How Innovations affect Firm's Productivity? A literature reviews

Abstract

Improving productivity is one of the vital tasks of an enterprise in the era of globalization. In which, innovation is widely considered as an essential solution to enhance the firm's productivity. However, there is still much controversy between concept as well as the measurement of innovation. Besides, the impact of innovation on firm's productivity is questionable, and most studies have focused on the direct effect. This paper has comprehensively analyzed the impact of innovations on productivity, including both direct and indirect impacts. Accordingly, direct effects through private rate of return reflect the investment efficiency of firms, the indirect impact through social rate of return reflects the overall impact of innovations on society and is interested in the governments. The study also reviewed three direct impact measures, the link between them and the important role of R&D consortium in improving regional and global productivity.