Effects of innovation on the growth of ecuadorian firms: a quantile analysis

  • Luis Enrique Simbaña-Taipe Universidad de las Fuerzas Armadas ESPE
  • David Rodeiro-Pazos Universidade de Santiago de Compostela
  • María Jesús Rodríguez-Gulías Universidade da Coruña
  • Sara Fernández-López Universidade de Santiago de Compostela
Keywords: innovation, growth, quantile regressions, panel data, Ecuador


This paper analyzes the relationship between firms’ innovation and growth measured by sales and labor productivity in Ecuador. The literature on this topic has focused mainly on developed countries. We apply panel data quantile regressions to analyze a sample of 99,872 private limited company and public limited company for the period 2000-2013. Quantile regression allows us to avoid conventional analysis through the study of the average impact for the average company, which can lead to the discovery of phenomena underlying relationships. The results show that firm innovation has a negative on productivity growth. In contrast, there is a positive relationship between innovation and sales growth for firms in some quantiles. These results lead us to establish a series of recommendations aimed at public policy decision-makers. In particular, the support of government entities is important for a company's R&D activities, which contribute to generating profitable intangible assets. This support can be through advice, subsidies, or tax benefits, among others. At the country level, government effort to protect intangible assets is also important, promoting competitive advantages for those companies that actually invest or buy such assets.


View per year:  
Download data is not yet available.


Adamou, A. and Sasidharan, S. (2007). The impact of R&D and FDI on firm growth in emerging-developing countries: Evidence from Indian manufacturing industries. Available at SSRN: https://ssrn.com/abstract=987024.

Aissa, S.B. and Goaied, M. (2016). Determinants of Tunisian hotel profitability: The role of managerial efficiency, Tourism Management, Vol. 52, pp. 478–487.

Almus, M. and Nerlinger, E.A. (1999). Growth of new technology-based firms: which factors matter?, Small business economics, Vol. 13, No.2, pp. 141–154.

Autio, E., Kronlund, M. and Kovalainen, A. (2007). High-growth SME Support Initiatives in Nine Countries: Analysis, Categorization, and Recommendations: Report Prepared for the Finnish Ministry of Trade and Industry. Ministry of Trade and Industry.

Baily, M.N., Bartelsman, E.J. and Haltiwanger, J. (1996). Downsizing and productivity growth: myth or reality?, Small Business Economics, Vol. 8, No.4, pp. 259–278.

Bigsten, A. and Gebreeyesus, M. (2007). The small, the young, and the productive: Determinants of manufacturing firm growth in Ethiopia, Economic Development and Cultural Change, Vol. 55, No.4, pp. 813–840.

Bottazzi, G., Dosi, G., Lippi, M., Pammolli, F. and Riccaboni, M. (2001). Innovation and corporate growth in the evolution of the drug industry, International Journal of Industrial Organization, Vol. 19, No.7, pp. 1161–1187.

Brenner, T. and Schimke, A. (2015). Growth Development Paths of Firms—A Study of Smaller Businesses, Journal of Small Business Management, Vol. 53, No.2, pp. 539–557.

Cainelli, G., Evangelista, R. and Savona, M. (2006). Innovation and economic performance in services: a firm-level analysis, Cambridge Journal of Economics, Vol. 30, No.3, pp. 435–458.

Calvo, J.L. (2006). Testing Gibrat’s law for small, young and innovating firms, Small Business Economics, Vol. 26, No.2, pp. 117–123.

Canay, I.A. (2011). A simple approach to quantile regression for panel data, The Econometrics Journal, Vol. 14, No.3, pp. 368–386.

Choi, K.S., Lee, J.D. and Baek, C. (2016). Growth of De Alio and De Novo firms in the new and renewable energy industry, Industry and Innovation, Vol. 23, No.4, pp. 295–312.

Coad, A. (2009), The growth of firms: A survey of theories and empirical evidence. Edward Elgar Publishing.

Coad, A. and Broekel, T. (2012). Firm growth and productivity growth: evidence from a panel VAR, Applied Economics, Vol. 44, No.10, pp. 1251–1269.

Coad, A. and Rao, R. (2008) Innovation and firm growth in high-tech sectors: A quantile regression approach, Research policy, Vol. 37, No.4, pp. 633–648.

