Firm Size, Competition, Financing and Innovation

Abstract

This paper investigates the effects of firm size, competition and access to finance on the innovation performance of that firm. After a review of the relevant literature, three logit models are proposed and tested. The empirical analysis is based on the business environment and enterprise performance survey (BEEPS) for 1053 enterprises from twenty-six countries in years 2002 and 2005. Our results suggest a positive and statistically significant relationship between firm size and innovation. We also find a positive relationship between both competition and access to finance with innovation.

Keywords

• access to financing
• firm size
• innovation and competition