This paper explores the persistence often found in firms’ innovation and advances current research by investigating its actual nature. Previous studies have aimed at disentangling true state dependence from spurious state dependence by using a random effects (RE) dynamic panel probit approach, thereby imposing strong conditions on the underlying structure of the unobserved heterogeneity. Building on recent advances in the econometric literature, which allows for true fixed effects estimation of dynamic nonlinear panel data models, we demonstrate that relaxing the assumptions on the unobserved heterogeneity can have a considerable effect on the estimates of true state dependence. While we confirm the existence of a strong persistence of innovation in firms, we however find that true state dependence only explains about half of the persistent behaviour displayed by firms; this is in contrast to the popular RE methodology that attributes 70% to 100% of persistence to true state dependence. Our results suggest that policy programs aimed at encouraging initial innovations alone are useful but may not possess a long-term stimulating effect on innovation activity.

中文翻译：

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关于持续创新中真实状态依赖的估计*

本文探讨了企业创新中经常发现的持久性，并通过调查其实际性质来推进当前的研究。以前的研究旨在通过使用随机效应（RE）动态面板概率方法将真实状态依赖与虚假状态依赖分开，从而对未观察到的异质性的潜在结构施加强有力的条件。基于计量经济学文献的最新进展，允许动态非线性面板数据模型的真实固定效应估计，我们证明放宽对未观察到的异质性的假设可以对真实状态依赖性的估计产生相当大的影响。虽然我们确认公司存在强大的创新持续性，然而，我们发现真正的状态依赖只解释了公司表现出的大约一半的持续行为；这与流行的 RE 方法形成对比，后者将 70% 到 100% 的持久性归因于真正的状态依赖。我们的研究结果表明，仅旨在鼓励初始创新的政策计划是有用的，但可能不会对创新活动产生长期的刺激作用。