Innovation, profitability and growth in medium and high-tech manufacturing industries: Evidence from Italy

The main goal of this article is to assess the impact of product innovation on the economic performance of firms operating in Medium and High- Tech (M&HT) industries. Using information from a large and unique dataset on Italian firms we estimate, by means of Propensity Score (PS) matching methods, a positive and significant 'innovation premium' both in terms of profitability and growth (in the short-run) for those firms who introduced new innovative products. We also find that this innovation premium is particularly large for small firms and even more so when considering new established firms. © 2012 Taylor & Francis.