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Innovation strategies and productivity growth in developing countries: Firm-level evidence from Pakistani manufacturers

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  • Wadho, Waqar
  • Chaudhry, Azam

Abstract

We examine the determinants of product, process, and organizational innovations, and their impact on firm labor productivity using data from a unique innovation survey of firms in Pakistan. We find significant heterogeneity in the impact of different innovations on labor productivity: Organizational innovation has the largest effect followed by process innovation. But unlike much of the literature, we found a negative impact of product innovation suggesting a disruption effect of new products. We find a strong impact of engaging in knowledge creation on product and process innovation. We also find that external knowledge networks and innovation cooperation play no significant role in firms’ decision to engage in innovation and its intensity, however, vertical linkages with suppliers (clients) promote product (process) innovations. Foreign competition has a negative effect on product innovation and a positive effect on organizational innovation. Exposure to foreign markets both in term of exporting and quality standard certification leads to better innovation performance.

Suggested Citation

  • Wadho, Waqar & Chaudhry, Azam, 2022. "Innovation strategies and productivity growth in developing countries: Firm-level evidence from Pakistani manufacturers," Journal of Asian Economics, Elsevier, vol. 81(C).
    • Handle: RePEc:eee:asieco:v:81:y:2022:i:c:s1049007822000422
    DOI: 10.1016/j.asieco.2022.101484
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    Cited by:

    1. Wadho, Waqar & Chaudhry, Azam, 2024. "Measuring process innovation outputs and understanding their implications for firms and workers: Evidence from Pakistan," Technovation, Elsevier, vol. 136(C).
    2. Ahmed Pirzada & Aadil Nakhoda & Saihan Mohammad & Sarah Javaid, 2024. "Pakistan and the rest: A tale of dismal productivity growth, misallocation, and missing transformation," Bristol Economics Discussion Papers 24/778, School of Economics, University of Bristol, UK.
    3. Wang, Hongxia & Li, Ming & Wang, Zhiru & Deng, Wenyueyang & Zhang, Zenglian, 2024. "Technological innovation strategies of information and communication technology enterprises: A comparative study of China, US, and Europe," Finance Research Letters, Elsevier, vol. 61(C).
    4. Sarker Jewel & Jongyi Hong & Chaechang Im, 2022. "Innovation Strategies for Textile Companies in Bangladesh: Development Using Quadrant Analysis Based on a Productivity Index," Sustainability, MDPI, vol. 14(24), pages 1-15, December.

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    More about this item

    Keywords

    Technological innovation; Organizational innovation; Labor productivity; Developing countries; Low-tech industries; CDM model; Pakistan; Textiles & apparel;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L67 - Industrial Organization - - Industry Studies: Manufacturing - - - Other Consumer Nondurables: Clothing, Textiles, Shoes, and Leather Goods; Household Goods; Sports Equipment
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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