Innovation complementarities in small and micro-enterprises in Johannesburg, South Africa

Godfrey Kamutando () and Fiona Tregenna ()
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Godfrey Kamutando: DSI/NRF South African Research Chair in Industrial Development, University of Johannesburg and Policy Research in International Services and Manufacturing (PRISM), University of Cape Town.
Fiona Tregenna: DSI/NRF South African Research Chair in Industrial Development and Department of Economics, University of Johannesburg.

No 2022-07, SARChI-ID Working Papers from SARChI Industrial Development (SARChI-ID), University of Johannesburg (UJ)

Abstract: Innovation is important to firms’ productivity, competitiveness, agility, resilience and growth. The success of a firm’s innovation strategy depends in part on how it combines and absorbs different innovation activities. This paper analyses complementarity between various innovation activities, for the case of small and micro manufacturing firms in Johannesburg, South Africa. Specifically, we analyse the extent and determinants of complementarity between types of innovation (product and process innovation) and between innovation sources (internal and external innovation). The empirical analysis utilises rich new firm-level survey data which, unlike most firm surveys, includes micro as well as informal enterprises. This contributes to the innovation complementarity literature that is very limited in the African context, and even internationally only sparsely covers small and micro firms, and informal firms. We extend the specifications used in previous studies to take account of the contextual setting. Our results show complementarity between product and process innovations but not between internal and external innovation. The results suggest that the capital intensity of the firm, firm age, ownership, research and development (R&D), main markets and financial constraints are key variables associated with complementarity.

Keywords: Innovation complementarities; product innovation; process innovation; research and development (R&D); small and micro-enterprises; South Africa (search for similar items in EconPapers)
JEL-codes: D22 L60 O14 O30 O32 O33 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2022-05, Revised 2022-05
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