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  • Author: Zoran Aralica x
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Innovation Propensity in Croatian Enterprises: Results of a Community Innovation Survey

This paper assesses the determinants of innovation activities in Croatian enterprises and their implications for innovation policy. A Type-2 Tobit model is used for modelling the innovation behaviour of Croatian companies, based on the results of a Community Innovation Survey conducted for the period 2001-2003. This model identified the positive effects of conditions for enterprise growth (enterprise size and demand pull variable) and the integration of enterprises into international flows of capital and goods (through foreign direct investments) as well as R&D activities. These variables can be tackled through a more effective policy framework that should increase competitiveness within industries in order to stimulate the demand for innovation. The focus should be on fostering enterprise growth, attraction of FDI with strong spillover effects, and stimulating the export capability of enterprises. Only in such a context can the positive effects of engagement in R&D be maximised.

Abstract

Institutional reforms in the countries of Central Eastern and South Eastern Europe (CESEE) brought about a redefinition of the role of the state, the market and the business sector. We assess the effects of various dimensions of the institutional environment on the labour productivity of manufacturing firms in selected CESEE countries by employing a multilevel model. Our findings reveal that the curbing of corruption and the provision of inter-industrial externalities through the development of a commercial and professional infrastructure have beneficial effects on firm productivity. At the same time, a stricter political and legal framework and the provision of R&D infrastructure have an adverse effect. Such a finding is typical for producers of standardised products in countries with low levels of legal framework development for which R&D and legal adjustments incur cost disadvantages. The implication is that institutional development should be accompanied by a strengthening of firms’ absorptive capacity in order for businesses to benefit from such changes