Obstacles affecting innovation in small and medium enterprises: Quantitative analysis of the Argentinean manufacturing sector

This study contributes to the understanding of how obstacles to innovation affect firms of different size. Until now, the literature on obstacles to innovation has not provided a systematic appraisal of how diverse obstacles affect different innovation decisions and whether this is similar for small and medium enterprises (SMEs) and larger firms. Identifying what and when obstacles matter is important for innovation policy. We use econometric techniques suitable for our data coming from an Argentinean innovation survey for the period 2010-2012. We find that there are different obstacles that prevent innovation (deterrent obstacles) and that affect the intensity of investment in innovation (revealed obstacles). Cost, market and institutional obstacles are important deterring barriers, while market and knowledge obstacles affect the intensity of investment in innovation. When contrasting SMEs against large firms, we see that the former are more affected by obstacles, particularly by cost obstacles, as factors deterring innovation.