JSSM  Vol.1 No.3 , November 2008
Innovation in the Financial Sector: Persistence and Schumpeterian Hypotheses
Author(s) Roberto Napoli
University of Trento.
The paper analyses innovation features in the German financial sector. The first topic is persistence of innovation. Our research question is: Do innovators plan further innovation for the subsequent year? In addition, since the sector is so far poorly researched, very basic questions are investigated in the paper: the relationship between firm size and innovation (both linear and quadratic), as well as the impact of market structure on innovation (i.e. Schumpeterian and neo-Schumpeterian hypotheses). Finally, Suttons argument of R & D sunk costs is investigated as a possible explanation for persistence. Basing on the CIS IV survey, our empirical evidence is consistent with the results of similar researches carried out in different sectors.

Cite this paper
nullR. Napoli, "Innovation in the Financial Sector: Persistence and Schumpeterian Hypotheses," Journal of Service Science and Management, Vol. 1 No. 3, 2008, pp. 215-225. doi: 10.4236/jssm.2008.13023.
[1]   C. Perez, “Technological revolutions and financial capital: The dynamics of bubbles and golden ages, “Celtenham, Elgar, 2002.

[2]   C. Perez, “Finance and technical change: A neo-schupeterian perspective,” to appear in H. Hanusch and A. Pyka eds., The Elgar Companion to Neo-Schumpeterian Economic, Edward Elgar, Celtenham, 2004.

[3]   J. Schumpeter, “The theory of economic development,” Harvard University Press, Cambridge, Massachussets, 1934.

[4]   J. Schumpeter, “Capitalism, socialism and democracy,” New York, 1942.

[5]   F. Malerba, L. Orsenigo, and P. Peretto, “Persistence of innovative activities, sectoral patterns of innovation and international technological specialization,” International Journal of Industrial Organization No. 15, pp. 801-826, 1997.

[6]   J. Lerner, “Where does state street lead?” A First Look at Financial Patents, 1971-2000, Journal of Finance, 57, pp. 901-930, 2002.

[7]   F. Malerba and L. Orsenigo, “Schumpeterian patterns of innovation,” Cambridge Journal of Economics, 19, pp. 47-65, 1995.

[8]   S. G. Winter, “Schumpeterian competition in alternative technological regimes”, Journal of Economic Behaviour and Organization, Vol. 5, pp. 287-320, 1984.

[9]   B. S. Tether, “The sources and aims of innovation in services: Variety between and within sectors,” Econ. Innov. New Techn, Vol. 12 (6), pp. 481-505, 2003.

[10]   G. Dosi, L. Marengo, and C. Pasquali, “How much should society fuel the greed of innovators?” On the relations between appropriability, opportunities and rates of innovation, Research Policy, Vol. 35, pp. 1110-1121 controlla anno, 2006.

[11]   P. Geroski, J. V.Reenen, and C. F. WALTERS, “How Persistently Do Firms Innovate?” Research Policy, 26, pp. 33-48, 1997.

[12]   S. Roper and N. Hewitt-Dundas, “Innovation persistence: Survey and case-study evidence,” Research Policy No. 37, pp. 149-162, 2008.

[13]   A. Cabbagnol and C. G. Le Bas, “How persistently do firms innovate?” An Evolutionary View, An Empirical Application of Duration Models, presented at the European Meeting of Applied Evolutionary Economics, 7-9 June 1999, Grenoble, France, 1999.

[14]   C. Le Bas, A. Cabagnols, and C. Gay, “An evolutionary view on persistence in innovation: An empirical application of duration model,” in P.Saviotti (ed.) Applied Evolutionary Economics, Northhampton, MA: Edward Elgar, 2003.

[15]   C. Le Bas and W. R. Latham, “Persistence of firm innovative behaviour: Towards an evolutionary theory,” working paper, 2004.

[16]   F. Malerba and L. Orsenigo, “Schumpeterian patterns of innovation,” Cambridge Journal of Economics, 19, pp. 47-65, 1995.

[17]   F. Malerba and L. Orsenigo, “Schumpeterian patterns of innovation are technology-specific,” Research Policy 25, pp. 451-478, 1996.

[18]   F. Malerba and L. Orsenigo, “Technological entry, exit and survival,” Research Policy 28, pp. 643-660, 1999.

