Institutions and Firms' Return to Innovation : Evidence from the World Bank Enterprise Survey
This paper poses a question: do firms in developing countries not innovate because they are unwilling to? The question moves away from the conventional focus on the obstacles (such as the lack of access to finance) that hinder firms' innovatio...
| Main Authors: | , |
|---|---|
| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2014/06/19654205/institutions-firms-return-innovation-evidence-world-bank-enterprise-survey http://hdl.handle.net/10986/18761 |
| Summary: | This paper poses a question: do firms in
developing countries not innovate because they are unwilling
to? The question moves away from the conventional focus on
the obstacles (such as the lack of access to finance) that
hinder firms' innovation ability. The World Bank's
Enterprise Survey is used first to estimate the return to
firms' innovation across many developing countries, in
terms of sales and sales per worker. Then the return to
innovation is compared across countries with different
levels of institutional quality. In countries with lower
institutional quality (specifically, rule of law, regulatory
quality, property and patent right protection), the return
to firms' innovation is lower. This suggests that poor
institutional environment lowers firms' return to
innovation and hence discourages them from investing in
researching and adopting new products. |
|---|