Innovation is a multilevel phenomenon. Not only characteristics of firms
but also environment within which firms operate matter. Although this
has been for long recognized in the literature, a quantitative test that
explicitly concerns the hypothesis that framework conditions affect
innovativeness of firms remains lacking. Using a large sample of firms
from many developing countries, we estimate a multilevel model of
innovation that integrates explanatory factors at different levels of
the analysis. Apart from various firm’s characteristics, national
economic, technological and institutional conditions directly predict
the likelihood of firms to innovate.
Key words: Innovation, technological capability, multilevel modeling, institutions, developing countries.
JEL codes: C30, E11, O30
UNU-MERIT Working Papers ISSN 1871-9872