According to the literature on innovation, several vital factors or determinants favor innovation in companies. In the case of R&D, significant advances have been made in the last two decades, which have enriched our understanding of its impact on various innovation outcomes. However, due to a lack of data availability, its study is difficult to address in emerging markets. This is why, using microdata from 5588 firms, we investigate the relationship between R&D investment and the impact on product and process innovations in different Latin American countries.
This Working Paper was published by United Nations University Maastricht Economic and social Research Institute on Innovation and Technology (UNU-MERIT). It seeks to provide insights about the main characteristics of innovative firms and to gather new evidence with regard to the nature of the innovation process in the Latin American and Caribbean region. This Paper analyses data from a number of CARICOM countries.
This document discusses a study on the effect of research and development (R&D) activities and open innovation activities on low/medium technology industries and firms in Catalonia. The study analyzes the links between open innovation activities and R&D activities in Catalan low/medium technology firms. It finds that both internal R&D and external knowledge sources through collaboration are important for innovation. The study also finds that government incentives have increased R&D spending in Catalonia firms, with positive effects for low/medium technology firms pursuing R&D and open innovation activities.
Innovation is the application of new solutions to meet new requirements or needs. It differs from invention in that innovation refers to using ideas or methods, while invention refers to creating them. Innovation can occur in individuals, societies, businesses, and organizations through sources like changes in markets, demographics, or scientific knowledge. Common goals of innovation programs are improved quality, new markets, and reduced costs, though failures can occur from issues like poor goal definition, participation, or monitoring of results. Innovation is measured globally using indexes that rank countries based on factors like research and development spending and patent activity.
100-hwang Impact assessment of R&D subsidies on input additionality and firms...innovationoecd
An analytical impact assessment was conducted on government R&D subsidies for private firms in Korea using different firm-level data sources. Various methods, including propensity score matching and difference-in-differences, found generally positive impacts of subsidies. Subsidies increased total R&D investment by 98% on average over 4 years but decreased firms' own R&D funding by 11% in the benefit year. Sales growth increased 12% over 4 years on average while profit growth was not significantly impacted. Capital investment and employment each increased by around 12% over 4 years. Subsidies also positively impacted firm survival rates.
This document summarizes a working paper that examines the impact of innovation activities on productivity and firm growth in Brazil. The paper uses microdata from Brazilian manufacturing firms between 2000-2002. It finds that activities like organizational change, cooperation with clients, human capital development, ICT usage, product innovation and learning by exporting were associated with higher productivity levels, with an R&D effect only in the long run. It also finds that while the intensity of innovation activities varies by sector, such activities were important for explaining sales growth differences across firms in all sectors.
Innovation and Territorial Development: anything new under the sun? Reflectio...EUROsociAL II
This document discusses innovation and territorial development in Latin America. It summarizes that the global economic landscape is changing due to macroeconomic power shifts, societal demands, microeconomic changes in production and networks, and evolving development models. It also discusses how the role of territories is changing, with examples of how countries are prioritizing innovation through R&D investment and supporting start-ups. Learning from experiences shows that choice of objectives, policy coherence across levels of government, consistency of policies over time, and monitoring of outcomes are important for regional development policies. The document examines experiences in Latin America and how approaches to territories are evolving in emerging regions.
Impact of innovativeness of the country on export performance: evidence from ...iosrjce
This paper makes an attempt to find the relationship between innovation indicators and export
performance of the country. We used patents, trademarks, industrial design, number of scientific journals, R&D
expenditures as indicators of innovativeness of the country. As a sample we have constructed unbalanced panel
data for 48 Asian countries with time series from 1997 to 2011. After OLS regression we found that only
innovativeness indicator which positively associated with export performance is a number of registered
industrial design in the country. The rest of innovativeness indicators did not show any significant relationship
with export performance of the country.
Innovation is a productive process which relies on human resources and investment
in capital assets procurement, machinery and/or equipments intended for technological
development and innovation activities. If the production function at the microeconomic
level is the relationship between productive factors and output, capital allocated to ICT
can be taken as another productive factor, in the same way as capital, work and human
capital. The relative ease of access to ICT, due to their fast price reduction and quality
increase, and to the fact that they are considered general purpose technologies, have led
various scholars to propose that ICT, due to their effect on cost reductions of coordination
among individuals and firms, may produce a change in firm structure. Likewise, innovation
also has an effect on productivity, mainly through total factor productivity but also by
interacting with other factors such as capital or human capital. This innovation refers
to technologically new processes and products, either at firm, local, country or global
level. The emphasis on novelty does not mean to make more of the same, but to expand
human knowledge frontier, observing that what is novel may also be applied at firm or
country level. Therefore, when we speak about innovation, we must understand that what
is new for a particular country may not be new at international level.
This Working Paper was published by United Nations University Maastricht Economic and social Research Institute on Innovation and Technology (UNU-MERIT). It seeks to provide insights about the main characteristics of innovative firms and to gather new evidence with regard to the nature of the innovation process in the Latin American and Caribbean region. This Paper analyses data from a number of CARICOM countries.
This document discusses a study on the effect of research and development (R&D) activities and open innovation activities on low/medium technology industries and firms in Catalonia. The study analyzes the links between open innovation activities and R&D activities in Catalan low/medium technology firms. It finds that both internal R&D and external knowledge sources through collaboration are important for innovation. The study also finds that government incentives have increased R&D spending in Catalonia firms, with positive effects for low/medium technology firms pursuing R&D and open innovation activities.
Innovation is the application of new solutions to meet new requirements or needs. It differs from invention in that innovation refers to using ideas or methods, while invention refers to creating them. Innovation can occur in individuals, societies, businesses, and organizations through sources like changes in markets, demographics, or scientific knowledge. Common goals of innovation programs are improved quality, new markets, and reduced costs, though failures can occur from issues like poor goal definition, participation, or monitoring of results. Innovation is measured globally using indexes that rank countries based on factors like research and development spending and patent activity.
100-hwang Impact assessment of R&D subsidies on input additionality and firms...innovationoecd
An analytical impact assessment was conducted on government R&D subsidies for private firms in Korea using different firm-level data sources. Various methods, including propensity score matching and difference-in-differences, found generally positive impacts of subsidies. Subsidies increased total R&D investment by 98% on average over 4 years but decreased firms' own R&D funding by 11% in the benefit year. Sales growth increased 12% over 4 years on average while profit growth was not significantly impacted. Capital investment and employment each increased by around 12% over 4 years. Subsidies also positively impacted firm survival rates.
This document summarizes a working paper that examines the impact of innovation activities on productivity and firm growth in Brazil. The paper uses microdata from Brazilian manufacturing firms between 2000-2002. It finds that activities like organizational change, cooperation with clients, human capital development, ICT usage, product innovation and learning by exporting were associated with higher productivity levels, with an R&D effect only in the long run. It also finds that while the intensity of innovation activities varies by sector, such activities were important for explaining sales growth differences across firms in all sectors.
Innovation and Territorial Development: anything new under the sun? Reflectio...EUROsociAL II
This document discusses innovation and territorial development in Latin America. It summarizes that the global economic landscape is changing due to macroeconomic power shifts, societal demands, microeconomic changes in production and networks, and evolving development models. It also discusses how the role of territories is changing, with examples of how countries are prioritizing innovation through R&D investment and supporting start-ups. Learning from experiences shows that choice of objectives, policy coherence across levels of government, consistency of policies over time, and monitoring of outcomes are important for regional development policies. The document examines experiences in Latin America and how approaches to territories are evolving in emerging regions.
Impact of innovativeness of the country on export performance: evidence from ...iosrjce
This paper makes an attempt to find the relationship between innovation indicators and export
performance of the country. We used patents, trademarks, industrial design, number of scientific journals, R&D
expenditures as indicators of innovativeness of the country. As a sample we have constructed unbalanced panel
data for 48 Asian countries with time series from 1997 to 2011. After OLS regression we found that only
innovativeness indicator which positively associated with export performance is a number of registered
industrial design in the country. The rest of innovativeness indicators did not show any significant relationship
with export performance of the country.
