What drives firms to innovate? Empirical evidence from firm-level cross-country data
By: Raihan, Selim Uddin, Mahtab and Khan, Farhan
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Material type: 
BookPublisher: The Indian Journal of Labour Economics Description: 68(4), Oct-Dec, 2025: p.1187-1208.Subject(s): Product Innovation, Process Innovation, Market Innovation, Factors affecting innovations World Bank Enterprise Survey
In:
The Indian Journal of Labour EconomicsSummary: We examine the factors influencing firms’ decision to innovate, where innovations are defined as: (i) process innovation, (ii) product innovation, (iii) market innovation, and (iv) a combination of these innovations. We use the World Bank Standardised Enterprise Survey (WB-SES) data 2019, which provides firm-level microdata on 82,497 firms from 142 countries covering 51 sectors. Using least square dummy variable (LSDV) estimation and controlling for country-, year-, and sector-fixed effects, we find that factors such as export orientation, firm size, competition in the domestic (informal) market, training of the workers, and top female managers positively influence firms’ decision to innovate. Furthermore, we find a significant inverse U relationship between institutional variables such as bribes, quality of bureaucracy, and political instability, on a firm’s decisions to innovate.-Reproduced
https://link.springer.com/article/10.1007/s41027-025-00594-w
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Articles
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Indian Institute of Public Administration | 68(4), Oct-Dec, 2025: p.1187-1208 | Available | AR138507 |
We examine the factors influencing firms’ decision to innovate, where innovations are defined as: (i) process innovation, (ii) product innovation, (iii) market innovation, and (iv) a combination of these innovations. We use the World Bank Standardised Enterprise Survey (WB-SES) data 2019, which provides firm-level microdata on 82,497 firms from 142 countries covering 51 sectors. Using least square dummy variable (LSDV) estimation and controlling for country-, year-, and sector-fixed effects, we find that factors such as export orientation, firm size, competition in the domestic (informal) market, training of the workers, and top female managers positively influence firms’ decision to innovate. Furthermore, we find a significant inverse U relationship between institutional variables such as bribes, quality of bureaucracy, and political instability, on a firm’s decisions to innovate.-Reproduced
https://link.springer.com/article/10.1007/s41027-025-00594-w
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