Template-type: ReDIF-Paper 1.0
Author-Name: Cristiano, Antonelli
Author-Email: antonelli.cristiano@unito.it
Author-Name: Scellato, Giuseppe
Author-Email: giuseppe.scellato@polito.it
Author-Workplace-Name: University of Turin
Author-Workplace-Homepage: http://www.est.unito.it/
Title: Complexity and Innovation: Social Interactions and Firm Level Total Factor Productivity.
Abstract:The analysis of social interactions as drivers of economic dynamics represents a growing field of the 
economics of complexity. Social interactions are a specific form of interdependence whereby the changes in the 
behavior of other agents affect the structure of the utility functions for households and of the production functions for producers. In
this paper, we apply the general concept of social interactions to the area of the economics of innovation and 
technological change. In particular, we discuss how both the knowledge spillovers literature and the Schumpeterian 
notion of creative reaction can be reconciled within a general framework building on the concept of social 
interactions within complex dynamics. The paper presents an empirical analysis of firm level total factor 
productivity (TFP) for a sample of 7020 Italian manufacturing companies observed during years 1996-2005. 
We show that changes in firm level TFP are significantly affected by localised social interactions. Such evidence 
is robust to the introduction of appropriate regional and sectoral controls, as well as to econometric specifications 
accounting for potential endogeneity problems. Moreover, we find evidence suggesting that changes in competitive 
pressure, namely the creative reaction channel, significantly affect firm level TFP with and additive effect with 
respect to localised social interactions deriving from knowledge spillovers.
Length: 26 pages
Creation-Date: 2007-07
File-URL:http://www.est.unito.it/do/home.pl/Download?doc=/allegati_wp/wp2007dip_l_b/9_wp_momigliano.pdf
File-Format: Application/PDF
Handle: RePEc:uto:labeco:200709