Innovation is a productive process which relies on human resources and investment
in capital assets procurement, machinery and/or equipments intended for technological
development and innovation activities. If the production function at the microeconomic
level is the relationship between productive factors and output, capital allocated to ICT
can be taken as another productive factor, in the same way as capital, work and human
capital. The relative ease of access to ICT, due to their fast price reduction and quality
increase, and to the fact that they are considered general purpose technologies, have led
various scholars to propose that ICT, due to their effect on cost reductions of coordination
among individuals and firms, may produce a change in firm structure. Likewise, innovation
also has an effect on productivity, mainly through total factor productivity but also by
interacting with other factors such as capital or human capital. This innovation refers
to technologically new processes and products, either at firm, local, country or global
level. The emphasis on novelty does not mean to make more of the same, but to expand
human knowledge frontier, observing that what is novel may also be applied at firm or
country level. Therefore, when we speak about innovation, we must understand that what
is new for a particular country may not be new at international level.
Introductory presentation to Saint Lucia stakeholders for consultation on developing innovation strategy and action plan for National Trade Strategy on behalf of International Trade Centre (ITC)
This master's thesis examines the relationship between innovation and export performance in transition economies, and how the home country business environment moderates this relationship. Using survey data from over 15,000 firms in 30 transition economies, the study finds that innovation has a positive effect on export performance. It also finds that better access to finance positively moderates the innovation-export performance relationship. However, lower corruption and stronger intellectual property rights protection do not moderate the relationship as expected. The results provide insights into how the business environment influences the ability of firms in transition economies to leverage innovation for export success.
This document provides an overview of three emerging business innovation trends: Design for Innovation, Smart Living, and Innovative Business Models. It describes each trend and provides examples of companies demonstrating success in each trend through four case studies per trend. The document also discusses the drivers and obstacles these companies face, relevant policy challenges around supporting these trends, and recommendations for policymakers based on discussions with stakeholders. The overall goal is to better understand new innovation practices and how policy can help scale successful approaches.
“Keeping pace with technological change: The role of capabilities and dynamis...Structuralpolicyanalysis
The document summarizes the key points from a conference on productivity. It discusses how technological change has failed to significantly boost productivity and income, and the research presented offered explanations. Adoption of digital technologies has been slow and uneven, with the most productive firms benefiting most. Complementary investments in intangible assets like skills and management are also important for adoption. While market concentration has increased, its implications are still debated. Ensuring strong competition, reducing barriers to business dynamism, and supporting skills development and technology adoption were highlighted as important for countries to realize productivity gains from technological change.
The Factors That Influence The Adoption Of New TechnologiesErika Nelson
This document discusses organizational change and innovation through the lens of technological change. It defines organizational change as the transformation and development within an organization, including changes to structure, work methods, or culture. A key driver of change is organizational innovation, or the implementation of new creative ideas. The document uses technology as a model, explaining that a new technology is initially introduced through innovation, may develop a dominant design if successful, and faces incremental changes until being replaced by a newer technology in its life cycle according to an S-curve pattern of growth and decline.
This document discusses trends in tax incentives for research and development (R&D) across OECD countries. It finds that more countries are introducing R&D tax credits rather than allowances, and targeting incentives towards both small and large firms. The design of fiscal incentives for R&D varies widely between countries and includes factors such as whether they apply to current or capital expenditures, their structure as allowances or credits, targeting certain levels or increments of R&D spending, and eligibility of foreign versus domestic firms. Overall the document analyzes how different incentive designs can impact the effectiveness of achieving policy goals like increasing private sector R&D investment.
This document discusses a study that examines the impact of different types of innovation on sales growth in small and medium enterprises (SMEs) in Kosovo. The study collected data from 278 SMEs through surveys. It analyzes the data using logistic regression to test hypotheses about the relationship between innovation types (product/process, marketing, organizational) and firm growth, measured by sales. The findings indicate that marketing innovation is positively associated with sales growth, while new products introduced only within the firm are negatively associated with growth. Other innovation attributes showed no significant relationship. The study aims to provide insights for both theory and policy regarding SME development and innovation in Kosovo.
Building an Innovation-Driven Economy – The Case of BRIC and GCC CountriesMaxim Kotsemir
Available at SSRN: https://ssrn.com/abstract=2491488
Purpose – The purpose of this paper is to undertake an analysis of the attempts of Gulf Cooperation Council (GCC) and Brazil, Russia, India and China (BRIC) countries to catch up in their national development to build an innovation-driven economy on which to base future growth and wealth. We conducted an analysis of GCC and BRIC countries to show the different strategies leaders have taken to try and achieve this aspiration. This paper analyses the various aspects of national innovation systems of BRIC and GCC countries, highlights similar and different approaches and attempts to quantify their success. For example, GCC countries spend extensively on research and development (R&D), but have so far achieved less than meaningful results. Brazil, China and India are catching up to the acknowledged world leaders in innovation, but Russia is lagging.
Design/Methodology/Approach – Our comparison was based mostly on secondary data from sources and institutions that use statistical data to build country rankings, such as the Global Competitiveness Index (GCI) produced by the World Economic Forum. BRIC and GCC countries were analyzed over 1996-2011 because most of the indicators data are only available from 1996. Data related to intellectual property rights have been collected since 1999 or 2000. The data available for the number of researchers proved problematic for both BRIC and GCC countries. For instance, some data for the GCC countries was missing. To not leave a gap, we extrapolated in line with the overall trend; using the least squares method to approximate a straight line for the missing data based on what had already been reported.
Findings – Counter-intuitively, we will argue that the push toward an innovation-based economy is actually not dependent on total expenditure on R&D, but rather relies on the efficient allocation of investments and the rigorous implementation of innovation strategy. And, we will demonstrate this by showing our ideas in relation to both BRIC and GCC countries. This analysis raises fascinating points of discussion for those looking to build an innovation economy in other countries and has practical implications for policy-makers and policy implementers in all countries.
Originality/Value – First analysis of the correlation of gross expenditure on R&D (GERD) with gross domestic product (GDP) growth and Straits Times Index (STI) policy measures.
The informal economy, innovation and intellectual propertyDr Lendy Spires
This document discusses concepts related to the informal economy, innovation, and intellectual property. It begins by reviewing definitions of the informal economy and presenting statistical data on its economic significance. Next, it applies concepts of innovation to the informal economy context. It then discusses a spectrum of appropriation mechanisms for innovations, ranging from formal intellectual property rights to informal mechanisms. Finally, it reviews existing policy approaches toward innovation in the formal economy and establishes a framework to consider future policy scenarios for applying intellectual property concepts to the informal economy.
This document discusses the informal economy, innovation, and intellectual property. It begins by reviewing definitions of the informal economy and presenting statistical data on its size and economic significance. Estimates suggest informal employment makes up over half of non-agricultural employment in most middle- and low-income countries.
The document then applies concepts of innovation to the informal economy context. It discusses a spectrum of appropriation mechanisms for innovations, ranging from formal intellectual property rights to informal mechanisms.
Finally, the document reviews existing policy approaches toward innovation in the formal economy. It establishes a framework to consider future policy scenarios for applying intellectual property concepts to innovation in the informal economy. The overall aim is to better understand innovation, appropriation, and
The past two decades have recorded significant improvement in the Nigerian financial markets. The banking sector
migrated from arm-chair of banking to a more sophisticated and globally competitive banking practices. The capital
market has also moved from the traditional trading system to automated trading system while more marketable
securities that are globally competitive are now traded in the Nigeria’s capital markets. The study examined the
relationship between financial innovations and the sustainable economic development in Nigeria. The study
examined ATM Banking, Web (Internet) Banking, POS Banking and Mobile Banking as proxies of financial
innovations and the GDP as the proxy for the nation’s economic growth and development. The study established that
a positive and significant relationship exists between all the variables and GDP with the exception of Mobile
Banking. The study also identified some risk issues that can mitigate the positive contributions of the financial
innovations to the sustainability of the Nigerian economy.
