Innovation Cooperation as a Crucial Source of Firms' External Knowledge

Abstract

Hand in hand with the growing importance of the concept of open innovation, firms are increasingly forced to look for new external knowledge that would support their innovation. Cooperation with various partners across the public and private sectors is thus one of the key determinants of successful innovation nowadays. However, concepts aimed at sharing knowledge and creating innovation together may not always be successful, specifically within Central and Eastern European (CEE) countries. For example, in comparison with Western countries. It is due to the fact, that CEE countries have undergone different historical developments and are often burdened by insufficient absorption capacity. Therefore, this paper analyses the importance of cooperation with various partners on firms´ process innovation within CEE countries, as a crucial source of firms´ external knowledge. Especially, we focus on the Czech Republic, Slovak Republic, and Estonia. In comparison with previous studies, we propose two step approach, while we firstly examine influence of various types of cooperation on firm’s innovation in each country. In the second step, use aggregate datasets of firms across selected CEE counties and perform the same analyses. As a data source, we are using the latest available Community Innovation Survey provided by Eurostat. The results of our study show that cooperation with other enterprises within enterprise group and cooperation with suppliers of equipment, materials, components, or software have a significant positive impact on Czech and Slovak firms as well as on the aggregated dataset of CEE countries. On the other hand, Estonian firms benefit from cooperation with competitors or other enterprises in sector and with universities or other higher education institutes. Surprisingly, we show that in the case of Estonia, cooperation with consultants or commercial labs has a negative influence on firms´ process innovation. Moreover, results for aggregated datasets of CEE counties has proved a negative effect of cooperation with government, public or private research institutes and with universities or other higher education institutes on firms´ process innovation. Based on these results, we propose several implications for innovating firms´ in each country as well as for other CEE countries.