Sources of Spillovers for Imitation and Innovation

Spillovers of technological activity are a highly discussed issue in several subfields of scholarly research in economics. In studies on firm-level productivity, for instance, spill-overs are typically modeled by including the sum of R&D of firms in the same industry, and sometimes R&D in other than the corresponding firm’s industries in a regression. These measures have some shortcomings like the implicit limitation to a certain geographic area. In addition, conventional measures by construction assume that recipients of spillovers all utilize them to the same extent as only one coefficient is estimated for each spillover variable. In addition, spillover effects may be realized from different types of sources, such as suppliers (upstream firms), customers (downstream firms), rivals (horizontally related firms), or research institutions. /p>

In this paper, we propose the use of survey measures that overcome the limitations of the ‘traditional’ spillover measures as discussed above. In addition, we distinguish the importance of spillovers for two types of innovative activitiy, i.e. original innovation based on own inventive activity versus imitation, and argue that heterogeneous effects can be expected by the source of the spillover. Although it is well known that spillovers may not only trigger innovation but also imitation, this latter effects is mostly neglected in empirical studies so far.

We use a sample of German firms and analyze their innovation and imitation behavior using sales of different product types (market novelties vs. products new to the firm but not new to the market) and estimate whether and to what extent spillovers from different sources contribute to these revenues. The data includes information on knowledge spillovers that were indispensable for the development of own products and if these came from competitors, customers, suppliers or research institutions.

Cappelli, Riccardo, Dirk Czarnitzki and Kornelius Kraft (2013), Sources of Spillovers for Imitation and Innovation, ZEW Discussion Paper No. 13-064, Mannheim, published in: Research Policy.