Abstract

Because of increasing levels of competition and decreasing product-life cycles, a firm's ability to generate a continuous stream of innovations may be more important than ever in allowing a firm to develop and/or maintain competitive advantage This paper investigates several issues that are central to an examination of the innovation productivity in a firm. I first investigate the relationship between a firm’s commitment to research and development and its innovative outcomes. Two innovative outcomes are examined; invention – which focuses on the development of new ideas, and innovation - the development of commercially viable products or services from creative ideas. Invention is measured by the number of patents granted, and innovation is assessed by the number of new product announcements. Moreover, because many inventions ultimately result in marketable innovations, and because patents may provide protection for new products, the relationship between patents and product announcements is also investigated. Finally, the ability of a firm to benefit from its inventions and innovations by examining their separate effects on firm performance, measured as ROA and sales growth.

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