Young Companies: Different innovation pathways to success

Previous studies show that young companies engaged in research and development (R&D) tend to grow particularly quickly. As a result, they are of special interest to policymakers. However, a recent paper by Petrik Runst (Thünen Institute) and Jörg Thomä (ifh Göttingen) argues that non-R&D-oriented innovation activities – which are especially common in rural areas – should be recognized as a distinct category. These activities follow a specific innovation mode known as “Learning by Doing, Using and Interacting” (DUI) and lead to a unique growth pattern.

The study shows that young companies relying on DUI mechanisms perform economically better than non-innovators, though not as strongly as R&D-oriented innovators. However, they grow with lower risk and reduced costs. Thus, a young company’s choice of a particular innovation and growth path can be seen as a trade-off between risk and return.

The published study can be found here

Contact: Dr. Petrik Runst