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by Jianmin Tang, Industry Canada, December 2003
For any given competitive environment, firms will have different perceptions about the degree of competition they are facing. This paper argues that the differences are important if firms are to undertake innovation activities. It uses the Statistics Canada 1999 Survey of Innovation to show that different types of competition perceptions tend to have different effects on technology invention and technology adoption, and some types even have a negative effect on innovation activities. This paper shows that the perception of easy substitution of products is an impediment to innovation activities, especially technology invention. In addition, it shows that the perceptions of constant arrival of competing products and rapid change of production technologies are driving forces behind firms' innovation activities, with the former more important for technology invention and the latter for technology adoption.