Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/225232 
Authors: 
Year of Publication: 
2020
Series/Report no.: 
DICE Discussion Paper No. 352
Publisher: 
Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE), Düsseldorf
Abstract: 
Can being innovative help firms to shield themselves from the disruptive effects of a recession? Using data for Spanish manufacturing firms, this paper finds that innovative firms suffered considerably less compared to noninnovative firms during the Great Recession. The operating mechanism for the resilience of innovative firms to market disruption during a recession is product differentiation, and not reduction in marginal cost of production and prices with process innovation. The data does not support alternative explanations such as better access to capital, or difference in labour moving costs for innovative firms. The results provide evidence for the role of innovation in making firms dynamically capable and resilient to large negative shocks.
Subjects: 
Innovation
Recession
Resilience
Product differentiation
Dynamic capability
JEL: 
L25
O30
O31
E32
ISBN: 
978-3-86304-351-3
Document Type: 
Working Paper

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