Business Groups, Innovation and Institutional Voids in Latin America

Fulvio, Castellacci (2012): Business Groups, Innovation and Institutional Voids in Latin America.

Abstract

The paper presents an empirical analysis of the innovative activities of business groups in Latin America. It compares the innovativeness of group-affiliated firms (GAFs) and standalone firms (SAFs), and it investigates how country-specific institutional factors – financial, legal, and labor market institutions – affect the group-innovation relationship. The empirical analysis is based on the most recent wave of the World Bank Enterprise Survey (period 2010-2011), and it focuses on a sample of 6500 manufacturing firms across 20 Latin American countries. The econometric results point out two major conclusions. First, GAFs are more innovative than SAFs: we estimate the innovation propensity of GAFs to be 9% higher than that of SAFs. Secondly, across countries, the innovativeness of GAFs is higher for national economies with a better institutional system than for countries with a less efficient institutional set up.

• Item Type: MPRA Paper
• Language: English
• Keywords: Business groups; innovation; institutional voids; emerging economies; Latin America
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development; L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior; D - Microeconomics > D2 - Production and Organizations; P - Economic Systems > P5 - Comparative Economic Systems; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O54 - Latin America ; Caribbean; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M2 - Business Economics; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance

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