How Do Young Innovative Companies Innovate?

This paper discusses the determinants of product innovation in Young Innovative Companies (YICs) by looking at in-house and external R&D and at the acquisition of external technology in embodied and disembodied components. These input-output relationships are tested on a sample of innovative Italian firms. A sample-selection approach is applied. Results show that in-house R&D is linked to the propensity to introduce product innovation both in mature firms and YICs; however, innovation intensity in the YICs is mainly dependent on embodied technical change from external sources, while - in contrast with the incumbent firms - in-house R&D does not play a significant role.