Purpose The purpose of this paper is to test the existence of true persistence in the generation and adoption of product innovations in the context of a developing country.
Design/methodology/approach A dynamic probit model with random effects is used to test true persistence relying on a panel data set constructed from three waves of the Colombian innovation survey (Encuesta de Desarrollo e Innvovación Tecnológica) covering the time span from 2003 to 2008.
Findings This paper empirically shows the existence of true innovation persistence for two of the three types of product innovation studied: the adoption of product innovation that is new to the firm; and the adoption of product innovation that is new to the national market. However, the study could not confirm true persistence in the generation of product innovation.
Originality/value To the best of our knowledge, this is the first study that systematically tests innovation persistence differentiating between the adoption of innovations that are new to the firm and innovation that is new to the national market. It is also the first study in this research area that uses a dynamic probit model with random effects according to the original specification by Wooldridge (2005).
AbstractThis special issue tackles two "trendy" topics much discussed at present by the community of scholars (and practitioners too) interested in regional economic development: systems and ecosystems. These metaphors have proved popular, and enduring, currently experiencing something of a buzz or moment in the sunshine. This special issue pushes them out of their comfort zone to explore contexts, elements, and approaches that have not yet been well explored in the literature to date. Contributions in this special issue cover a wide range of international cases and explore systemic perspectives on economic development placing institutional context and evolutionary dynamics at the core.
Purpose: The purpose of this paper is to analyze the differential impact each of the dominant theoretical explanations has on innovation persistence. The authors hereby differentiate the degree of novelty, distinguishing between innovation based on invention (new products for the international market) and those based on imitation or adoption processes (new products for the company or new products in the national market). Design/methodology/approach: Placing this study in the context of a developing country, the authors apply an ordered probit model inflated in zeros (ZIOP). This methodology enables one to not only provide results not biased by the excess of zeros but also take into account the unobserved heterogeneity with respect to the sources of zeros (that is those firms which do not innovate). The empirical analysis is based on three Colombian innovation surveys carried out between 2003 and 2008 by the Colombian National Statistics Department. Findings: The results provide empirical evidence that two elements are essential for both types of innovation persistence: accessing external financial resources and learning through interaction. Furthermore, the sunk R&D cost approach and technological learning explain persistence in innovation of new products for the international market. Research limitations/implications: The limitations of this study are directly related to the methodological choice. The authors were unable to take into consideration two sources of heterogeneity: the one related to initial conditions and the one related to the source of the many non-innovators. They opted to focus on the latter due the research question and setting of this study. Additionally, macroeconomic instability did not allow to consider a long panel; instead the authors had to rely on a short panel. Practical implications: The results provide important insights to managers. Continuous investments in innovation activities are important bot to become an innovative firm as well as to improve the odds of persistently innovating. Particularly, R&D investments are a pre-requisite for new-to-the-world innovations. Finally, it is not one specific set of capabilities which is a prerequisite for the generation of innovation; rather it is a strategic combination of various skills that increase the probability to (persistently) innovate. Social implications: With innovation persistence being especially relevant for long-run dynamics behind economic growth, the results of this study provide insights into potential public policies. Governments are in a position to at least lower barriers, which might enable more firms to persistently innovate. Continuous access – less than the actual amount – to financial resources aimed at innovation activities and learning through interaction with external agents is fundamental for both kinds of innovation persistence. Both are market characteristics where governments can – at least indirectly – intervene. Originality/value: Despite the existence of various theoretical approaches, the bulk of empirical research focuses on the verification of true state innovation persistence. Thus, while innovation persistency has been widely confirmed to exist to a certain degree, knowledge regarding which theoretical approach is likely to drive a firm to persistently innovation is still scarce. Additionally, this study is placed in the context of a developing country, which by most empirical research has been overlooked but is characterized by one element which is decisive for the empirical methodology: many firms do not innovate, let alone persistently innovate.
PurposeThis paper aims to evaluate whether entrepreneurs with an innovative product/service are more likely to formally register their businesses. Understanding the decision of business registration as a rational choice of the entrepreneurs, where she weighs the costs versus the benefits of such formalization, the study expands the literature on informal entrepreneurship by looking at the benefit-side rather than the typically evaluated cost-side of an individual cost-benefit evaluation.Design/methodology/approachThe authors relied on the Global Entrepreneurship Monitor (GEM) adult population survey to evaluate the hypothesis. Specifically, the authors used the GEM data of 2016 for Colombia, covering 2,069 observations (a representative sample at the country level), evaluating the relationship between innovativeness and business registration for the early stage of the entrepreneurial process. Given the nature of our dependent variable, the authors estimated a logistic regression model.FindingsDifferent from what the authors hypothesized, they did not find empirical evidence for a positive correlation between an innovative product or service and business registration. Instead, businesses that compete with many others offering the same product/service have a higher tendency to register at the Chamber of Commerce. Contrarily of what might be suspected, opportunity-based entrepreneurship – as opposed to necessity-based – is not a relevant variable when formalizing a business, providing evidence for our hypothesis that necessity-based entrepreneurship cannot be equalized with informal entrepreneurship. Additionally, the authors show that an entrepreneur with higher socioeconomic status is more likely to register his company.Research limitations/implicationsThe results provide first exploratory evidence that the benefit evaluation may play a role in formalizing a start-up, thus calling for future research that not only tackles the influence of registration costs and administrative burden but rather looks at the outcome of a cost-benefit analysis. The data imply several limitations which future research should address: variables measuring the innovativeness of the product/service are rather coarse measures and need to be expanded and detailed in future research. Additionally, the authors acknowledge that a relatively high number of missing values may generate a selection bias in our population sample. Finally, because of situating the research in a developing country, the research results may lack generalizability. Therefore, researchers are encouraged to test the proposed propositions further.Practical implicationsIn a country like Colombia with very high levels of informality, it is necessary that the government fully understands the role of innovation in the formalization process of start-ups. The results indicate that a differentiation of support mechanisms to increase the formalization of businesses according to the different stages of their development may be necessary and that aside from costs, benefits of formalization play a role. A higher level of formality is not only related to economic growth but also much better protection of workers, therefore going beyond the reduction of registration costs and the implied administrative burden should be an additional public policy target for decreasing informality. Finally, the correlation of socioeconomic stratum with the decision to register hints at a varying evaluation of formalization, a point that merits attention by government and academia.Originality/valueThe study shifts the focus from the evaluation of solely costs for business registering as a barrier to start-up formalization to the cost-benefit analysis. The authors propose – and show – that such an evaluation is not generalizable for all kinds of business. Specifically, the authors show that a start-up is more likely to register when it competes with a large number of competitors than when it competes with a smaller number of others offering the same. At the same time, the authors also show that the stage at which the start-up company is at influences the decision to formalize.
