Firm Heterogeneity and Industrial Heterogeneity : A Non-Taxonomical Approach To Innovation

Empirical works dealing with the issue of heterogeneous technological regimes in firm and industry level innovation effects generally use exploratory data analysis methods to map firms’ innovative activity to these regimes following the taxonomical approach work of Pavitt (1984). Using a knowledge production function with innovation inputs within the framework of random parameter panel count data, the present paper attempts to capture simultaneously both the firm and the industrial heterogeneity effect. The data is drawn from EC-JRC/OECD research microdata set for 2010-2013 period. The results indicate that combining firm and industry heterogeneity provides the best information relative to the standard alternatives