Academic journal article International Advances in Economic Research

Innovation in the Portuguese Manufacturing Industry: Analysis of a Longitudinal Company Panel

Academic journal article International Advances in Economic Research

Innovation in the Portuguese Manufacturing Industry: Analysis of a Longitudinal Company Panel

Article excerpt

Abstract

Two projects on innovation were developed in the 1990s under the scope of a Portuguese university research center: the Industry/Innovation project (INDINOVA) (1989-1991) and the System for the Observation of Technology and Innovation in Portuguese Industry project (SOTIP) (1997-2000). The two main objectives in this paper are: 1) to compare the results of the first project and the last project; and 2) to explain the evolution that took place between these two periods in regard to the Portuguese 'system of innovation'. In particular, the aim is to focus attention on the evolution (trajectories) followed by a specific group of 165 companies included in both surveys during the 1990s. The final step is to link the evolution of economic and business performances to innovation management practices. In instrumental terms, we utilize factor analysis (JEL O30)

Introduction

In Portugal--whose economy is a small and open one with a fragile scientific and technological system, despite enjoying considerable improvements of late--the experience of supporting industrial innovation is a fairly recent one. For this reason, there are not yet sufficient global empirical studies to permit a satisfactory assessment of firstly, the situation regarding innovative activities and secondly, the quantitative impact of innovation policies.

However, the need for this type of study has been frequently stressed. As a result, two projects were undertaken in the last decade, which will be addressed in this paper: the Industry/Innovation project (INDINOVA-1989-91) [CISEP/GEPIE, 1991] and the System for the Observation of Technology and Innovation in Portuguese Industry project (SOTIP-1997-99) [Monteiro-Barata, 1999, 2000, 2004]. These two projects took place under the scope of a university research center (CISEP/ISEG, Lisbon) and share the common feature of being based on a postal survey mailed to a random sample of companies. (1)

The Innovation Concept: Paths for Applied Research

The concept of innovation, which was generically adopted in the projects under review, naturally resulted from a synthesis of the relevant literature (see for example, Kline and Rosenberg [1986], Rothwell [1992], Freeman and Soete [1997], Dosi [1998], Beije [1998]) and the definitions proposed by international bodies, such as the Organization of Economic Cooperation and Development (OECD). Three fundamental areas of innovation were considered: innovation in products, processes, and management.

A product is regarded as technologically innovative when it displays a substantial difference in the materials or components used in comparison with similar products manufactured beforehand, or when it is designed for new uses. Innovation may refer to either an entirely new product (radical innovation) or improvements to a product (incremental innovation), i.e., intervention in parts or components that modify their functioning or performance. Products that are considered innovative may be so at a world level, at a national or industry level, or merely at the firm level and, as a rule, they will provide access to new markets.

A process is regarded as technologically innovative when it is used either for the production of new or improved products that could not be produced through conventional means or for the manufacture of products which were previously made by the firm but now require new techniques or the same techniques performed in a more effective manner. Here one should also draw a distinction between new and improved processes.

In the management area, innovative activities are considered to be practices that make it possible to exploit the company's resources (human, material, energy, etc.) and which may improve knowledge and access to new productive processes, besides adapting the company to the evolution of market structures [Tidd et al., 2001]. All these different specifications of innovation, its dynamic, economic and social impact (radical versus incremental innovation) and the difficulties of the empirical approach, point to the complexity of the phenomenon in question. …

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