Innovation and firm-level persistent profitability: a Schumpeterian framework

✍ Scribed by Peter W Roberts

• Publisher: John Wiley and Sons
• Year: 2001
• Tongue: English
• Weight: 127 KB
• Volume: 22
• Category: Article
• ISSN: 0143-6570
• DOI: 10.1002/mde.1018

✦ Synopsis

Abstract

Studies of firm‐level profit dynamics tend to attribute the variance in profit persistence to variability in the extent to which imitative pressures are resisted. This monopoly‐based explanation of persistent profitability implicitly assumes a one‐to‐one correspondence between firm‐level and product‐level profit dynamics. Following Schumpeter, this paper begins to develop a framework for firm‐level profit persistence that embraces product innovation, competitor imitation, and, more importantly, the prospect that several product innovations may be embodied within a single firm. Such an approach opens the door for an innovation‐based explanation of profit persistence to accompany the monopoly‐based arguments that are typically offered. Copyright © 2001 John Wiley & Sons, Ltd.