Innovation in Small-Sized High-Growth Firms. A study of Norwegian Gazelle Firms

Abstract

This thesis studies innovation within 280 small-sized high-growth firms in Norway, with a main focus on the relationship between firm size, customer knowledge and innovative activity. Innovation is a present and future need for Norway. A study of the innovative activity within the high-growth firms is done by applying a Probit and a Tobit Type I model for corner solutions. It is found that firm size as an explanatory variable does not have any statistical significant effect on innovative activity. Another finding in the context of customer knowledge on innovative activity is that cooperating with customers in the innovation process has a statistically significant positive impact on innovation. However, the degree of market acceptance of products made together with customers turns out to have no statistical significant effect on a firm’s innovative activity. It is further found that having an R&D department has a statistically significant positive effect on a firm’s probability of having innovation, but no statistically significant effect on the firm’s amount of innovation. The results from the variables of customer knowledge together with the results from the variable R&D suggests that policy makers should give firms financial incentives to include customers in the innovation process, instead of giving incentives to invest in R&D departments. On the other hand, the validity of these estimated results is questioned for several reasons, for example the difficulty of measuring innovation and customer knowledge.