This study empirically examines the relationship between a firm's characteristics and its product/process innovation, and further explores the interaction between product and process innovation. We first constructed a unique set of firm-level innovation output data in semiconductor and pharmaceutical industries. We used the product and process patents awarded to firms as output measures of innovation, and employed an independent expert process to identify the patents as product and process innovations. Using the dataset, we then tested a set of hypotheses. The results indicate that the relationship between firm size and product/process innovation is consistent and robust across size measurement proxies in both industries. The interaction between product and process innovation is complementary and significant. The relationship between product/process innovation and other firm characteristics is contingent on the industry and measurement proxy.
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