Innovation, Competition, and Incentives: Evidence from Uruguayan Firms

Ramiro de Elejalde, Carlos J. Ponce () and Flavia Roldán
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Carlos J. Ponce: Departamento de Economía, Universidad Alberto Hurtado

ILADES-UAH Working Papers from Universidad Alberto Hurtado/School of Economics and Business

Abstract: Using a sample of manufacturing firms in Uruguay, this paper studies the eect of product market competition on innovative activities, labor practices and the provision of incentives within firms. Our estimates show that a higher level of product market competition: (i) decreases innovative expenditures, (ii) increases the number of innovations per dollar spent on innovative activities, and: (iii) leads firms to implement incentive payment schemes based on employee performance. These results suggest that, in developing economies, firms react to a higher level of product market competition by providing internal incentives that ultimately lead to significant increases in the productivity of their innovative outlays.

Keywords: Competition; Innovation; Innovative Productivity; Incentives. (search for similar items in EconPapers)
Pages: 27 pages
Date: 2019-03
New Economics Papers: this item is included in nep-com, nep-cse, nep-lam, nep-tid and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:ila:ilades:inv328

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