The effect of innovation on business performance in economic downturn. An application to the automotive industry

Abstract

The aim of this research is to go in-depth on the effect of competitiveness on innovation and the results. We have applied the analysis in an area characterized by the technological intensity of the production chains: the manufacturers of components of the Spanish automotive industry. We have used data from the 2008 economic downturn period to reduce the impact of the innovation performance lag. The sample included a total of 920 companies (81% SMEs and 19% large companies). In the context of the 2008 economic downturn, it is found that companies that are less innovative experience worse results and, more important, that there is a threshold of innovation from which marginal productivity is decreasing. From the theoretical approaches used and in our opinion, it marks the boundary between the Structure-Conduct-Outcome paradigm and the Resource-Capacity-Based Approach.