This paper examines the empirical relationship between technological innovations, market share and stock market value. New developments in the estimation of dynamic count data models are used to control for unobserved firm specific heterogeneity. We find a robust and positive effect of market share on observable headcounts of innovations and patents although increased product market competition in the industry tends to stimulate innovative activity. Furthermore, the impact of innovation on market value is larger for firms with higher market shares. We argue that our results are consistent with models where high market share firms have incentives to pre-emptively innovate.
Authors
CPP Co-Director
Richard is Co-Director of the Centre for the Microeconomic Analysis of Public Policy (CPP) and Senior Research Fellow at IFS.
CPP Co-Director, IFS Research Director
Rachel is Research Director and Professor at the University of Manchester. She was made a Dame for services to economic policy and education in 2021.
John Van Reenen
Journal article details
- Publisher
- University College London
- Issue
- July 1999
Suggested citation
R, Blundell and R, Griffith and J, Van Reenen. (1999). 'Market share, market value and innovation in a panel of British manufacturing firms' (1999)
More from IFS
Understand this issue
It’s time to take a firmer grip on companies and competition law
Globalisation, inequality, feeble productivity growth, earnings stagnation, the falling labour share of national income — the most important features of economic life. And one institution binds them together: the firm.
25 April 2022
Spring Budget 2024: What you need to know
7 March 2024
If you can’t see it, you can’t be it: role models influence female junior doctors’ choice of medical specialty
24 April 2024
Policy analysis
Freeports: What are they? What do we know? And what will we know?
10 March 2023
Freeports and Investment Zones – what sorts of things should we consider when assessing whether they are good policy?
10 March 2023
UK outlook: why we need to do things differently
11 October 2022
Academic research
Firms and inequality
3 March 2022
Technology, skills, and performance: the case of robots in surgery
7 November 2022
Overconfidence and technology adoption in health care
31 August 2022