Complementarities of Innovation Strategies: Evidence from Transition Economies

This paper explores complementarities among innovation strategies in transition economies. Specifically, on the basis of data from the fifth round of Business Environment and Enterprise Performance Survey (BEEPS V), we have investigated the existence of possible complementarities between various types of innovation modes (product, process and non-technological (marketing and/or organizational) innovations) in their impact on the firm's productivity. The study reveals complementarity between the following two combinations of innovations: product/process and process/non-technological innovations. Further, the results of the study show that only those combinations of innovation modes that assume all the types of innovations and/or the combination of process and non-technological innovations have positive and statistically significant impact on the firm's productivity. In the paper, we account for the simultaneous occurrence of different types of innovation inputs-in-house knowledge generation and out-house knowledge acquisition activities- and estimate their joint effects on various modes of innovation. The study results suggest that implementation of internal research and development (R&D) strategy can stimulate not only technological innovations but non-technological innovative activity as well. However, we find that external knowledge acquisition strategy has positive and statistically significant effect on innovation output only when the firm's innovation mix incorporates non-technological novelties.