Innovation and Firm Growth: Turkish Manufacturing and Services Smes

Abstract

The aim of the study is to explore the effect of innovation on growth of firms placed at different percentiles of the growth distribution in manufacturing and services sectors in Turkey. We show that innovation crucially adds to the likelihood of being a high growth firm. Innovation efforts are found to have more pronounced effects on growth performance of firms at the upper end of the distribution of growth. Results indicate that compared with services, manufacturing firms are influenced more by R&D whereas innovation outputs are more beneficial for services firms.