نوآوری در محصول و تصمیم به سرمایه گذاری در دارایی های سرمایه ثابت: شواهدی از بررسی شرکت های کوچک و متوسط در شش کشور عضو اتحادیه اروپا

This work explores the relationship between product innovation and the decision to invest in fixed capital assets among a sample of SMEs in six European Union countries located in both peripheral and more central areas. We find that the presence of product innovation reduces the probability to invest. A firm’s size exerts a direct, inverted U-shape effect on the probability to invest and an indirect effect through the linear effect of size on the probability to innovate. The gap in the probability to invest between innovative and non-innovative firms increases with size.

The existence and operation of SMEs are of paramount importance for the European economy. This is due to two reasons. First, micro enterprises (firms with less than 10 employees) and all SMEs (firms from 1 to 250 employees) account for 92% and for more than 99%, respectively, of all businesses in Europe (European Commission, 2003). Unlike in the US, SMEs in Europe have a very high share of total employment. Second, SMEs create an entrepreneurial economy as opposed to a managed economy and contribute to increased knowledge, competition and variety (Audretsch and Thurik, 2001 and European Commission, 2003). The Commission of the European Union has recognized the importance of SMEs to the competitiveness of the European economy and the need to support innovation among SMEs. Thus, the Commission launched the Competitiveness and Innovation Framework Programme (CIP) that runs from 2007 to 2013 and is divided into three operational programmes. The Entrepreneurship and Innovation Programme (EIP) is one of the three CIP operational programmes, with an overall budget of 2.17 billion euro. Innovative activities compete with other activities for a firm’s financial and human resources. Financial constraints emerge as the prime barrier to innovation in many recent business surveys carried out among European firms. The Observatory of European SMEs most recent survey (Flash Eurobarometer, 2007) revealed that almost 37% of SMEs do not report any turnover from innovative products. The managers of these businesses argue that problematic access to finance, scarcity of skilled labour, and expensive human resources are three of the top four barriers to innovation, the fourth being inadequate market demand. It is also important to note that almost half of the managers of non-innovative enterprises (16% of all respondents) are troubled by high interest rates and other problems with access to finance. Finding or mobilizing financial resources is also one of the top four unsatisfied needs of innovative large companies and SMEs alike (Flash Eurobarometer, 2004). In the same survey, 90% of innovative firms state that a part of their overall investments is channelled into innovation, 47% dedicate up to 10% of their overall investments to innovation, while big innovation investors (investments in innovation accounting for more than 51% of total investments) were 14% of total innovative businesses. The empirical evidence presented above suggests that firstly, innovative activity (product or process) demands investments, and secondly, innovative and non-innovative firms alike find access to financial resources to be an important barrier to innovation. Economic theory has highlighted the important role of innovation and investments for the growth of regions and countries. Innovation and investments that enable businesses to be ‘blazing new trails’ are crucial for business success while, without innovation, automatic decline is inevitable (Schumpeter, 1951). For an individual firm’s performance, product innovation is considered to be among the dynamic capabilities of a firm, since it can either strengthen the firms’ competencies by allowing the firm to exploit its capacities, or it can be used by the firm to explore new fields which currently are outside its capabilities (Malerba and Orsenigo, 1993 and Teece and Pisano, 1994). Investment in fixed capital, on the other hand, expands a firm’s capacity and strengthens its position against rivalries (Dixit and Pindyck, 1994). Apparently, both investment and innovation thus contribute to firms’ performance. Notwithstanding the remarkable research concerning the relationships between human capital and R&D expenditures as an input to innovative activity (Leiponen, 2005 and Mohnen and Röller, 2005), surprisingly little research has hitherto been conducted on the relationship between innovation and the decision to invest in fixed capital assets. Our contribution aims to bridge this research gap. In particular, we examine whether innovative activity is complementary or competitive to the decision to invest in fixed capital assets, among a sample of over 500 SMEs located in six European Union member states. Thus, the research question of the present work addresses issues at the heart of the strategy launched by the European Council in Lisbon in March 2000. In the case of complementarities between innovative activity and the decision to invest in fixed assets, innovation may lead to an increase in the demand for a firm’s product, which may result in the firm’s expansion in terms of employment and fixed capital. Smolny (2003) argues that there are complementarities between innovations and capital investments, without assuming a causal relation. For example, a new product requires a new production process and a new production process allows the production of a new good. Thus, he argues, “the probability to implement an innovation depends positively on the amount of investment and the amount of investment depends positively on the implementation of innovations”. Smolny (2003) findings show that “firms that implemented a product innovation only, invested even less than firms that did not innovate”. In the second case, when innovation and the decision to invest in fixed capital assets are competitive, innovation is not followed by an increase in fixed capital assets. Economic actors know that there exists a kind of opportunity and they use resources to explore new products or processes (Dosi, 1988 and Oerlemans and Meeus, 2005), and thus drain a firm of capital that could otherwise have supported investments in fixed assets. Most frequently, investments in fixed assets support a managed economy dictated by the forces of large-scale production, reflecting the predominance of the production factors of capital and (unskilled) labour as the sources of competitive advantage. Innovative activity underlines an entrepreneurial economy dominated by the production factor of knowledge. Thus, a possible competitive relation between innovation and fixed assets investments may be reduced to the operation of counterbalancing forces between the managed and entrepreneurial mode within SMEs in the same economy. Firm size exercises an important, and frequently contradictory, effect on innovative activity and fixed asset growth. For this reason, we extend our analysis beyond the mere exploration of the relationship between innovation and the decision to invest in fixed assets. We also examine the simultaneous effects that a firm’s size exercises on innovation and the decision to invest in fixed assets. The paper is developed in four further sections. The theoretical framework underlying the relationship between innovative activity and investments in fixed assets is presented in Section 2. The case study areas and the methodology are presented in Section 3. The major results from our case study areas are presented in Section 4, while a discussion regarding the findings and shortcomings of our work follows in Section 5 where we also explore the importance of our findings for public economic policy.

