Division of Labor between Innovation Intermediaries for SMEs: Productivity Effects of Interfirm Organizations in Japan

Innovation intermediaries are individuals or organizations that help others improve productivity. This study examines how small- and medium-sized enterprises (SMEs) chose intermediaries and how intermediaries affected total factor productivity (TFP) growth of participants through different channels. Estimated switching regression models reveal that cooperative associations improved TFP of participants through cost sharing, such as joint logistics, while voluntary groups improved TFP of participants through knowledge sharing, such as joint R&D. Innovative SMEs appear to have exploited different intermediaries so that the benefit from each intermediary would be complementary to TFP growth. The results suggest the division of labor between intermediaries.