Innovation and employment growth in Ecuadorian firms

Abstract

We study in this paper the four types of innovation and their effect over employment in Ecuadorian Firms. We have worked with a data set from the National Innovation Activities Survey 2009-2011 (NIAS) with information about 2815 firms from 2009 – 2011 in Ecuador. In our research, we have applied Harrison et al. (2008) methodology, where they introduce an innovative sales growth (pro d- uct), and other types (process, organizational and marketing) of innovation to measure in the d y- namic of employment growth . For the final estimation, we have used an Instrumental Variables to have efficient coefficients. The model, although gives us a productivity proxy ́s about between new and old products, and demand ed factors. The results drive along the line of compensation effect for product and marketing innovation. Furthermore, our results suggest that the innovation increase the demand of its products (new and old), on the other hand, the organizational innovation which was only based on innovation decision that destroys jobs in the short terms for Ecuadorian firms, where the displacement effect over employment dominates. We found that the old products are not diffe r- ent than new products in terms of productivity. Our results, contribute to literature in developing countries for understand the innovative behavior in the firms and it effects.