The Relationship between Productivity Growth and Types of Innovation
Evidence from Thailand Manufacturing Firms
Abstract
This paper examines the effect of product innovation and process innovation on the growth of Total Factor Productivity (TFP). There are two steps in the data analysis. The first step, we calculate the firm-level TFP using Data Envelopment Analysis (DEA) method and then calculate the growth of TFP. In the second step, we applied multiple regressions to test the relationship between the dependent variable, productivity growth, and the independent variables, including both types of Innovation, and other firm variables such as firm size, cooperation on innovation activities, owning research and development department. The data are from the “Innovation Activities Survey 2003” on Thailand manufacturing sectors by National Science and Technology Development Agency, Ministry of Science and Technology, which has data for 23 sectors. The result shows both production innovation and process innovation affect productivity growth. There is a direct relationship between process innovation on productivity growth since process innovation improves efficiency growth from reduce defects reducing cost. On the other hand, there is an inverse relationship product innovation on productivity growth since product innovation creates a need for radical change in the production process used.
References
1. สานักงานพัฒนาวิทยาศาสตร์และเทคโนโลยีแห่งชาติ. รายงานผลการสารวจการวิจัยและพัฒนา และกิจกรรมนวัตกรรมในภาคอุตสาหกรรมของประเทศไทย ประจาปี 2546, กระทรวงวิทยาศาสตร์และเทคโนโลยี, 2548.
2. __________. ดัชนีวิทยาศาสตร์และเทคโนโลยีของประเทศไทยปี 2550, กระทรวงวิทยาศาสตร์และเทคโนโลยี, 2550.
3. สานักงานเศรษฐกิจอุตสาหกรรม. แผนแม่บทการเพิ่มประสิทธิภาพและผลิตภาพของภาคอุตสาหกรรม พ.ศ. 2551-2555, กระทรวงอุตสาหกรรม, 2550.
4. สานักงานนวัตกรรมแห่งชาติ. รายงานผลการสารวจขีดความสามารถด้านนวัตกรรมของไทย ประจาปี 2550, สภาอุตสาหกรรมแห่งประเทศไทย, 2550.
5. Abhinorasaeth, N. “Innovation and Productivity in Developed and Developing Countries: A Comparative study of Japanese and Thai manufacturing firms.” Hitotsubashi University, 2007.
6. Arnold, E. (2002). Enhancing Policy and Institutional Support for Industrial Technology Development in Thailand. The Overall Policy Framework and the Development. Of the Industrial Innovation System. World Bank, (1)
7. Benavente, J.M., “The Role of Research and Innovation in Promoting Productivity in Chile.” Third draft, November 4, 2002. p.1-1.
8. Charoenporn, P. “Technological Innovation Development in Thai Manufacturing Sector.” Hiroshima University. 2006.
9. Crepon, B., Duguet, E. and Mairesse J., “Research, innovation and productivity: an econometric analysis at the firm level.” NBER Working Paper 6696, 1998.
10. Duguet, E. 2002. “Innovation height, spillovers and TFP growth at firm level: Evidence from French manufacturing”, EUREQua, 2002.
11. Griliches, Z., “R and D and Productivity: Econometric Results and Measurement Issues.” Handbook of the Economics of Innovation and Technological Change, Paul Stoneman Blackwell Handbooks in Economics, 1995, p.52 – 89.
12. Gulbiten, O. anTaymaz, E., “Are Small Firms Inefficient? A Schumpeterian Analysis of Productivity Differentials.” Middle East Technical University Ankara. Turkey, 2000.
13. Hall, P., “Innovation, Economics and Evolution: Theoretical Perspectives on Changing Technology in Economic Systems.” Harvester Wheatsheaf, 1994, p. 15 – 57
14. Hall, R.H. “A framework linking intangible resource and capabilities to sustainable competitive advantage.” Strategic Management Journal, Vol.14, 1994, p.607-618
15. Heshmati, A., Kim, Y.K. and Kim, H. (2006). The Effects of Innovation on Performance of Korean firms. The American Economic Review, (82), 73-84
16. Hjalmarsson, L. and A. Veiderpass, 1992, "Productivity in Swedish Electricity Retail Distribution,'' Scandinavian Journal of Economics 94, 193-205.
17. Huergo, E. and J. Jaumandreu, 2004, "Firms' age, process innovation and productivity growth," International Journal of Industrial Organization, Vol 22, 541-559.
