Innovation Strategies, Process and Product Innovations and Growth: Firm-Level Evidence from Brazil

Using World Bank ICS data from Brazilian manufacturing firms, this paper identifiesinnovation strategies of firms - in particular internal technology creation (make) and externaltechnology acquisition (buy)- and their effect on successful process and product innovations.It also explores the importance of innovations for firm growth. Successful process andproduct innovations occur mostly through technology acquisition, mostly embodied inmachinery and equipment, either alone or in combination with internal technologydevelopment. The option of only relying on internal development is less performing. Theresults indicate that innovative performance is an important driver for firm growth. It isparticularly the combination of product and process innovations that significantly improvesfirm growth. Both innovation and growth performance are supported by access to finance.Skills of workforce and management matter, but not necessarily tertiary education levels. Theimpact of international linkages on innovative and growth performance is mixed.