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Does Participation in Business Associations Affect Innovation?

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  • Felipe Aguilar
  • Roberto Alvarez

Abstract

In this paper, we use data for more than 5,000 Chilean companies to investigate whether participation in business association increases the probability of R&D investment. Dealing with the endogeneity of participation through a bivariate Probit model with an exclusion variable that captures the trust environment among firms, we find that this probability increases by about 27%. This effect is heterogeneous across firms. Participation increases the probability of R&D investment by 30.8% for SMEs and by 43.9% for those companies with severe financial constraints. Our evidence is consistent with the idea that associativity may help SMEs to close the innovation gap and/or to alleviate financial problems.

Suggested Citation

  • Felipe Aguilar & Roberto Alvarez, 2025. "Does Participation in Business Associations Affect Innovation?," Working Papers Central Bank of Chile 1064, Central Bank of Chile.
    • Handle: RePEc:chb:bcchwp:1064
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