Financial and knowledge barriers to innovation: Complementary and substitution effects on innovative effort

Micaela Vidal Jaureguy, Carlos Bianchi and Pablo Blanchard

Research Policy, 2023, vol. 52, issue 7

Abstract: Innovation studies have thoroughly analysed how firms' perception of barriers affects their innovative behaviour. We contribute to this line of research by analysing complementary and substitution effects between financial barriers, internal knowledge barriers and external knowledge barriers on firms' innovative effort. Using a panel data set of Uruguayan firms between 2006 and 2015, we add to empirical studies on this topic by estimating both unconditional and conditional complementary and substitution effects between these innovation barriers. We apply an econometric two-step specification that includes an estimation of instrumental variables, which allows us to control for endogeneity biases in the supermodularity and submodularity tests. We find significant evidence that external and internal knowledge barriers reinforce each other's effects (complementary effects), conditional on the absence of financial barriers. We also find that financial and internal knowledge barriers mitigate each other's effects (substitution effects) conditional on the firm's perception of external knowledge barriers. Additionally, we find substitution effects between financial and external knowledge barriers, conditional on the firm's perception of internal knowledge barriers. We discuss these results against the backdrop of Uruguayan innovation policies during the period studied, and stress the necessary articulation between instruments that will help strengthen firms' innovation management to recognize and manage innovation barriers.

Keywords: Innovation barriers; Complementarity and substitution; Innovation policy; Latin America (search for similar items in EconPapers)
JEL-codes: D22 D83 L25 O32 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0048733323000987
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:respol:v:52:y:2023:i:7:s0048733323000987

DOI: 10.1016/j.respol.2023.104814

Access Statistics for this article

Research Policy is currently edited by M. Bell, B. Martin, W.E. Steinmueller, A. Arora, M. Callon, M. Kenney, S. Kuhlmann, Keun Lee and F. Murray

More articles in Research Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().