[19]   E. Cefis and L. Orsenigo, “The persistence of innovative activities: A cross-countries and cross-sectors comparative analysis,” Research Policy No. 30, pp. 1139-1158, 2001.

[20]   R. Nelson and S. Winter, “An evolutionary theory of economic change,” The Bellknap Press of Harvard University Press, Cambridge, MA, 1982.

[21]   G. Dosi, “Sources, procedures and microeconomic effects of innovation,” The Journal of Economic Literature, pp. 1120–1171, 1988.

[22]   E. Cefis, “Is there persistence in innovative activities,” International Journal of Industrial Organization No. 30, pp. 489-515, 2003.

[23]   G. Bottazzi, G. Dosi, M. Lippi, F. Pammolli, and M. Riccaboni, “Innovation and Corporate Growth in the Evolution of the Drug Industry,” International Journal of Industrial Organization No. 19, pp. 1161-1187, 2001.

[24]   E. Duguet and S. Monjon, “Is innovation persistent at firm level?” An Econometric Examination Comparing the Propensity Score and Regression Methods, University of Paris I-Cahiers de la MSE Working Paper No. 2004(75), 2004.

[25]   Peters, “Persistence of innovation: Stylised facts and panel data evidence,” Discussion Paper No. 05-81, 2006.

[26]   J. Sutton, “Sunk Costs and Market Structure,” Cambridge, 1991.

[27]   R. Napoli, “L’innovazione finanziaria in Italia e Germania: Statistiche descrittive e considerazioni teoriche”, in Bancaria, n. 2008/1, pp. 90-102, 2008.

[28]   P. Tufano, “Financial innovation and first mover advantages,” Journal of Financial Economics, No. 25, pp. 213-240, 1989.

[29]   D. Teece, “Reflections on “Profiting from innovation,” Research Policy No. 35, pp. 1131-1146, 2006.

[30]   R. Gilbert and D. Newberry, “Pre-emptive Patenting and the Persistence of Monopoly,” American Economic Review, 72 (3), pp. 514-526, 1982.

[31]   G. Symeonidis, “Innovation, firm size and market structure: Schumpeterian Hypotheses and Some New Themes,” OECD 1996.

[32]   G. Gellatly and V. Peters, “Understanding the innovation process: Innovation in dynamic service industries,” Statistics Canada, Working Paper 127, 1999.

[33]   K. Kamien and N. Schwartz, “Market structure and innovation,” Cambridge University Press, 1982.

[34]   W. Cohen, “Empirical studies of innovation activity,” Oxford: Blackwell, 1995.

[35]   W. M. Cohen and R. C. Levin, “Empirical Studies of Innovation and Market Structure,” in Handbook of Industrial Organization, eds R. Schmalensee and R. D. Willig, New York: North-Holland, 1989.

[36]   A. Vaona and M. Pianta, “Firm size and innovation in European manufacturing,” Kiel Working Paper No. 1284, 2006.

[37]   Z. J. Acs and D. B. Audretsch, “Innovation in large and small firms: An empirical analysis,” The American Economic Review, Vol. 78, No. 4, pp. 678-690, 1988.

[38]   N. S. Siddharthan, “In-house r & d, imported technology and firm size: Lessons from Indian experience,” Developing Economies, No. 26, pp. 212-21, 1988.

[39]   N. Kumar and A. Aggarwal, “Liberalization, outward orientation and in-house r&d activity of multinational and local firms: A quantitative exploration for indian manufacturing,” unpublished paper, 2000.

[40]   S. Heffernan, “Financial Innovation in the UK,” Working Paper No 4, Cass Business School, City University, London, 2008.

[41]   J. Lerner, “The new new financial thing: The origins of financial innovations,” Journal of Financial Economics, 79, pp. 233-255, 2006.

[42]   W. S. Frame and L. J. White, “Empirical studies of financial innovation: Lots of talk, little action?” Federal Reserve Bank of Atlanta, Working Paper, No.12, July 2002.

[43]   P. Tufano, “Financial Innovation,” working paper, 2002.

[44]   F. M. Scherer and D. Ross, “Industrial market structure and economic performance,” 3rd ed. Boston: Houghton-Mifflin, 1990.

[45]   R. C. Merton, “Financial innovation and economic performance,” Journal of Applied Corporate Finance 4(4), pp. 12-22, 1992.