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The Impact Of Technological And Nontechnological Innovations On Firm Growth

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Executive Summary

This paper investigates the relationship between innovations and firm growth, based on the data of Finnish firms operating in the software industry. The authors find that in terms of turnover and employment, firms with only technological innovations do not grow more rapidly than other firms. However, firm growth is positively associated with the combination of technological and non-technological innovations. Innovations have long been recognised to have the central role in economic growth (e.g. Kuznets 1930, Schumpeter 1939). However, the majority of empirical evidence concerning the relationship between innovations and firm growth has focused on innovations relating to technology development.

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