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Innovation Strategies and Productivity Growth in Developing Countries: Evidence from Pakistan

Author

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  • Wadho, Waqar
  • Chaudhry, Azam

Abstract

We examine the determinants of product, process, and organizational innovation, and their impact on firm labor productivity using data from a unique innovation survey of firms in Pakistan. We find significant heterogeneity in the impact of different innovations on labor productivity: Organizational innovation has the largest effect followed by process innovation. But unlike much of the literature, we found a negative impact of product innovation suggesting a disruption effect of new products; however, this is mitigated if new products are paired with process or organizational innovations. We find a strong impact of engaging in knowledge creation on product and process innovation. We found that external knowledge networks and innovation cooperation play no significant role in firms’ decision to perform R&D and its intensity, though vertical linkages with suppliers (clients) promote product (process) innovations. Foreign competition has a negative effect on product innovation and a positive effect on organizational innovation.

Suggested Citation

  • Wadho, Waqar & Chaudhry, Azam, 2020. "Innovation Strategies and Productivity Growth in Developing Countries: Evidence from Pakistan," GLO Discussion Paper Series 466, Global Labor Organization (GLO).
  • Handle: RePEc:zbw:glodps:466
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    More about this item

    Keywords

    Technological Innovation; organizational innovation; labor productivity; developing countries; Labor intensive industries;

    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
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L67 - Industrial Organization - - Industry Studies: Manufacturing - - - Other Consumer Nondurables: Clothing, Textiles, Shoes, and Leather Goods; Household Goods; Sports Equipment
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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