The role of innovation and management practices in determining firm productivity in developing economies
Wiebke Bartz, Pierre Mohnen & Helena Schweiger
#2016-034
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.
JEL Classification: M21, O12, O32
Keywords: innovation, management practices, productivity, developing
countries