What Determines Firm's Innovation? The Case of Catching-up CEE Countries

Abstract

Purpose: The purpose of the paper is to recognize significant innovation determinants on firms' product, process, and overall innovation activity. Methodology/Approach: The source of data for the analysis is the Community Innovation Survey 2012-2014. If the company has implemented the relevant innovation activity, they acquire a value of 1, or, if the company has not performed a certain activity in the period, they reached 0. As the variables are binary, the logistic regression analysis was used. Findings: Based on the results from the analysis, we defined the proper determinants of firms' innovation activities but unfortunately, firms are not able to achieve innovative outputs, specifically within CEE countries. This is due, among other things, to several factors such as different conditions in individual countries, different innovation policies at the national as well as company level, managerial approach (aversion) to risk, mistrust between the various actors, and many others. A typical example is the impact of internal R&D on firm innovations. While in the case of product innovations we found a significant positive impact, in the case of process innovations the impact was negative Research Limitation/Implication: We performed on outdated data and we did not make a comparison with countries from Western Europe.