How does competition affect innovation behaviour in french firms?

摘要

This paper investigates the relationship between competition and innovation at the firm level. Recent papers (Aghion et al., 2005; Askenazy et al., 2013; Rafique Hashmi, 2013) advocate a non-linear relationship, conciliating the Schumpeterian and Arrowian views. In this paper, the effect of competition on innovation is studied at the firm level using a large dataset for France coming from the annual surveys on R&D, covering the period 2000-2013, where a dummy variable is available for product or process innovation.The econometric results do not confirm the inverted-U shape relationship between the Lerner index and innovation, found by Aghion et al. (2005). This may be due to the use of firm-level data rather than industry-level data. However, for most firms, there is a negative effect of competition on innovation, meaning that more competition in the industry or a small market share has a negative effect on the propensity to innovate, either in products or processes, and the effect seems to be slightly stronger for product than for process innovation. (C) 2019 Elsevier B.V. All rights reserved.