Does economy wide knowledge spillover determine firm level process innovation

Purpose - The purpose of this study is to see how the economy-wide spillover effect affects company process innovation. Design/methodology/approach - To account for national differences, the current study used a hierarchical model. Findings - The findings of this study show that knowledge spillover is related to and influences the innovation process of businesses. Only a level two study that takes into account country-specific differences may reveal this. The current work uses a hierarchical model to try to capture knowledge spillover. Furthermore, the findings suggest that medium and large businesses, as well as businesses conducting research and development (R&D), are more inventive than small businesses and firms not conducting R&D. Furthermore, female-owned businesses are more likely than their male counterparts to innovate their processes. Originality/value - This study is unique in that it makes predictions about how businesses innovate (behave) based on firm-level characteristics, or macroeconomic structure, without sacrificing information and variance. Furthermore, this study attempts to solve the difficulty of prior empirical research’s single-level analysis and cross-level inference. The research is based on data from the 2019 World Bank regular Enterprise Survey, which includes 18,148 businesses from 38 countries.