Assessing the Impacts of Market Failures on Innovation Investment in Uruguay

Authors

  • Daniel Bukstein Unidad de Evaluación y Monitoreo, Agencia Nacional de Investigación e Innovación and Facultad de Administración y Ciencias Sociales, Universidad ORT Uruguay,
  • Elisa Hernández Unidad de Evaluación y Monitoreo, Agencia Nacional de Investigación e Innovación
  • Ximena Usher Unidad de Evaluación y Monitoreo, Agencia Nacional de Investigación e Innovación

DOI:

https://doi.org/10.4067/S0718-27242019000400137

Keywords:

CDM model, financial and non-financial barriers to innovation, innovative firms, Uruguay

Abstract

This paper analyzes the effects of financial and nonfinancial obstacles to innovation on Uruguayan firms. We contribute to the literature by including the role of systemic and institutional factors affecting the different stages of the innovation process. The empirical analysis is based on four waves of national innovation surveys covering firms in the industry and services sector. In line with recent studies, we confine our analysis to the relevant sample of potentially innovative firms. Our results show that market, financial, knowledge, and context obstacles are the most important factors reducing innovation propensity and the amount invested in innovation activities. The effects are similar for firms in the industry and services sectors. We do not find evidence that institutional factors hamper innovation. Investment in equipment and investment in R&D and other intangible activities are affected differently by obstacles. On the other hand, innovation outcomes are affected mainly by financial and market-related barriers. We do not find evidence that obstacles to innovation have a significant impact on labor productivity.

Downloads

Download data is not yet available.

Metrics

Metrics Loading ...

References

Aboal, D. et al. 2015. Innovación en Uruguay: Diagnóstico y propuestas de política. Working paper No. 12. Montevideo, Uruguay: CINVE.

Álvarez, R., and G. A. Crespi. 2015. Heterogeneous Effects of Financial Constraints on Innovation: Evidence from Chile. Science and Public Policy 42(5): 711–724. https://doi.org/10.1093/scipol/scu091

Angelelli, P, Luna, F and Suaznabar, C. Agencias latinoamericanas de fomento de la innovación y el emprendimiento: Características y retos futuros. IADB Technical note IDB-TN-1285. http://dx.doi.org/10.18235/0000857

Antonioli, D., A. Marzucchi, and M. Savona. 2017. Pain Shared, Pain Halved? Cooperation As a Coping Strategy for Innovation Barriers. The Journal of Technology Transfer 42(4): 841–864. https://doi.org/10.1007/s10961-016-9545-9

Baldwin, J., and Z. Lin. 2002. Impediments to Advanced Technology Adoption for Canadian Manufacturers. Research Policy 31(1): 1–18. https://doi.org/10.1016/s0048-7333(01)00110-x

Bernheim, R., D. Bukstein, E. Hernández, and X. Usher. 2014. Impacto de los instrumentos de promoción de la innovación orientada al sector productivo. Working Paper No. 7. Montevideo, Uruguay: ANII.

Bianchi, C., M. Bianco, and M. Snoeck. 2014. Value Attributed to STI Activities and Policies in Uruguay. In G. Crespi and G. Dutrénit (eds), Science, Technology and Innovation Policies for Development: The Latin American Experience. Switzerland: Springer International Publishing. https://doi.org/10.1007/978-3-319-04108-7_7

Blanchard, P., J. P. Huiban, A. Musolesi, and P. Sevestre. 2012. Where There Is a Will, There Is a Way? Assessing the Impact of Obstacles to Innovation. Industrial and Corporate Change 22(3): 679–710. https://doi.org/10.1093/icc/dts027

Bond, S., D. Harhoff, and J. Van Reenen. 1999. Investment, R&D and Financial Constraints in Britain and Germany (No. W99/05). London: Institute for Fiscal Studies. https://doi.org/10.1920/wp.ifs.1999.9905

Bukstein, D. et al. 2017. Impacto de los instrumentos de promoción de la innovación orientada al sector productivo. Working paper No. 12. Montevideo, Uruguay: ANII.

Canepa, A., and P. Stoneman. 2007. Financial Constraints to Innovation in the UK: Evidence from CIS2 and CIS3. Oxford Economic Papers 60(4): 711–730. https://doi.org/10.1093/oep/gpm044

Chaminade, C., and C. Edquist. 2006. From Theory to Practice: The Use of the Systems of Innovation Approach in Innovation Policy. In J. Hage and M. Meeus (eds), Innovation, Science, and Institutional Change: A Research Handbook. Oxford: Oxford University Press.

Coad, A., G. Pellegrino, and M. Savona. 2016. Barriers to Innovation and Firm Productivity. Economics of Innovation and New Technology 25(3): 321–334. https://doi.org/10.1080/10438599.2015.1076193

Crépon, B., E. Duguet, and J. Mairesse. 1998. Research, Innovation and Productivity: An Econometric Analysis at the Firm Level. Economics of Innovation and New Technology 7(2): 115–158. https://doi.org/10.3386/w6696

Crespi, G., and G. Dutrénit (eds). 2014. Science, Technology and Innovation Policies for Development: The Latin American Experience. Switzerland: Springer International Publishing. https://doi.org/10.1007/978-3-319-04108-7

Crespi, G., and P. Zuniga. 2012. Innovation and Productivity: Evidence from Six Latin American Countries. World Development 40(2): 273–290. https://doi.org/10.1016/j.worlddev.2011.07.010

D’Este, P., S. Iammarino, M. Savona, and N. von Tunzelmann. 2012. What Hampers Innovation? Revealed Barriers Versus Deterring Barriers. Research Policy 41(2): 482–488. https://doi.org/10.1016/j.respol.2011.09.008

