A multilevel analysis of innovation in developing countries

Martin Srholec


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