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The roadblocks to progress: A comprehensive study on the relationship between regional institutional quality and firms’ innovation of sub-Saharan African nations

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  • Abel Dula Wedajo
  • Xiao Huilin

Abstract

This study examines the impact of regional institutional quality (level two) on firm-level innovation (level one) in Sub-Saharan Africa (SSA), where cultural and institutional diversity challenges frameworks derived from homogeneous contexts. Analyzing 7,578 firms across Ethiopia, Kenya, Rwanda, Tanzania, Uganda, Zambia, and Zimbabwe (2011–2019 World Bank Enterprise Survey data), the paper highlights the need for multi-level analysis to capture regional variations.The study challenges uniform institutional frameworks, emphasizing SSA's diversity in religion, ethnicity, and language. Using hierarchical logistic regression, it reveals direct firm-level effects of internal resources on innovation and cross-level influences of regional institutions. A composite measure of regional institutional quality significantly predicts innovation, with regulatory quality showing notable moderating effects.Contributing to innovation dynamics in diverse settings, the paper advocates for multi-level approaches to understand firm behavior in heterogeneous environments. Its originality lies in analyzing firm innovation while preserving variations in internal resources and macroeconomic structures, addressing limitations of single-level analyses in prior research.

Suggested Citation

  • Abel Dula Wedajo & Xiao Huilin, 2025. "The roadblocks to progress: A comprehensive study on the relationship between regional institutional quality and firms’ innovation of sub-Saharan African nations," African Journal of Science, Technology, Innovation and Development, Taylor & Francis Journals, vol. 17(5), pages 663-680, July.
    • Handle: RePEc:taf:rajsxx:v:17:y:2025:i:5:p:663-680
    DOI: 10.1080/20421338.2025.2510832
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