Coad, A. and Rao, R. (2010). Firm growth and R&D expenditure”, Economics of Innovation and New Technology, Vol. 19, No.2, pp. 127–145.

Coad, A. and Rao, R. (2011). The firm-level employment effects of innovations in high-tech US manufacturing industries, Journal of Evolutionary Economics, Vol. 21, No.2, pp. 255–283.

Coad, A., Segarra, A. and Teruel, M. (2013). Like milk or wine: Does firm performance improve with age?, Structural Change and Economic Dynamics, Vol. 24, pp. 173–189.

Coad, A., Segarra, A. and Teruel, M. (2016). Innovation and firm growth: Does firm age play a role?, Research Policy, Vol. 45, No.2, pp. 387–400.

Corsino, M. and Gabriele, R. (2010). Product innovation and firm growth: evidence from the integrated circuit industry, Industrial and corporate change, p. dtq050.

Del Monte, A. and Papagni, E. (2003). R&D and the growth of firms: empirical analysis of a panel of Italian firms, Research policy, Vol. 32, No.6, pp. 1003–1014.

Delmar, F., Davidsson, P. and Gartner, W.B. (2003). Arriving at the high-growth firm, Journal of business venturing, Vol. 18, No.2, pp. 189–216.

Delmar, F., McKelvie, A. and Wennberg, K. (2013). Untangling the relationships among growth, profitability and survival in new firms, Technovation, Vol. 33, No.8, pp. 276–291.

Del Monte, A., & Papagni, E. (2003). R&D and the growth of firms: empirical analysis of a panel of Italian firms. Research policy, 32(6), 1003-1014.

Demir, R., Wennberg, K. and McKelvie, A. (2016). The strategic management of high-growth firms: a review and theoretical conceptualization, Long Range Planning.

Dosi, G. (1982). Technological paradigms and technological trajectories: a suggested interpretation of the determinants and directions of technical change, Research policy, Vol. 11, No.3, pp. 147–162.

Elche, D. M., & González, Á. (2008). Influence of innovation on performance: analysis of Spanish service firms. The Service Industries Journal, 28(10), 1483-1499.

Evangelista, R. and Savona, M. (2003), Innovation, employment and skills in services. Firm and sectoral evidence, Structural Change and Economic Dynamics, Vol. 14, No.4, pp. 449–474.

Fariñas, J.C. and Moreno, L. (1997), Size, Age and Growth: An Application to. Fundación Empresa Pública.

Federico, J.S. and Capelleras, J.L. (2015). The heterogeneous dynamics between growth and profits: the case of young firms, Small Business Economics, Vol. 44, No.2, pp. 231–253.

Gibrat, R. (1931), Les inégalités économiques. Recueil Sirey.

Global Innovation Index (2017). Global Report, http://www.wipo.int/publications/es/details. jsp?id=4193

Goedhuys, M. and Sleuwaegen, L. (2010). High-growth entrepreneurial firms in Africa: a quantile regression approach, Small Business Economics, Vol. 34, No.1, pp. 31–51.

Hall, B.H. (1986). The relationship between firm size and firm growth in the US manufacturing sector. National Bureau of Economic Research Cambridge, Mass., USA.

Hax, A.C. and Majluf, N.S. (1984). Strategic management: an integrative perspective.

Herrera, G. (2009). La innovación como estrategia y solución empresarial para impulsar la competitividad y un crecimiento sostenido a largo plazo, Ciencia y Mar, Vol. 13, No.38, pp. 51–60.

Jovanovic, B. (1982). Selection and the Evolution of Industry, Econometrica: Journal of the Econometric Society, pp. 649–670.

Koenker, R. (2004). Quantile regression for longitudinal data, Journal of Multivariate Analysis, Vol. 91, No.1, pp. 74–89.

Koenker, R. and Hallock, K. (2001). Quantile regression: An introduction, Journal of Economic Perspectives, Vol. 15, No.4, pp. 43–56.

Lee, C. Y. (2009). Competition favors the prepared firm: Firms’ R&D responses to competitive market pressure. Research Policy, 38(5), 861-870.

