
0 1 2 3 4
years
2007
-10
-5
0
5%
0 1 2 3
years
2009
-10
-5
0
5%
0 .2 .4 .6 .8 1
years
2011
Yes No
-10
-5
0
5
10
15
%
0 1 2 3 4
years
-10
-5
0
5
10
15
%
0 1 2 3 4
years
-10
-5
0
5
10
15
%
0 1 2 3
years
-10
-5
0
5
10
15
%
0 1
years

21. -10
-5
0
5%
2005 2006 2007 2008 2009 2010 2011 2012
year
all No Yes
RELATIVE
MFP
GROWTH
OVER
TIME
OF
MARKETING
INNOVATORS
VS
NON-­‐INNOVATORS
Firms
that
had
introduced
marke&ng
innova&on
did
significantly
becer
during
economic
downturn
Charts
show
coefficients
from
OLS
regressions
of
change
in
2-­‐yr-­‐MA
of
MFP
from
year
0
to
t
on
innova?on
in
year
0.
Regressions
include
controls
for
base
year
and
firm
characteris?cs.
Bars
show
95%
confidence
intervals.
Sample
contains
firms
in
BOS
2005-­‐2011
with
output
measures
un?l
2012.
Observa?ons
weighted
by
BOS
sampling
weights
?mes
predicted
output.
21

22. -20
-10
0
10%
0 1 2 3 4
years
2005
0 1 2 3 4
years
2007
0 1 2 3
years
2009
0 .2 .4 .6 .8 1
years
2011
new to world new only to NZ new only to firm not new
RELATIVE
MFP
GROWTH
BY
YEAR
OF
PRODUCT
INNOVATORS
BY
NOVELTY
OF
PRODUCT
Innova&on
followers
did
becer
than
innova&on
leaders
in
2005
&
2007
but
innova&on
leaders
did
becer
in
2009
Charts
show
coefficients
from
OLS
regressions
of
change
in
2-­‐yr-­‐MA
of
MFP
from
year
0
to
t
on
innova?on
in
year
0.
Regressions
include
controls
for
base
year
and
firm
characteris?cs.
Bars
show
95%
confidence
intervals.
Sample
contains
firms
in
BOS
2005-­‐2011
with
output
measures
un?l
2012.
Observa?ons
weighted
by
BOS
sampling
weights
?mes
predicted
output.
22

23. -10
-5
0
5
10%
2005 2006 2007 2008 2009 2010 2011 2012
year
all new to world new only to NZ new only to firm not new
RELATIVE
MFP
GROWTH
OVER
TIME
OF
PRODUCT
INNOVATORS
BY
NOVELTY
OF
PRODUCT
Innova&on
followers
performed
becer
during
economic
downtown
but
innova&on
leaders
performed
becer
during
the
recovery
Charts
show
coefficients
from
OLS
regressions
of
change
in
2-­‐yr-­‐MA
of
MFP
from
year
0
to
t
on
innova?on
in
year
0.
Regressions
include
controls
for
base
year
and
firm
characteris?cs.
Bars
show
95%
confidence
intervals.
Sample
contains
firms
in
BOS
2005-­‐2011
with
output
measures
un?l
2012.
Observa?ons
weighted
by
BOS
sampling
weights
?mes
predicted
output.
23

24. -20
-10
0
10
20%
0-5
yrs
5-10
yrs
10-20
yrs
20-50
yrs
50+
yrs
age
R&D
activity
Product
innovation
Process
innovation
Organisational
innovation
Marketing
innovation
Younger
firms
experience
highest
boost
in
produc&vity
growth
following
innova&on
RELATIVE
CHANGE
IN
MFP
OVER
3
YEARS
BY
INNOVATION
TYPE
&
AGE
24
Charts
show
difference
in
predic?ve
margins
from
series
of
OLS
regressions
of
change
in
3-­‐yr
MA
of
MFP
from
year
0
to
year
t
on
innova?on
in
year
0
interacted
with
firm
characteris?cs
and
controls
for
base
year.
Bars
show
95%
confidence
intervals.
Sample
contains
firms
in
BOS
2005-­‐2011
with
output
measures
un?l
2012.
Observa?ons
weighted
by
BOS
sampling
weights
?mes
predicted
output.

