dissertation in pdf-format - Aalto-yliopisto

good measure of IPR activity in metal products and motor vehicles, car and motor industries where
firms clearly show an above-average propensity to introduce product and process innovations
(Huergo and Jaumandreu, 2004). In this study, branch of industry will be analysed through
univariate statistics because of the small amount of observations in some branches of industry
(Table 1). Thus, based on the assumptions of resource–munificence and regional competitiveness
theories, it is believed that firms in urban areas produce more IPRs than their counterparts in rural
areas. This leads to the following hypothesis:
H1.Firm location has an impact on the innovation activity (IPRs) of growing SMEs.
2.2 Size, age and innovativeness
The relationships between size, age, innovations and performance of a firm have long been debated
in innovation and growth studies. Many empirical studies test the Schumpeterian hypothesis that
large firms tend to have a resource advantage to exploit new technology compared with small ones
(Acs and Audretsch, 1988; Battacharya and Bloch, 2004; Cohen, 1995; Freeman and Soete, 1997;
Santarelli and Piergiovanni, 1996; Tether, 1998). Bouwer and Kleinknecht (1999) confirmed that
large firms have a greater probability of seeking patent protection. Kohn and Scott (1982) showed
that a relatively strong resource base of R&D inputs does not necessarily imply the existence of
scale economies in producing innovative output. Small firms are often structurally less complex or
have less hierarchical organizations and management, and thus they may have more flexibility and
time advantages in adjusting their resources.
Tether (1998) found that the average value of innovations varied systematically with the size of
the firm. Large enterprises were responsible for almost all the high-value innovations, whilst most of
the lower-value innovations were introduced by small businesses. Nelson (1993) proposed that new
and small firms have introduced extremely high- value R&D outputs, too. There is some evidence
that the propensity to create innovations from patents increases with the firm’s annual sales growth
(Arundel and Kabla, 1998). This finding links the size, innovations and growth of the firm.
In prior studies, the size of the firm and its connection to growth, have been tested separately by
applying the Gibrat’s law of proportionate growth. Gibrat’s law assumes that size is not correlated
with growth and that growth follows a random walk. However, the results of numerous empirical
studies suggest that firm growth decreases with the size of the firm (Almus and Nerlinger, 2000).
Based on the assumption that the propensity to create innovations from patents increases with the