TY - JOUR
T1 - The primacy of demand and financial obstacles in hindering innovation
AU - Zahler, Andrés
AU - Goya, Daniel
AU - Caamaño, Matías
N1 - Funding Information:
This paper is part of the research project ‘Assessing the Impacts of Market Failures on Innovation in LAC Countries’, led and financed by the Competitiveness, Technology, and Innovation Division of the Inter-American Development Bank (IDB). The information and opinions presented here are entirely those of the authors and do not necessarily reflect the views of the IDB, its board of executive directors, or the countries they represent. The authors would like to thank Maria Savona, Fabrice Galia, Gustavo Crespi, Jocelyn Olivari and participants at MEIDE 2017, the 17 th International Schumpeter Society Conference, the Second IDB-CIECTI conference, Globelics 2018 as well as seminar participants at Pontificia Universidad Católica de Valparíso, Universidad Adolfo Ibáñez, Universidad de Talca and Pontificia Universidad Católica de Chile and two anonymous reviewers for their helpful suggestions. We would like to thank Ignacio Urrea for his excellent research assistance. All remaining errors are our own.
Publisher Copyright:
© 2021 Elsevier Inc.
PY - 2022/1
Y1 - 2022/1
N2 - We study the effects of different types of obstacles to innovation on the probability of obtaining different firm-level innovation outcomes. We consider financial, knowledge, cooperation, regulatory and demand-related obstacles, which we separate into two categories: market structure and lack or uncertainty about demand. Using a pooled sample of four Chilean innovation surveys and an instrumental variables approach novel to this literature to address endogeneity, we find that only demand and financial barriers seem to have a negative effect on the probability of generating innovations. When financial or demand barriers are present, they seem to be binding and take prevalence over all other obstacles, and when they are absent, other barriers become significant. We provide evidence of heterogeneous effects on different sectors, considering not only manufacturing and services but also primaries, a comparison that has not been previously conducted and holds relevance for developing economies. We show that knowledge obstacles are relevant to manufacturing and market structure and regulatory obstacles are relevant in the services sector, while demand and financial obstacles appear to matter across the board. The pervasiveness of financial and demand obstacles, their relationship with the remaining barriers, and the observed sectoral differences have important policy implications.
AB - We study the effects of different types of obstacles to innovation on the probability of obtaining different firm-level innovation outcomes. We consider financial, knowledge, cooperation, regulatory and demand-related obstacles, which we separate into two categories: market structure and lack or uncertainty about demand. Using a pooled sample of four Chilean innovation surveys and an instrumental variables approach novel to this literature to address endogeneity, we find that only demand and financial barriers seem to have a negative effect on the probability of generating innovations. When financial or demand barriers are present, they seem to be binding and take prevalence over all other obstacles, and when they are absent, other barriers become significant. We provide evidence of heterogeneous effects on different sectors, considering not only manufacturing and services but also primaries, a comparison that has not been previously conducted and holds relevance for developing economies. We show that knowledge obstacles are relevant to manufacturing and market structure and regulatory obstacles are relevant in the services sector, while demand and financial obstacles appear to matter across the board. The pervasiveness of financial and demand obstacles, their relationship with the remaining barriers, and the observed sectoral differences have important policy implications.
KW - demand for innovation
KW - financial and demand barriers to innovation
KW - innovation obstacles
KW - instrumental variables
KW - sectoral heterogeneity
UR - http://www.scopus.com/inward/record.url?scp=85118484681&partnerID=8YFLogxK
U2 - 10.1016/j.techfore.2021.121199
DO - 10.1016/j.techfore.2021.121199
M3 - Article
AN - SCOPUS:85118484681
VL - 174
JO - Technological Forecasting and Social Change
JF - Technological Forecasting and Social Change
SN - 0040-1625
M1 - 121199
ER -