Beyond the ‘Creative’ Side of Innovation: Exploring Outcomes of Firm-level Innovation Capability Building (Paulo N. Figueiredo and Saulo Gomes)


This paper examines outcomes of firms’ innovation capabilities in natural resource-processing industries in an emerging economy. Based on fieldwork evidence of six large forestry and pulp and paper firms in Brazil (1950-2010), this study finds that: (i) in terms of innovation capability-building, the firms took a different direction in terms of technological development than global leaders and introduced a qualitatively different segment at the international technological frontier; (ii) as these firms reached world-leading capability levels, different outcomes could be identified: implemented innovations, improved operational and environmental performance, the diversification of output and spill-overs, and welfare outcomes. Therefore, firms’ capability-building efforts to create new technological trajectories do pay off in terms of generating benefits for not only the innovative firms themselves but also to the industry and, consequently, the economy. These efforts should receive specific policy attention and support. 
Working Paper