This paper explores whether workers share innovation returns and how the size of innovation returns is affected by market conditions. Using a panel data of Spanish manufacturing firms during the period from 1990 to 1993, we answer affirmatively to both questions. Product and process innovations both generate returns, but such returns are higher for process innovations. The size of innovation returns seems to be affected positively by demand growth, by product standardization, and by low product market concentration. The three empirical results are in agreement with the theoretical predictions, such as Schmoockler’s (1966) theory of demand‐pool innovation, the price‐elasticity of demand effects postulated by Kamien & Schwartz (1970), and the replacement effect suggested by Arrow (1962). At the time of generating returns, process innovations are more affected by market conditions than are other innovations.
Martínez‐Ros, E. and Salas‐Fumás, V. (2004), "Do Workers Share Innovation Returns? A Study of the Spanish Manufacturing Sector", Management Research, Vol. 2 No. 2, pp. 147-160. https://doi.org/10.1108/15365430480000507
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