Exploring the link between Innovation and Growth in Chilean firms - Working Paper Series 2016/09

Sep 4, 2026

Employing a balanced panel dataset covering the entire Chilean productive structure, the paper examines how the introduction of innovation relates to subsequent firm growth measured by sales. It moves beyond average effects by addressing heterogeneity in which firms benefit most from innovation. The analysis combines parametric and non-parametric approaches and uses quantile treatment effects to compare firms with similar propensity to innovate across growth quantiles, showing differing impacts for process versus product innovation.

LanguageEnglish

CategoryResearch & Report

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Pages25

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1 Introduction

LEM WORKING PAPER SERIES Exploring the link between Innovation and Growth in Chilean irms Caterina Santi ° Pietro Santoleri ° ° Institute of Economics, Scuola Superiore Sant'Anna, Pisa, Italy 2016/09 March 2016 ISSN(ONLINE) 2284-0400 Exploring the link between Innovation and Growth in Chilean 􀀌rms Caterina Santi􀀃 Pietro Santoleri† Abstract We employ a balanced panel dataset representative of the entire Chilean productive structure in order to investigate the relation between the introduction of innovation and subsequent 􀀌rm growth in terms of sales. Recent contributions examining thereturns to innovation on 􀀌rm performance have stressed the need of going beyond the analysis of the ‘average e􀀋ect for the average 􀀌rm’. However, previous studies in the case of Latin American economies have often overlooked the importance of analyzing which 􀀌rms bene􀀌t more from the introduction of innovations. Our analysis consists of a series of parametric and non-parametric exercises which take into account the properties of the 􀀌rm growth distribution. In particular, we adopt quantile treatment e􀀋ects (QTE) which allow to estimate the e􀀋ect of the introduction of innovation by comparing 􀀌rms with a similar propensity to innovate for di􀀋erent quantiles of the 􀀌rm growth distribution. On one hand, our results indicate that process innovation shows a positive and signi􀀌cant relation with 􀀌rm growth for those 􀀌rms located at the 75th and 90th percentiles. On the other, product innovation shows a negative association only for high-growth 􀀌rms. Keywords: innovation, 􀀌rm growth, Chile, quantile regression, quantile treatment e􀀋ects JEL classi􀀌cation: C14, C21, C22, D22, O31 . 1 Introduction Latin America lags behind the OECD economies in terms of innovation and technology adoption. Contrarily to East-Asian countries which have narrowed their technological gaps by making their productive structures more complex and knowledge-intensive, Latin American economies have made little progress in this area throughout the last decades. Within this region, a particular case is represented by Chile. Indeed, despite having the highest GDP per capita in Latin America, this country still features low expenditures on R&D (0.35% of GDP, the 7th economy in Latin America) (OECD/World Bank, 2015) . Oneof the reasons for such limited e􀀋orts in developing domestic capabilities to generate and 􀀃 Institute of Economics, Scuola Superiore Sant’Anna – c .santi@sssup .it †Institute of Economics, Scuola Superiore Sant’Anna – [p.santoleri@sssup.it](p.santoleri@sssup.it) 1 Acknowledgments The authors would like to thank Federico Tamagni, Angelo Secchi, Stefano Bianchini, Le Li, Nanditha Mathew, Ernest Miguel􀀓ez for their helpful comments and suggestions. Thanks are also due to the participants to the DRUID Academy conference at Bordeaux University and to the 3rd Ph.D. workshop in Economics of Innovation, Complexity and Knowledge at Collegio Carlo Alberto in Turin. manage technological change has been the tendency of the business sector not to prioritise innovation and technological development (OECD/ECLAC, 2013) . In fact, the private sector contributes only for the 32% to the total R&D domestic expenditures, one of the lowest 􀀌gures worldwide (the average for OECD countries is 68%) (OECD/World Bank, 2015) . These limited e􀀋orts in improving domestic technological capabilities are, in turn, observable in the degree of novelty of the innovations commercialized by Chilean 􀀌rms. For instance, compared with other Latin American countries, Chile has one of the lowest shares in terms of new-to-the-world product innovations while the bulk refers to new-to-the-􀀌rm products (Casanova et al., 2011) . Given this context, the aim of this study is to shed more light on the link between the introduction of technological innovations and 􀀌rm growth in the Chilean business sector. While previous contributions have focused on the nexus between innovation and pr

FAQs

What does the paper study about innovation and growth in Chilean firms?

The paper investigates the relationship between introducing innovation and subsequent firm growth, using sales growth as the outcome.

Why does the study go beyond average effects?

Because prior evidence suggests results differ across firms, and innovation may benefit only a subset of fast-growing firms located in upper quantiles of the growth distribution.

How are quantile treatment effects used in the analysis?

Quantile treatment effects compare firms with similar propensity to innovate across different quantiles of the firm growth distribution, enabling estimation of innovation effects for each quantile.

Sep 4, 2026

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