Is Demand-Pulled Innovation Equally Important in Different Groups of Firms?

Previous empirical literature has tested the demand-pull hypothesis and found that innovation may be driven by output. Using a balanced panel of 216 Italian manufacturing firms (1995-2000) and checking for the path-dependent nature of Ramp;D we find a role of sales in inducing Ramp;D. However, the demand-pull effect plays a varying role for different sub-samples of firms. Exporting firms, liquidity-constrained firms, unsubsidised firms and those not heading a group seem to be sensitive to sales in deciding Ramp;D. These results have been obtained using a Least Squares Dummy Variable Corrected Estimator, a recent panel-data technique suitable for small samples