While Medieval Weapons and Medieval Warfare both discuss innovation in medieval times, they differ in their perspectives. The Medieval Machine views technological advancements positively as beneficial to society, while Medieval Warfare sees them negatively as perpetuating warfare. Both texts agree that innovations led to counter-innovations, like developments in armor spurring more powerful weapons. Overall, the books provide contrasting views on whether medieval innovations helped or hindered society.
Global Trends in R&D-Intensive FDI and Policy Implications for Developing Cou...iBoP Asia
This document summarizes recent trends in research and development (R&D)-intensive foreign direct investment (FDI) and discusses policy implications for developing countries. It finds that while global R&D networks are becoming more multi-polar with some developing countries becoming destinations and sources of R&D FDI, this is largely driven by China and India. Growth of R&D FDI may be slowing due to mature corporate networks and economic crises. Developing effective policies can help countries attract and benefit from R&D FDI by building absorptive capacity. Both direct effects like new R&D jobs and indirect effects like knowledge spillovers must be considered.
Industrial Revolution and the Market’s Perspective towards the Business Indus...ijtsrd
Industrial Revolution directly affects the Business Industry through its demands of innovation, changes, and adaptation, this research however focused on how the market gets affected by it. The results show clear effects of Industrial Revolution towards the perspective of the business industry market in terms of their needs and wants, product delivery system, and branding. This also justifies that Industrial Revolution aside from its positive contributions to the growth of the economy also brings negative impacts particularly on employment opportunities, environment, and the operations of small and medium sized businesses. This research is a good basis for a sustainable and responsible Industrial development initiative and a guide to the business industry in making sure sustainable operations. Mark Gabriel Wagan Aguilar "Industrial Revolution and the Market’s Perspective towards the Business Industry: A Macro Analysis" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-4 | Issue-3 , April 2020, URL: https://www.ijtsrd.com/papers/ijtsrd30695.pdf Paper Url :https://www.ijtsrd.com/management/general-management/30695/industrial-revolution-and-the-market%E2%80%99s-perspective-towards-the-business-industry-a-macro-analysis/mark-gabriel-wagan-aguilar
This study examines the relationship between cosmetic companies' yearly research and development expenditure and revenue growth over 20 years. The author collected data on the top 10 cosmetic companies from 1995-2015 and found a moderately strong positive correlation between changes in R&D spending and revenue growth. This suggests that increased investment in R&D is linked to increased revenue growth in the cosmetic industry.
This document summarizes the results of the 2009 Survey of Innovation Activities conducted in the Philippines. The survey aimed to gather data on innovation activities among firms to better understand innovation and its relationship to economic growth. It found that over half of sampled firms engage in some form of innovation, with larger firms innovating more than smaller ones. Firms varied in innovation activities across study areas and industries. Effects of innovation were largely customer-driven. Firms reported that cost factors were the biggest barriers to innovation and government support for innovation was limited, especially for medium-sized firms and product innovations. Knowledge and cooperation networks for innovation in the Philippines were also found to be relatively weak.
Many countries around the world have initiated national ID card programs in the last decade. These programs are considered of strategic value to governments due to its contribution in enhancing existing identity management systems. Considering the total cost of such programs which goes up to billions of dollars, the success in attaining their objectives is a crucial element in the agendas of political systems in countries worldwide. Our experience in the field shows that many of such projects have been challenged to deliver their primary objectives of population enrolment, and therefore resulted in failing to meet deadlines and keeping up with budgetary constraints. The purpose of this paper is to explain the finding of a case study action research aimed to introduce a new approach to how population are enrolled in national ID programs. This is achieved through presenting a case study of a business process reengineering initiative undertaken in the UAE national ID program. The scope of this research is limited to the enrolment process within the program. This article also intends to explore the possibilities of significant results with the new proposed enrolment approach with the application of BPR. An overview of the ROI study has been developed to illustrate such efficiencies.
Impacts of Productive Development Programs at the Firm Level in BrazilMauricio Carneiro
This document provides context for an evaluation of productive development programs (PDPs) supported by the IDB Group in Brazil. It discusses the IDB Group's extensive portfolio supporting PDPs through different approaches, including productive finance, business consulting, value chains, innovation, and exports. The evaluation aims to assess the impact of these various approaches on firm-level outcomes like productivity, employment, wages, and exports using Brazilian firm-level data. It seeks to inform future strategic decisions around supporting productivity in Latin America and the Caribbean.
The Role of Financial Technologies in the Global Economyijtsrd
The article analyses the global trends in the development of financial technologies, and their role in the development of global economy. We tried to research the existing trends in the development of financial sector and highlight the nature of the new coming innovations. Taniev A. B "The Role of Financial Technologies in the Global Economy" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Special Issue | Modern Trends in Scientific Research and Development, Case of Asia , October 2020, URL: https://www.ijtsrd.com/papers/ijtsrd35768.pdf Paper Url :https://www.ijtsrd.com/economics/financial-economics/35768/the-role-of-financial-technologies-in-the-global-economy/taniev-a-b
The research report which has chosen by me here is demonstrating about setting up of business plan in an underdeveloped country. The business and country that is selected to be established is a multi cuisine restaurant in Mongolia. Mongolia is sheltered in between China and Russia. It covers 1,565,000 sq km. area under which 60 percent of total population is resides in the Ulaanbaatar. In addition to this, 95,000 and 74,000 inhabitants live in two main urban centers, such as Erdenet and Darkhan. Moreover, now day’s tourists from diverse places are more attracted towards visiting Mongolia, due to presence of Forests Mountains, dissimilar landscapes ranging from the huge steppes and the country’s most popular Gobi desert. These all striking factors of the place have forced me to make research on the driving dynamics, which is creating desires in the other nation’s people to visit Mongolia.
La empresa de estudios de mercado Ipsos lanzó su informe mensual “Preocupaciones del Mundo”, que estudia la percepción sobre los temas que generan mayor inquietud en la ciudadanía en más de 25 mil personas adultas de 29 países. Aquí podemos ver:
¿Cual es el tema que más inquieta a los chilenos?
¿Es el control de inmigración uno de los temas que más preocupa a los chilenos?
¿Va Chile por el buen camino?
La empresa de investigación de mercados Ipsos lanzó su más reciente informe “Claves Ipsos”, para lo que encuestaron a varias personas con el fin de identificar las principales opiniones y preocupaciones de los chilenos sobre sus prioridades desde la agenda ciudadana y la reforma de pensiones.
Introductory presentation to Saint Lucia stakeholders for consultation on developing innovation strategy and action plan for National Trade Strategy on behalf of International Trade Centre (ITC)
This master's thesis examines the relationship between innovation and export performance in transition economies, and how the home country business environment moderates this relationship. Using survey data from over 15,000 firms in 30 transition economies, the study finds that innovation has a positive effect on export performance. It also finds that better access to finance positively moderates the innovation-export performance relationship. However, lower corruption and stronger intellectual property rights protection do not moderate the relationship as expected. The results provide insights into how the business environment influences the ability of firms in transition economies to leverage innovation for export success.
This document provides an overview of three emerging business innovation trends: Design for Innovation, Smart Living, and Innovative Business Models. It describes each trend and provides examples of companies demonstrating success in each trend through four case studies per trend. The document also discusses the drivers and obstacles these companies face, relevant policy challenges around supporting these trends, and recommendations for policymakers based on discussions with stakeholders. The overall goal is to better understand new innovation practices and how policy can help scale successful approaches.
