Differences in Creating Product Innovations versus Process Innovations across European Industries

International Journal of Innovation and Regional Development, vol 9 (1) p59-84, 2019

28 Pages Posted: 9 Apr 2019 Last revised: 14 Oct 2019

See all articles by Matthias Georg Will

Matthias Georg Will

Martin Luther University of Halle-Wittenberg - Faculty of Economics and Business Administration

Robert B Mellor

Kingston University

Date Written: March 16, 2019

Abstract

The innovative performance of 1,200 representative firms in the Czech Republic, Germany, Hungary, Poland, Romania and the Slovak Republic was analyzed. The study differentiates between product innovation and three different forms of process innovations. This data was joined to the quality of societal institutions of the country containing the firms. Results show that institutional quality is correlated with the innovative performance of firms through different channels.

With respect to product innovations, institutional quality exhibits mediate effects through financing of R&D and the design of the organizational structure, with larger technical / R&D departments being found in firms in environments of high societal quality.

However when investigating process innovations, the pattern is surprisingly different: firms located in European countries with a relatively low score regarding institutional quality, develop predominantly more process innovations. We speculate that this is the result of the characteristics of competition in countries with a relatively poor quality of institutions.

With regard to industrial sector, the data reveals that firms in the wholesale and trade areas follow quite different patterns compared to firms involved in manufacturing/production. Manufacturing firms make predominantly product innovations and these are often financed by external sources, whereas firms in wholesale and trade make more process innovations and these tend to be financed by internal sources.

Keywords: Innovation Management, Product Innovations, Process Innovations, Institutions, SEMs

JEL Classification: L23, L25, O30, O31, O32, O38

Suggested Citation

Will, Matthias Georg and Mellor, Robert B, Differences in Creating Product Innovations versus Process Innovations across European Industries (March 16, 2019). International Journal of Innovation and Regional Development, vol 9 (1) p59-84, 2019, Available at SSRN: https://ssrn.com/abstract=3353821 or http://dx.doi.org/10.2139/ssrn.3353821

Matthias Georg Will (Contact Author)

Martin Luther University of Halle-Wittenberg - Faculty of Economics and Business Administration ( email )

Germany

Robert B Mellor

Kingston University ( email )

Penrhyn Road
Kingston-upon-Thames
Surrey, KT1 2EE
United Kingdom

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