Innovation Strategies, Process and Product Innovations and Growth: Firm-Level Evidence from Brazil
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Using World Bank ICS data from Brazilian manufacturing firms, this paper identifies innovation strategies of firms - in particular internal technology creation (make) and external technology acquisition (buy)- and their effect on successful process and product innovations. It also explores the importance of innovations for firm growth. Successful process and product innovations occur mostly through technology acquisition, mostly embodied in machinery and equipment, either alone or in combination with internal technology development. The option of only relying on internal development is less performing. The results indicate that innovative performance is an important driver for firm growth. It is particularly the combination of product and process innovations that significantly improves firm growth. Both innovation and growth performance are supported by access to finance. Skills of workforce and management matter, but not necessarily tertiary education levels. The impact of international linkages on innovative and growth performance is mixed.