“Keeping pace with technological change: The role of capabilities and dynamis...Structuralpolicyanalysis
The document summarizes the key points from a conference on productivity. It discusses how technological change has failed to significantly boost productivity and income, and the research presented offered explanations. Adoption of digital technologies has been slow and uneven, with the most productive firms benefiting most. Complementary investments in intangible assets like skills and management are also important for adoption. While market concentration has increased, its implications are still debated. Ensuring strong competition, reducing barriers to business dynamism, and supporting skills development and technology adoption were highlighted as important for countries to realize productivity gains from technological change.
The Factors That Influence The Adoption Of New TechnologiesErika Nelson
This document discusses organizational change and innovation through the lens of technological change. It defines organizational change as the transformation and development within an organization, including changes to structure, work methods, or culture. A key driver of change is organizational innovation, or the implementation of new creative ideas. The document uses technology as a model, explaining that a new technology is initially introduced through innovation, may develop a dominant design if successful, and faces incremental changes until being replaced by a newer technology in its life cycle according to an S-curve pattern of growth and decline.
This document discusses trends in tax incentives for research and development (R&D) across OECD countries. It finds that more countries are introducing R&D tax credits rather than allowances, and targeting incentives towards both small and large firms. The design of fiscal incentives for R&D varies widely between countries and includes factors such as whether they apply to current or capital expenditures, their structure as allowances or credits, targeting certain levels or increments of R&D spending, and eligibility of foreign versus domestic firms. Overall the document analyzes how different incentive designs can impact the effectiveness of achieving policy goals like increasing private sector R&D investment.
This document discusses a study that examines the impact of different types of innovation on sales growth in small and medium enterprises (SMEs) in Kosovo. The study collected data from 278 SMEs through surveys. It analyzes the data using logistic regression to test hypotheses about the relationship between innovation types (product/process, marketing, organizational) and firm growth, measured by sales. The findings indicate that marketing innovation is positively associated with sales growth, while new products introduced only within the firm are negatively associated with growth. Other innovation attributes showed no significant relationship. The study aims to provide insights for both theory and policy regarding SME development and innovation in Kosovo.
Building an Innovation-Driven Economy – The Case of BRIC and GCC CountriesMaxim Kotsemir
Available at SSRN: https://ssrn.com/abstract=2491488
Purpose – The purpose of this paper is to undertake an analysis of the attempts of Gulf Cooperation Council (GCC) and Brazil, Russia, India and China (BRIC) countries to catch up in their national development to build an innovation-driven economy on which to base future growth and wealth. We conducted an analysis of GCC and BRIC countries to show the different strategies leaders have taken to try and achieve this aspiration. This paper analyses the various aspects of national innovation systems of BRIC and GCC countries, highlights similar and different approaches and attempts to quantify their success. For example, GCC countries spend extensively on research and development (R&D), but have so far achieved less than meaningful results. Brazil, China and India are catching up to the acknowledged world leaders in innovation, but Russia is lagging.
Design/Methodology/Approach – Our comparison was based mostly on secondary data from sources and institutions that use statistical data to build country rankings, such as the Global Competitiveness Index (GCI) produced by the World Economic Forum. BRIC and GCC countries were analyzed over 1996-2011 because most of the indicators data are only available from 1996. Data related to intellectual property rights have been collected since 1999 or 2000. The data available for the number of researchers proved problematic for both BRIC and GCC countries. For instance, some data for the GCC countries was missing. To not leave a gap, we extrapolated in line with the overall trend; using the least squares method to approximate a straight line for the missing data based on what had already been reported.
Findings – Counter-intuitively, we will argue that the push toward an innovation-based economy is actually not dependent on total expenditure on R&D, but rather relies on the efficient allocation of investments and the rigorous implementation of innovation strategy. And, we will demonstrate this by showing our ideas in relation to both BRIC and GCC countries. This analysis raises fascinating points of discussion for those looking to build an innovation economy in other countries and has practical implications for policy-makers and policy implementers in all countries.
Originality/Value – First analysis of the correlation of gross expenditure on R&D (GERD) with gross domestic product (GDP) growth and Straits Times Index (STI) policy measures.
The informal economy, innovation and intellectual propertyDr Lendy Spires
This document discusses concepts related to the informal economy, innovation, and intellectual property. It begins by reviewing definitions of the informal economy and presenting statistical data on its economic significance. Next, it applies concepts of innovation to the informal economy context. It then discusses a spectrum of appropriation mechanisms for innovations, ranging from formal intellectual property rights to informal mechanisms. Finally, it reviews existing policy approaches toward innovation in the formal economy and establishes a framework to consider future policy scenarios for applying intellectual property concepts to the informal economy.
This document discusses the informal economy, innovation, and intellectual property. It begins by reviewing definitions of the informal economy and presenting statistical data on its size and economic significance. Estimates suggest informal employment makes up over half of non-agricultural employment in most middle- and low-income countries.
The document then applies concepts of innovation to the informal economy context. It discusses a spectrum of appropriation mechanisms for innovations, ranging from formal intellectual property rights to informal mechanisms.
Finally, the document reviews existing policy approaches toward innovation in the formal economy. It establishes a framework to consider future policy scenarios for applying intellectual property concepts to innovation in the informal economy. The overall aim is to better understand innovation, appropriation, and
The past two decades have recorded significant improvement in the Nigerian financial markets. The banking sector
migrated from arm-chair of banking to a more sophisticated and globally competitive banking practices. The capital
market has also moved from the traditional trading system to automated trading system while more marketable
securities that are globally competitive are now traded in the Nigeria’s capital markets. The study examined the
relationship between financial innovations and the sustainable economic development in Nigeria. The study
examined ATM Banking, Web (Internet) Banking, POS Banking and Mobile Banking as proxies of financial
innovations and the GDP as the proxy for the nation’s economic growth and development. The study established that
a positive and significant relationship exists between all the variables and GDP with the exception of Mobile
Banking. The study also identified some risk issues that can mitigate the positive contributions of the financial
innovations to the sustainability of the Nigerian economy.
While Medieval Weapons and Medieval Warfare both discuss innovation in medieval times, they differ in their perspectives. The Medieval Machine views technological advancements positively as beneficial to society, while Medieval Warfare sees them negatively as perpetuating warfare. Both texts agree that innovations led to counter-innovations, like developments in armor spurring more powerful weapons. Overall, the books provide contrasting views on whether medieval innovations helped or hindered society.
Global Trends in R&D-Intensive FDI and Policy Implications for Developing Cou...iBoP Asia
This document summarizes recent trends in research and development (R&D)-intensive foreign direct investment (FDI) and discusses policy implications for developing countries. It finds that while global R&D networks are becoming more multi-polar with some developing countries becoming destinations and sources of R&D FDI, this is largely driven by China and India. Growth of R&D FDI may be slowing due to mature corporate networks and economic crises. Developing effective policies can help countries attract and benefit from R&D FDI by building absorptive capacity. Both direct effects like new R&D jobs and indirect effects like knowledge spillovers must be considered.
Industrial Revolution and the Market’s Perspective towards the Business Indus...ijtsrd
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2. Axioms 2023, 12, 149 2 of 14
Oslo Manual, proposed by the OECD, which is the basis for the national firm innovation
surveys applied in the OECD countries and others. The third version of the Oslo Manual
defines four types of innovation: product and process innovations (named technological
innovations) and marketing and organizational innovations (named non-technological
innovations) [16]. The fourth version of the Oslo Manual describes the product (goods and
services) and process innovations. Specifically, it defines “a business innovation as a new or
improved product, or business process (or a combination thereof) that differs significantly
from the firm’s previous products or business processes and that has been introduced on
the market or brought into use by the firm” [17].
Additionally, different studies have been developed analyzing the key determinants
that favor development processes in firms, such as size, having qualified personnel, access
to sources of financing, inter-organizational cooperation, and research and development
(R&D), among others [5,6,15,18,19].
