Business Groups, Innovation and Institutional Voids in Latin America

Fulvio Castellacci

MPRA Paper from University Library of Munich, Germany

Abstract: The paper presents an empirical analysis of the innovative activities of business groups in Latin America. It compares the innovativeness of group-affiliated firms (GAFs) and standalone firms (SAFs), and it investigates how country-specific institutional factors – financial, legal, and labor market institutions – affect the group-innovation relationship. The empirical analysis is based on the most recent wave of the World Bank Enterprise Survey (period 2010-2011), and it focuses on a sample of 6500 manufacturing firms across 20 Latin American countries. The econometric results point out two major conclusions. First, GAFs are more innovative than SAFs: we estimate the innovation propensity of GAFs to be 9% higher than that of SAFs. Secondly, across countries, the innovativeness of GAFs is higher for national economies with a better institutional system than for countries with a less efficient institutional set up.

Keywords: Business groups; innovation; institutional voids; emerging economies; Latin America (search for similar items in EconPapers)
JEL-codes: D2 L1 L2 M2 O1 O3 O54 P5 (search for similar items in EconPapers)
Date: 2012-09
New Economics Papers: this item is included in nep-ino and nep-lam
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