Description: Institutions and Firms' Return to Innovation : Evidence from the World Bank Enterprise Survey

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Institutions and Firms' Return to Innovation : Evidence from the World Bank Enterprise Survey

This paper poses a question: do firms in developing countries not innovate because they are unwilling to? The question moves away from the conventional focus on the obstacles (such as the lack of access to finance) that hinder firms' innovatio...

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Bibliographic Details
Main Authors:	Nguyen, Ha, Jaramillo, Patricio A.
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	BANK LOANS BANK POLICY BUSINESS ENVIRONMENT BUSINESS SECTOR COMPETITOR COMPETITORS CONTRACT ENFORCEMENT CONTRACT ENFORCEMENTS CONTRACT RIGHTS COPYRIGHTS DEVELOPING COUNTRIES DEVELOPMENT BANK DEVELOPMENT ECONOMICS DOMESTIC BANK DUMMY VARIABLE DUMMY VARIABLES ECONOMIC ACTIVITY ECONOMIC GROWTH ECONOMICS ELECTRICITY EMERGING MARKETS EMPLOYMENT ENFORCEMENT MECHANISMS ENTERPRISE SURVEY ENTERPRISE SURVEYS EQUIPMENT EXPENDITURES EXPORTER FIRM PERFORMANCE FIRM SIZE FIRMS FOREIGN CAPITAL FOREIGN DIRECT INVESTMENT GEOGRAPHIC REGION GOVERNMENT POLICY INCOME INNOVATION INNOVATION ACROSS COUNTRIES INNOVATION PROCESS INNOVATIONS INSTITUTION INSTITUTIONAL FACTORS INSTRUMENT INTELLECTUAL PROPERTY INTELLECTUAL PROPERTY RIGHT INTELLECTUAL PROPERTY RIGHTS INTELLECTUAL RIGHT INTERNATIONAL BANK INVENTION INVENTIONS INVESTING INVESTMENT ACTIVITIES LABOR COSTS LABOR ECONOMICS LABOUR LEGAL SYSTEM LICENSING MACROECONOMIC CONDITIONS MANUFACTURING MARKET SHARE MARKETING MARKETING STRATEGIES MATERIAL MICRODATA NEW PRODUCT NEW PRODUCTS NEW TECHNOLOGIES NEW TECHNOLOGY OPEN ACCESS PERFORMANCE MEASURES PRIVATE SECTOR PRIVATE SECTOR DEVELOPMENT PRODUCT INNOVATION PRODUCTIVITY PROPERTY RIGHT PROPERTY RIGHTS PROPERTY RIGHTS PROTECTION R&AMP;D RATES OF RETURN RESULT RESULTS RETURN RETURNS RULE OF LAW SEES SMALL FIRMS TAX TECHNOLOGICAL INNOVATION TECHNOLOGY TRANSFER TRADE LIBERALIZATION TREATIES WEB WISDOM
Online Access:	http://documents.worldbank.org/curated/en/2014/06/19654205/institutions-firms-return-innovation-evidence-world-bank-enterprise-survey http://hdl.handle.net/10986/18761

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Summary:	This paper poses a question: do firms in developing countries not innovate because they are unwilling to? The question moves away from the conventional focus on the obstacles (such as the lack of access to finance) that hinder firms' innovation ability. The World Bank's Enterprise Survey is used first to estimate the return to firms' innovation across many developing countries, in terms of sales and sales per worker. Then the return to innovation is compared across countries with different levels of institutional quality. In countries with lower institutional quality (specifically, rule of law, regulatory quality, property and patent right protection), the return to firms' innovation is lower. This suggests that poor institutional environment lowers firms' return to innovation and hence discourages them from investing in researching and adopting new products.