Effects of Innovation on Technical Progress in Spanish Manufacturing Firms

We analyse the effect of innovation on technical progress in Spanish manufacturing firms by identifying and explaining how the following innovation factors affect technical progress: research and development (R&D) activities and expenditures, patents, innovations in products and in processes, internal organisation of innovation, outsourcing R&D activities, public R&D funding, external relationships of innovation and different ways of external collaboration for innovation. We focus on how firm behaviour and structure drive these innovation factors. Our results are based on multiple regression analyses using firm-level data from 2010. We show that innovations in product, processes and R&D activities (especially external R&D activities) are more likely to improve the productivity of Spanish manufacturing firms. In addition, the activities related to the internal organisation or the external collaboration for innovation generates a higher productivity level. This positive effect is bigger when a firm collaborates with universities and/or technology centres and employs recent college graduates, especially those with degrees in science, engineering or technology.