Experience, Innovation and Productivity - Empirical Evidence from Italy's Slowdown

1. Introduction

Innovation is one of the main drivers of productivity growth. It is thus no wonder that the study of
its determinants has attracted considerable attention (Geroski 2000, Comin and Hobijn 2009).
Extensive empirical evidence has documented that R&D enhances firm innovation and productivity
by enabling product innovation (Griliches, 1992; van Pottelsberghe de la Potterie, 2008) as well as
easing the adoption of technologies developed in other firms and possibly countries (Griffith,
Redding and van Reenen, 2004; Parisi, Schiantarelli and Sembenelli, 2006). The risky nature of
innovation also makes it a typically hard-to-finance undertaking, which has led a number of
scholars to investigate the enabling role of cash flows to avoid that liquidity constraints strangle yet
undeveloped innovations in their infancy (Brown, Fazzari and Petersen, 2009, Geroski, van Reenen
and Walters, 2002, Hall, Mairesse, Branstetter and Crépon, 1998).

Less investigated, and perhaps more controversial, is the relation between experience on one side
and innovation and productivity on the other. Does it pay for a firm to be endowed with the breadth
and the novelty of ideas brought about by newcomers on the entrepreneurial and the workers’ side?
Or do innovation and productivity gains mostly originate from the competence of older - hence mor
experienced - workers and managers?

As discussed by Jones (2010), the case list of how un-experienced entrepreneurs and workers
managed to develop and bring brand new products and technologies to the market are long. It starts
with an un-experienced Bill Gates leaving Harvard in 1975 to co-found Microsoft with his friend
Paul Allen, and continues with Steve Jobs and Steve Wozniak, the young founders of Apple. More
recently, Sergei Brin and Larry Page, the co-founders of Google, were bright but young and un-
experienced Stanford PhD students when they started thinking about the number and the
informational content and nature of the links underlying the functioning of the World Wide Web.
Yet we can also think of radical innovations brought about by more experienced workers and
entrepreneurs, in some cases by the same grown-up entrepreneurs that had revolutionized their
industry already once. It is still Steve Jobs who has made a tremendous comeback with his i-Pod, i-

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