Firms' decisions to innovate and innovation routines

This article investigates the forces that lead some firms to engage in more innovative activities than others using a survey of 360 large Australian firms. Many earlier studies on the determinants of innovation followed the Schumpeterian tradition, and focused on size and market structure as possible causes of innovativeness; however, with the event of new qualitative measures of industry knowledge and managerial styles, these factors have been found to be less important. The results of the present study show that external factors and generic routines common to all industries, such as the extent of learning, knowledge spillovers, appropriability and managerial approach are more important than industry specific forces. Locally-owned companies were also found to be more innovative, other things considered.