External Knowledge and Technology Acquisition and Firm Innovation Performance in CEE Countries

Abstract

In today's globalized world, for firms to keep up with the competition and make ever greater profits, innovation is essential. Therefore, firms are looking for new ways to innovate as efficiently and quickly as possible, at the lower or same costs. Knowledge is seen as the critical determinant of successful innovation because it could lead to knowledge spillover effects. These occur inside as well as outside the firm boundary, depending on several different factors. These are, for example, the openness of firms, absorptive capacity, firm policy in protecting internal know-how, and many others. Similarly, the acquisition of external technologies was recognized as an essential method to create innovations and achieve higher economic returns. Therefore, in the era of open innovation, the ability of firms to effectively use external resources (knowledge and technology) is crucial, especially in the countries of Central and Eastern Europe (CEE). These countries have not always been able to benefit from external knowledge sources successfully and thus lag behind other European countries, among other things, in the areas of innovation and competitiveness. It is since CEE countries have faced (in comparison with Western European countries) to several challenges. For example, the worse technological equipment of companies, less advanced research and innovation systems and networks, lower trust, entrepreneurial skills, and spirit, due to the broken entrepreneurial tradition. Therefore, this article aims to analyze the influence of external knowledge and technology acquisition on firms' product and process innovation performance within selected CEE countries. Namely, we focus on the Czech Republic, Slovakia, and Poland. For this study, we are using our own binary logistic regression models and data provided by the World Bank – the latest available Enterprise Survey 2019. The results of our research will provide several practical implications for firms and public policymakers in selected countries, but also in other CEE countries.