Chapter 4. Fifty Years of Empirical Studies of Innovative Activity and Performance

This chapter reviews the empirical literature on the determination of firms’ and industries’ innovative activity and performance, highlighting the questions addressed, the approaches adopted, impediments to progress in the field, and research opportunities. We review the “neo-Schumpeterian” empirical literature that examines the effects of firm size and market concentration upon innovation, focusing on robust findings, questions of interpretation, and the identification of major gaps. We also consider the more modest literature that considers the effect on innovation of firm characteristics other than size. Finally, we review the literature that considers three classes of factors that affect interindustry variation in innovative activity and performance: demand, appropriability, and technological opportunity conditions.