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This paper analyses the effect of interaction with universities on firms' innovation output, measured as the degree of novelty of product innovation. The analysis is based on a sample of 3,257 manufacturing firms, active in innovation, and located in Spain. The authors distinguish between two types of interaction mechanisms: cooperation in innovation activities and outsourcing of Research and Development (R&D) services. Using data from two waves of the Spanish innovation survey (2004 and 2007), they examine the effect of interaction in 2004 on subsequent product innovation in 2005-2007. The results show that neither co-operation with universities nor outsourcing of R&D services to these agents has a significant effect on product innovation.
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