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Innovation Activities and Competitiveness: Empirical Evidence on the Behaviour of Firms in the New EU Member States and Candidate Countries

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  • Nebojsa Stojcic
  • Iraj Hashi
  • Shqiponja Telhaj

Abstract

This paper aims to explore the factors influencing the ability of firms to compete in globalised markets. The Austrian and evolutionary economics and the endogeneous growth literature highlight the role of innovation activities in enabling firms to compete more effectively - and expand their market share. On the basis of these theories, and using a large panel of firms from several Central and East European Countries (CEECs), this paper attempts to identify the factors and forces which determine the ability of firms to compete in conditions of transition. The competitiveness of firms, measured by their market share, is postulated to depend on indicators of firms' innovation behaviour such as improvements in cost-efficiency, labour productivity and investment in new machinery and equipment as well as characteristics of firms and their environment such as location, experience, technological intensity of their industries and the intensity of competition. To control for the dynamic nature of competitiveness and the potential endogeneity of its determinants, and to distinguish between short and long run effects of firm behaviour, a dynamic panel methodology is employed. The results indicate that the competitiveness of firms in transition economies is enhanced with improvements in their cost efficiency, productivity of labour, investment and their previous business experience while stronger competition has a negative impact on it.

Suggested Citation

  • Nebojsa Stojcic & Iraj Hashi & Shqiponja Telhaj, 2011. "Innovation Activities and Competitiveness: Empirical Evidence on the Behaviour of Firms in the New EU Member States and Candidate Countries," CASE Network Studies and Analyses 424, CASE-Center for Social and Economic Research.
  • Handle: RePEc:sec:cnstan:0424
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    References listed on IDEAS

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    1. Kurt A. Hafner, 2013. "Agglomeration economies and clustering -- evidence from German and European firms," Applied Economics, Taylor & Francis Journals, vol. 45(20), pages 2938-2953, July.
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    Cited by:

    1. Ozren Rafajac & Marinko Skare, 2017. "Quantitative and Qualitative Analysis of X-efficiency in the Croatian Market," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 11(3), September.
    2. Małgorzata Stefania Lewandowska & Tomasz Gołębiowski & Maja Szymura-Tyc & Małgorzata Rószkiewicz, 2017. "Komplementarność innowacji a eksport nowych produktów," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 1, pages 95-117.
    3. Małgorzata Stefania Lewandowska & Tomasz Gołębiowski, 2012. "Complementarity Between Process and Organizational Innovation of Polish Exporters," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 5-6, pages 29-55.
    4. Heri Beziæ & Tomislav Galoviæ & Petar Miševiæ, 2016. "The key goal of this research is to empirically determine the effects of terrorism on FDI of the selected EU and EEA member countries," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 34(2), pages 333-362.
    5. Nebojsa Stojcic & Marija Becic & Perica Vojinic, 2012. "The Competitiveness of Exports from Manufacturing Industries in Croatia and Slovenia to the EU-15 Market: A Dynamic Panel Analysis," Croatian Economic Survey, The Institute of Economics, Zagreb, vol. 14(1), pages 69-105, April.
    6. Lau, Chi Keung Marco & Suvankulov, Farrukh & Karabag, Solmaz Filiz, 2012. "Determinants of firm competitiveness: case of the Turkish textile and apparel industry," MPRA Paper 46974, University Library of Munich, Germany.
    7. Lewandowska, Małgorzata Stefania & Szymura-Tyc, Maja & Gołębiowski, Tomasz, 2016. "Innovation complementarity, cooperation partners, and new product export: Evidence from Poland," Journal of Business Research, Elsevier, vol. 69(9), pages 3673-3681.
    8. Voulgaris, Fotini & Lemonakis, Christos, 2014. "Competitiveness and profitability: The case of chemicals, pharmaceuticals and plastics," The Journal of Economic Asymmetries, Elsevier, vol. 11(C), pages 46-57.
    9. Tibor Lalinsky, 2013. "Firm competitiveness determinants: results of a panel data analysis," Working and Discussion Papers WP 4/2013, Research Department, National Bank of Slovakia.

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    More about this item

    Keywords

    competitiveness; restructuring; transition economies; market share; dynamic panel analysis;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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