How the innovation-competition link is shaped by technology distance in a high-barrier catch-up economy

Publication date: Available online 20 March 2019Source: TechnovationAuthor(s): Evguenia Bessonova, Ksenia GoncharAbstractThe paper studies the effects of competition on innovation in various technology groups of mature Russian manufacturing firms. The purpose of the research is to establish whether more intense competition is good or bad for innovation, and to learn how the response to competition varies between technology leaders, followers and laggards.The study uses the 2014 survey data, which includes 1920 manufacturing firms from 19 sectors and size groups between 10 and 10,000 employees. The finding is that commitment to product innovation increases with competition at a modest level of competitive pressure, especially if foreign entry and import are considered. However, this result is mostly driven by technologically weak plants, which innovate less than leaders and followers at a low level of competition, but are encouraged to innovate more by a modest increase of competitive pressure, when theoretically predicted optimal behavior would be to refrain from innovation. When competition is strong, plants in all technology groups give up the innovation race. Competition is less influential in explaining process (as opposed to product) innovation, and the findings demonstrate a clear inverted U-shaped link: laggards and leaders are more likely to upgrade process technologies when weak competition increases slightly, and are less likely to do so when strong competition beco...

Source: Technovation - March 21, 2019 Category: Science Source Type: research