D’Este, P., F. Rentocchini, and J. Vega-Jurado. 2014. The Role of Human Capital in Lowering the Barriers to Engaging in Innovation: Evidence from the Spanish Innovation Survey. Industry and Innovation 21(1): 1–19. https://doi.org/10.1080/13662716.2014.879252

Galia, F., and D. Legros. 2004. Complementarities between Obstacles to Innovation: Evidence from France. Research Policy 33: 1185–1199. https://doi.org/10.1016/j.respol.2004.06.004

Galia, F., S. Mancini, S., and V. Morandi. 2012. Obstacles to Innovation and Firms Innovation Profiles: Are Challenges Different for Policy Makers? Erasmus Research Institute of Management, EURAM 12th Conference, Rotterdam, June 6–8. https://doi.org/10.4995/icbm.2015.1287

Griliches, Z. 1979. Issues in Assessing the Contribution of Research and Development to Productivity Growth. The Bell Journal of Economics 10(1): 92–116. https://doi.org/10.2307/3003321

Hall, Bronwyn H. 2002. The Financing of Research and Development. NBER Working Paper 8773. Cambridge, MA: National Bureau of Economic Research. https://doi.org/10.3386/w8773

———. 2008. The Financing of Innovation. In Scott Shane (ed), Handbook of Technology and Innovation Management. Oxford: Blackwell Publishers Ltd.

Himmelberg, C. P., and B. C. Petersen. 1994. R & D and Internal Finance: A Panel Study of Small Firms in High-Tech Industries. The Review of Economics and Statistics, 38–51. https://doi.org/10.2307/2109824

Hottenrott, H., and B. Peters. 2012. Innovative Capability and Financing Constraints for Innovation: More Money, More Innovation? Review of Economics and Statistics 94(4): 1126–1142. https://doi.org/10.1162/rest_a_00227

Iammarino, S., R. Sanna-Randaccio, and M. Savona. 2009. The Perception of Obstacles to Innovation: Foreign Multinationals and Domestic Firms in Italy. Revue d’économie industrielle 125(1): 75–104. https://doi.org/10.4000/rei.3953

Mancusi, M. L., and A. Vezzulli. 2010. R&D, Innovation and Liquidity Constraints. Paper presented at the CONCORD Conference, Seville, March 3–4.

———. 2013. R&D and Credit Rationing in SMEs. Working Paper No. 2013/12. Lisbon: Department of Economics, ISEG, Lisbon School of Economics and Management, Universidade de Lisboa. https://doi.org/10.1111/ecin.12080

Mohan, P., E. Stroble, and P. Watson. 2017. Barriers to Innovation and Firm Productivity in the Caribbean. In S. Donhert, G. Crespi, and A. Maffioli (eds), Exploring Firm-Level Innovation and Productivity in Developing Countries: The Perspective of Caribbean Small States. Washington, DC: Inter-American Development Bank. https://doi.org/10.18235/0000616

Mohnen, P., and J. Rosa. 2001. Les obstacles à l’innovation dans les industries de services au Canada. L'Actualité économique 77(2): 231–254. https://doi.org/10.7202/602351ar

Mundlak, Y. 1978. On the Pooling of Time Series and Cross Section Data. Econometrica 46: 69–85. https://doi.org/10.2307/1913646

Pakes, A., and Z. Griliches. 1984. Patents and R&D at the Firm Level: A First Look. In Z. Griliches (ed), R&D, Patents, and Productivity. Chicago: University of Chicago Press. https://doi.org/10.3386/w0561

Pellegrino, G., and M. Savona. 2017. No Money, No Honey? Financial Versus Knowledge and Demand Constraints on Innovation. Research Policy 46(2): 510–521. https://doi.org/10.1016/j.respol.2017.01.001

Savignac, F. 2008. Impact of Financial Constraints on Innovation: What Can Be Learned from a Direct Measure? Economics of Innovation and New Technology 17(6): 553–569. https://doi.org/10.1080/10438590701538432

Schubert, T. 2010. Marketing and Organizational Innovations in Entrepreneurial Innovation Processes and their Relation to Market Structure and Firm Characteristics. Review of Industrial Organization 36(2): 189–212. https://doi.org/10.1007/s11151-010-9243-y

Segarra-Blasco, A., J. García-Quevedo, and M. Teruel-Carrizosa. 2008. Barriers to Innovation and Public Policy in Catalonia. International Entrepreneurship and Management Journal 4(4): 431–451. https://doi.org/10.1007/s11365-008-0086-z

Solow, R. M. 1957. Technical Change and the Aggregate Production Function. Review of Economics and Statistics 39: 312–320. https://doi.org/10.2307/1926047.

Tourigny, D., and C. D. Le. 2004. Impediments to Innovation Faced by Canadian Manufacturing Firms. Economics of Innovation and New Technology 13(3): 217–250. https://doi.org/10.1080/10438590410001628387

Wooldridge, J. M. (2002). Econometric analysis of cross section and panel data. Cambridge, Mass: MIT Press.

Woolthuis, R. K., M. Lankhuizen, and V. Gilsing. 2005. A System Failure Framework for Innovation Policy Design. Technovation 25(6): 609–619. https://doi.org/10.1016/j.technovation.2003.11.002

Downloads

Published

2019-12-12

How to Cite

Bukstein, D., Hernández, E., & Usher, X. (2019). Assessing the Impacts of Market Failures on Innovation Investment in Uruguay. Journal of Technology Management & Innovation, 14(4), 137-157. https://doi.org/10.4067/S0718-27242019000400137

Issue

Section

Research Articles