Innovation and Productivity
Description
In this stream of research, Professor Steinwender examines how firms adjust their innovative behavior and productivity in response to changes in the external environment. Analyzing Spanish firm-level data, she finds that two mechanisms proposed in the economic literature heighten firms’ productivity in the face of globalization, but that they work for different types of companies. Firms with initially high productivity increase it further, primarily through investment in new technology, when market access expands. Firms with initially low productivity increase it in response to growing foreign competition.
Professor Steinwender also studies change in companies’ investment behavior in an environment of credit constraints caused by financial crises. Again using data from Spanish firms, she finds that credit constraints cause domestic firms and those with more mature debt to delay making long-term investments, such as in R&D. This delay serves to prolong the effects of the crisis on the economy as a whole.
Another aspect of Professor Steinwender’s research is the role of public policy in private-sector innovation and productivity. She looks at how firms adjust their own investments in R&D when the government provides them with R&D subsidies, finding that government-funded R&D actually increases private-sector investment and productivity. She also notes a spillover effect, as other firms, both domestic and international, benefit from the research efforts of those with increased investments.