Effectiveness of Business Innovation and R&D in Emerging Economies: The Evidence from Panel Data Analysis

Abstract

The problems of management and optimization of business innovative effort seem to be of vital importance in the contemporary economics, especially in the period of global economic slowdown. This paper is the continuation of research work aiming to assess, on the basis of estimation of transformation of Cobb-Douglas production function the effectiveness of various types of business innovation expenditures of manufacturing enterprises located in Poland. The survey is based on data obtained from public statistics (The Central Statistical Office). The econometric estimations presented in the paper are based on the total sample of maximum 191 firms permanently (every year in the time series) active in the field of R&D over the observed 10 year period between 2000 and 2009. The estimations are based on the relative EBITD growth as dependent variable. Independent variables including various categories of innovation expenditure plus non innovative capital expenditure relative to sales and relative employment growth were lagged from 0 to 6 years. The study revealed strong variation in terms of effectiveness of various categories of innovative expenditure and relatively strong and consistently positive lagged random effects (RE) of both internal and external R&D expenditure. This, together with other findings, might suggest that positive effects of business R&D are mostly associated with specific time-invariant individual characteristics of business units.