Innovation and establishments' productivity in Canada

Introduction of innovation surveys in most industrial OECD countries4 in the early nineties provided data that enabled researchers to statistically document the multiple sources of innovation, the variety of types of innovation and their relationship with the expected and achieved impact of innovation results on the performance of innovating firms. [...] One of the conclusions emerging from these studies suggested that instead of treating them separately, as had been customary in the literature, the effects of innovation activity on the performance of the firm can be modeled as a series of relationships that link the investment in knowledge to productivity growth. [...] Another original feature of this application of the CDM model is the inclusion of local, national and EU funding of R&D in the Heckman section of the model. [...] The authors argue that their revenue per employee-based model offers a better framework for assessing the links between the results of the innovation process and the firm performance because the results of innovation are measured in revenue terms rather than in value added terms. [...] The study also finds that the estimation of return on innovation investment benefits from the inclusion of more information on the technological environment of the firm.