Obstacles to Innovation in Argentina: how barriers affect innovation in SMEs?

ARZA, VALERIA; DEL CASTILLO, M.; LÓPEZ, EMANUEL; OBAYA, M.

Conferencia; MEIDE Model-based Evidence on Innovation and Development; 2017

This study seeks to contribute to the understanding of the barriers faced by firms during the innovation process. Based on the case of Argentina it intends to understand what obstacles hamper innovation, in general, and particularly in SMEs. The paper also identifies whether cooperation activities are used as an strategy to overcome obstacles and to what extent it is successful. The relevance of this topic lies in the important role SMEs play in the economic structure. In developing countries, in addition, SMEs lag far behind average productivity so the need for innovation is outstanding. We use different econometric techniques suitable for our data characteristics and restrictions. Through sample sub-setting we aim at controlling for selection bias and we also use bi-variate probit models to account for possible omitted variables biases affecting the joint occurrence of cooperation and innovation in order to get a better understanding of these variables in relation to obstacles. The data to be used comes from the ?Employment and Innovation Dynamics National Survey? (ENDEI, for its acronym in Spanish). We found that financial obstacles are important barriers for pursuing innovation activities and obtaining innovative results. Knowledge obstacles seem to hamper the probability of obtaining innovative outcomes. Cooperation with third parties is used as strategy to overcome (mainly knowledge) obstacles, and it shows a positive effect on innovative outcomes. Unexpected results are obtained for regulatory obstacles, but further analysis is needed to understand the differential effects of each of its different components.