Does firm innovation lead to high growth? Evidence from Ecuadorian firms

Abstract

We analyze the determinants of: i) employment and sales growth, and ii) the likelihood of becoming a high-growth firm (HGF) among Ecuadorian firms for the period 2011-2014. We apply a two-stage econometric model that controls for selection bias in the choice to innovate in regards to the two rounds of the Ecuadorian National Innovation Activities Survey. We find that younger firms and firms that spend more on R & D activities per employee have significantly higher levels of employment growth and are significantly more like to become employment HGFs.