THE IMPACT OF TECHNOLOGY TRANSFER ON INNOVATION

The aim of this paper is to examine the two types of relationships - the first one between R&D activities of the firms and innovations and the second relationship between technology transfer and innovation among businesses in Azerbaijan. Data collection were conducted through surveys among 300 small and medium businesses operating in different sectors of economy in Azerbaijan. The novelty of the research lies in 1) surveying the SME sector which have less intensive innovation activities than large, capital intensive firms; 2) SMEs owned entirely by foreign investors are more innovative as compared to firms owned by local investors. Developed and developing economies have attached significant importance to technology transfer as a catalyst of innovation. Transfer of knowledge and technology from generators of such technology including universities and research institutions to industry has shown its result in the example of countries where there is a strong bridge between universities and industry. In other economies where there is not such a strong link between industry and research institutions, innovation can be promoted through adopting ready technology developed by universities and businesses abroad. The results of econometric analysis indicate that while a strong relationship exists between R&D investment and innovation, there is not a strong empirical support that obtaining licenses will increase innovation potential of firms. The partnership between firms and research centers as well as universities, on the other hand lead to increased innovativeness of the businesses under study.