Dataset for Determinants of Firm Innovation Strategy
Description
The objective of this study is to examine the determinants of firm innovation strategy in low-resource settings. Consequently, the gaps in the literature highlighted the need to address the following questions: what strategies do product-innovating firms adopt? and what are the key determinants for these strategies? The study hypothesis include: Hypothesis 1a: Research and Development is positively associated with the probability of adopting the (a) make, and (b) ally innovation strategy. Hypothesis 1b: Replacement of outdated products is positively associated with the probability of adopting the (a) make, (b) buy, and (c) imitate innovation strategy. Hypothesis 2a: Firm age is negatively associated with the probability of adopting the (a) make, and (b) imitate innovation strategy. Hypothesis 2b: Firm export status is positively associated with the probability of adopting the make innovation strategy. Hypothesis 2c: Firm size is positively associated with the probability of adopting the (i) make, (ii) buy, and (iii) ally innovation strategies Hypothesis 3: Lack of absorptive capacity is negatively associated with the probability to adopt the (a) make, and (b) imitate innovation strategy. The results indicate that the strategies firms adopt in low-resource settings vary with expenditures on innovation activities, firm characteristics, and the objectives of product innovation. Specifically, firms are likely to adopt the “Make” innovation strategy when expenditure is channeled to external R&D and the acquisition of machinery. Internal R&D has no significant observable effect on any of the strategies adopted by product-innovating firms. However, older firms are less likely to adopt the "Make" innovation strategy, while firms lacking internal technical expertise rely on the "Buy" and "Imitate" innovation strategies. Moreover, firms are less likely to adopt the “Ally” and “Imitate” innovation strategies if their close competitors are sources of information for innovation.
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The analysis draws on an innovation survey dataset based on the Oslo manual guidelines collected from Uganda’s business enterprise sector for the period 2011-2014. The questionnaire, the sample selection and data collection methods are benchmarked on the community innovation survey (CIS). The survey data used in the empirical analysis allows us to include many of the dimensions identified in the theoretical literature to explain the determinants of a firm’s decision to innovate and determine the optimal choice of innovation strategy. The survey targeted business enterprises in the industry and services sectors, with a total population of 6,475 businesses. From this pool, a sample of 705 businesses employing 10 or more individuals was selected. Out of the 705 businesses surveyed, 533 responded, resulting in a response rate of 75.6%. The product-innovative businesses, defined as those that reported to have introduced new or significantly improved goods over three years, accounted for 59.7%. Stratified random sampling based on firm size and International Standard Industrial Classification (ISIC) categorization was the sampling technique adopted. The study analyses the firm’s innovation strategy following the Audretsch & Belitski, (2020) approach. This approach is a modification of the Crepon et al. (1998) model of firm innovation and productivity. The study expands on Audretsch and Belitski’s three innovation strategies (make, buy, ally) by introducing a fourth strategy (imitate). The study focuses on the innovation strategy adopted by product innovative firms. The four innovation strategies are as follows: Make, Ally, Buy, and Imitate. The Make innovation strategy is when a product innovation is developed mainly by the firm or enterprise group. The Ally innovation strategy is used when the firm develops a product innovation with other enterprises. The Buy innovation strategy is adopted when other firms develop a product innovation and the Imitate innovation strategy is used when a product innovation is developed by adapting or modifying innovations originally developed by other firms. Data was generated using STATA 15 software package.