Lee, C.Y. (2010), A theory of firm growth: Learning capability, knowledge threshold, and patterns of growth, Research Policy, Vol. 39, No.2, pp. 278–289.

Lee, N. (2014). What holds back high-growth firms? Evidence from UK SMEs, Small Business Economics, Vol. 43, No.1, pp. 183–195.

Levy-Carciente, D. (2016). International property rights index. Washington, DC: Property Rights Alliance.

Loi, T.H. and Khan, A.A. (2012). Determinants of firm growth: evidence from Belgian companies, Master thesis, university of GENT.

Mansfield, E. (1962). Entry, Gibrat’s law, innovation, and the growth of firms, The American economic review, pp. 1023–1051.

Meyer, L.H. (1998). The present and future roles of banks in small business finance, Journal of Banking & Finance, Vol. 22, No.6, pp. 1109–1116.

Moreno, F. and Coad, A. (2015). High-growth firms: Stylized facts and conflicting results, en Entrepreneurial Growth: Individual, Firm, and Region, Emerald Group Publishing Limited, pp. 187–230.

Navaretti, G.B., Castellani, D. and Pieri, F. (2014). Age and firm growth: evidence from three European countries, Small Business Economics, Vol. 43, No. 4, pp. 823–837.

Nogueira, A., Fernández-López, S., Rodríguez-Gulías, M.J., Vivel-Búa, M. and Rodeiro-Pazos, D. (forthcoming): The hidden effect of innovation in the growth of the Spanish firms, International Journal of Entrepreneurship and Small Business.

Oliveira, B. and Fortunato, A. (2006). Firm growth and liquidity constraints: A dynamic analysis, Small Business Economics, Vol. 27, No.2-3, pp. 139–156.

Park, K. and Jang, S.S. (2010). Firm growth patterns: examining the associations with firm size and internationalization, International Journal of Hospitality Management, Vol. 29, No.3, pp. 368–377.

Rodríguez-Gulías, M.J., Fernández-López, S. and Rodeiro-Pazos, D. (2016). Growth determinants in entrepreneurship: A longitudinal study of Spanish technology-based university spin-offs, Journal of International Entrepreneurship, Vol. 14, No.3, pp. 323–344.

Roy, V.V. and Nepelski, D. (2016). Assessment of Framework Conditions for the Creation and Growth of Firms in Europe, Joint Research Centre (Seville site), Working Paper JRC103350.

Salazar, M. and Valderrama, M.G. (2013). La Alianza Universidad-Empresa-Estado: una estrategia para promover innovación, Revista EAN, No.68, pp. 112–133.

Schwartz, L. y Guaipatín, C. (2014). Ecuador: Análisis del Sistema Nacional de Innovación: Hacia la consolidación de una cultura innovadora. https://publications.iadb.org/handle/11319/6664

Segarra, A. and Teruel, M. (2014). High-growth firms and innovation: an empirical analysis for Spanish firms, Small Business Economics, Vol. 43, No.4, pp. 805–821.

Serrasqueiro, Z., Nunes, P. M., Leitão, J., & Armada, M. (2010). Are there non-linearities between SME growth and its determinants? A quantile approach. Industrial and Corporate Change, 19(4), 1071-1108.

Triguero, Á. and Córcoles, D. (2013). Understanding innovation: An analysis of persistence for Spanish manufacturing firms, Research Policy, Vol. 42, No.2, pp. 340-352.

Yasuda, T. (2005). Firm Growth, Size, Age and Behavior in Japanese Manufacturing, Small Bus Econ, Vol. 24, No.1, pp. 1-15.

Yrigoyen, C.C. and Reyes, B.S. (2012). Externalidades Ambientais e Prezo Da Vivenda En Madrid: Unha Análise Con Regresión Cuantílica Espacial, Revista Galega de Economía. Vol. 21, No. 2, pp. 277-296.
How to Cite
Simbaña-Taipe, L. E., Rodeiro-Pazos, D., Rodríguez-Gulías, M. J., & Fernández-López, S. (2018). Effects of innovation on the growth of ecuadorian firms: a quantile analysis. Journal of Business, Universidad Del Pacífico (Lima, Peru), 10(2), 70-87. https://doi.org/https://doi.org/10.21678/jb.2018.851