Uneven Firms’ Innovation Persistence: Policy Mix Implications from Uruguay

A large body of literature has identified positive persistence effects of innovation in firms located in developed countries. However, this is not the rule in developing economies. This article adds to this topic by analysing the short- and medium-term innovation persistence in Uruguayan firms during the recent period of expansion of the innovation policies in this country. Using a panel data set from the Uruguayan Innovation Survey 2007–2018, we run parametric and nonparametric estimations of firms’ innovation persistence in manufacturing and service sectors. Our findings indicate that innovation is an uneven, even erratic, process. Contrary to most of the extant research on the topic, we find mostly negative persistence effects of outcome innovation (both product and process) in the short term and positive persistence effects of R&D and innovation activities based on external knowledge acquisition (input innovation) in the medium term. Moreover, we observe positive effects of public support on both input and outcome innovation in the short term but no effects in the medium term. We discuss timing and coordination challenges for innovation policies in Uruguay, and the applicability of our findings to developing countries as an alternative to the extended interpretation of innovation as a self-efficient process.