1. On the role of process innovation on SMEs productivity
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1. Poster Title
• Replace the mock-up text of the poster title (”Joint Research Centre”) with the text of your own title.
• Keep the original font colour (100c 80m 0y 0k).
• Keep the flush-right justification.
• Set it in Helvetica Rounded Bold Condensed, if you own the typeface. Otherwise, in Arial, Helvetica or Verdana – plain or bold.
• Keep the original font body size (102 pt or, preferably,120 pt) and the title on a single line whenever possible. Reduce the body size and/or set the title on more than one line only if unavoidable.
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• Keep the original font body size (72 pt) and the subtitle on a single line whenever possible. Reduce the body size and/or set the subtitle on more than one line only if unavoidable.
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• Adjust the font body size and leading to the needs of your own text, depending on its overall length, for optimal display and legibility.
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5. Additional Logos
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• Place any additional logos on the bottom of the poster, evenly spaced between the JRC and (if there is one) the Directorate or Institute logo, and vertically centred with them.
On the role of process innovation on SMEs productivity
Juan A. Máñez, María E. Rochina, Amparo Sanchis y Juan A. Sanchis
Motivation / Objectives
Small and medium enterprises (SMEs) are a driving force for economic growth in the world economy.
Objectives:
To explore in depth the direct effect of process innovations on total factor productivity for small and medium enterprises by analyzing:
the extent of and the life span of the productivity gains brought about by the introduction of process innovations
In order to do this, we first analyse whether:
the ex-ante more productive SMEs are those that start introducing process innovations;
then, we test whether process innovations boost SMEs productivity growth using matching techniques to control for the possibility that selection into introducing process innovations may not be a random process
Methodology
To test for non-random selection into implementing process innovation we use Kormogorov-Smirnov tests to compare TFP distributions between process and non-process innovators
To properly control for the direction of causality from implementing process innovations to productivity growth, we use a matching techniques that explicitly take into account for the non-random selection process.
Data base
We use data on SMEs drawn from the Encuesta sobre Estrategias Empresariales (ESEE, hereafter) for the period This survey data is representative of Spanish manufacturing SMEs classified by industrial sectors and size categories.4 The panel data nature of the data set allows classifying SMEs according to their process innovation patterns over time and to analyse the extent and the life span of the impact of process innovations on SMEs productivity growth
Approach
We start by testing whether among non-process innovators in t-1 those introducing process innovations in t are more productive in t-1. In order to do so, we compare TFP (previous to obtain a process innovation) of SME implementing a process innovation for the first time, with TFP of non-process innovators. Therefore, we compare,
F1991,…,2002((z1991,…,2002|n=n0) vs.
F1991,…,2002((z1991,…,2002|n=n0) , n0=l,s
To control for the direction of causality from implementing process innovations to productivity growth, let Δy denote the growth rate of TFP and Dit = {0, 1} be an indicator of whether SME i is a first-time process innovator in period t (as opposed to a non-process innovator). Thus, we can use to define the TFP growth between t-1 and (t-1)+s, s>0, for SME i classified as first-time process innovator in t, and as the growth outcome for SME i if it had not implemented any process innovation. Thus, the causal effect of implementing a first process innovation for SME i at time period (t-1)+s can be defined as
Δy1i(t-1)+s-Δy0i(t-1)+s
The main problem of causal inference is that Δy0i(t-1)+s in observational studies the counterfactual is not observed, and therefore it has to be generated. Thus, causal inference relies on the construction of the counterfactual for this term
Results
We find that the introduction of process innovations yields a delayed (not contemporaneous) extra productivity growth to a SME implementing a process innovation for the first time, as compared to a SME that does not introduces process innovations, and this extra productivity growth has an inverted U-shaped form.
Policy implications
Our results suggest that SME policy should be on support of innovative SMEs, and in particular, on undertaking and developing initiatives aimed at facilitating SMEs the introduction of process innovations, such as tax incentives, access to finance and grant schemes, and also incentives heading for the maintenance and improvement of SMEs skills to innovate and to adapt and develop new technologies. This issue is especially important in Europe since increasing the share of innovative SMEs in the overall industrial sector is one of Europe’s major challenges.
Contact
Juan A. Sanchis
Unversidad de Valencia and ERI-CES
Facultad de Economía, Departamento de Economía Aplicada II, Avda. de los Naranjos, s/n, Valencia,
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