In the specific case of R&D as a firm’s innovation determinant, fundamental advances
have been made in the last two decades, enriching our understanding of its impact on
various innovation outcomes. However, there are still gaps between R&D and innovation
in firms [17], specifically the effect of R&D on the innovation type (product or process) in
Latin American countries. Microdata studies have mainly focused on firms’ R&D invest-
ment effects on productivity [20]. Although such empirical studies have found a positive
relationship between domestic R&D investment and productivity [21], showing that R&D
intensity is a determinant affecting the realization of technological innovations [22] and
examining the behaviors of these factors in different geographic regions will allow a greater
possibility for developing economies [23]. Evidence points to countries with higher levels of
investment in R&D and innovation having significantly higher economic growth rates than
other countries [21]. Therefore, the impact of research and development (R&D) investment
on firms is interesting but challenging to address in emerging markets due to the lack of
data availability. Therefore, using microdata from 5588 firms, we study the relationship
between R&D investment and the impact on product and process innovations in Latin
American countries.
There are two reasons for studying the economies of Latin America. First, according
to the literature review, we have identified that few papers address a group of countries
in this geographical area [6]. We have studied works that consider Asian [21,24], Eu-
ropean [25–29], and North American [30] countries. This lack of research gives us the
possibility to contribute, both methodologically and practically, to the literature. Evidence
suggests that firms sustaining their innovation activity will gain a significant advantage
in any post-COVID-19 recovery [31]. Secondly, the research results obtained in other
economies are not replicable in Latin American countries because the determinants of a
firm’s innovation are specific to each industrial sector and country. In this territory, there
are specific elements that affect innovation, such as institutional instability, difficulties
in accessing financing, low levels of inter-organizational cooperation to innovate, a low
presence of digital transformation in companies, and the presence of high levels of informal
competition, among others [32–36]. In fact, Latin America and the Caribbean account for
4% of the global total of patenting and scientific publications, and their countries rank in
middle and low positions in the global innovation index [37,38].
In this context, this study has two objectives. The first is to study the linkages between
R&D investment and innovation, focusing on a group of Latin American countries; the
second is to contribute to the methodology by using a machine learning model to compare
with the Crépon–Duguet–Mairesse (CDM) model [39], which has become the workhorse in
the empirical literature on innovation and productivity and has been applied to microdata
from more than 40 countries [40].
This paper is organized as follows: In the next section, we present the data and
methods used. In the results section, we report the findings. Finally, we discuss and
conclude our work.
3. Axioms 2023, 12, 149 3 of 14
2. Materials and Methods
Our analysis utilizes the 2010 World Bank Enterprise Survey (WBES), which includes
specific questions about R&D and other relevant innovation activities. Using a stratified
random sampling technique, the WBES draws samples at random from the universe of
registered enterprises in each location. The core survey uses standardized survey instru-
ments to assess company performance and measure the investment climate of individual
economies worldwide.
The sample, as indicated in Table 1, consists of seven countries with the following per-
centages: Argentina, 18.86%; Bolivia, 6.48%; Chile, 18.49%; Colombia, 16.86%; Guatemala,
10.56%; Peru, 17.90%; Uruguay, 10.86%. Table 2 shows the average process and product
innovation level reported by each country’s surveyed companies. For example, 54.27% of
the enterprises examined exhibited product innovation in Argentina while 45.73% did not,
and 42.79% presented process innovation while 57.21% did not. The weighted average of
all countries shows that 43.70% of enterprises are active in product innovation and 37.70%
in process innovation.
Table 1. Selected countries from the WBES 2010.
Country No. Obs. % Sample
Argentina 1054 18.86
Bolivia 362 6.48
Chile 1033 18.49
Colombia 942 16.86
Guatemala 590 10.56
Peru 1000 17.90
Uruguay 607 10.86
Total 5588 100
Table 2. Innovation process and product level in 2010.
Country
Product Process
Yes No Yes No
Argentina 54.27 45.73 42.79 57.21
Bolivia 20.17 79.83 19.34 80.66
Chile 43.27 56.73 37.27 62.73
Colombia 45.97 54.03 42.99 57.01
Guatemala 34.75 65.25 27.63 72.37
Peru 49.30 50.70 46.40 53.60
Uruguay 36.24 63.76 27.67 72.33
Mean 43.70 56.30 37.70 62.30
Notes: Variable definitions are as follows: Product innovation (LACe1): Dummy = 1 if this establishment
introduced any new or significantly improved products (goods or services) over the last three years, 0 otherwise.
Process innovation (LACe4): Dummy = 1 if this establishment introduced any new or significantly improved
processes for producing or supplying products (goods or services) over the last three years, 0 otherwise.
The summary statistic for each variable used in our analysis is shown in Table 3. A few
remarks are worthy of attention. Argentina, for example, has the oldest firms evaluated
(car1 = 32.99 years), while Peru has the youngest firms examined (car1 = 21.47 years). Most
enterprises in most countries have female ownership participation of much less than fifty
percent (see gend1). Most of the country has the majority of firms with female participation
in ownership. All variable definitions can be found in Table 4.
4. Axioms 2023, 12, 149 4 of 14
Table 3. Descriptive statistics of Latin American countries in 2010.
Argentina Bolivia Chile Colombia Guatemala Peru Uruguay
Mean Mean Mean Mean Mean Mean Mean
car1 32.99 27.05 31.66 23.80 25.71 21.47 32.43
car2 88.03 90.50 89.09 92.68 88.82 90.49 90.78
car3 11.68 9.36 10.61 6.96 10.68 9.26 8.89
exporter 27.57 9.67 16.88 18.05 22.37 23.00 18.62
fin1 61.42 64.20 55.26 43.33 57.33 36.99 70.80
fin2 19.68 16.97 29.17 33.08 20.01 46.74 17.45
fin3 12.34 6.73 9.32 11.92 12.56 8.18 5.89
gend1 30.30 41.36 27.24 42.15 33.16 27.14 32.37
obst1 13.92 7.83 13.01 16.06 7.30 7.62 7.30
t1 34.54 24.12 35.08 31.28 15.87 25.42 17.37
t2 73.71 89.17 55.40 62.21 73.72 37.50 48.50
t3 71.90 68.31 71.60 69.28 72.24 70.89 72.37
t4 18.57 25.22 17.94 12.11 15.00 14.49 9.97
t5 83.19 67.31 75.02 69.75 58.74 66.10 58.48
t6 98.01 95.86 95.55 99.04 85.93 93.90 88.45
N 1054 362 1033 942 590 1000 607
Notes: Variable definitions are as follows: car1: firm’s age (years); car2: ownership—private domestic (%); car3:
ownership—private foreign (%); exporter: exporter (exporters vs. non-exporters); fin1: internal finance for
investment (%); fin2: bank finance for investment (%); fin3: supplier credit financing (%); fin15: % of firms with a
checking or savings account: gend1: % of firms with female participation in ownership; obst1: obstacles: Access
to finance; t1: % of firms with ISO certification ownership; t2: % of firms with annual financial statement reviewed
by the external auditor; t3: capacity utilization(%) (Manufacturing only); t4: % of firms using technology licensed
from foreign companies; t5: % of firms using the web to communicate with clients/suppliers; t6: % of firms using
email to communicate with clients/suppliers. The data source is the Central America Plus Ecuador Panel Data
Enterprise Surveys Indicator Database.
Table 4. Definition of variables used in this study.
