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Innovation, Competition, and Incentives: Evidence from Uruguayan Firms

Author

Listed:
  • Ramiro de Elejalde

    (Departamento de Economía, Universidad Alberto Hurtado)

  • Carlos J. Ponce

    (Departamento de Economía, Universidad Alberto Hurtado)

  • Flavia Roldán

    (Universidad ORT Uruguay)

Abstract

Using a sample of manufacturing firms in Uruguay, this paper studies the eect of product market competition on innovative activities, labor practices and the provision of incentives within firms. Our estimates show that a higher level of product market competition: (i) decreases innovative expenditures, (ii) increases the number of innovations per dollar spent on innovative activities, and: (iii) leads firms to implement incentive payment schemes based on employee performance. These results suggest that, in developing economies, firms react to a higher level of product market competition by providing internal incentives that ultimately lead to significant increases in the productivity of their innovative outlays.

Suggested Citation

  • Ramiro de Elejalde & Carlos J. Ponce & Flavia Roldán, 2019. "Innovation, Competition, and Incentives: Evidence from Uruguayan Firms," ILADES-UAH Working Papers inv328, Universidad Alberto Hurtado/School of Economics and Business.
    • Handle: RePEc:ila:ilades:inv328
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    Keywords

    Competition; Innovation; Innovative Productivity; Incentives.;
    All these keywords.

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