economic prospects, firms had to cut costs and reconsider their business strategies. With respect to innovation, cost cutting … often means to stop or underresource innovation projects which may harm a firm's long-term competitiveness. Firms may … therefore refrain from reducing innovation budgets during crises but rather deliberately allocate more resources to innovation …

A growing literature investigates how firms' innovation input reacts to changes in the business cycle. However, so far … there is no evidence whether there is cyclicality in the effects of innovation on firm performance as well. In this paper …. (2014), our empirical analysis reveals four important findings: First, the net effect of product innovation on employment …

dynamics. We investigate this reallocation in terms of employment gains and losses from innovation. New employment created by … product innovation may be offset by employment losses in related products, known as 'cannibalisation' or 'business stealing …' effects in the literature, by employment losses from process and organisational innovation and by general productivity …