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Institutions and firms'return to innovation : evidence from the world bank enterprise survey

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  • Nguyen, Ha
  • Jaramillo, Patricio A.

Abstract

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.

Suggested Citation

  • Nguyen, Ha & Jaramillo, Patricio A., 2014. "Institutions and firms'return to innovation : evidence from the world bank enterprise survey," Policy Research Working Paper Series 6918, The World Bank.
    • Handle: RePEc:wbk:wbrwps:6918
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    Citations

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    Cited by:

    1. Chun Yang & Bart Bossink & Peter Peverelli, 2018. "The Value of Business–Government Ties for Manufacturing Firms’ Product Innovation during Institutional Transition in China," Sustainability, MDPI, vol. 11(1), pages 1-27, December.
    2. Loredana Fattorini & Mahdi Ghodsi & Richard Grieveson & Sandra M. Leitner & Armando Rungi, 2017. "Monthly Report No. 9/2017," wiiw Monthly Reports 2017-09, The Vienna Institute for International Economic Studies, wiiw.
    3. World Bank, 2015. "Peru Building on Success," World Bank Publications - Reports 22984, The World Bank Group.
    4. Ghulam, Yaseen, 2021. "Institutions and firms’ technological changes and productivity growth," Technological Forecasting and Social Change, Elsevier, vol. 171(C).
    5. Agostino, Mariarosaria & Nifo, Annamaria & Trivieri, Francesco & Vecchione, Gaetano, 2016. "Total factor productivity heterogeneity: channelling the impact of institutions," MPRA Paper 72759, University Library of Munich, Germany.
    6. Busom, Isabel & Vélez-Ospina, Jorge Andrés, 2017. "Innovation, Public Support, and Productivity in Colombia. A Cross-industry Comparison," World Development, Elsevier, vol. 99(C), pages 75-94.

    More about this item

    Keywords

    Debt Markets; E-Business; Labor Policies; Microfinance; Innovation;
    All these keywords.

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