Innovation and Firms’ Performance in the Rwandese Manufacturing Industry: A Firm-Level Empirical Analysis

Abstract

The main objectives of this paper are: (i) determining the factors that support Rwandese manufacturing firms' engagement in innovative activities; (ii) assessing the effects of innovation decisions on innovation performance of Rwandese manufacturing firms; and (iii) evaluating the impact of innovations on the financial performance of Rwandese manufacturing firms. To address these objectives, the study uses a structural multi-stage framework as proposed by Crépon et al. (Econ Innov New Technol 7(2):115-158 1998). The study uses data from the 'World Bank Enterprise Survey: Rwanda 2006' and draws three main conclusions: (i) product innovations are positively linked to process innovations, that is, firms which engage in process innovations also introduce new or improved products in the market; (ii) for innovation output, the 'international quality recognition' is not linked to a firm's engagement with innovations; instead it is linked to the use of technology licensed from foreign firms; and (iii) 'international quality recognition' is the main determinant of a firm's financial performance.