18. Janz, N. and Peters, B. (2003) “Innovation and Innovation Success in the German Manufacturing Sector Econometric Evidence at Firm Level.” The American Economic Review, (79), 57-71.
19. Janz N., Loof H. and Peters B. “Firm Level Innovation and Productivity – Is there a Common Story across Countries.” Problems and Perspectives in Management, 2004.
20. Keunjae Lee and Sang-Mok Kang, Innovation Types and Productivity Growth: Evidence from Korean Manufacturing Firms, (Global Economic Review, 2007), p.p343 — 359
21. Kim, L. “Imitation to Innovation: the Dynamics of Korea’s Technological Learning.” Harvard Business School Press, Boston, MA., 2003.
22. Lee, K.J., and D.S. Lee, 2004, “Firm Characteristics, Cooperation over Technology and Types of Innovation: Based on the Busan Innovation Survey”, Journal of Economic Studies, Vol. 22, No 4, 173-199.
23. Lee, H. and J. A. Stone, 1994, Product and process innovation in the product life cycle: estimates for U.S. manufacturing industries, Southern Economics Journal, Vol. 60, 754-763.
24. Llorca, R., 2002, "The impact of process innovations on firm's productivity growth: the case of Spain," Applied Economics, Vol. 34, 1007-1016.
25. Loof, H. and Heshmati, A., “Knowledge Capital and Performance Heterogeneity: A Firm Level Innovation Study.”
26. SSE/EFI Working Paper Series in Economics and Finance, KTK Report, Department of Industrial Economics and Management, June 13, 2000.
27. Loof, H. and Heshmati, A. “Knowledge capital and performance heterogeneity: a firm level innovation study.” International Journal of Production Economics, Vool.76 (1), 2002, p. 61-85.
28. Lui Diaz-Balteiro, A. Casimiro Herruzo, Margarita Martinez and Jacinto Gonza´lez-Pacho´n. “An analysis of productive efficiency and innovation activity using DEA: An application to Spain’s wood-based industry” Forest Policy and Economics Vol. 8, 2000, p. 762–773.
29. Mansfield, E. “Size of firm, structure, and innovation.” Journal of Political Economy. Vol.71, 1963, p. 556-576
30. Masso,J. and Vahter, P. “Innovation and Firm Performance in a Catching-up Economy.” Institute of Economics, University of Tartu, Estonia.
31. OECD. “Measuring Productivity: OECD Manual Measurement of Aggregate and Industry-Level Productivity Growth.” OECD Publications, Paris. 2001.
32. OECD. “OECD Proposed Guidelines for Collecting and Interpreting Technological Innovation Data-Oslo Manual.” OECD Publications Service, Pan’s. 1997.
2. __________. ดัชนีวิทยาศาสตร์และเทคโนโลยีของประเทศไทยปี 2550, กระทรวงวิทยาศาสตร์และเทคโนโลยี, 2550.
3. สานักงานเศรษฐกิจอุตสาหกรรม. แผนแม่บทการเพิ่มประสิทธิภาพและผลิตภาพของภาคอุตสาหกรรม พ.ศ. 2551-2555, กระทรวงอุตสาหกรรม, 2550.
4. สานักงานนวัตกรรมแห่งชาติ. รายงานผลการสารวจขีดความสามารถด้านนวัตกรรมของไทย ประจาปี 2550, สภาอุตสาหกรรมแห่งประเทศไทย, 2550.
5. Abhinorasaeth, N. “Innovation and Productivity in Developed and Developing Countries: A Comparative study of Japanese and Thai manufacturing firms.” Hitotsubashi University, 2007.
6. Arnold, E. (2002). Enhancing Policy and Institutional Support for Industrial Technology Development in Thailand. The Overall Policy Framework and the Development. Of the Industrial Innovation System. World Bank, (1)
7. Benavente, J.M., “The Role of Research and Innovation in Promoting Productivity in Chile.” Third draft, November 4, 2002. p.1-1.
8. Charoenporn, P. “Technological Innovation Development in Thai Manufacturing Sector.” Hiroshima University. 2006.
9. Crepon, B., Duguet, E. and Mairesse J., “Research, innovation and productivity: an econometric analysis at the firm level.” NBER Working Paper 6696, 1998.
10. Duguet, E. 2002. “Innovation height, spillovers and TFP growth at firm level: Evidence from French manufacturing”, EUREQua, 2002.
