Determinants of Innovation-based Sustainability in Transition and Developing Economies

Abstract

Technological advancement enhanced by rising competition in a globalising world led to the acceleration of innovation activity. Literature implies that corruption, share of state ownership, and expertise of top management can have a strong influence on firms’ performance and innovation-based sustainability. Using the BEEPS 2012-2014 database, this paper applies cross section analysis to examine this literature implication. Our results imply that larger manufacturing enterprises with experienced top management and international quality assurance certificates that operate in environments with increased corruption levels and competition have higher levels of innovation. In addition, the results show that state ownership is insignificant for innovation activity. In terms of regional analysis, we find that corruption, top management experience, and possession of international quality assurance certificates lead to an increase in product innovation in Balkan and former Soviet countries, while these factors do not create any significant impact on innovation activity within Central European countries. Enterprises faced with fierce competition levels are more innovative in former Soviet and Central European countries than in the Balkans.