This paper considers the relationship between innovation, ownership and profitability for a panel of manufacturing plants in Ireland and Northern Ireland. Previous literature suggests that innovators are persistently more profitable than non-innovators, but little is known about how this link is moderated by external versus domestic ownership. We consider the link between innovation and profits separately for indigenous innovators and non-innovators and externally-owned plants. We also consider the determinants of innovation over the distribution of plant-level profitability, and find that the determinants of profitability – including innovation and external ownership – vary over the distribution from low to high profitability plants. We find support for the view that innovators and non-innovators have different profitability determinants, and that the profitability of externally-owned plants depends on very different factors to those of indigenously-owned enterprises.
Bibliographical noteNOTICE: this is the author’s version of a work that was accepted for publication in International journal of industrial organization. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Love, JH, Roper, S & Du, J, 'Innovation, ownership and profitability' International journal of industrial organization, vol. 27, no. 3 (2009) DOI 10.1016/j.ijindorg.2008.11.001
- quantile regression
- Northern Ireland