Variable Name Definition
Investment R&D LACe6 Dummy = 1 if the firm declared expenditure in R&D, 0 otherwise
Innovation expenditure
per employee
LACe7 log of Innovation expenditure per employee
Medium Size a6a Dummy = 1 if firm size Medium, 0 otherwise
Large Size a6a Dummy = 1 if the firm size is Large, 0 otherwise
Capacity utilization between
{50%–80%)
f1
Dummy = 1 if companies have a medium level of investment opportunities
(capacity utilization between 50% and 80%), 0 otherwise
Capacity utilization ≥ 80% f1
Dummy = 1 if companies have high investment opportunities (capacity
utilization rates > 80%), 0 otherwise
Establishments a7a Number of establishments that form the firm
Foreign b2b
The percentage of this firm is owned by Private foreign individuals,
companies, or organizations
Exports d8 Dummy = 1 if this establishment export directly or indirectly, 0 otherwise
Employees l1 log of the number of permanent, full–time workers ends of the last fiscal year
Intermediate-level education l9a
Dummy = 1 if the average number of years of education of a typical full–time
permanent production worker is between 10 to 13 years, 0 otherwise
High-level education l9a
Dummy = 1 if the average number of years of education of a typical full–time
permanent production worker is over 13 years, 0 otherwise
Bank financing k3bc
The proportion of this establishment’s working capital that was financed from
borrowing from banks (private and state-owned)
5. Axioms 2023, 12, 149 5 of 14
Table 4. Cont.
Variable Name Definition
Non—Bank financing k3e
The proportion of this establishment’s working capital that was financed from
borrowed from non–bank financial institutions
Age b5 log of age firm
Product innovation LACe1
Dummy = 1 if this establishment introduced any new or significantly
improved products (goods or services) over the last three years, 0 otherwise
Process innovation LACe4
Dummy = 1 if the establishment introduced any new or significantly improved
processes for producing or supplying products (goods or services) over the last
three years, 0 otherwise
2.1. The CDM Model
The original Crépon–Duguet–Mairesse model assumes that R&D and subsequent
innovation activities directly impact firms’ economic performance, usually measured by
labor productivity. In this case, we will use the first three of the four stages initially
proposed by [39].
In the first and second stages, the decision to invest in innovative activities and the
intensity of the innovation effort are considered. Thus, in the third stage, the expected
innovation effort becomes an input for the probability of introducing different types of
innovations, in our case, product and process innovations. Product innovation is what
customers perceive as a new product. In contrast, process innovation involves new methods
to reduce the cost of existing products or to enable new ones [41].
In detail, the first two equations deal with investment in innovation activities, which
consists of two decisions: whether to invest, gi, and the magnitude of the investment, ri.
The latter is only observable when the firm invests a positive amount, τ:
gi =
(
1 i f g∗
0,i = ∑ x1iβ1 + ε1i > τ
0 i f g∗
0,i = α1Si + ∑ x1iβ1 + ε1i ≤ τ
(1)
ri =
r∗
i = ∑ xi2β2 + ε2i i f gi = 1
= 0 i f gi = 0
(2)
In Equation (1), α1 is a parameter, x1i is a vector of explanatory variables, β1 is
the associated vector of coefficients and ε1i is an error term of decision 1. Similarly, in
Equation (2), corresponding to decision 2. The firm invests in RD if g∗
i , a latent variable,
is positive or greater than the constant threshold, τ. In turn, r∗
i is a latent or true RD
expenditure intensity for firm i determined by Equation (2). In particular, r∗
i = ri, RD
expenditure per employee, when firm i invests.
Given that r∗
i is observable only when g∗
i exceeds a minimum threshold, it is necessary
to specify a joint distribution for the unobservable components, ε1i and ε2. Specifically, they
are assumed to have a normal joint distribution:
ε1i
ε2i
∼ N
0
0
,
σ2
1 ρσ1σ2
ρσ2σ1 σ2
2
(3)
where σ1 and σ2 are the standard deviations of ε1i and ε2i, respectively, and ρ is their
correlation coefficient. Equations (1) and (2) are estimated jointly through a generalized
maximum-likelihood Tobit model [42].
The third Equation of the system refers to the introduction of innovations, which
is observed as a binary variable. Its exact formulation depends on whether the firm’s
innovative output involves a product or process innovation. This formulation is coded as a
1 if the answer is affirmative and zero otherwise. The statistical specification of Equation (4)
6. Axioms 2023, 12, 149 6 of 14
states the effects of a set of explanatory variables on the probability that the firm declares
some innovation activity:
Ii =
1 i f I∗
i = α3r∗
i ∑ x3iβ3 + ε3i 0
0 i f I∗
i = α3r∗
i ∑ x3iβ3 + ε3i ≤ 0
(4)
where Ii = 1 if the firm innovated in products and/or processes. The coefficient α3 is a
measure of the impact of research expenditure on the firm’s propensity to innovate, i.e., a
measure of the return to research.
Including the expected RD intensity in Equation (4) offers two advantages. First, it
acknowledges that all firms may display an innovation effort, although only a few have
invested and reported RD expenditure. Second, it enables instrumenting innovative
efforts in the knowledge production function by addressing the simultaneity between RD
effort and the expectation of successful innovation [43].
Equation (4) will be applied to product and process innovation in the empirical imple-
mentation by fitting separate probit models. These two probit equations are a seemingly
unrelated system; they are based on the same independent variables (see Table 4 for
variables used in empirical implementation). To explicitly study the degree of pairwise
complementarity between the two types of innovations, it is necessary to correct for time-
invariant individual effects to not attribute complementarity to time-invariant individual
characteristics [44].
2.2. Algorithm LASSO
Once the CDM model was obtained, we performed in parallel the methodology
developed in (24). To the RD propensity variable, as developed in machine learning
applications, a logistic model is applied to identify the relevant variables. However, more
than the logistic model is required to allow us to make the coefficients of the variables 0
when they are irrelevant. For this, we use the LASSO model, initially proposed by [45,46],
which corresponds to a logit model with L1 regularization, such that those irrelevant
variables have their regression coefficients as 0, thereby selecting the relevant variables and
reducing the over-fitting.
3. Results
Table 5 shows the confusion matrix for the third stage of the CDM model, considering
product innovation as the dependent variable. In general, the model correctly predicts at
least 67.41% of the time for Colombia and 86.74% at most for Bolivia. The model for all
the countries considered has a sensitivity more significant than the specificity, indicating a
higher proportion of true positives than true negatives.
Table 5. Confusion matrix stage 3 CDM model, product innovation.
Argentina Bolivia Chile Colombia Guatemala Peru Uruguay
Accuracy 76.94 86.74 68.25 67.41 77.46 68.30 77.59
Sensitivity 88.67 91.41 72.79 75.63 85.00 70.04 92.26
Specificity 72.08 67.61 62.74 61.50 65.65 66.73 63.55
Table 6 shows the confusion matrix for the third stage of the CDM model, considering
process innovation as the dependent variable. In general, the model correctly predicts at
least 64.09% of the time for Peru and correctly predicts 88.40% at most for Bolivia, as in the
case of product innovation. The model for all the countries considered has a sensitivity
more significant than the specificity, which indicates that it had a higher proportion of true
positives than true negatives.
7. Axioms 2023, 12, 149 7 of 14
Table 6. Confusion matrix stage 3 CDM model, process innovation.
Argentina Bolivia Chile Colombia Guatemala Peru Uruguay
Accuracy 68.88 88.40 68.05 66.03 77.12 64.90 78.58
Sensitivity 83.95 92.23 73.80 73.95 81.20 69.31 84.41
Specificity 59.48 71.21 57.53 58.69 61.48 60.84 62.03
Table 7 presents the confusion matrix for the LASSO algorithm, considering product
innovation as the dependent variable. In general, the model correctly predicts at least
65.60% of the time for Peru and correctly predicts 77.13% at most for both Argentina
and Bolivia. The model for all the countries considered has a sensitivity higher than the
specificity, which indicates that it had a higher proportion of true positives than true
negatives.
Table 7. LASSO confusion matrix, product innovation.
Argentina Bolivia Chile Colombia Guatemala Peru Uruguay
Accuracy 77.13 77.13 67.09 68.37 76.10 65.60 76.44
Sensitivity 89.51 88.82 76.61 79.05 86.93 65.90 97.66
Specificity 72.10 67.24 59.61 61.30 62.07 66.11 60.97
Table 8 shows the confusion matrix for the LASSO algorithm, considering product
innovation as the dependent variable. In general, the model correctly predicts at least
62.90% of the time for Peru, as well as for product innovation, and correctly predicts 85.08%
at most for Bolivia. The model for all the countries considered has a sensitivity higher than
the specificity, which indicates that it had a higher proportion of true positives than true
negatives.
