Rethinking The “Innovative Firm”: Innovation Creation In The Australian Water Technology Industry

Abstract

A positive relationship between innovation and export success is assumed in much of the economic literature. This assumption is tested with firms from the Australian water technology industry, defined as manufacturing activities that are related to water treatment. Empirical evidence from over 80 firms in this industry reveals that quantitative relationships between innovation proxies (R&D and patents) and firm-performance measures (export proportion and productivity) are generally weak. This paper argues that a broader concept of innovation, expressed as appropriate technology, offers a better explanation of why exports develop for these firms. This finding has implications for formulating industry policy and for further theoretical development of the concept of innovation.