Innovation, R-D Investment and Productivity in Colombia

"The main objective of this paper is to establish a formal relationship between innovation and performance using Colombian firm-level data. We find that, as predicted by the literature, the production of goods and services new to the firm and to the domestic market enhances firms productivity and sales. In the same way, innovation in management and marketing boosts firms productivity and sales. However, contrary to theoretical predictions, the production of goods and services new to the international market has a strong negative impact on TFP, although it largely increases sales when firms invest in R-D. We also study the factors behind the firms decision to invest in innovation, the intensity of such investment and the returns to investment in innovation."