Table 8. LASSO confusion matrix, process innovation.
Argentina Bolivia Chile Colombia Guatemala Peru Uruguay
Accuracy 67.17 85.08 63.60 64.23 74.92 62.90 72.16
Sensitivity 92.13 89.14 63.60 73.36 76.77 65.60 72.65
Specificity 57.01 63.79 63.64 56.61 73.08 59.87 45.45
Table 9 shows the parameters of the CDM stage 3 to the introduction of the product
innovations model for each variable for the different countries. Notably, some parameters
are significant for all countries, such as Employees. On the other hand, the other variables
are significant in some countries and not in others. It is interesting that the positivity or
negativity of the parameters also changes by country; for some, the parameter contributes
to the Innovation Intensity, and for others, it reduces the variable’s value. This opens the
discussion to review what aspect may be idiosyncratic by country when establishing its
Innovation Intensity for each of its companies.
8. Axioms 2023, 12, 149 8 of 14
Table 9. Probability of the introduction of product innovations stage 3 CDM model.
Argentina Bolivia Chile Colombia Guatemala Peru Uruguay
Innovation
IntensityPred 1.702 *** −0.919 *** −4.181 *** −1.693 *** 2.729 *** 5.398 *** 7.632 ***
(0.154) (0.266) (0.764) (0.271) (0.330) (2.063) (0.820)
Foreign −0.001 −0.002 0.025 *** 0.005 ** −0.006 ** −0.003 0.064 ***
(0.002) (0.004) (0.004) (0.002) (0.003) (0.002) (0.007)
Exports −0.913 *** −1.175 *** 0.674 ** −0.604 ** −3.663 *** −0.212 −1.695 ***
(0.228) (0.435) (0.300) (0.271) (0.578) (0.362) (0.331)
Medium Size 0.151 −0.480 1.639 *** −0.435 *** −0.602 *** 0.030 −6.481 ***
(0.123) (0.292) (0.291) (0.136) (0.199) (0.116) (0.739)
Large Size −0.125 −0.020 0.910 *** −0.411 *** −1.317 *** 1.561 ** −9.597 ***
(0.210) (0.407) (0.255) (0.158) (0.311) (0.653) (1.092)
Employees 0.182 *** 0.366 *** 0.130 ** 0.127 *** 0.229 *** 0.141 *** 0.183 *
(0.063) (0.115) (0.061) (0.046) (0.076) (0.051) (0.102)
Capacity
utilization
between
0.151 0.694 * −0.245 −0.050 0.189 0.199 0.372 *
[50%, 80%] (0.164) (0.355) (0.161) (0.156) (0.216) (0.159) (0.212)
Capacity
utilization ≥
80%
−0.068 −0.437 −0.629 *** −0.536 *** −0.105 −0.593 *** 0.396 *
(0.182) (0.415) (0.170) (0.176) (0.245) (0.168) (0.238)
Establishments −0.002 −0.003 *** −0.012 *** 0.037 0.002 −0.011 0.011 *
(0.003) (0.001) (0.004) (0.023) (0.002) (0.007) (0.007)
Middle
education
−0.693 *** 0.125 3.819 *** 0.268 ** −3.025 *** 0.092 −5.031 ***
(0.147) (0.385) (0.555) (0.120) (0.417) (0.230) (0.589)
Bank financing 0.003 −0.002 0.003 * −0.001 0.007 * 0.001 −0.005
(0.002) (0.004) (0.002) (0.002) (0.003) (0.001) (0.004)
Non - Bank
financing
0.013 * 0.022 ** −0.004 −0.000 0.005 0.006 0.011
(0.007) (0.010) (0.005) (0.007) (0.007) (0.004) (0.011)
Age −0.052 −0.435 * 0.042 −0.024 −0.041 0.143 −0.018
(0.074) (0.244) (0.090) (0.110) (0.150) (0.093) (0.102)
Constant −9.700 *** 7.922 *** 42.507 *** 23.457 *** −11.714 *** −34.140 *** −45.333 ***
(0.956) (2.525) (7.926) (3.870) (1.507) (12.425) (4.853)
Observations 1048 362 1033 942 589 1000 603
*** p 0.01; ** p 0.05; * p 0.1.
Table 10 shows the parameters of the CDM stage 3 to the introduction of the process
innovations model for each variable for the different countries. Notably, some parameters
are significant for all countries, such as Exports, which is negative for all countries, except
for Chile (0.843). On the other hand, the other variables are significant in some countries
and not in others. It is interesting that the positivity or negativity of the parameters also
changes by country; for some, the parameter contributes to the Innovation Intensity, and
for other countries, it reduces the value of the variable. This opens the discussion to review
what aspect may be idiosyncratic by country when establishing its Innovation Intensity for
each of its companies. For example, Bank Financing is positive and significant for Chile
(0.003), Guatemala (0.006), and Peru (0.002), and negative for Bolivia (−0.009); however,
Non-Bank financing is positive and significant for Bolivia (0.017) and negative for Colombia
(−0.021).
9. Axioms 2023, 12, 149 9 of 14
Table 10. Probability of the introduction of process innovations stage 3 CDM model.
Argentina Bolivia Chile Colombia Guatemala Peru Uruguay
Innovation
IntensityPred 1.518 *** −0.905 *** −4.855 *** −1.790 *** 2.413 *** 3.397 * 6.914 ***
(0.155) (0.260) (0.787) (0.271) (0.326) (1.993) (0.770)
Foreign −0.004 ** −0.003 0.026 *** 0.001 0.002 −0.003 0.058 ***
(0.002) (0.004) (0.004) (0.002) (0.003) (0.002) (0.007)
Exports −0.812 *** −1.569 *** 0.843 *** −0.922 *** −3.576 *** −0.635 * −1.289 ***
(0.207) (0.459) (0.299) (0.272) (0.582) (0.366) (0.332)
Medium Size 0.171 −0.214 1.899 *** −0.389 *** −0.887 *** 0.100 −5.542 ***
(0.119) (0.301) (0.300) (0.137) (0.208) (0.115) (0.671)
Large Size 0.122 0.423 1.203 *** −0.208 −1.319 *** 1.256 ** −7.857 ***
(0.195) (0.460) (0.263) (0.155) (0.309) (0.632) (1.021)
Employees 0.095 * 0.338 *** 0.094 0.028 0.271 *** 0.086 * 0.012
(0.057) (0.129) (0.063) (0.046) (0.071) (0.051) (0.105)
Capacity
utilization
between
−0.013 0.479 −0.179 0.190 0.369 0.055 0.162
[50%, 80%] (0.153) (0.359) (0.163) (0.148) (0.230) (0.161) (0.217)
Capacity
utilization ≥
80%
−0.082 −0.625 −0.453 *** −0.337 ** 0.109 −0.739 *** 0.312
(0.170) (0.429) (0.175) (0.168) (0.255) (0.172) (0.243)
Establishments 0.002 −0.021 −0.010 ** 0.034 ** −0.016 −0.023 * −0.021 **
(0.002) (0.038) (0.005) (0.017) (0.018) (0.013) (0.010)
Middle
education
−0.600 *** 0.302 4.183 *** 0.102 −2.575 *** 0.050 −4.898 ***
(0.141) (0.375) (0.576) (0.120) (0.421) (0.222) (0.559)
Bank financing 0.002 −0.009 * 0.003 ** 0.001 0.006 * 0.002 * 0.003
(0.002) (0.004) (0.002) (0.002) (0.003) (0.001) (0.003)
Non - Bank
financing
0.006 0.017 * 0.000 −0.021 *** 0.009 0.000 0.006
(0.007) (0.009) (0.005) (0.007) (0.007) (0.004) (0.010)
Age 0.020 −0.893 *** −0.121 −0.015 −0.232 0.060 0.043
(0.074) (0.284) (0.092) (0.110) (0.149) (0.090) (0.096)
Constant −8.936 *** 9.827 *** 49.952 *** 25.169 *** −10.002 *** −20.912 * −41.457 ***
(0.939) (2.601) (8.166) (3.878) (1.472) (12.018) (4.556)
