Innovation and Productivity: A Review in Literature

Abstract

Innovation plays a crucial role in improving a firm's performance. The relationship between innovation and productivity has been widely analysed during this decade across countries and industries, generating important new findings. This study aims to provide an overall literature review on the relationship between innovation and the productivity of firms to obtain a comprehensive overview of the role innovation plays in changing productivity. By reviewing existing empirical evidence, one can better understand the different measurements of innovation and productivity. This study also provides a discussion on methods adopted to quantify the relationship between innovation and productivity: CDM model, IV regression, and system-GMM approach.

JEL classification: D22, D24, O30