Research and Development, Innovation, Training, Quality and

This paper studies, simultaneously, the relationships between R&D investments, innovation, training investments, quality and firm performance at the firm level. It offers some empirical evidence on how innovation, training, quality affect firm profitability. The new feature we introduce is the link between training and quality. We build a five equations model including censored, dichotomous and linear variables with a specific circular scheme. To estimate this system, we adopt the asymptotic least square method as our framework. The empirical analysis is based on the French innovation survey combined with firm level register data. We use neglected variables on training and quality. Controlling for the traditional determinants, the results show the existence of a virtuous circle. Moreover, we find consistent results with many stylized facts.