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Drawing on survey data about firms in Mexico, we investigate the determinants of innovation and the linkages between innovation and productivity in the services sector. We apply a three-stage Crépon-Duguet-Mairesse (CDM) econometric model; the use of manufacturing firms as a benchmark helps to better appreciate our findings. We find that a series of structural, performance, and behavioral factors increase a firm’s propensity to invest in innovation, but some differences arise between services and manufacturing firms. Intensive investment in innovation leads to superior innovation performance, while innovation output has a positive effect on labor productivity.
Fuentes et al. (Mon,) studied this question.
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