Institutional Parameters of Innovating vs. Non-innovating Firms

Inga Stankevice, Giedrius Jucevicius


The paper, entitled Institutional Parameters of Innovating vs. Non-innovating Firms, is aimed at identifying institutional parameters, which enable to explain a spectrum of innovating and non-innovating firms at a national level. The previous research has indicated a number of institutional features which affect innovativeness of firms; however, it has largely remained either over generalized in respect of definition of the institutional factors or too fragmented in respect of the amount of analyzed sectors and/or countries at a time. In this paper, the institutional parameters are extracted from the Institutional Profiles Database 2009, which covers 123 countries and 368 variables, thus ensuring a large sample, which represents the greater part of the whole population, and a great variety of concrete institutional indicators. The sample firms cover 12 different sectors, which represent core target population of Community Innovation Survey 2008, and 19 additional sectors; thus, the paper is not confined to the insularity in terms of neither sectors nor countries.In order to extract the major distributive institutional variables, exploratory factor analysis is implemented. Then, the assessed model is confirmed in a smaller sample of the countries. For this purpose, confirmatory factor analysis is employed. Finally, the distributions of the countries by the distinguished institutional parameters and the extent of firm innovativeness are compared. The findings, obtained due to hierarchical cluster analysis and comparative qualitative analysis, lead to a conclusion that the distinguished models of institutional parameters generally repeat the patterns of the distribution of the countries by the spectrum of innovating and non-innovating firms within them. In addition, the distribution by the number of firms with suspended or abandoned innovation supports the assessed patterns by connecting countries-outliers with those which firmly correspond to the patterns. Countries with significantly different amounts of innovators and non-innovators are characterized by different qualities of synergies between the extent of the rule of law, extent of decentralization, degree of focus on public interest, transparency of capital and labor market, practical quality of education, and quality of free operation of capital markets. In addition, each of these institutional factors is broken down into certain institutional parameters.The paper is written by Prof. Giedrius Jucevicius (e-mail:, Head of the Department of Strategic Management, and Inga Stankevice (e-mail:, PhD candidate and Junior Research Assistant, Kaunas University of Technology, Kaunas, Lithuania. The paper draws on the project The Innovation Strategies of Organizations in the Emerging Economic-Institutional Environment (agreement No MIP024/12), sponsored by the Research Council of Lithuania.Keywords: Institutional Parameters, Innovativeness, Firms

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