Using micro data from Brazilian manufacturing firms, this paper
investigates the impact of a wide set of innovation activities on firms'
total factor productivity (TFP) and its subsequent effect on firm
growth, measured by sales. Controlling for size and age of the firms,
productivity levels and productivity growth of firms over time are found
to be key drivers of firm size adjustments. The activities leading to
higher productivity levels are organizational change, cooperation with
clients, human capital development, ICT usage, product innovation and
learning by exporting, with an R&D effect only in the long run. Though
the intensity with which firms engage in these innovation activities is
sector dependent, innovation activities are in all sectors important for
explaining sales growth differences, also in the more traditional
sectors in which Brazilian firms have a competitive advantage.
UNU-MERIT Working Papers ISSN 1871-9872