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The role of innovation and management practices in determining firm productivity in developing economies

Wiebke Bartz (), Pierre Mohnen () and Helena Schweiger
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Wiebke Bartz: Centre for Development Finance, Frankfurt School of Finance and Management

No 34, MERIT Working Papers from United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT)

Abstract: In this paper, we compare the impacts of management practices and innovation on productivity, using data from a unique firm-level survey covering 30 mostly developing countries in Eastern Europe and Central Asia in the period 2011-2014. We adapt the well-established three-stage model by linking productivity to innovation activities and management practices. Results suggest that both returns to innovation and returns to management practices are important drivers of productivity in developing economies. However, productivity in lower-income economies is affected to a larger extent by management practices than by innovation while the opposite holds in higher-income economies. These results imply that firms operating in less favourable business environments can reap large productivity gains by improving the quality of management practices, before engaging in innovation through imitating and adapting foreign technologies.

Keywords: innovation; management practices; productivity; developing countries (search for similar items in EconPapers)
JEL-codes: M21 O12 O32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-cse, nep-cwa, nep-ger, nep-ino, nep-sbm, nep-tid and nep-tra
Date: 2016-06-16
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Persistent link: https://EconPapers.repec.org/RePEc:unm:unumer:2016034

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