11. Griliches, Z., “R and D and Productivity: Econometric Results and Measurement Issues.” Handbook of the Economics of Innovation and Technological Change, Paul Stoneman Blackwell Handbooks in Economics, 1995, p.52 – 89.
12. Gulbiten, O. anTaymaz, E., “Are Small Firms Inefficient? A Schumpeterian Analysis of Productivity Differentials.” Middle East Technical University Ankara. Turkey, 2000.
13. Hall, P., “Innovation, Economics and Evolution: Theoretical Perspectives on Changing Technology in Economic Systems.” Harvester Wheatsheaf, 1994, p. 15 – 57
14. Hall, R.H. “A framework linking intangible resource and capabilities to sustainable competitive advantage.” Strategic Management Journal, Vol.14, 1994, p.607-618
15. Heshmati, A., Kim, Y.K. and Kim, H. (2006). The Effects of Innovation on Performance of Korean firms. The American Economic Review, (82), 73-84
16. Hjalmarsson, L. and A. Veiderpass, 1992, "Productivity in Swedish Electricity Retail Distribution,'' Scandinavian Journal of Economics 94, 193-205.
17. Huergo, E. and J. Jaumandreu, 2004, "Firms' age, process innovation and productivity growth," International Journal of Industrial Organization, Vol 22, 541-559.
18. Janz, N. and Peters, B. (2003) “Innovation and Innovation Success in the German Manufacturing Sector Econometric Evidence at Firm Level.” The American Economic Review, (79), 57-71.
19. Janz N., Loof H. and Peters B. “Firm Level Innovation and Productivity – Is there a Common Story across Countries.” Problems and Perspectives in Management, 2004.
20. Keunjae Lee and Sang-Mok Kang, Innovation Types and Productivity Growth: Evidence from Korean Manufacturing Firms, (Global Economic Review, 2007), p.p343 — 359
21. Kim, L. “Imitation to Innovation: the Dynamics of Korea’s Technological Learning.” Harvard Business School Press, Boston, MA., 2003.
22. Lee, K.J., and D.S. Lee, 2004, “Firm Characteristics, Cooperation over Technology and Types of Innovation: Based on the Busan Innovation Survey”, Journal of Economic Studies, Vol. 22, No 4, 173-199.
23. Lee, H. and J. A. Stone, 1994, Product and process innovation in the product life cycle: estimates for U.S. manufacturing industries, Southern Economics Journal, Vol. 60, 754-763.
24. Llorca, R., 2002, "The impact of process innovations on firm's productivity growth: the case of Spain," Applied Economics, Vol. 34, 1007-1016.
25. Loof, H. and Heshmati, A., “Knowledge Capital and Performance Heterogeneity: A Firm Level Innovation Study.”
26. SSE/EFI Working Paper Series in Economics and Finance, KTK Report, Department of Industrial Economics and Management, June 13, 2000.
27. Loof, H. and Heshmati, A. “Knowledge capital and performance heterogeneity: a firm level innovation study.” International Journal of Production Economics, Vool.76 (1), 2002, p. 61-85.
28. Lui Diaz-Balteiro, A. Casimiro Herruzo, Margarita Martinez and Jacinto Gonza´lez-Pacho´n. “An analysis of productive efficiency and innovation activity using DEA: An application to Spain’s wood-based industry” Forest Policy and Economics Vol. 8, 2000, p. 762–773.
29. Mansfield, E. “Size of firm, structure, and innovation.” Journal of Political Economy. Vol.71, 1963, p. 556-576
30. Masso,J. and Vahter, P. “Innovation and Firm Performance in a Catching-up Economy.” Institute of Economics, University of Tartu, Estonia.
31. OECD. “Measuring Productivity: OECD Manual Measurement of Aggregate and Industry-Level Productivity Growth.” OECD Publications, Paris. 2001.
32. OECD. “OECD Proposed Guidelines for Collecting and Interpreting Technological Innovation Data-Oslo Manual.” OECD Publications Service, Pan’s. 1997.
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Published
2018-07-31
How to Cite
เขมะสุนันท์ ป., & ธัญญะประเสริฐ แ. (2018). The Relationship between Productivity Growth and Types of Innovation: Evidence from Thailand Manufacturing Firms. Thailand and The World Economy, 29(1), 48–94. Retrieved from https://so05.tci-thaijo.org/index.php/TER/article/view/137391
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