Institutions, Resources and Innovation in Developng Countries: A Firm Level Approach

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

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    This study examines how firm-level resources interact with regional institutional quality to explain innovation in developing countries. We hypothesize that the institutional environment within which the firm operates moderates the effect of firm-level resources on innovative output. We examine the moderating role of institutions with regards to the transformation of firm-level resources including internal research and development, employee level of education and quality certification into innovative output using firm-level data from the World Bank Enterprise Survey and the Innovation Follow-up Survey that includes the innovation module for the years 2010 through 2012. We test our hypotheses using a multilevel logistic model. We find that the effects of firm-level resources vary depending on the institutional environment and that regional institutional quality positively moderates the effects of the firm-level resources. The positive effects of internal research and development on innovative output are substantially reinforced by regional institutional quality.
    Original languageEnglish
    Place of PublicationTilburg
    PublisherTilburg University
    Number of pages38
    Publication statusPublished - Dec 2014

    Publication series

    NameDFID Working Paper


    • firm-level resources
    • regional institutional quality
    • innovative output
    • developing countries
    • multilevel logistic model


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