Hidden innovators: the role of non-RD activities

Although RD has been highlighted as the main source of firm-level innovations, a significant group of firms develop innovations without performing RD activities. The primary goal of this study is to understand the sources of innovation in such firms. To accomplish this goal, we explore the role played by other, non-RD activities that can lead to innovation - activities such as technology forecasting, design, use of advanced manufacturing technologies and training. Our empirical analysis is based on a representative panel of Spanish manufacturing firms. The results strongly support the view that non-RD activities are critical factors in explaining both product and process innovations attained by any firm, especially in the case of firms not performing RD. Academic, managerial, and policy implications are derived from these results.