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ICC Advance Access originally published online on May 30, 2008
Industrial and Corporate Change 2009 18(3):497-506; doi:10.1093/icc/dtn018
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© The Author 2008. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved.

Routinization of innovation in German manufacturing: the David–Goliath symbiosis revisited

Oliver Falck

Correspondence: Oliver Falck, Ifo Institute for Economic Research, Poschingerstr. 5, 81679 Munich, Germany. e-mail: falck{at}ifo.de

Small and medium-sized firms frequently are viewed as the drivers of radical innovation. However, they often do not have the focus and commitment necessary for improving and extending the innovation, tasks better accomplished by routinized large firms. Using a uniquely rich industry-level data set for German manufacturing industries during 1991–2004, this article finds evidence for this David–Goliath symbiosis. Although small and medium-sized firm innovation rates can explain the within-industry variation of productivity growth, it is the large firm process innovation rate that explains differences in the level of productivity growth between industries, i.e. differences in the degree of routinization of innovation.


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