Working Paper

Institutions, Resources and Innovation in Developing Countries: A Firm Level Approach

author(s) Knoben, J.. - Barasa, L.. - Kimuyu, P.. - Kinyanjui, B.. - Vermeulen, P.
from UK Foreign, Commonwealth & Development Office (FCDO)
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themes
regions
  • Eastern Africa
  • Sub-Saharan Africa
  • Africa
  • World
  • South-Eastern Asia
  • Asia
  • Southern Asia
  • Southern Africa
citation

Barasa, L.; Kimuyu, P.; Vermeulen, P.; Knoben, J.; Kinyanjui, B. Institutions, Resources and Innovation in Developing Countries: A Firm Level Approach. Radboud University Nijmegen, Nijmegen, Netherlands (2014) 38 pp

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Abstract

This study examines how firm-level resources interact with regional institutional quality to explain innovation in developing countries. We hypothesize that the institutional environment within which the firm operates moderates the effect of firm-level resources on innovative output. We examine the moderating role of institutions with regards to the transformation of firm-level resources including internal research and development, employee level of education and quality certification into innovative output using firm-level data from the World Bank Enterprise Survey and the Innovation Follow-up Survey that includes the innovation module for the years 2010 through 2012. We test our hypotheses using a multilevel logistic model. We find that the effects of firm-level resources vary depending on the institutional environment and that regional institutional quality positively moderates the effects of the firm-level resources. The positive effects of internal research and development on innovative output are substantially reinforced by regional institutional quality

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