25. -10
-5
0
5
10%
0-20 20-50 50-100 100+
total employment
R&D
activity
Product
innovation
new to world
Product
innovation
Process
innovation
Organisational
innovation
Marketing
innovation
Small-­‐to-­‐medium
size
firms
appear
to
do
worse
if
they
innovate
RELATIVE
CHANGE
IN
MFP
OVER
3
YEARS
BY
INNOVATION
TYPE
&
FIRM
SIZE
25
Charts
show
difference
in
predic?ve
margins
from
series
of
OLS
regressions
of
change
in
3-­‐yr
MA
of
MFP
from
year
0
to
year
t
on
innova?on
in
year
0
interacted
with
firm
characteris?cs
and
controls
for
base
year.
Bars
show
95%
confidence
intervals.
Sample
contains
firms
in
BOS
2005-­‐2011
with
output
measures
un?l
2012.
Observa?ons
weighted
by
BOS
sampling
weights
?mes
predicted
output.

26. -20
-10
0
10
20%
Primary Manufacturing Services
sector
R&D
activity
Product
innovation
new to world
Product
innovation
Process
innovation
Organisational
innovation
Marketing
innovation
Firms
in
manufacturing
sector
experience
strongest
impact
of
innova&on
on
MFP
growth
RELATIVE
CHANGE
IN
MFP
OVER
3
YEARS
BY
INNOVATION
TYPE
&
SECTOR
26
Charts
show
difference
in
predic?ve
margins
from
series
of
OLS
regressions
of
change
in
3-­‐yr
MA
of
MFP
from
year
0
to
year
t
on
innova?on
in
year
0
interacted
with
firm
characteris?cs
and
controls
for
base
year.
Bars
show
95%
confidence
intervals.
Sample
contains
firms
in
BOS
2005-­‐2011
with
output
measures
un?l
2012.
Observa?ons
weighted
by
BOS
sampling
weights
?mes
predicted
output.

27. -20
-10
0
10
20%
NZ-owned domestic foreign-owned domestic international
level of internationalisation
R&D
activity
Product
innovation
new to world
Product
innovation
Process
innovation
Organisational
innovation
Marketing
innovation
Interna&onally
connected
firms
engaged
in
product
or
organisa&onal
innova&on
experience
higher
MFP
growth,
while
domes&c
firms
have
lower
growth
RELATIVE
CHANGE
IN
MFP
OVER
3
YEARS
BY
INNOVATION
TYPE
&
INTERNATIONAL
FOCUS
27
Charts
show
difference
in
predic?ve
margins
from
series
of
OLS
regressions
of
change
in
3-­‐yr
MA
of
MFP
from
year
0
to
year
t
on
innova?on
in
year
0
interacted
with
firm
characteris?cs
and
controls
for
base
year.
Bars
show
95%
confidence
intervals.
Sample
contains
firms
in
BOS
2005-­‐2011
with
output
measures
un?l
2012.
Observa?ons
weighted
by
BOS
sampling
weights
?mes
predicted
output.

28. Innova&on
macers
for
produc&vity,
but
more
for
some
firms
than
others
FINDINGS
• R&D
and
innovaCon
associated
with
growth
in
size
but
not
necessarily
with
producCvity
• Firms
doing
markeCng
innovaCon
show
clearest
returns
overall,
especially
in
2007-­‐2009
(economic
downturn)
• Firms
doing
product
and
organisaConal
innovaCon
performed
beeer
afer
2009
(economy
recovery),
but
possibly
worse
before
• Younger
firms,
manufacturing
firms,
and
firms
with
internaConal
connecCons
have
highest
returns
to
innovaCon
CONCLUSIONS
• More
to
innovaCon
than
R&D
• Non-­‐technological-­‐types
of
innovaCon
maeer
as
much
if
not
more
• Market
condiCons
important
• Some
types
of
firms
get
more
value
out
of
innovaCon
than
others
For
more
informa&on
www.produc&vity.govt.nz
@Nzprocom
28