In this work we find strong indications that, among a sample of SMEs in six European Union member states, innovative activity and investments in fixed capital assets are competitive processes, because the presence of innovative activity reduces the probability that investments in fixed capital assets have been undertaken by the same firm and in a time span covering 5 years. Innovation and investments in fixed assets share the common economic characteristics of uncertainty, irreversibility and the opportunity to postpone. Our analysis shows that as scale economies are exploited and the SMEs in our sample reach the size of about 150 employees, the probability to innovate becomes very much weighted on the probability to invest. Thus, the gap in the probability to invest between innovating and non-innovating firms widens. This is also governed by the region’s GDP growth, showing that more peripheral dynamic regions with generally higher GDP growth rates provide for a higher probability to invest. This trade-off between investment and innovation reveals the ambiguity prevailing in the fragmented policies supporting innovation, investment and access to finance in the past. Under the Entrepreneurship and Innovation Operational Programmes of the CIP Framework Programme, presented in Section 1 of this paper, the European Commission consolidates its instruments that provide access to finance for SMEs through venture capital investments and loan guarantee instruments. The SME Guarantee Facility (SMEGF) managed by the European Investment Fund coordinates efforts to increase access to finance for the start-up and growth of SMEs and investment in innovation activities. The approach presented in this paper is only indicative of the specific regions and countries, and thus no strict policy recommendations can be based on the interpretation of our results. However these serve as a starting point for preliminary discussions concerning the relationship between innovation and capital accumulation as well as the effect of firm size on the probability to invest. Our results indicate that the conventional view holding the small firm as a constrained firm may not be entirely correct. When innovation and investments in fixed capital assets are simultaneously considered, the larger firm is more constrained and the probability to invest is lower, in relation to its size. This is due to the fact that larger firms are more likely to innovate, and thus, indirectly, less likely to invest. In another, completely reverse angle, one may argue that since larger firms have already invested above a minimum efficient scale they are able to forgo further investments in favour of innovative activities. Unfortunately, our econometric analysis framework does not allow for a formal causality test that would permit us to test this hypothesis formally. However, Fig. 1 allows us to speculate that even for firms which are below a minimum efficient scale of around 150 employees, and thus in need for further investments, the gap in the probability to invest between innovators and non-innovators increases. The discussion above is concerned with evidence on a micro scale. On a macro scale, Aghion and Howitt (1992) introduced a Schumpeterian-like growth model of creative destruction where firms invest resources in research to introduce a new product that renders the previous product obsolete, with the prospect of monopoly profits. In this model, competition and growth are inversely related. In more recent versions of this model it is shown that a more competitive structure may contribute to economic growth and that capital accumulation and innovation are complementary processes in the growth process (Howitt and Aghion, 1998). If the micro data show competition between capital growth and innovation then the organizations creating the opportunities are not the same organizations that exploit the opportunities, and the entrepreneurial act of starting a new firm serves definitely as a mechanism for knowledge spillovers (Audretsch, 1995). In our case it may be that larger firms create opportunities (innovate) but smaller firms exploit the opportunities (invest). In this perspective, the micro evidence of competition between innovation and capital accumulation does not necessarily contradict the macro evidence of complementarity. On the contrary, our evidence may indicate that an entrepreneurial society allocates resources to capital and innovation by sustaining rivalry between capital accumulation and innovation within a firm and, in turn, this firm-specific rivalry gives rise to economy-wide complementarities of capital and innovation. One way to achieve this is by disentangling the role of the firm-innovator from that of the production-oriented imitator. However, our results do not go so far as to support this argument empirically.