The Determinants of Innovation Adoption

Abstract:     
Using a sample of 46,000 EU firms from the Community Innovation Survey, this paper analyses the drivers of innovation adoption. In contrast to most empirical studies on innovation diffusion in which a specific technology is analyzed, this study covers several countries and industries in the European Union. Following Van de Ven and Van Praag (1981), Heckman’s method is applied in a context of binary endogenous variable to explain the choices made by firms regarding innovation. Distinctions are made between the internal generation of innovation and the adoption of innovation produced by others, as well as between different types of adoption (product vs. process and cooperation-based adoption vs. isolated adoption). The study is focused on the impact of users’ features and their cooperation with suppliers on the adoption choices. The results point out that cooperation is a key driver of adoption choices. Usual determinants such as firm size, absorptive capability or exports would foster generation of innovation instead of adoption.

Number of Pages in PDF File: 37

Keywords: Innovation adoption, Innovation diffusion, Community Innovation Survey, Process adoption, Product adoption

JEL Classification: O31, O33

working papers series