Innovation inputs and efficiency: manufacturing firms in Sub-Saharan Africa

L. Barasa, P. Vermeulen, J. Knoben, B. Kinyanjui, P. Kimuyu

Research output: Contribution to journalArticleScientificpeer-review

41 Citations (Scopus)

Abstract

Purpose
Countries in Africa have a common goal policy of industrialisation that is expected to be driven by investing in innovation that yields efficiency. The purpose of this paper is to investigate the technical efficiency effects arising from innovation inputs including internal R&D, human capital development (HCD), and foreign technology adoption in manufacturing firms in Africa.

Design/methodology/approach
This study uses cross-sectional firm-level survey data from the 2013 World Bank Enterprise Survey and the linked 2013 Innovation Follow-up Survey. A heteroscedastic half-normal stochastic frontier is used for analysing the technical efficiency effects of innovation inputs of 418 firms.

Findings
This study reveals that internal R&D, and foreign technology have negative effects on technical efficiency. Notwithstanding, the combination of foreign technology and internal R&D, and foreign technology and HCD reinforce each other’s effects on technical efficiency.

Practical implications
This study provides evidence that whereas individual innovation inputs may not yield positive efficiency outcomes, the combination of absorptive capacity enhancing inputs comprising internal R&D and HCD with foreign technology is vital for enhancing technical efficiency in manufacturing firms in Africa. This study offers important lessons for managers in manufacturing firms in Africa.

Originality/value
This study is virtually the first to investigate the relationship between innovation inputs and efficiency in Africa. This study demonstrates that investing in foreign technology in isolation from absorptive capacity enhancing innovation inputs diminishes efficiency. HCD and internal R&D are imperative for building absorptive capacity that enhances efficiency outcomes arising from foreign technology.
Original languageEnglish
Pages (from-to)59-83
JournalEuropean Journal of Innovation Management
Volume22
Issue number1
DOIs
Publication statusPublished - Jan 2019
Externally publishedYes

Keywords

  • Africa
  • manufacturing
  • technical efficiency
  • R&D
  • human capital development
  • foreign technology adoption

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