The joint impact of different types of innovation on firm's productivity: Evidence from Italy

This paper explores the firm-level relationship between product, process, organizational and marketing innovation activities and firm productivity. We propose a structural model that relates R&D decisions, innovation activities, and productivity by using a version of the model developed by Crépon et al. (1998) and empirically analyze the drivers of firms' innovation strategies as well as which combination has effects on firm's economic productivity. Results show that R&D expenditures are an important predictor of all types of innovation as well as an important indirect driver of firm productivity through innovation activities. Both process and product innovation have positive effects on firm's economic productivity, especially when they are jointly conducted. Organizational activities are beneficial also for other types of innovation and especially for process innovation. The introduction of a new product on the market may raise productivity if complemented by marketing innovations. Results are driven by firms that have invested the most in new equipment and machinery.