Observations 1048 362 1033 942 589 1000 603
*** p 0.01; ** p 0.05; * p 0.1.
4. Discussion
Our findings indicate that the CDM model outperforms the LASSO algorithm in almost
all cases, comparing the confusion matrix. We think that one way to consider a model of
superior quality is when it obtains better results in its confusion matrix since both models
perform different activities to fit the data. As we will explain, the CDM model attempts
to obtain two connections between innovation variables: innovation development and
innovation expenditure per number of employees. Thus, the model attempts to incorporate
this double dependence, which uses the variables with the highest relation to the adjustment
objective. These findings are similar to those found by [24]. The algorithm automatically
selects the least relevant variables by a statistical criterion and not by theoretical implication
on the determinants of RD investment and the impact on product and process innovation.
The LASSO model attempts to fit the model only for the binary variable of whether or not
to innovate, either in process or product, adjusting to a single result.
When studying the determinants of RD investment measured as the expenditure
per employee made by the firm, an excessive number of zero values are obtained since
the vast majority of firms do not invest in RD. This suggests that such data should be
analyzed using limited dependent variable models (Tobit, Heckman selection, and others)
10. Axioms 2023, 12, 149 10 of 14
or count data models (Poisson, negative binomial or zero-inflated Poisson, and others).
Otherwise, the results will be wrong since firms that do not intend to innovate would be
studied as if they did [47,48]. The most common applications of these limited dependent
variable models are the logit and probit models, both used to explore the determinants of
the probability of innovating together with its intensity in both developing economies [49]
and developing economies [43,50–52].
However, by far, the most widely used model for this type of study is the CDM
model in its original version of innovation and its relationship with productivity [53,54]. In
addition, multiple extensions or modifications have been made, such as adding a new first
stage to study the impact of public support. The central characteristic of these extensions
is to have panel data, thus having an observation that can be learned over time, which is
essential for studying the effects of public policy on innovation [55–59].
Considering the results, the Accuracy indicator is high, which means that the models
obtained are a good discriminator of whether the company innovates, the worst outcome
being for Chile in product innovation with 68.25% and Peru in process innovation with
64.9%. Interestingly, the Sensitivity and Specificity indicators also have high values, which
shows consistency in the classification.
Different authors have highlighted the effects of RD on innovation, especially in
technological innovations [4,60]. However, the relationship between RD and innovation
is still unclear, as different results have been found [60,61].
One of the parameters that are significant for product and process innovation in
all countries is employees. This is particularly important, as there is evidence that it is
imperative to examine the factors and dynamics that affect employees’ innovative behavior
in organizations [62]. Innovation requires cognitive, psychological, and physical efforts on
the part of the individual [63].
A striking element is that exports behave differently in different countries. This can
be explained by establishing that trade patterns result from technological differences be-
tween countries, which can increase or decrease according to innovation and diffusion
processes [64]. In addition, there is evidence that the market is essential. Exports with
a more comprehensive geographic range imply more innovation. Closer and more se-
cure markets provide less incentive for innovation activities than participating in broader
commercial ventures [65].
These findings enrich the literature on RD and innovation in firms and have im-
portant implications for public policy. The CDM model makes it possible to predict with
a relative level of certainty whether a company will innovate in process or product and
how much it will spend on this decision, considering that innovation is a decision that
involves different levels of complexity in a company. This statement shows the importance
of promoting public policies that stimulate investment in RD in innovation systems. It
can lead to companies becoming more competitive, directly affecting employment and
economic growth in the countries.
5. Conclusions
The findings of our research allow us to state two conclusions. First, the CDM model
obtains better results than the LASSO algorithm in analyzing RD investment in process
and product innovation in Latin American countries. The CDM model and its autonomous
learning eliminate variables irrelevant to the analysis, and the CDM model attempts to
obtain two joint innovation variables: innovation development and innovation expenditure
per number of employees, allowing the highest relation to the adjustment objective.
The second conclusion is that RD has a positive effect on process and product
innovation in Latin American firms. These findings enrich the literature on RD and
innovation in firms and have important implications for public policy and firm strategies.
The CDM model makes it possible to predict, with a relative level of certainty, whether a
company will innovate in a process or product and how much it will spend on this decision,
11. Axioms 2023, 12, 149 11 of 14
considering that innovation is a decision that involves different levels of complexity within
a company.
We recognize methodological difficulties in approaching such complex analyses at the
company and country levels. There is a lack of long-term indicators associated with Science,
Technology, and Innovation, which would allow us to better characterize the development
of countries, as well as some more appropriate indicators to measure the performance of
economies, and the socio-political environment of the countries.
This lack of information opens two great opportunities for future research. On the one
hand, the growing use of methods based on machine learning and deep learning allows a
deepening of the analysis of the relationships between different variables linked to different
management processes. In addition, these results, plus the growing availability of company
data, will enable the development of individual and joint analyses of the factors that lead
companies to innovate, especially in different contexts. These results, plus the increasing
availability of company data, will allow the development of individual and joint analyses
of the factors that lead companies to innovate, especially in different contexts.
To generate innovation (or increase the probability of its occurrence), companies
must implement a favorable environment in their organization and with their employees.
Addressing skills development and education will promote success [54,66].
Considering the positive effects of RD on innovation in Latin American countries and
the need to increase the levels of innovation in companies, policies that favor the formation
of collaborative networks with national, but mainly foreign, organizations should be
generated since they create more significant effects.
Also, along with favoring the development of RD in companies, the development
of knowledge spillovers should be favored since they are complementary strategies and
explain, to some extent, the better performance of the United States with respect to European
countries in business innovation [67]. In fact, Audretsch and Belitski [20], using a CDM
model of RD, innovation, and productivity for UK firms, established that RD and
knowledge spillovers are complementary; while RD have more important effects on
innovation and productivity, knowledge spillovers are important on productivity.
In addition, Heij et al. [60] highlight from an analysis of companies in Germany that
RD has a positive effect on product innovation. This effect is moderated by management
innovation, indicating the need for Latin American companies to include not only RD
but also management innovation.
In conclusion, one of the significant issues in these countries that impacts the develop-
ment of innovation and RD investments is rooted in institutional theory. We postulate
our decisions that governments can overcome the problems by promoting new and more
efficient administrative reforms and new policies, and by integrating industry more cooper-
atively.
Author Contributions: Conceptualization, R.O.H. and F.A.C.; methodology, R.O.H., T.A.F. and
F.A.C.; software, R.O.H. and F.A.C.; writing—original draft preparation, R.O.H., T.A.F., C.G., M.C.-V.
and F.A.C.; writing—review and editing, R.O.H., C.G. and M.C.-V. All authors have read and agreed
to the published version of the manuscript.
Funding: This research was funded by Agencia Nacional de Investigación y Desarrollo of Chile
(ANID): FONDECYT Iniciación grant N◦ 11220339; recipient MCV and The APC was funded by the
Faculty of Economics and Business, Universidad Alberto Hurtado.
Institutional Review Board Statement: Not applicable.
Informed Consent Statement: Not applicable.
Data Availability Statement: The data used in the study are available to other authors who require
access to this material.
Acknowledgments: The authors would like to thank the Faculty of Economics and Business of the
Universidad Alberto Hurtado for their support in developing the research.
12. Axioms 2023, 12, 149 12 of 14
Conflicts of Interest: The authors declare no conflict of interest.
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