Innovation quality and manufacturing firms' performance in Canada

The overall objective of this paper was to determine the impact of producing a world-first innovation, a Canada-first innovation and a first-to-the firm innovation on firms' economic performance (employment, labour productivity, market share and total value added). The study used unique data from Statistics Canada's Citation1999 Survey of Innovation that was linked to the 1997 Annual Survey of Manufactures. Three hypotheses were tested: that innovative firms (firm-first, Canada-first, world-first) should have higher performance (in terms of the performance measures that are defined in the next section) than non-innovative firms; that the dichotomous innovation variables should be statistically different from zero in the multivariate analysis; that the estimated coefficients in the performance regressions should be greater for world-first innovations compared to firm-first innovations. In the regressions world-first innovators had higher employment and market share offering support for the first hypothesis, while the results for labour productivity and total value added were not statistically significant. With regard to hypothesis two, the multivariate results were somewhat mixed since the world-first innovator was significant in two performance equations. Hypothesis three was confirmed since in all cases the ordering on coefficient size for the performance variables was world, Canada, and firm (with world being the largest and firm being the smallest).