Discussion Paper

No. 2018-24 | March 08, 2018
Innovation strategies of firms – identification, dynamics and intra-industry heterogeneity


The study aims at providing new evidence with respect to the still unresolved question, whether the innovation behaviour of firms reflects industry-specific characteristics (“technological regime approach”), or whether it is the outcome of firm-specific strategies to gaining a competitive edge (“strategic management view”). To this end, the author firstly identifies a set of innovation strategies (cluster analysis), whose adequacy he evaluates using the “economics of innovation” as reference. Secondly, the author investigates the dynamics of innovation strategies to get some insights into structural changes of the economy. Thirdly, he examines, based on a large number of 4-digit branches, the intra-industry heterogeneity of innovation strategies. Finally, the author analyses in a production function framework the relative importance of a company’s innovation strategy and its industry affiliation as determinants of firm performance. The third part of the paper tends to support the “strategic management view” (high intra-industry heterogeneity), while the final one is rather in line with the “technological regime approach” (industry affiliation is the more important factor determining firm performance). These opposite findings indicate that a company has a certain room of manoeuvre to choose an innovation strategy in line with its specific capabilities, but some structural characteristics at industry level restrict the strategic options.

JEL Classification:

O30, O31, O32, O33


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Cite As

Heinz Hollenstein (2018). Innovation strategies of firms – identification, dynamics and intra-industry heterogeneity. Economics Discussion Papers, No 2018-24, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2018-24

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